2018 (11) TMI 410 - AT - Central Excise

Method of Valuation -sale of mineral water to PVRs who are institutional consumers - whether valued in terms of section 4 or section 4A of CEA? - appellant availed area based exemption under N/N. 56/02-CE dt.14.11.2002 - Held that - Admittedly, in this case, PVRs although are buying the goods in bulk from the appellant not using the same and ultimately are selling to their customers in retail. Therefore, these PVRs cannot be said institutional buyers - As there is only dispute whether the PVRs are institutional buyers, who are ultimately selling the mineral water to their customers against the certain price printed on the bottles, in that circumstance, it can be said the appellant is not clearing the goods to institutional buyers. Therefore, the appellant has discharged duty in terms of Section 4A of the Act. The issue decided in the case of JAYANTI FOOD PROCESSING (P) LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAJASTHAN 2007 (8) TMI 3 - SUPREME COURT , where it was held that there is no question of the applicability of Section 4 of the Act as the package as it is a retail sale of the package to the Jet Airways which supplies the same to the passengers on demand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Valuation of goods under Section 4A or Section 4 of the Central Excise Act, 1944.

Analysis:
The case involved a dispute regarding the valuation of mineral water sold by the appellant to PVRs, who then sold the water to retail customers. The appellant claimed to have correctly discharged duty under Section 4A of the Act, while the Revenue argued for valuation under Section 4 of the Act due to sales to institutional buyers. The key issue was whether the PVRs qualified as institutional buyers or not, determining the applicable valuation section.

The Tribunal analyzed the facts and legal precedents, notably referring to the decision in Jayanti Food Processing Pvt. Ltd. v. CCE, Rajasthan. The Tribunal noted that the PVRs were not using the goods themselves but selling them at retail, hence not meeting the criteria of institutional buyers. The Tribunal emphasized that the MRP was correctly mentioned on the packaging, leading to the conclusion that valuation should be under Section 4A, not Section 4 of the Act.

Citing the definition of "commodity in packaged form" and the specific circumstances of the case where the bottles were packed for a specific entity and not intended for resale, the Tribunal upheld the appellant's position. It was clarified that the package did not qualify as a wholesale package and was directly sold to the end consumers, justifying the application of Section 4A for valuation purposes.

Ultimately, the Tribunal ruled in favor of the appellant, setting aside the impugned proceedings and allowing the appeal with consequential relief. The decision highlighted the importance of correctly interpreting the provisions of the Central Excise Act based on the specific facts and nature of the transactions involved.

This detailed analysis showcases how the Tribunal carefully considered the legal arguments, factual circumstances, and relevant legal precedents to arrive at a well-reasoned decision regarding the valuation of goods under the Central Excise Act, 1944.