2007 (10) TMI 101 - AT - Central Excise

Hair dye MRP based valuation Sachets packed in mono-cartoons Each pouch contains less than 20 gms of dye So goods are exempt u/r 34(1)(b) of SWM(PC) Rules & not to be assessable u/s 4A of C.E.(Valuation) Rules In instant case, for bulk supply of retail item, section 4 is applicable

Summary

Issues:
Valuation of hair dyes under Central Excise Act, applicability of Standards of Weights and Measures (Packaged Commodities) Rules, demand of differential duty, penalty imposition, interpretation of Rule 34(1)(b) exemption, conflicting judgments.

Valuation of Hair Dyes:
The appellant, engaged in hair dye manufacture, cleared products to a dealer in mono-cartons containing sachets. The appellant considered each sachet as a retail pack and claimed exemption under Rule 34(1)(b) from other SWM (PC) Rules, valuing goods under Section 4 of Central Excise Act. The department viewed mono-cartons as "multi-piece packages" under Rule 17, requiring valuation under Section 4A, leading to show-cause notices for differential duty and penalties.

Applicability of SWM (PC) Rules:
The dispute revolved around whether the hair dyes in sachets were intended for retail sale as standalone products or as part of mono-cartons. The appellant argued that only sachet packs were intended for retail sale, exempt from SWM (PC) Rules under Rule 34(1)(b). The Revenue contended that mono-cartons constituted retail packs, necessitating compliance with SWM (PC) Rules.

Demand of Differential Duty and Penalty Imposition:
The Commissioner of Central Excise upheld valuation under Section 4A, demanding differential duty and imposing penalties under Rule 173Q of Central Excise Rules. The appellant contested the demands, emphasizing the exemption claimed under Rule 34(1)(b) for sachet packs.

Interpretation of Rule 34(1)(b) Exemption:
The larger Bench decision in Urison Cosmetics clarified that quantities of cosmetics weighing less than 10 grams, even in multi-pack sachets, were exempt under Rule 34(1)(b) of SWM (PC) Rules. This exemption rendered Section 4A inapplicable to such multi-packs, aligning with the appellant's claim regarding the retail sale of sachet packs.

Conflicting Judgments:
The Tribunal noted conflicting judgments on the issue, with the West Zonal Bench following the Urison Cosmetics decision in similar cases. The appellant's claim that their products were sold in sachets to end consumers, not mono-cartons, was upheld based on Rule 34(1)(b) exemption. The impugned order demanding differential duty and penalties was set aside, allowing the appeal.

This detailed analysis encompasses the valuation of hair dyes, applicability of SWM (PC) Rules, demand of duty and penalties, interpretation of Rule 34(1)(b) exemption, and the resolution of conflicting judgments, culminating in the setting aside of the impugned order.