2013 (9) TMI 130 - AT - Central Excise

MRP based duty - clearance of chocolates to Job worker - In the premises of job worker, the 5 Star and Dairy Milk Gold were repacked into assortment packs called Celebrations , which were cleared on payment of duty on the value determined under Section 4A i.e. MRP declared on Celebrations pack minus abatement. The dispute in this case is about the duty payable on the clearances of Dairy Milk Gold and 5 Star chocolates in cardboard boxes by the appellant to their job worker. - Revenue was of the view that the duty on their clearances would be chargeable on the value determined under Section 4A. Held that - It had not been shown as to how the 44 gms. Cadbury Gold and 20 gms. Cadbury 5 Star chocolate packs were exempt from the requirement of printing MRP under SWM (PC) Rules - Clearance of one type of retail pack for repacking into another type of retail pack - assortment pack cannot be said to be for - use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry - Moreover under Rule 34(a) of SWM (PC) Rules, for exemption from the requirement of printing MRP - the marking on the package must unambiguously indicated that it had been specifically packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry . - The provisions of Section 4A were attracted to the case and duty was payable on the value determined u/s 4A Jayanti Food Processing Pvt. Ltd. & Others v. Commissioner of Central Excise, Rajasthan & Others 2007 (8) TMI 3 - Supreme Court - The plain language of Section 4A(1) unambiguously declared that for its application there had to be the requirement under the SWM Act or the Rules made thereunder or any other law to declare the MRP on the package - If there was no such requirement under the Act on the Rules, there would be no question of application of Section 4A - Thus if the appellant was successful in showing that there was no requirement under the SWM Act or the Rules made thereunder for declaration of MRP on the package, then there would be no question of applicability of Section 4A(1) & (2) of the Act - Even if the assessee voluntarily displayed on the pack the MRP, that would be of no use if otherwise there was no requirement under the SWM Act and the Rules made thereunder to declare such a price - The case of repacking of one type of retail pack into another type of retail pack-assortment pack called Celebrations by a job worker cannot be called bulk sale to an intermediary for further sale or distribution in smaller quantities Decided against assessee.

Summary

Issues:
Determination of duty payable on clearances of chocolates to a job worker, applicability of Section 4A of the Central Excise Act, 1944, requirement of printing MRP on packages, interpretation of wholesale packages under SWM (PC) Rules.

Analysis:

Issue 1: Duty Determination on Clearances
The appellant contended that duty on clearances of chocolates to the job worker should be based on the value determined under Section 4, considering the cardboard packs as wholesale packages. They argued that since there was no requirement to affix MRP on wholesale packages, Section 4A was not applicable. However, the Department argued that Section 4A applied, emphasizing the presence of MRP on individual packs, indicating goods meant for retail sale. The Tribunal noted the conflicting interpretations.

Issue 2: Applicability of Section 4A
The Tribunal referred to the Supreme Court judgment in the case of Jayanti Food Processing Pvt. Ltd., emphasizing the requirement of printing MRP on retail packages for Section 4A to apply. They highlighted that the package refers to the retail pack sold to consumers, irrespective of repacking for distribution. The Tribunal found that since MRP was required on the packages of chocolates, Section 4A was applicable.

Issue 3: Requirement of Printing MRP
The Tribunal analyzed the SWM (PC) Rules, noting that exemptions from printing MRP apply to packages specifically meant for industrial use, which was not the case here. They observed that the absence of such markings on the packages indicated the requirement for MRP printing. Consequently, the provisions of Section 4A were deemed applicable.

Issue 4: Interpretation of Wholesale Packages
The appellant argued that the cardboard packs were wholesale packages under SWM (PC) Rules. However, the Tribunal clarified that wholesale packages involve bulk sales to intermediaries for further distribution, not repacking for retail sale. Therefore, the Tribunal upheld the applicability of Section 4A, requiring duty payment based on its provisions.

In conclusion, the Tribunal dismissed the appeal, affirming the duty payment based on the value determined under Section 4A. The judgment highlighted the necessity of printing MRP on packages for the application of Section 4A, emphasizing the distinction between wholesale and retail packages under the SWM (PC) Rules.