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TMI Blog2009 (5) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian Army/Indian Tibetan Border Police (ITPB). On enquiry, the Assistant Controller from Metrology Department, Mysore circle, Mysore Govt. of Karnataka vide letter No. 423/06-07 dated 30-8-2006, clarified that as per Rule 6(1)(f) Standard Weights and Measures Act, 1977, there is no exemption from affixing M.R.P. on packaged commodities supplied to Indian Army/ITBP or to any institution coming under Central Government, Defence/Home Ministry. Accordingly the lower authorities felt that assessee is not covered under exemption category specified under Rule 34 of the Standards of Weights and Measures (Packed Commodities) Rules, 1977. The assessee is adopting valuation under Section 4 of the Central Excise Act, 1944, whereas they are required to adopt valuation of their goods under Section 4A of the Central Excise Act, 1944, and the differential duty on account of adopting Section 4 procedure, worked out to Rs. 75,26,380/- for the clearance made to Indian Army/Indian Tibetan Border Police (ITPB) for the period from February - to September/2006. Further the assessee have not disclosed the sales concerning the issue of supplies made to such institution/bulk buyers like the Indian Army/I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he SCN has been issued on 1st December, 2006. As early as April, 2002 the party M/s. Nestle India Limited had informed the department that they are making supplies to the Army on which they are discharging duty liability on the basis of the invoice. The department was fully aware of the nature of the transactions and in view of this factual position, the demand for the period from February, 2004 to November, 2005 is clearly time barred as the demand has been made beyond the normal statutory time limit of one year. The extended period of time cannot be invoked in this case as the party had kept informed the Department of the factual position. Therefore on this ground also the demand for differential duty is not sustainable for the period mentioned above. 25. In coming to the above conclusion, I also rely upon the following judicial pronouncements and legal opinion. In the case of Commissioner of C. Excise and Customs, Bhubaneshwar v. Mehar Shoes Industries [2004 (172) E.L.T. 409] the Appellate Tribunal held, that in a case where shoes were made and supplied on the basis of bulk orders received from various Govt. departments like Orissa Police, State Home Guard, Orissa Fire ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Items supplied free with another consumer items as marketing strategy, Example, one Lux soap free with one box of surf 5. Items supplied free as marketing strategy or for gauging the market response. Example Physician Samples, bubble gums etc. 6. Items meant for export etc., 2. The matter has been examined. Section 4A of the Central Excise Act, 1944 is applicable in respect of those cases only where the manufacturer is legally obliged to print the MRP on the packages of the goods under the provisions of the Standards of Weights and Measures Act, 1976 or the Rules made there under or any other law for the time being in force. 3. In respect of telephones falling under heading 85.17 and notified under Section 4A, it was noticed that the manufacturers also make bulk supplies of telephone instruments to the Department of Telecommunication and MTNL who in turn provide these instruments on rental basis to the telephone subscribers. The ownership of telephone instruments remains with the Telephone department and there is, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is sold in bulk to Hotels/Restaurants the same has to be affixed with RSP under SWM Act and are to be assessed under Section 4A of Central Excise Act, 1944. Hence, bulk sale is not a factor to decide the applicability of Section 4A of Central Excise Act, 1944. Further, the Hon'ble Tribunals in the case of CCE, Madras v. MRF and Kwality Biscuits Pvt. Ltd. v. CCE (Appeals-II) Bangalore have held that "quantity involved in a particular transaction is not conclusive of the true character of the transaction" and "It has been made very clear that the fact that the goods are sold in bulk under a contract cannot be made a criteria for valuation" respectively. Also, the Hon'ble Apex Court delivered a landmark judgment on 22-8-2007 (reported in 2007-TIOL-150-SC-CX) and disposed 15 appeals filed by the department and assessees. In the said judgment, the Apex Court has examined various issues, which are identical to the instant case and has delivered the judgment in favour of the department on the issues covered in the instant case. In the case on hand, just because the items are sold in bulk will not negate the applicability of the provisions of SWM Act to affix RSP and hence, it is very cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 215) E.L.T. 327 (S.C.) will squarely cover the issue in favour of the respondent. 7. We have considered the submission made at length by both sides and perused the records. Issue involved in this case is regarding the applicability of the provisions of Section 4A of Central Excise Act, 1944, to the clearances of instant coffee by the respondent to the Ministry of Defence. It is undisputed that the respondent is not printing MRP when they supplied instant coffee to Indian Army/Indo Tibetan Border Police. It is also undisputed that the respondent is adopting the valuation under Section 4 of the CE Act, 1944. The demand is for the deferential duty. On careful perusal of the records we find that the respondent has been clearly marking the goods supplied to the Ministry of Defence as "for Defence Services only" or "for ITBP only" It is also, undisputed that the coffee powder supplied by the respondent to the Indian Army or ITBP are meant for supply as ration to Army/police personnel and not for any sale, let alone retail sale. We find that in these circumstances, the decision of the Hon'ble Apex court in the case of Jayanthi food Processing (supra) will be applicable. We may repro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vernment by notification in the Official Gazette, then the valuation of such goods would be on the basis of the retail sale price of such goods and only to such goods the provisions of sub-section (2) shall apply whereby it is provided that the value of such goods would be deemed to be the such retail price declared on the packages. Of course, the assessee shall be entitled to have a reduction of abatement as declared by the Central Government by the notification in the Official Gazette. Even at the cost of repetition the following would be factors to include the goods in Section 4A(1) & (2) of the Act : (i) The goods should be excisable goods; (ii) They should be such as are sold in the package (iii) There should be requirement in the SWM Act or the Rules made thereunder or any either law to declare the price of such goods relating to their retail price on the package. (iv) The Central Government must have specified such goods by notification in the Official Gazette; (v) The valuation of such goods would be as per the declared retail sale price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at is required to be printed under Rule 6(1)(f) is the retail sale price of the package. Retail sale price is defined under Rule 2(r) and it suggests that the retail sale price means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer........:........ 16. There is one more substantial reason supporting the appellant. Shri Ravinder Narain invited our attention to Rule 34 in Chapter V of SWM (PC) Rules which provides for exemptions. We have quoted Rule 34 earlier. The Rule has now been amended. However, under the unamended Rule there is a specific declaration that the SWM (PC) Rules shall not apply to any package containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw- material or for the purpose of servicing any industry, mine or quarry. Learned counsel points out that the package which is sold by the assessee mentions that it is specially packed for the exclusive use of the catering industry. Learned counsel further argues that such package was for the purposes of servicing the hotel industry or catering industry as the case may be. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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