2018 (1) TMI 720 - AT - Wealth-tax

Valuation - yeast - whether the yeast cleared in pack from the factory appearing a marking for industrial use only and specially made for bakery industry only will be assessable under Section 4 or Section 4A of the Central Excise Act, 1944? Held that - for the product which are exempted under Rule 34 of the provisions of Standard of Weights and Measures (Packaged commodities) Rules, 1977, there is no need to affix the MRP on the product. In the facts of the present case, the appellant is exempted from affixing MRP under Rule 34 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Consequently, they are not required to affix the MRP, as per the provisions of Standards of Weights and Measures, Act 1976. Accordingly, the valuation of the goods in question cannot be governed by Section 4A. Whereas it is governed by Section 4 of the Central Excise Act, 1944. Appeal allowed.

Issues:
Whether yeast cleared in pack from the factory marked for industrial use only and specially made for bakery industry only will be assessable under Section 4 or Section 4A of the Central Excise Act, 1944.

Analysis:

1. Valuation under Section 4 or Section 4A:
The issue in this case revolved around the assessment of yeast cleared from the factory marked for industrial use only and specifically made for the bakery industry. The appellant argued that the goods should be assessed under Section 4, not Section 4A, of the Central Excise Act, 1944. The appellant's counsel highlighted that the Government of Maharashtra had previously ruled that there was no requirement to affix MRP on the subject goods, which was upheld by the Bombay High Court. This established that the goods were not required to be affixed with MRP, thereby falling under Section 4 for valuation purposes.

2. Limitation and Penalty Imposition:
The appellant contended that the demand was time-barred as regular audits did not raise any valuation issues. Correspondence with departmental authorities also emphasized valuation under Valuation Rules, 2000, indicating no suppression of facts or malafide intent. The appellant argued that since the issue involved interpretation of law reaching the High Court, penalties should not be imposed. This argument was crucial in determining the applicability of penalties in the case.

3. Legal Requirement of MRP Affixing:
The Tribunal analyzed the legal requirement of affixing MRP on goods under Section 4A of the Central Excise Act, 1944. The Tribunal noted that even if a product is notified under Section 4A, it must comply with the provisions of the Standards of Weights and Measures Act, 1976. The Government of Maharashtra had previously ruled that the subject goods were exempted under Rule 34 of the Standards of Weights and Measures Rules, 1977, as they were marked for industrial use only and specially made for the bakery industry. This exemption from affixing MRP was crucial in determining the correct valuation section under the Central Excise Act.

4. Judicial Precedents and Circulars:
The Tribunal referred to judicial precedents and circulars to support its decision. The High Court's order upheld the Government of Maharashtra's ruling, emphasizing that goods not statutorily required to declare MRP should be assessed under Section 4, not Section 4A. The circular clarified that assessment under Section 4 was applicable even for notified commodities exempt from MRP declaration. This legal interpretation based on precedents and circulars provided a strong foundation for setting aside the impugned order and allowing the appeal in favor of the appellant.

In conclusion, the judgment by the Appellate Tribunal CESTAT Mumbai clarified the valuation assessment of yeast products marked for industrial use only and specially made for the bakery industry. The decision highlighted the legal requirements of MRP affixing, limitations on penalty imposition, and the significance of judicial precedents and circulars in determining the correct valuation section under the Central Excise Act.

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