2017 (8) TMI 309 - AT - Central Excise

Method of valuation - MRP based valuation - Powder Hair Dye (PHD) packed in sachets of 3 gms. 6/8 such sachets are put in a mono-carton - Section 4 or Section 4A of Central Excise Act, 1944? - Held that - In view of the categorical clarifications issued by the Competent Authority, we find no merit in the conclusion drawn by the Original Authority regarding non-applicability of the Legal Metrology provision to the impugned goods - the Revenue did not bring any evidence to support the claim that the 3 gms. sachet is in fact a commonly traded retail pack in the market. On the contrary, the appellants produced supporting evidence to state that the mono-cartons containing multiple sachet are generally considered in retail trade as retail packs. Valuation has to be done in terms of Section 4A the calculation of duty liability and confirmation of demands in terms of Section 4 is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Valuation of Powder Hair Dye (PHD) under Section 4 or Section 4A of Central Excise Act, 1944; Correct value for Central Excise duty under Section 4; Question of limitation against the demand.

Analysis:
The appeals dealt with the valuation of Powder Hair Dye (PHD) under Central Excise Tariff Heading 3305, specifically whether it should be valued under Section 4 or Section 4A of the Central Excise Act, 1944. The dispute arose as the Department argued that the appellants incorrectly valued the product under Section 4A (MRP based valuation) instead of Section 4 (normal transaction value). The Tribunal remanded the matter to the Adjudicating Authority for fresh consideration, emphasizing the need to consult the Legal Metrology Department for clarity on the issue. The Department's valuation under Section 4 was deemed erroneous, requiring re-computation. The Original Authority held that mono-cartons containing PHD sachets should be assessed under Section 4, leading to the present appeals against these denovo orders by the Commissioner.

The main contention revolved around the interpretation of Legal Metrology provisions and whether the mono-cartons with 6 or 8 sachets should be considered retail packages. The appellant argued that various Competent Authorities, including the Legal Metrology Departments of Sikkim and West Bengal, clarified that such mono-cartons are retail packages and must comply with Legal Metrology rules, including mandatory declarations and net quantity requirements. The Department failed to provide evidence that the 3 gms. sachets were intended for retail sale, while the appellant presented evidence indicating they were recognized as retail packs in the market. The appellant contended that regardless of the valuation provision used, any amounts paid to the Department should be refunded, and penalties were unwarranted due to the nature of the dispute.

After analyzing the clarifications from the Competent Authorities, the Tribunal found that the Original Authority's conclusion on the non-applicability of Legal Metrology provisions to the goods was unfounded. The Original Authority did not consider the clarifications submitted by the appellant, leading to an improper assessment. The Tribunal noted that the evidence supported the mono-cartons being retail packs and highlighted that excess payments were made due to the Original Authority's re-computation of valuation. Ultimately, the Tribunal set aside the impugned orders, allowing the appeals and emphasizing the need to value the goods under Section 4A, rendering the demands under Section 4 unsustainable.