2015 (10) TMI 1991 - AT - Central Excise

MRP based Valuation u/s 4A or transaction value u/s 4 - whether the goods supplied to the distributor in wholesale packages are liable to be assessed under section 4(A) of the Central Excise Act 1944 or not - Held that - As per the definition of multi piece packages and the definition of wholesale packages, we find that sub clause 2(x) of the standard of Weight and Measures (Package Commodities) Rule 1977 is applicable to the facts of this case, as the fasteners are sold by the appellant to wholesaler in bulk enabling the wholesaler to sell distribute or deliver such fastener to the consumer in smaller quantity. As per Rule 29 of the said rules the appellant were not required to affix MRP on the product which were cleared as wholesale packages, therefore, the provisions of the SWM (PC) Rules are not applicable to the facts of this case which is squarely covered by the guidelines issued by the Hon ble Apex Court in the case of Jayanti Food Processing (P) Ltd. (2007 (8) TMI 3 - Supreme Court). In these circumstances, we hold that appellant has correctly valued their goods sold to the wholesaler in wholesale packages and valued as per section 4 of the Central Excise Act 1944 i.e. transaction value - Decided in favour of assessee.

Summary

Issues:
Determination of Central Excise duty on goods sold to wholesale dealers in bulk packaging.

Analysis:
The judgment concerns the manufacturer of fasteners, charged with Central Excise duty under specific notifications. The dispute revolves around the duty payment on goods sold to wholesale dealers in bulk packaging. The period in question spans from 2006 to 2010. The appellant's goods were sold in various forms, including loose to automobile manufacturers and in packings to spare parts divisions. The show cause notices were issued for duty payment on goods sold to wholesale dealers. The appellant contested the demand, citing statutory changes and legal precedents.

The appellant argued that the goods sold in bulk to wholesale dealers should be valued under section 4 of the Central Excise Act, not section 4(A). They emphasized that the goods were not individually packed or labeled for retail sale, supporting their stance with case law examples. The appellant challenged the imposition of duty beyond the normal limitation period, citing earlier notices and the absence of statutory valuation methods before 2008.

The appellate tribunal analyzed the definitions of wholesale and multi-piece packages under relevant rules. It concluded that the appellant's goods sold in bulk to wholesalers qualified as wholesale packages, not multi-piece packages. The tribunal noted that wholesale packages did not require MRP declaration, aligning with the appellant's contentions. The judgment referenced the Apex Court's guidelines on valuation under section 4(A) and determined that the appellant's valuation method adhered to the law.

Ultimately, the tribunal set aside the demand for duty payment on goods sold to wholesale dealers, ruling in favor of the appellant. The decision was based on the correct valuation of goods under section 4 of the Central Excise Act for wholesale packages. The appeals were allowed without delving into the limitation issue, providing consequential relief to the appellant.