2004 (6) TMI 135 - AT - Central Excise

Classification of products - Ayurvedic Medicaments - Precedent - determination of assessable value of goods supplied to Hotels under Section 4A - Departmental instructions - HELD THAT - The mere fact that the packaged commodities were also sold to hotels will not make any difference for the purpose of valuation for levying Central Excise duty. The sale at contractual price in wholesale cannot be the criterion for valuation as in the normal course of business goods are traded through wholesale business whether the valuation is resorted to under Section 4 or Section 4A of the Act. The definition of retail sale in Rule 2(q) of the Standards of Weights Measures (Packaged Commodities) Rules 1977 makes it very clear that goods covered by the said Rules need not actually be sold in retail. In the present matters the impugned goods are distributed to the consumers through the instrumentality of hotels. The provisions of Section 34 of the Packaged Commodities Rules 1977 are not applicable to the impugned goods as no material has been adduced by Revenue to show that the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry. The Commissioner (Appeals) has given a specific finding in the impugned Order-in-Appeal Nos. 759-767/2001 that the goods in question are not used as raw material. It has been submitted that the goods supplied by the appellants to the hotels are in turn distributed to the customers and thus these goods are not supplied for servicing the hotel industry. The learned Advocate has rightly distinguished both the decisions relied upon by the learned SDR. In Trishul Research Lab. 2002 (4) TMI 130 - CEGAT COURT NO. I NEW DELHI case provisions of Rule 34(1)(a) and definition of retail sale as given in Packaged Commodities Rules were not discussed and as held by the Supreme Court in State of U.P. v. Synthetics and Chemicals Ltd. 1991 (7) TMI 297 - SUPREME COURT precedents subsilentio and without argument are of no moment decision in the case of Bharti Systel Ltd. 2002 (6) TMI 78 - CEGAT COURT NO. I NEW DELHI was passed in view of the Board s Circular No. 625/16/2002-CX. holding that the Revenue cannot be heard to contend against a view taken in such circulars. Accordingly the said decision is not applicable to the present matters as it is always open to the assessees to challenge the views taken by Revenue in its Circulars. In view of the this we find no reason to interfere with the impugned Orders passed by the Commissioner (Appeals) and reject both the appeals filed by Revenue on the count of valuation.

Summary

Issues involved:
Classification of products manufactured by M/s. Ishaan Research Laboratories under Heading No. 30.03 or Chapter 33 of the Schedule to the Central Excise Act, and determination of assessable value of goods supplied to Hotels under Section 4A of the Central Excise Act.

Classification Issue:
The Appellate Tribunal upheld the classification of products as Ayurvedic Medicaments based on a previous Final Order, as no stay order was issued against it.

Assessable Value Issue:
- Revenue argued that Section 4A of the Act does not apply to goods supplied to hotels as they are not retail sales, citing Weights & Measures Rules.
- They emphasized that MRP declaration is not mandatory for goods supplied to hotels, thus Section 4A valuation is not applicable.
- Reference was made to a Tribunal decision and a Board Circular to support the argument that Section 4A applies only when MRP is statutorily required.
- On the contrary, the Advocate contended that goods specified under Section 4A are subject to its provisions, regardless of the sales channel.
- The Advocate highlighted the non obstante clause in Section 4A, indicating its primacy over Section 4 for specified goods.

Rule 34(1)(a) Applicability:
- The Advocate argued that Rule 34(1)(a) applies only if the package is exclusively for industry use, which was not the case for the impugned goods.
- The definition of 'retail sale' was discussed to show that distribution through hotels qualifies as retail sale under the Packaged Commodities Rules.
- Precedents and relevant case laws were cited to support the argument against Revenue's contentions.

Decision:
- The Tribunal found that the goods were specified under Section 4A, requiring MRP declaration, thus Section 4A valuation applies.
- The distribution through hotels constitutes retail sale as per the Packaged Commodities Rules definition.
- The Tribunal rejected Revenue's appeals on valuation, emphasizing the applicability of Section 4A and the distinction made by the Advocate in relevant case laws.