2013 (6) TMI 238 - AT - Central Excise

MRP Based duty or Transaction value - under section 4 OR 4A - whether the appellants not required to print MRP as it is a raw material specially packed for exclusive use of any industry? - assessee company manufactures self adhesive tapes classifiable under chapter 3919 of the Central Excise Tariff Act - Held that - As relying on Jayanti Food Processing (P) Ltd case 2007 (8) TMI 3 - Supreme Court and in the light of provisions of Section 4A of Central Excise Act, 1944 and the provisions of SWM Rules especially Rule 34, an assessee cannot be forced or can be said to be not covered by Rule 34 of SWM Rules. Just because the appellant has mentioned exclusively for industrial use and not to be sold in loose , Rule 34 cannot be compulsorily applied. The definition of Retail Sale under Rule 2 makes it quite clear that the retail sale definition is vide enough to cover the transaction in question and therefore unless an assessee claims exemption from printing MRP under Rule 34 of SWM Rules, the MRP is required to be printed and assessable value has to be determined under Section 4A of Central Excise Act, 1944. Thus appellant has made out a case that goods are required to be assessed and value has to be determined as per the provisions of Section 4A of Central Excise Act, 1944 keeping the MRP as the basis.

Summary

Issues:
1. Applicability of Rule 34 of Standards of Weights and Measures (Packaged Commodity) Rules 1977 to the appellant's clearances.
2. Assessment of duty under Section 4 or Section 4A of the Central Excise Act, 1944 based on the products' intended use and packaging information.

Analysis:

Issue 1: Applicability of Rule 34 of SWM Rules
The dispute revolves around whether Rule 34 of SWM Rules applies to the appellant's products. Rule 34 exempts certain packages from mandatory MRP printing if marked for exclusive industrial use. The appellant's products, self-adhesive tapes, were packed with labels stating "for industrial use" and "not to be sold loose." The department argued that this labeling falls under Rule 34, necessitating assessment under Section 4. However, the Tribunal rejected this argument, emphasizing that Rule 34 exemption requires unambiguous packaging indications exclusively for industrial use as raw material. The Tribunal held that the appellant's labeling did not compulsorily trigger Rule 34 exemption, affirming the applicability of Section 4A for valuation.

Issue 2: Assessment under Section 4 or Section 4A
The second issue concerns the appropriate duty assessment section, Section 4 or Section 4A, based on the products' intended use and packaging details. The department contended that since the products were not meant for retail sale, they should be assessed under Section 4. The Tribunal referenced the decision in ITEL Industries Pvt. Ltd., highlighting that goods covered by Section 4A need not be sold in retail, as per Packaged Commodities Rules. The definition of "Retail Sale" was crucial, encompassing distribution for consumption beyond traditional sales. Therefore, the Tribunal concluded that unless exempted under Rule 34, MRP printing and valuation under Section 4A were mandatory for the appellant's products.

In conclusion, the Tribunal ruled in favor of the appellant, determining that the products should be assessed under Section 4A based on MRP valuation. The discussion highlighted the importance of clear packaging indications for Rule 34 exemption and the broad interpretation of "Retail Sale" under Section 4A. The judgment emphasized that unless there is clear evidence of duty evasion, penalties or extended periods cannot be imposed solely based on interpretation issues.