2011 (11) TMI 539 - AT - Central Excise

Waiver of pre deposit - Duty liability under Section 4A of the Central Excise Act - Valuation as per MRP - Held that - exemption under Rule 34 of the Standards of Weights and Measures Rules, 1977 is in respect of package containing a commodity. In the present case, commodity is spit tobacco and the exemption is in respect of packet containing a commodity if the net weight is 10 gms. and less than 10 gms - commodity is spit tobacco and not pouch, therefore, prima facie we find merit in the contention of the applicant that the exemption under Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 is applicable on the facts and circumstances of the present case. The pre-deposit of duty interest and penalty is waived and recovery of the same is stayed during pendency of the appeal - Following decision of Makson Confectionery Pvt. Ltd. 2010 (9) TMI 10 - SUPREME COURT and Kraftech Products 2008 (3) TMI 12 - Supreme court - Stay granted.

Summary

Issues:
Classification of goods under Central Excise Tariff, applicability of Section 4A of Central Excise Act, interpretation of Rule 34 of Standards of Weights and Measures Act.

Classification of Goods:
The applicant filed for waiver of pre-deposit of duty, interest, and penalty regarding the classification of the product marketed as spit tobacco. The Revenue contended the goods fall under Heading 2403 99 10, while the applicant argued for classification under Heading 2403 99 90, claiming exemption under the Standards of Weights and Measures Act due to the goods being sold in pouches by weight. The applicant challenged the adjudication order's finding that the goods were sold in numbers, emphasizing the weight of the commodity over the number of pouches.

Applicability of Section 4A of Central Excise Act:
The main contention was whether the goods were liable for duty under Section 4A of the Central Excise Act. The applicant argued that the goods, being sold in pouches of 10 gms. or less, were exempt from the provisions of Section 4A under Rule 34 of the Standards of Weights and Measures Act. The Revenue argued that the goods were sold by numbers, not weight, and therefore, the exemption did not apply. The Tribunal referred to previous Supreme Court decisions regarding the interpretation of Rule 34 and upheld that commodities sold by weight, even if in pouches or sachets, are exempt from Section 4A.

Interpretation of Rule 34 of Standards of Weights and Measures Act:
The Tribunal analyzed Rule 34, which exempts packages containing commodities of 10 gms. or less from certain rules. Relying on Supreme Court precedents, the Tribunal concluded that commodities sold by weight, regardless of packaging, qualify for the exemption. In this case, as the commodity was spit tobacco, not the pouch itself, the Tribunal found merit in the applicant's argument that the exemption under Rule 34 applied. Consequently, the pre-deposit of duty, interest, and penalty was waived, and recovery stayed during the appeal process.

This detailed analysis of the judgment highlights the key issues of classification, the applicability of Section 4A of the Central Excise Act, and the interpretation of Rule 34 of the Standards of Weights and Measures Act, providing a comprehensive overview of the legal reasoning and conclusions reached by the Tribunal.