2009 (2) TMI 215 - AT - Central Excise

Valuation - Multi-piece packages containing common commodity The respondents herein manufacture and clear Clinic Plus Shampoo of 8 ml in what the department alleged was a multi-piece package in corrugated box containing 60 strips of sachets, each strip having 16 nos. of individually packaged and labelled pieces of shampoo sachets totaling 960 nos. - held that such packages qualified for exemption under Rule 34 of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 from the legal requirement of declaration of retail sale price and that Section 4A of the Central Excise Act is not applicable to such packages. Even a multipiece package containing a common commodity, if exempted under Rule 34 ibid, is covered under Section 4 revenue s appeal rejected

Summary

Issues:
Valuation of multi-piece packages under Section 4A of the Central Excise Act, 1944.

Analysis:
The case involved the manufacture and clearance of 'Clinic Plus Shampoo' in multi-piece packages, leading to a dispute regarding the valuation under Section 4A of the Act. The department issued a show-cause notice for recovery of differential duty and penalty. The Assistant Commissioner upheld the demand and imposed a penalty, but the Commissioner (Appeals) ruled in favor of the respondents based on a prior decision. The primary grounds raised by the department in the appeal were based on a High Court case and a CBEC Circular, arguing for valuation under Section 4A. However, the issue was settled in favor of the assessees by a Larger Bench decision of the Tribunal in a similar case involving hair dye sachets. The Tribunal held that such packages qualified for exemption under Rule 34 of the Standards of Weights and Measures Rules, and Section 4A was not applicable. This decision was upheld by the Apex Court in a subsequent case. Another case involving shampoo sachets also followed the same principle, emphasizing valuation under Section 4, not Section 4A.

In a related case, the Tribunal reiterated the exemption under Rule 34 for hair dye sachets, further supporting the position that valuation should be done under Section 4. The Tribunal's decision in a shampoo case was upheld by the Supreme Court, reinforcing the precedent set by the Larger Bench decision. The Court also critiqued a CBEC Circular, stating that it did not consider legal principles and misinterpreted the applicable rules, leading to an incorrect interpretation regarding multi-piece packages. Ultimately, the Tribunal upheld the impugned order and rejected the Revenue's appeal based on the established legal principles and precedents.

This comprehensive analysis of the judgment highlights the key legal issues, the arguments presented by both parties, the relevant legal precedents, and the final decision reached by the Tribunal based on established principles and case law.