2020 (2) TMI 182 - AT - Central Excise

Valuation - MRP based value u/s 4A or transaction value u/s 4 - shampoo sold in sachets - HELD THAT - The goods in question itself is not required to affix MRP as per Rule 34(b) of Legal Metrology Act / Rules. The Tribunal in the case of Sarvotham Care Ltd. 2013 (4) TMI 505 - CESTAT BANGALORE had analysed a similar issue and has held that The goods in the form of liquid packed in sachets though may be sold in numbers, it cannot be said that they are not being sold by weight or volume as each sachet contains pre-determined quantity of the liquid by weight as well as by volume. The valuation done by the appellant under section 4 of the Central Excise Act, 1944 is correct. Therefore the demand made by the department under section 4A therefore cannot sustain - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Assessment of shampoo sachets under Central Excise Act - Section 4 vs. Section 4A.

Analysis:
The case involved a dispute regarding the assessment of shampoo sachets under the Central Excise Act, specifically whether they should be assessed under Section 4 or Section 4A. The appellant argued that the shampoo sachets weighing 10 ml or less, sold under brand names like "Clinic Plus," "Clinic All Clear," and "Sunsilk," should be assessed under Section 4 and not under Section 4A as alleged by the department. The appellant contended that since the quantity was less than 10 ml, there was no statutory requirement to affix Maximum Retail Price (MRP) on the goods. The appellant cited various decisions and a Board Circular to support their argument that assessment under Section 4 was appropriate in this case.

The Tribunal examined the issue and referred to the Legal Metrology Act and Rules, particularly Rule 34(b), which stated that goods not required to affix MRP did not fall under Section 4A valuation. The Tribunal also considered previous decisions, including Sarvotham Care Ltd. case, which provided guidelines for determining when Section 4A valuation should be applied. The Tribunal highlighted factors such as the requirement to declare the price on the package, notification by the Central Government, and the manufacturer's intention and marketing pattern. It was emphasized that even if a commodity was notified under Section 4A, assessment under Section 4 was appropriate when there was no statutory requirement to declare MRP on the packages.

In a previous case cited by the appellant, the Tribunal had ruled that duty should be paid based on transaction value under Section 4, not MRP, for goods sold in numbers with weight less than 10 grams per piece. Following these precedents and considering the facts presented, the Tribunal concluded that the appellant's valuation under Section 4 was correct, and the demand raised under Section 4A was not sustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the judgment clarified the criteria for assessing goods under Section 4 or Section 4A of the Central Excise Act, emphasizing the importance of statutory requirements, manufacturer's intention, and previous rulings in similar cases. The decision provided a comprehensive analysis of the legal provisions and precedents to determine the appropriate valuation method for the shampoo sachets in question.