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2023 (8) TMI 609 - AT - Central ExciseMethod of Valuation - to be valued under Section 4 or Section 4A of Central Excise Act, 1944? - branded chewing tobacco of 8 gms and 9 gms packing falling under Chapter sub-heading 2403.9910, cleared in a pack of one bag containing 40 packets of the said goods and each pack containing 50 pouches of 8 gms and 9 gms each - HELD THAT - This issue is no longer res-integra as in various judgments this issue is decided that the individual piece, if having less than 10gms even though the number of individual pieces are packed in secondary packet and cleared the individual piece bearing MRP which is having less than 10gms, shall be considered as retail pack and since it is less than 10gms, the same should not be valued under Section 4A. Accordingly, in the present case also, the individual piece of pouch is of 8gms/ 9gms even though 50 pieces of pouches are packed in one packet, the same should be valued under Section 4 and not 4A for the reason that the each pouch is considered as retail pack and not a packet of 50 pouches. Therefore, the value should not be governed under Section 4A whereas the same should be governed under Section 4. The very same issue of chewing tobacco was considered by this Tribunal in the case of M/S ARORA PRODUCT VERSUS CCE, JAIPUR-II 2011 (8) TMI 928 - CESTAT, DELHI wherein the Tribunal held that both the legal requirements for applying section 4A were satisfied and hence Central Excise duty should have been paid adopting the value as per section 4A. The issue is no longer res-integra. Accordingly, the impugned order passed by learned Commissioner (Appeals) bears no infirmity and the same is upheld. Revenue s appeal is dismissed.
Issues Involved:
1. Whether branded chewing tobacco in packs of 8 gms and 9 gms should be valued under Section 4 or Section 4A of the Central Excise Act, 1944. Summary: Issue 1: Valuation under Section 4 or Section 4A of Central Excise Act, 1944 This appeal is directed against Order-in-Original No. 10-18-DEM-CEX-COMMR-I-BRC-I-2012 dated 30.11.2012 whereby learned Commissioner (Adjudication) dropped the demand proceedings of the show cause notices. The issue involved in the present case is whether the branded chewing tobacco of 8 gms and 9 gms packing falling under Chapter sub-heading 2403.9910, cleared in a pack of one bag containing 40 packets of the said goods and each pack containing 50 pouches of 8 gms and 9 gms each, are liable to be valued under Section 4 or Section 4A of Central Excise Act, 1944. Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on behalf of the Revenue reiterates the grounds of appeal. He submits that since the appellant have packed 50 pouches in one packet, the same should be treated as retail pack and accordingly packet of more than 10gm is liable to be valued under Section 4A and not under Section 4. Accordingly, the Adjudicating Authority has wrongly dropped the proceedings of the show cause notice. Shri Abhishek M. Mehta learned Counsel appearing on behalf of the respondent submits that this issue is no longer res-integra as in various cases it was held that even though the packet contains more than 50 pouches but the each pouch is less than 10gms and MRP is affixed on each pouch and not on the packet of 50 or 40 pouches therefore, the same should be valued under Section 4 and not under Section 4A. He placed reliance on the following judgments:- (a) Arora product vs. CCE, Jaipur - 2012 (276) ELT 77 (Tri. Del.) (b) Makson Pharmaceuticals (I) Pvt. Limited vs. CCE&ST, Bhavnagar - (2023) 8 Centax 4 (Tri. Ahmd.) On careful consideration of the submissions made by both the sides and perusal of record, we find that this issue is no longer res-integra as in various judgments this issue is decided that the individual piece, if having less than 10gms even though the number of individual pieces are packed in secondary packet and cleared the individual piece bearing MRP which is having less than 10gms, shall be considered as retail pack and since it is less than 10gms, the same should not be valued under Section 4A. Accordingly, in the present case also, the individual piece of pouch is of 8gms/ 9gms even though 50 pieces of pouches are packed in one packet, the same should be valued under Section 4 and not 4A for the reason that the each pouch is considered as retail pack and not a packet of 50 pouches. Therefore, the value should not be governed under Section 4A whereas the same should be governed under Section 4. The very same issue of chewing tobacco was considered by this Tribunal in the case of Arora Product (supra) wherein the Tribunal passed the following order:- "The appellants are engaged in the manufacture of Chewing Tobacco falling under Sub-heading No. 2404.41 of the First Schedule to the Central Excise Tariff Act, 1985. 2. The officers of the Anti-Evasion Wing of Central Excise Commissionerate, Jaipur-II visited their factory premises by surprise on 29-9-2004 and conducted various checks and found that they manufacture four different types of packages and on the following details were inter alia printed on the pouches and the packages.
3. Chewing Tobacco has been notified under Section 4A of Central Excise Act w.e.f. 1-3-2003 vide S. No. 24A of Notification No. 13/2000-C.E. (N.T.), dated 1-3-2002. It was observed that the appellants had cleared Chewing Tobacco and paid Central Excise duty by adopting value as arrived at under Section 4A of Central Excise Act, 1944 on the basis of MRP on all types of multi-piece packages (3 gms. & 6 gms., 12 gms.) up to 7-3-2004. However, with effect from 8-3-2004 the appellants stopped payment of Central Excise duty adopting value under Section 4A of Central Excise Act, 1944 on multi piece packages containing 3 gms and 6 gms pouches and instead started paying duty adopting value under Section 4 of Central Excise Act, 1944. The appellants continued to pay Central Excise duty on 12 gms. Pouch under Section 4A of Central Excise Act, 1944. 4. Under Rule 34 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977, if any goods are sold by weight and the net content of each of the retail pack is below 10 gms, the manufacturers were not required to affix MRP on such packages. The Appellants were claiming this exemption for items 2, 3 and 4. The SCN raises the issue that these goods were not sold by weight but in terms of number of pouches. Further the SCN alleged that the multi piece packages also were retail packages and hence under the law the Appellants were required to affix MRP on the multi-piece packages and they were doing so. So the SCN proposed that provisions of Section 4A of Central Excise Act would apply to the multi-piece packages containing individual pouches with content 3 gms and 6 gms and this basis demanded differential duty and interest and also proposed penalty. 5. The Appellants say that the goods were sold by weight and only individual pouches were meant for retail sale and the multi piece packages were not meant for retail sale. 6. If Revenue's contention is correct, the Appellant was required under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 to affix MRP on multi-piece package. If they were required under the law to do so and since the item was notified under Section 4A of the Central Excise Act, assessable value was required to be determined as per the provisions of the said Section 4A and central excise duty was to be paid accordingly. 7. If the Appellant's contention is correct they were not required under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 to affix MRP on multi-piece package. If they were not required under law to do so, even if they had affixed MRP on the multi-piece packages the provisions of Section 4A would not apply even if it is a product notified under Section 4A and consequently provisions of Section 4 of Central Excise Act were to apply to such goods like any other case and the Appellants had paid duty accordingly from 8-3-2004. This legal position stands clarified under Circular No. 411/44/98-CX dated 31-7-1998 issued by C.B.E. & C. and a few decisions of the Tribunal and Higher Courts. 8. The adjudicating officer considered the submissions and gave his findings as under : "A similar question arose before the Hon'ble High Court, Madras as reported in 2004 (163) E.L.T. 160 in the case of Varnica Herbs. In the case cited, herbal hair dye manufactured by the petitioner-assessee were being packed in sachets of 8 gms in weight in Photo Protective Pouch and six such pouches were being packed in a Mono Carton. The contention of the petitioner was that merely because sachets were placed in a mono-carton that would not make the pack a multi-piece package. The assessee also claimed the benefit of exemption under Rule 34 ibid. The Hon'ble Court after considering the matter held that articles kept in separate pouches by the petitioner could be termed as multi piece package in view of provisions contained in Rule 6 ibid, which requires every retail package to contain the net quantity and the maximum retail price read with the definition of multi- piece package given in Rule (j) ibid. The Hon'ble Court has further held that even though the net weight of a commodity might be less than 10 gms., but if it was evident that article was not intended to be sold either by weight or by measure as contemplated under Rule 34(b) ibid, then benefit of Rule 34(b) ibid will not be applicable. The facts of the present case are identical to Varnica Herbs case. In this case also small packs of 3 gms and 6 gms are not intended to be sold either by weight or by measure." 9. Aggrieved by the order the Appellant filed appeal with the Commissioner (Appeal). The Commissioner (Appeal) confirmed the finding of the adjudicating authority. He also examined the issue whether the multi-piece-package is a retail package and recorded his finding in para 13 of the order which is reproduced below : "13. The other point that has been raised is that the appellants were clearing only wholesale packages,
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