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2009 (8) TMI 489 - AT - Central ExciseValuation- Notification No. 13/2002-C.E. (N.T.), dated 1-3-2002 and Notification No. 2/2006-C.E. (N.T.), dated 1-3-2006- The main contention of the appellant before the adjudicating authority was that though the goods are exempt under the provisions of Section 4A of the Act, the goods are cleared in bulk to other concerns in Himachal Pradesh and there entire activity of packing and making the product available for retail was done, hence the clearances which have taken place here are clearly covered under Section 4 and not Section 4A. It was also contented that pre-packed as has been defined in Rule 2(1) of the Standard Weights and Measurement Act, 1976 requires that it should be put in a package. All the contents which were raised by the appellants before the adjudicating authority were not accepted by him and he came to the conclusion that the appellants had in fact evaded the Central Excise duty and should have discharged the duty liability under Section 4A of the Central Excise Act, 1944. In the light of the various decisions held that- the impugned order confirming the demands on the appellant and imposing penalties and interest is unsustainable as the law has been squarely settled by Hon ble Supreme Court in favour of the assessee. Thus, that the impugned order is liable to be set aside and appeal is allowed.
Issues Involved:
1. Applicability of Section 4A of the Central Excise Act, 1944. 2. Demand of differential duty and penalties. 3. Limitation period for issuing the show cause notice. 4. Imposition of penalties under Section 11AC and Rule 25 of the Central Excise Rules, 2002. 5. Interest under Section 11AB of the Central Excise Act, 1944. Issue-wise Detailed Analysis: 1. Applicability of Section 4A of the Central Excise Act, 1944: The primary issue was whether the goods "Razors and Razor Blades" cleared in bulk are liable to be assessed under Section 4A or Section 4 of the Central Excise Act, 1944. The appellant argued that the goods were cleared in bulk and not intended for retail sale, thus Section 4A, which requires declaration of the retail sale price (MRP) on the package, was not applicable. The Tribunal referred to the Supreme Court's decision in Jayanti Food Processing (P) Ltd., which clarified that Section 4A applies only when there is a statutory requirement to declare MRP on the package. Since the goods in question were not in retail packages at the time of clearance and were intended for further processing and packing in Himachal Pradesh, the Tribunal concluded that Section 4A was not applicable. The Tribunal also considered CBEC Circular No. 625/16/2002-CX and other relevant judgments, which supported the appellant's contention. 2. Demand of Differential Duty and Penalties: The lower authority had demanded differential duty and imposed penalties on the appellant for allegedly undervaluing the goods by not assessing them under Section 4A. The Tribunal found the demand and penalties unsustainable, as the goods were not required to declare MRP at the time of clearance. The Tribunal emphasized that the goods should be assessed in the condition they are cleared from the factory, not in the condition they are sold. 3. Limitation Period for Issuing the Show Cause Notice: The appellant argued that the demand for the period April 2005 to December 2005 was barred by limitation, as the show cause notice was issued on 8-2-2007, beyond the normal one-year period. The Tribunal agreed that the extended period of limitation under Section 11A could not be invoked, as the appellant had disclosed the nature of the clearances in their ER-1 returns, and there was no suppression of facts. 4. Imposition of Penalties under Section 11AC and Rule 25 of the Central Excise Rules, 2002: The Tribunal found that the penalties under Section 11AC and Rule 25 were not justified, as the appellant had correctly assessed the duty liability under Section 4, based on the condition of the goods at the time of clearance. The Tribunal noted that the issue was purely a legal question and the appellant had not contravened any provisions of the Central Excise Act or Rules. 5. Interest under Section 11AB of the Central Excise Act, 1944: Since the Tribunal held that no differential duty was payable, it concluded that interest under Section 11AB was also not applicable. Conclusion: The Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision was based on the Supreme Court's interpretation in Jayanti Food Processing (P) Ltd., which clarified the applicability of Section 4A, and the Tribunal's finding that the goods were not liable to be assessed under Section 4A as they were not intended for retail sale at the time of clearance. The Tribunal also found the demand for differential duty and penalties unsustainable, and the extended period of limitation inapplicable.
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