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2020 (3) TMI 838 - AT - Central ExciseValuation - Scope of the show cause notice (SCN) - short paid the Central Excise Duty - inclusion of MRP of these toffees in the MRP of the jar cleared by them containing 150 Bubble Gums and 20 Solano Toffees - extended period of limitation - HELD THAT - It is not the case of the revenue that the jar containing 150 bubble gums and 20 Solano Toffees were to be valued as per the Section 4A of the Central Excise Act, 1944. On the contrary the finding of the Adjudicating authority that the said pack is an whole sale pack and not the retail sale pack has been admitted by the Committee of the Chief Commissioners while directing to file this appeal. After having done so, revenue has proposed to determine the value of whole sale pack by applying the provisions of Section 4A in respect of the Bubble Gums cleared by the appellant and the value of remaining Solano Toffees by treating them as free samples by application of Section 4 of the Central Excise Act, 1944 - We are not in agreement with such approach as by doing so revenue has proposed to disintegrate the wholesale package and determine the value of individual components under separate provisions of the same act. Section 4A is not applicable to the whole sale pack in the form in which the jar containing 150 Bubble Gums and 20 Solano Toffees was cleared the value of entire jar was to be determined by application of Section 4 as it existed at that time. Revenue has in the show cause proposed not to determine the value of the whole sale pack but only a component of the said pack under Section 4 - Section 4 should have been applied to the entire pack in the form in which it is cleared, and liability to duty determined. Since the show cause notice or the appeal filed by Revenue does not propose to determine the assessable value of wholesale pack in the form in which it is offered for clearance, there are no merits in the appeal filed by the Revenue - appeal dismissed - decided against Revenue.
Issues:
1. Determination of assessable value of a wholesale pack containing Bubble Gums and Solano Toffees for Central Excise Duty. 2. Application of Section 4A and Section 4 of the Central Excise Act, 1944 in valuing the pack. 3. Allegations of short payment of Central Excise Duty on the Solano Toffees. 4. Interpretation of whether the pack is a retail pack or a wholesale pack. 5. Invocation of extended period of limitation for duty recovery. Issue 1: Determination of Assessable Value The case involved the manufacturing of Chewing Gum, Bubble Gum, Solano Candy, and other confectionary items. The issue arose when it was found that the company was clearing Bubble Gums in jars containing 150 Bubble Gums and 20 Solano Toffees without including the MRP of the toffees in the jar's total MRP. The Revenue issued a show cause notice demanding duty recovery, interest, and penalties. The Commissioner adjudicated the matter, and the Committee of Chief Commissioners directed the Revenue to file an appeal challenging the decision. Issue 2: Application of Section 4A and Section 4 The Revenue contended that the assessable value of the pack should be determined under Section 4 of the Central Excise Act, 1944, and not Section 4A as suggested by the Commissioner. They argued that the value should be calculated based on the Central Excise Valuation Rules, 2000, and relevant case laws. The Tribunal analyzed previous decisions and concluded that the Revenue's approach to disintegrate the wholesale package and value individual components separately was incorrect. They emphasized the need to apply Section 4 to the entire pack as cleared, citing the decision in the Makson Confectionary case. Issue 3: Allegations of Short Payment The Revenue alleged that duty on the Solano Toffees was short paid, as the company did not include their MRP in the total MRP of the jar. The Tribunal disagreed with this assertion, stating that the pack should be valued as a whole and not by segregating components for valuation under different provisions of the Act. Issue 4: Retail Pack vs. Wholesale Pack The adjudicating authority determined that the pack was a wholesale pack based on inscriptions on the jar, contradicting the company's claim that it was a retail pack. The Tribunal upheld this determination and emphasized that the value of the entire pack should be assessed under Section 4 of the Act. Issue 5: Extended Period of Limitation The Revenue sought to invoke the extended period of limitation for duty recovery. However, the Tribunal found no merit in the appeal as the Revenue's proposal did not address the assessable value of the wholesale pack as offered for clearance, leading to the dismissal of the appeal. In conclusion, the Tribunal dismissed the Revenue's appeal, emphasizing the need to value the wholesale pack as a whole under Section 4 of the Central Excise Act, 1944, and rejecting the Revenue's attempt to value individual components separately. The decision highlighted the importance of assessing the entire pack's value and upheld the adjudicating authority's classification of the pack as a wholesale pack.
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