2006 (2) TMI 21 - AT - Central Excise

Central Excise Cosmetics Hair dye (1) Valuation MRP - under Standards of Weights and Measures (Packaged Commodity) (2) Exemption for multi-pack

Summary

Issues:
1. Method of valuation of goods under Central Excise Act, 1944.
2. Interpretation of Section 4A of the Central Excise Act.
3. Application of Rule 34 of the Standards of Weights and Measures (Packaged) Commodity Rules, 1977.
4. Exemption of goods under Rule 34 of SWMR.
5. Legal requirements for selling cosmetics by weight or volume.

Detailed Analysis:
1. The dispute in this case revolves around the method of valuation of goods, specifically 'Godrej' brand hair dye in packs of 3 sachets of 3 gms each, under the Central Excise Act, 1944. The Revenue contends that the packs should be valued based on the maximum retail price (MRP) under Section 4A, while the respondents argue for valuation under Section 4, asserting that Section 4A does not apply to such goods.

2. Section 4A of the Central Excise Act pertains to the valuation of excisable goods with reference to the retail sale price. It specifies that for Section 4A to apply, the goods must be specified in a notification, and there must be a legal requirement to declare the retail sale price on the package under the Standards of Weights and Measures Act, 1976, or any other relevant law.

3. The crux of the matter lies in the interpretation and application of Rule 34 of the Standards of Weights and Measures (Packaged) Commodity Rules, 1977 (SWMR). This rule exempts packages containing commodities weighing ten grams or less from certain requirements. The respondents argue that the impugned goods fall under this exemption, as supported by previous Tribunal decisions.

4. Previous Tribunal decisions have consistently held similar goods to be eligible for exemption under Rule 34 of SWMR, emphasizing that the weight of individual pouches is crucial in determining eligibility for exemption. The respondents argue that the specific legal requirements mandate the sale of cosmetics, such as hair dyes, by weight or volume, justifying the exemption.

5. The legal requirements for selling cosmetics by weight or volume are crucial in determining the applicability of Rule 34 of SWMR. The Tribunal's analysis delves into the specific provisions of the SWMR, highlighting the necessity to sell cosmetics by weight or volume, especially for quantities weighing less than 10 gms, to qualify for the exemption under Rule 34.

In conclusion, the Tribunal's detailed analysis emphasizes the specific legal provisions governing the valuation and sale of goods, particularly cosmetics, under the Central Excise Act and the Standards of Weights and Measures rules. The decision underscores the importance of adhering to legal requirements for selling goods by weight or volume, ultimately impacting the valuation and exemption criteria under the relevant laws.