2018 (5) TMI 2041 - AT - Central Excise

Method of Valuation - transaction value u/s 4 or MRP based value u/s 4A - clearances of Calcium Prudent toothpaste effected to M/s Gillette Diversified Operations Ltd and intended for delivery to Canteen Stores Department (CSD) - coverage under special facility incorporated in circular no. 625/16/02 dated 28th February 2002 of Central Board of Excise Customs - denial on the ground that the exclusion is available only to goods that are not sold further, goods that are sold for further service or on goods which are excluded from printing/declaring maximum retail price thereon - period from March 2002 to March 2004 - HELD THAT - There is no doubt that it is the intention of a manufacturer, made manifest by affixing of pre-requisites enumerated in Legal Metrology Act, 2011, and the attendant Rules, which renders applicability of section 4A of Central Excise Act 1944 even as the responsibility for such affixing is enforced at the last stage of retail. The issue is covered by the decision in the case of CHARMS COSMETICS PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE I 2017 (3) TMI 1129 - CESTAT MUMBAI where it was held that it is the value determined under section 4 of CEA, 1944 that will determine the basis for computation of duty liability. Thus, in the present case, the goods were correctly assessed to duty by the appellant and that, with the incorrect application of section 4 A of Central Excise Act, 1944, the impugned order cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Upholding demand of differential duty under section 4A of Central Excise Act, 1944
- Applicability of special facility for duty liability on 'Calcium Prudent toothpaste'
- Interpretation of intention for further sale under section 4A
- Responsibility for affixing 'maximum retail price' on pre-packaged goods
- Examination of Canteen Stores Department as a retailer
- Compliance with Legal Metrology Act, 2011 for institutional consumers

Analysis:
The judgment dealt with an appeal against an order upholding a demand of differential duty under section 4A of the Central Excise Act, 1944, along with penalties and interest. The appellant, a manufacturer of 'Calcium Prudent toothpaste,' claimed duty liability discharge under section 4 based on a circular from the Central Board of Excise & Customs, which was contested by lower authorities. The dispute centered on whether the special facility applied only to goods not sold further or excluded from declaring 'maximum retail price.' The appellant argued that a previous Tribunal decision supported their position, emphasizing the intention for further sale as crucial for section 4A assessment.

The Tribunal analyzed the responsibility for affixing 'maximum retail price' on pre-packaged goods, highlighting that the intent to cater to the retail market determines the applicability of section 4A. It was clarified that while manufacturers affix the price, the obligation primarily lies with pre-packagers. The judgment emphasized the importance of intent over the act of pre-packing, citing relevant legal provisions and consumer protection laws. The decision underscored that the affixed price does not automatically subject goods to legal metrology laws or excise duty, especially for institutional buyers like the Canteen Stores Department (CSD).

Regarding the CSD's status as a retailer, the Tribunal examined its functions and relationship with legal metrology laws. It concluded that the CSD, as an in-house procurement agency for the Ministry of Defence, did not fall under legal metrology enforcement due to its distinct role and pricing structure. The judgment differentiated institutional consumers from end customers, asserting that goods supplied in bulk to armed forces members did not necessitate compliance with retail pricing regulations. Ultimately, the Tribunal allowed the appeal, holding that the goods were correctly assessed under section 4, not section 4A, of the Central Excise Act, 1944, based on the clear intention for non-retail sale.