2016 (10) TMI 735 - AT - Central Excise

Transaction value or MRP based valuation - Taxability of Hair Dye with the brand name Indica cleared in retail packs containing 6 gms. each and six numbers of such pack placed in mono-carton for convenience of sale - Section 4 of the Central Excise Act, 1944 or Section 4A of the said Act? - Rule 34 of the 1977 Rules at the material time very specifically states that the goods weighing less than 20 grams or less than 20 milli litres when sold by weight or measure, are out of the purview of 1977 Rules. - Held that - the appellants had cleared 6 gms. sachet of the Hair Dye in a monopack carton containing six numbers of such sachet. The weight of goods in individual sachet satisfies the condition of Rule 34 of 1977 Rules. Therefore, goods of appellant are covered by Rule 34 of the 1977 Rules and enjoy exemption from application of the 1977 Rules. Revenue says that legal Metrological Department has opined that the goods in question being 5.6 gms. each that ipso facto cannot be considered to be a multi-piece package. We are not guided by this opinion of the Metrology authority in view of factual finding of the adjudicating authority as to the weight of the sachet and clearance of six numbers of sachets packed in mono-pack carton attracting Rule 34 of the 1977 Rules, being a pack of 6 gms. in each sachet. That gets exemption from the application of the 1977 Rules. Accordingly, the goods cleared by appellant are to be assessed under Section 4 of the Central Excise Act without the same assessable under Section 4A thereof on the facts and circumstances of the case - penalty also waived - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of Rule 34 of the Standards of Weight & Measures (Packaged Commodities) Rules, 1977.
2. Applicability of Section 4 and Section 4A of the Central Excise Act, 1944.
3. Exemption under Rule 34 of the 1977 Rules for goods sold in multi-piece packs.
4. Consideration of factual findings over expert opinion from the legal Metrological Department.

Analysis:

Issue 1: Interpretation of Rule 34 of the Standards of Weight & Measures (Packaged Commodities) Rules, 1977
The appellant contended that the goods, Hair Dye in retail packs of 6 gms each, placed in a mono-carton, should be exempt from the 1977 Rules as per Rule 34. The Tribunal analyzed the factual findings and concluded that the weight of the goods in individual sachets satisfied the conditions of Rule 34, granting exemption from the 1977 Rules. This exemption was crucial in determining the legal implications of the case.

Issue 2: Applicability of Section 4 and Section 4A of the Central Excise Act, 1944
The dispute centered around whether the goods should be assessed under Section 4 or Section 4A of the Central Excise Act, 1944. The Revenue argued for Section 4A, citing retail sale clearance. However, the Tribunal, based on the exemption under Rule 34, held that the goods were to be assessed under Section 4, not Section 4A. This decision was pivotal in determining the duty liability of the appellant.

Issue 3: Exemption under Rule 34 of the 1977 Rules for goods sold in multi-piece packs
The Tribunal referred to the decision in CCE Vapi Vs Krafttech Products to support the appellant's contention that the goods, sold in multi-piece packs, were exempt under Rule 34. The judgment highlighted the applicability of the exemption clause in Rule 34 for multi-piece packages, emphasizing the legal significance of the packaging and sale format of the goods in question.

Issue 4: Consideration of factual findings over expert opinion from the legal Metrological Department
Despite the legal Metrological Department's opinion that the goods were not a multi-piece package due to their weight, the Tribunal prioritized the factual findings regarding the weight of the sachets and the packaging format. Relying on these factual determinations, the Tribunal disregarded the expert opinion and concluded that the goods qualified for exemption under Rule 34, impacting the assessment under the Central Excise Act.

In conclusion, the Tribunal's judgment clarified the interpretation of Rule 34, determined the applicable sections of the Central Excise Act, recognized the exemption for goods sold in multi-piece packs, and prioritized factual findings over expert opinions, ultimately granting relief to the appellant and allowing the appeals.