2017 (3) TMI 1138 - AT - Central Excise

Method of Valuation - transaction value u/s 4 or MRP based value u/s 4A - fuse base /fuse links - whether the fuse base /fuse links manufactured and cleared by the appellant without individual packing in bulk in cardboard cartons are covered by section 4A of the Central Excise Act, 1944 read with notification issued thereunder or not? - it is the contention of the appellant that the goods manufactured were packed in cardboard cartons solely to protect the same from the damage during transit and goods were made available to the buyers for inspection - validity of SCN. Held that - the SCN has been issued to the appellant is factually on wrong facts. In the SCN, it is alleged that fuse base or fuse links are individually packed but on production of sample, we find that these are not individually packed at all but these are packed in bulk in a carton of 3, 6 or 10 fuse bases or 3, 10 or 15 pieces for the purpose of transportation. The goods are in wholesale packs as is evident from the samples placed on record and before us that the goods are not individually packed and the goods are to be sold by manufacturer to wholesaler in bulk enabling the wholesaler to sell /distribute or deliver such goods to the consumer in smaller quantity - As the goods cleared by the appellant to the wholesaler are in bulk, therefore we hold that the appellants are clearing the goods in wholesale packages - the provisions of section 4A of CEA are not applicable to the facts of the case in hand - the appellant has correctly valued their goods and paid the duty under section 4 of CEA, 1944 on transaction value. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the fuse base/fuse links manufactured and cleared without individual packing in bulk in cardboard cartons are covered by section 4A of the Central Excise Act, 1944 read with notification issued thereunder or not.

Analysis:
The appellants filed appeals against an order confirming duty demand, interest, penalty, and penalty on the company's Director. The issue revolved around the manufacturing of HRC fuses not paying duty as per the value of goods under section 4A of the Act. The appellants argued the goods were not for retail sale but for industrial use, packed in cardboard cartons for transportation. The show cause notice demanded differential duty under section 4A. The Tribunal found the notice factually incorrect, as the goods were not individually packed but in bulk for transportation, akin to wholesale packages. The Tribunal referred to a similar case, Sterling Tools Ltd., where goods were cleared in wholesale packages, not requiring MRP declaration, thus correctly valued under section 4 of the Act.

The learned Counsel for the appellant argued that the goods were not individually packed but in bulk in cardboard cartons, contrary to the show cause notice's allegations. The AR contended that the goods were deliberately packed for individual retail sale, breaching packaging rules. The Tribunal, after hearing both sides, analyzed whether the goods fell under section 4A. They found the show cause notice factually incorrect, aligning with the Sterling Tools Ltd. case, where goods were cleared in bulk for wholesale distribution, not necessitating MRP declaration, and correctly valued under section 4 of the Act.

The Tribunal considered the issue of whether the fuse base/fuse links were covered by section 4A of the Central Excise Act. They found the show cause notice inaccurately alleged individual packing, whereas the goods were bulk-packed for transportation. Relying on the Sterling Tools Ltd. case, the Tribunal concluded that the goods were cleared in wholesale packages, not requiring MRP declaration, and correctly valued under section 4 of the Act. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal's decision was based on the factual discrepancy in the show cause notice, determining that the goods were not individually packed but in wholesale packages, exempt from MRP declaration under section 4 of the Central Excise Act. The judgment aligned with the precedent set in the Sterling Tools Ltd. case, ensuring correct valuation and duty payment for goods cleared in bulk for wholesale distribution.