2013 (4) TMI 505 - AT - Central Excise

MRP based valuation u/s 4A of the Act - wholesale packs or Multi-piece Package - It was alleged that with an intention to evade payment of duty, the appellant-assessee along with the others mis - declared the outer as a wholesale pack though it was actually meant for retail sale to their ultimate consumer. Appellant s claim that their products were sold in sachets, and not in mono-cartons, to the ultimate consumers. The mono-cartons were only intended to be used by the retailer as a convenient receptacle for the sachets to be sold in retail. Held that - The goods in the form of liquid packed in sachets though may be sold in numbers, it cannot be said that they are not being sold by weight or volume as each sachet contains pre determined quantity of the liquid by weight as well as by volume. The intention of the manufacturer as revealed by details printed on the sachets manufactured by them and the marketing pattern followed by AMWAY indicate that the goods are meant for retail sale to the ultimate consumers. Under the circumstances, the packages under which the impugned products are sold by the appellants clearly fall within the exemption provided under Rule 34(1)(b) of the PC Rules. Though, the commodity is notified under Section 4A, there is no statutory requirement under the law for declaring the MRP on the packages cleared by the manufacturer. The packages in which the assessee clears the goods namely mono-carton and shipper bags cannot be treated as multi-piece packs but only as wholesale packs. Therefore, the assessment under Section 4 is in order. In view of the above, the impugned order is set aside and all the appeals are allowed with consequential relief as per law.

Issues Involved:
1. Whether mono-carton containing 20 or 30 sachets can be considered as retail pack 'Multi-piece Pack' to be sold in retail.
2. Whether in respect of 'Multi-piece Package', the weight of all pieces to be taken into consideration to consider the eligibility of the exemption under Rule 34.
3. Whether the appellant-assessee was under obligation to print MRP on the mono-carton pack or they were exempted under Rule 34 of PC Rules.
4. Whether the assessment has to be made under Section 4A as contended by the department or under Section 4 as claimed by the assessee.
5. Whether there is any suppression of relevant facts justifying invocation of extended period of limitation and imposition of penalties on the appellant.

Detailed Analysis:

Issue 1: Retail Pack 'Multi-piece Pack'
The Tribunal examined whether mono-cartons containing 20 or 30 sachets should be classified as retail packs or 'multi-piece packs' for retail sale. It was concluded that there was no evidence provided by the department to show that these mono-cartons were being sold in retail to ultimate consumers. The department also failed to obtain any opinion from the Metrology Department to support their contention. The goods were sold to Amway in wholesale, and the distributors buying from Amway were not considered ultimate consumers. Therefore, the mono-cartons and shipper bags containing 540/900 sachets were not upheld as multi-piece packages.

Issue 2: Weight Consideration for 'Multi-piece Package'
The Tribunal found that if the mono-cartons were considered 'multi-piece packages', the weight of all pieces should be taken into account, which would negate the exemption under Rule 34. However, since there was no evidence of retail sale to ultimate consumers, the exemption under Rule 34 was applicable. The goods in the form of liquid packed in sachets, though sold in numbers, were considered sold by weight or volume as each sachet contained a pre-determined quantity.

Issue 3: Obligation to Print MRP
The Tribunal determined that the marking of MRP on individual sachets was voluntary and not mandated by the SWMA or PC Rules. Therefore, the exemption from printing MRP was available to the manufacturer in terms of Rule 34 of the PC Rules. The goods were intended for wholesale sale to Amway, and the details printed on the sachets indicated they were not meant for direct retail sale.

Issue 4: Assessment Under Section 4A or Section 4
The Tribunal reviewed several decisions and concluded that the packages under which the impugned products were sold fell within the exemption provided under Rule 34(1)(b) of the PC Rules. The assessment under Section 4 was deemed appropriate as there was no statutory requirement under the law for declaring the MRP on the packages cleared by the manufacturer. The packages were considered wholesale packs, not multi-piece packs, and thus, the valuation under Section 4A was not applicable.

Issue 5: Suppression of Facts and Penalties
Given that the Tribunal's decisions and the Supreme Court's rulings were in favor of the assessee, the question of invoking the extended period of limitation and imposing penalties did not arise. The Tribunal concluded that there was no suppression of relevant facts justifying such actions.

Conclusion:
The Tribunal set aside the impugned order and allowed all the appeals with consequential relief as per law. The assessment under Section 4 was upheld, and the packages were not treated as multi-piece packs but as wholesale packs. The exemption under Rule 34 was applicable, and there was no obligation to print MRP on the mono-carton packs. The operative part of the order was pronounced in court on 11-6-2012.

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