2007 (6) TMI 170 - AT - Central Excise

Assessee cleared biscuits valuing them as per Section 4A of CEA - Revenue proceeded to re-assess the goods in terms of provisions of Schedule III of Standards of Weights and Measures (Packaged Commodity) Rules - impugned goods viz., biscuits are notified under Section 4A and are not exempted under Rule 34 of the Packaged Commodity Rules, their valuation would be under Section 4A only - there is no requirement in respect of biscuits that they cannot be packed in packages weighing more than 1 kg

Summary

Issues:
1. Application of Standards of Weights and Measures Act to the assessment of excise duty on biscuits.
2. Interpretation of Rule 5 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
3. Exemption under Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
4. Valuation of goods under Section 4A of the Central Excise Act.

Analysis:

Issue 1: Application of Standards of Weights and Measures Act
The appellants contested the re-assessment of goods under the Standards of Weights and Measures Act by the Revenue. They argued that this provision should not be applied to their case. However, their pleas were rejected, leading to the appeal. The Tribunal examined the matter and referred to a previous judgment in the assessee's own case where it was determined that the goods were not covered by the Standards of Weights and Measures Rules, thus Section 4A would not be applicable.

Issue 2: Interpretation of Rule 5 of the Standards of Weights and Measures Rules
The Tribunal analyzed Rule 5 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 in detail. It was highlighted that biscuits falling under a specific category in Schedule-III could be packed in quantities exceeding the standard limit specified. The lower authorities' reasoning was deemed incorrect as they had not fully considered Rule 5. The Tribunal clarified that the appellants were permitted to pack biscuits in quantities exceeding 1 kg for retail sale.

Issue 3: Exemption under Rule 34 of the Standards of Weights and Measures Rules
The Tribunal discussed Rule 34, which deals with exemptions for certain packages. It was noted that the Revenue did not demonstrate that biscuits fell under Rule 34. Therefore, the Tribunal concluded that the statutory conditions for adopting valuation under Section 4A of the Central Excise Act were met, as the goods were not exempted under Rule 34.

Issue 4: Valuation of goods under Section 4A of the Central Excise Act
The Tribunal relied on previous decisions to support its conclusion that the valuation of the goods, in this case, biscuits, should be done under Section 4A and not under Section 4 of the Central Excise Act. It was emphasized that the goods being sold in bulk under a contract did not exempt them from being valued under Section 4A. The Tribunal allowed the appeal, setting aside the impugned orders and granting consequential relief based on the application of Section 4A for valuation.

In conclusion, the Tribunal's decision favored the appellants, emphasizing the correct application of the relevant legal provisions and rules in determining the excise duty on biscuits.