2023 (8) TMI 609 - AT - Central Excise

Method of Valuation - to be valued under Section 4 or Section 4A of Central Excise Act 1944? - branded chewing tobacco of 8 gms and 9 gms packing falling under Chapter sub-heading 2403.9910 cleared in a pack of one bag containing 40 packets of the said goods and each pack containing 50 pouches of 8 gms and 9 gms each - HELD THAT - This issue is no longer res-integra as in various judgments this issue is decided that the individual piece if having less than 10gms even though the number of individual pieces are packed in secondary packet and cleared the individual piece bearing MRP which is having less than 10gms shall be considered as retail pack and since it is less than 10gms the same should not be valued under Section 4A. Accordingly in the present case also the individual piece of pouch is of 8gms/ 9gms even though 50 pieces of pouches are packed in one packet the same should be valued under Section 4 and not 4A for the reason that the each pouch is considered as retail pack and not a packet of 50 pouches. Therefore the value should not be governed under Section 4A whereas the same should be governed under Section 4. The very same issue of chewing tobacco was considered by this Tribunal in the case of M/S ARORA PRODUCT VERSUS CCE JAIPUR-II 2011 (8) TMI 928 - CESTAT DELHI wherein the Tribunal held that both the legal requirements for applying section 4A were satisfied and hence Central Excise duty should have been paid adopting the value as per section 4A. The issue is no longer res-integra. Accordingly the impugned order passed by learned Commissioner (Appeals) bears no infirmity and the same is upheld. Revenue s appeal is dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core legal question in this judgment is whether the branded chewing tobacco pouches of 8 gms and 9 gms, packed in bags containing multiple pouches, should be valued under Section 4 or Section 4A of the Central Excise Act, 1944. This involves determining whether such packaging constitutes a retail pack for the purpose of excise duty valuation.

2. ISSUE-WISE DETAILED ANALYSIS

Relevant Legal Framework and Precedents:

The legal framework involves Sections 4 and 4A of the Central Excise Act, 1944, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Section 4 pertains to valuation based on transaction value, while Section 4A pertains to valuation based on Maximum Retail Price (MRP). Rule 34 of the Packaged Commodities Rules provides exemptions for packages with net content below 10 gms.

Court's Interpretation and Reasoning:

The Tribunal considered whether the individual pouches or the entire multi-piece package should be treated as the retail pack. The court relied on previous judgments, including Arora Product vs. CCE and Makson Pharmaceuticals (I) Pvt. Limited vs. CCE&ST, which held that individual pouches with less than 10 gms, even when packed in larger quantities, should be valued under Section 4 if MRP is affixed on each pouch and not on the outer package.

Key Evidence and Findings:

The Tribunal found that each pouch of tobacco was labeled with MRP and weighed less than 10 gms. Despite being packed in larger quantities, the individual pouches were intended for retail sale, not the entire package.

Application of Law to Facts:

The Tribunal applied the legal principles from previous cases, determining that since each pouch was less than 10 gms and bore an MRP, the valuation should be under Section 4. The multi-piece package was not intended for retail sale as a whole, thus not subject to Section 4A valuation.

Treatment of Competing Arguments:

The Revenue argued that the entire package should be valued under Section 4A due to the total weight exceeding 10 gms. However, the Tribunal rejected this, emphasizing the intent for retail sale of individual pouches and the legal precedent supporting Section 4 valuation.

Conclusions:

The Tribunal concluded that the individual pouches should be valued under Section 4, not Section 4A, as they were intended for retail sale and exempt from MRP requirements under Rule 34 of the Packaged Commodities Rules.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"The individual piece of pouch is of 8gms/ 9gms even though 50 pieces of pouches are packed in one packet, the same should be valued under Section 4 and not 4A for the reason that each pouch is considered as retail pack and not a packet of 50 pouches."

Core Principles Established:

The judgment reinforces the principle that individual pouches intended for retail sale and weighing less than 10 gms should be valued under Section 4, even if packed in larger quantities. The presence of MRP on individual pouches, not the outer package, supports this valuation approach.

Final Determinations on Each Issue:

The Tribunal upheld the decision to value the chewing tobacco pouches under Section 4, affirming that the multi-piece package was not intended for retail sale as a whole. The appeal by the Revenue was dismissed, and the Tribunal's previous rulings were deemed applicable and binding.

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