2004 (10) TMI 118 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of Central Excise duty on assessable value under Section 4 vs. M.R.P. under Section 4A of the Central Excise Act.
2. Interpretation of Rule 34(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977.
3. Validity and applicability of the Central Board of Excise & Customs (CBEC) Circular dated 2-11-99.
4. Reliance on new grounds at the appellate stage.
5. Applicability of previous judgments and orders in similar cases.

Detailed Analysis:

1. Applicability of Central Excise duty on assessable value under Section 4 vs. M.R.P. under Section 4A of the Central Excise Act:
The core issue in the appeal was whether the Central Excise duty should be calculated based on the assessable value under Section 4 or the Maximum Retail Price (M.R.P.) under Section 4A of the Central Excise Act. The Respondents argued for assessment under Section 4, while the Revenue contended for Section 4A, citing that multi-piece packages required a declaration under Rule 17 of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (PCR, 1977).

2. Interpretation of Rule 34(b) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977:
The Commissioner held that Rule 34(b) of PCR, 1977 provides an exemption for packages containing commodities with a net weight or measure of 20 grams or 20 milliliters or less, sold by weight or measure. The Revenue argued that this exemption does not apply to multi-piece packages, while the Respondents maintained that their products, sold in sachets of 3 grams or multi-packs totaling 9 grams, should be exempt under Rule 34(b).

3. Validity and applicability of the Central Board of Excise & Customs (CBEC) Circular dated 2-11-99:
The Revenue relied on the CBEC Circular dated 2-11-99, which clarified that the exemption under Rule 34(b) does not apply to multi-piece packages and that such packages should be assessed under Section 4A. The Respondents countered that this Circular was not referenced in the show cause notice or during adjudication, and thus should not be considered at the appellate stage.

4. Reliance on new grounds at the appellate stage:
The Respondents argued that the Revenue could not introduce new grounds at the appellate stage, citing the Supreme Court's decision in Kalyani Packaging Industry v. U.O.I., which held that parties cannot rely on materials not presented before lower authorities. The Tribunal agreed, noting that the Circular dated 2-11-99 was not part of the original proceedings.

5. Applicability of previous judgments and orders in similar cases:
The Tribunal referenced its own previous decisions in the Respondents' cases, which upheld the contention that multi-piece packages with a total weight less than 10 grams are exempt under Rule 34(b) and should be assessed under Section 4, not Section 4A. The Tribunal also noted that the Madras High Court's decision in Varnica Herbs was factually different, as it involved packages exceeding the weight limit specified in Rule 34(b).

Conclusion:
The Tribunal concluded that the impugned products are liable to be assessed based on the assessable value determined under Section 4 of the Central Excise Act, as the net weight of the commodity was less than the maximum weight limit prescribed in Rule 34(b) of PCR, 1977. The appeal filed by the Revenue was rejected.