2016 (3) TMI 436 - AT - Central Excise

Valuation of chewing tobacco - Section 4 or Section 4A - multiple packing / bulk packing - pouches of 6 gms. and 7 gms. - These are then packed in multiples of 52/42/40/32 pouches in a plastic bag and are cleared on sale. - Held that - the CBEC vide their Circular dated 28/2/2002 (para 7) clarified that in case of doubt in situation like this, the matter should be got clarified by the concerned Department of State Government. We find as pointed out by the respondent/assessee the State Government Authorities (Haryana and Maharashtra) and also legal Metrology Unit of Government of India, New Delhi have clarified that packages below 10 gms. are totally exempt from purview of SWM Rules. Packages containing 10 or more retail packages are considered as wholesale packages and need not carry retail sale price declaration. - Decided against revenue

Summary

Issues:
1. Valuation of chewing tobacco under Section 4 or Section 4A of the Central Excise Act.
2. Refund claim by the respondent.
3. Interpretation of multi-piece packages and MRP valuation.

Analysis:

Issue 1: Valuation of chewing tobacco under Section 4 or Section 4A of the Central Excise Act:
The case involved appeals by the Revenue regarding the valuation of chewing tobacco manufactured and cleared by the respondent. The Revenue contended that the products should be assessed under Section 4A based on the retail sale price. However, the Commissioner (Appeals) ruled in favor of the respondent, stating that the products were not "multi-piece packages" and thus not governed by MRP regulations. The Tribunal upheld this decision, emphasizing that the small pouches of chewing tobacco were intended for wholesale, not retail sale, and thus exempt from declaring net weight and MRP under SWM Rules. Various legal precedents were cited to support this interpretation, including decisions by the Hon'ble Supreme Court and other Tribunals.

Issue 2: Refund claim by the respondent:
Following the favorable order by the Commissioner (Appeals), the respondent filed a refund claim, which was initially rejected by the Original Authority. However, the Commissioner (Appeals) allowed the appeal with consequential relief, noting that the respondent had met the requirements and evidence to prove that the duty incidence was not passed on to buyers. The Tribunal upheld this decision, emphasizing that the Revenue's grounds for denial were not substantiated, and the respondent had fulfilled the necessary criteria for the refund claim.

Issue 3: Interpretation of multi-piece packages and MRP valuation:
The crux of the dispute revolved around whether the chewing tobacco packages constituted multi-piece packages subject to MRP valuation. The Commissioner (Appeals) determined that the products were wholesale packages, not multi-piece packages, based on interpretations and clarifications from State Metrology Authorities. The Tribunal concurred with this finding, citing previous judgments and clarifications that packages below 10 gms were exempt from SWM Rules and not liable for RSP-based assessment. The Tribunal dismissed the Revenue's appeals, highlighting the clarity provided by State Government Authorities and legal Metrology Units regarding the exemption of packages below 10 gms from MRP regulations.

In conclusion, the Tribunal dismissed the Revenue's appeals, upholding the decisions of the Commissioner (Appeals) regarding the valuation of chewing tobacco under Section 4, the refund claim by the respondent, and the interpretation of multi-piece packages for MRP valuation. The legal precedents and clarifications from State Authorities played a crucial role in determining the outcome of the case.