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TMI Blog2006 (1) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... n provided under Rule 34(1)(b) of the said Rules. – goods can not be subject to MRP valuation - E/2653/2004 & 419-420, 512, 526-527, 1519-1520/200 - A/218-227/2006-WZB/C-III - Dated:- 25-1-2006 - S/Shri S.S. Sekhon, Member (T) and T. Anjaneyulu, Member (J) REPRESENTED BY : S/Shri Prakash Shah, V. Sridharan, S.P. Bharucha M.P. Baxi, Advocates, for the Appellant. Shri U.H. Jadhav, JDR, for the Respondent. [Order per : T. Anjaneyulu, Member (J)]. - Appeal No. E/419/, 512, 526, 527, 1519 and 1520/05 are filed by M/s. Mackson Food Pvt. Ltd. and Appeal No. E/420/05 is filed by M/s. Makson, Confectionary Pvt. Ltd. (hereinafter referred to as appellants), who are engaged in the manufacture of Confectionary, falling under sub-heading 1704.90 and 1804.00, of the Central Excise Tariff Act, 1985. They manufacture and sell confectioneries of various brands and names on outright basis to M/s. Nestle India Ltd. (hereinafter referred to as 'NIL') and M/s. Hindustan Lever Limited (hereinafter, referred to as 'HLL'). 1.2 The manner of packing/selling the sugar confectionary (e.g. Toffy Max Caramel/Chocolate) is described as under : (a) Individual Toffy Max C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n each piece of the confectionary sold. Therefore, the determination and payment of the duty as effected under Section 4 was correct in law. The lower authorities did not accept the contentions and confirmed the demands. Hence the present appeals. 1.6 Appeal No. E/2653/04 of Ms. Swan Sweets Pvt. Ltd. was also heard along with the above appeals of M/s. Makson Confectionary as in this case also individual confectionary, packed in wrappers and falling under Chapter 17 and 18 of CETA, 1985 was cleared in jars, boxes and pouches, each containing individual pieces less than 12 gms. by weight, which were not required to declare MRP, considered to be exempt from operation of the provisions of the Standards of Weights and Measures Act, 1976 in terms of Rule 34(1)(a) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. (hereinafter referred to as MRP Rules for short) framed under the said Act and therefore not covered by the valuation formula prescribed vide Section 4A of the Central Excise Act, 1944 and these are not assessable under the provisions of the Notification No. 13/2002-C.E. (N.T.) thereunder. 1.7 Appeal Nos. E/2041 and 2042/04 of M/s. Cadbu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackage only when such package is intended for sale in retail sale. 2.4 CBEC vide following circulars has clarified that even if the commodity is notified for the purposes of Section 4A(1), if there is no statutory requirement under the law i.e. MRP Rules for declaring MRP on the packages cleared by the manufacturer, then the assessment will be done under Section 4 and not under Section 4A. (a) Circular/Letter F. No. 341/64/97-TRU, dated 11-8-1997 (b) Circular No. 411/44/98-CX., dated 31-7-1998 (c) Circular No. 625/16/2002-CX., dated 28-2-2002 In all these circulars, it has been clarified that valuation under Section 4A will be restored to only when there is a statutory requirement for declaring the MRP on the packages by the manufacturer and such commodities are notified by the Government under Section 4A(1). It has also been clarified that even if an item is notified under a Notification issued under Section 4A(1), if there is no statutory requirement to affix MRP, then Section 4A cannot be resorted to. It is an obvious fact that in the trade all items are ultimately meant for sale to customers. The question is, whether in the form in which the goods ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity is packed or sold by number, the number of the commodity contained in the package; (d) the month and year in which the commodity is manufactured or pre-packed. (e) the retail sale price of package; (f) where the sizes of the commodity contained in the package are relevant, the dimensions of the commodity contained in the package and if the dimensions of the different pieces are different, the dimensions of each such different piece; (g) such other matters as are specified in these rules. (2) Where a commodity consists of a number of components and these components are packed in two or more units, for sale as a single commodity, the declaration required to be made under sub-rule 3(1) shall appear on the main package and such main package shall also carry information about the other accompanying packages". "Retail sale price" has been defined in Rule 2(r) as under : (r) "retail sale price" means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer and where such price is mentioned on package, there shall be printed on the packages the words "Maximum or max. retail price.....inclusive of all taxes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, or showing the existence of any state of body or bodily feeling, are relevant, when the existence of any such state of mind or body or bodily feeling is in issue or relevant. Explanation 1 - A fact relevant as showing the existence of a relevant state of mind must show that the state of mind exists, not generally, but in reference to the particular matter in question. Clearances are to be thus regulated. Taking the case of Toffy Max Caramel/Chocolate manufactured on behalf of NIL, it is found that the individual Toffy Max Caramel/Chocolate weighs about 4 gms, which is meant for retail sale in trade. The retail packs of Toffy Max Caramel/Chocolates are packed in wholesale package and each wholesale package weight would vary from 500 gms. to 520 gms. Such wholesale packages are cleared by the appellants to wholesale traders who in turn sell the packs to retailers. The retail traders break open such wholesale pack for retail sale. Therefore, the packs in which the appellants clear the Toffy Max Caramel/Chocolates are wholesale packages which are meant for the convenience of distribution in the trade and are not intended for retail sale to the ultimate consumer. Since per capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . package 'wholesale pack', it will not render such a pack as a wholesale pack, since such packs would be available in retail and would be purchased by the ultimate consumer. There is no basis to uphold this finding as arrived at by the Commissioner (Appeals). The Commissioner (Appeals) refers to a purchase of 500 gms. pack by a parent to distribute the Toffy Max Caramel/Chocolate to children at School or in neighbourhood to celebrate the birthday of a son. Such occasional purchase, if they shall take place, would not be a normal intended sale of Toffy Max Caramel/Chocolate. Therefore, 500 gms. pack of individual toffees in jar, box or pouch would not be a normal sale and will not cause for assessments for Central Excise purposes under Section 4A. 2.7 The findings and the view of the Revenue that product removed is a multi-pack also cannot be accepted, since the term 'multi-pack' is a work of art in MRP Rules and has to be interpreted in the fashion provided thereunder. It is relevant to note that the definition of 'wholesale package' has undergone various changes. Rule 2(x) of the MRP Rules was amended on 17-8-1999 vide the Standards of Weights and Measures (Packaged Commo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the very case exemption under Rule 34 was not applicable to multi-piece pack. In the present case, the pack is not found to be a multi-piece pack. Therefore, the decision in the case of M/s. Varnica Herbs of Hon'ble Madras High Court is not applicable to the facts of this case. 2.9 No statutory requirement to declare MRP on such individual packs of the products involved herein, which are below 10 gms. weight individually, has been shown to us. Confectionary cleared from the appellants' factory have discharged duty under Section 4 of the Act on the packs intended for retail sale, which are below 10 gms. in weight in jars, boxes, poly bags/polyethylene bags, etc., in which the individual packs are kept/placed at the time of clearance, which are below 10 gms. are wholesale bags, which are not intended for retail safe. In fact, the Commissioner (Appeals) admits purchases by individuals of such bags to be an isolated rare occasion as recorded by him and not a norm. Such, packs are not required to declare MRP on them. Reading of Rule 34 under Chapter V of the MRP Rules is as under :- Chapter V "34. Exemption in respect of certain packages - Nothing contained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ackages of less than 10 gms. not requiring a declaration of MRP has to be upheld. 2.12 The following additional submissions are made as regards the product of HLL. The marketing pattern of the goods by HLL is - (i) Individual units of sugar confectionary weighing 4 gms. approx. are packed in individual packages either with a wrapper around the confectionary or in the form of pillow packs/sachets and sealed. (ii) The retail packages of confectionary as described above are then packed into one of the following containers: (a) Wholesale jars containing about 720 grams and above, containing 216 to 250 pieces of confectionary approximately. (b) Wholesale pouches containing about 500 grams containing about 125 pcs. of sugar confectionary of the same flavour, which are clearly wholesale packages. These pouches are primarily used to refill jars lying with the retails. (iii) The appellants sell to HLL and others in bigger wholesale cartons containing about 36 poly bags/42 poly bags. These cartons are primarily meant for large wholesalers. (iv) HLL and others in turn sell the wholesale cartons containing the wholesale pouches to their Redistributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e affixed statutorily, then the same are liable to be assessed under Section 4 of the Central Excise Act, 1944. The Central Board of Excise Customs had once again vide Circular No. 625/16/2002-CX., dated 28-2-2002, clarified that Section 4A of the Central Excise Act, 1944 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 thereunder or any other law for the time being in force. In the light of the clarifications given in the above Circulars, the appellants submit that, the CBEC had recognized the practice of sale of goods both under MRP as well as to buyers in bulk and the decision of the Ld. Commissioner (Appeals) to bring such clearances of wholesale packs within the ambit of retail packs for charging duty on the basis of MRP and the requirement of declaring the MRP on individual packages under Rule 6(1)(f) of the SWMR, is not tenable. (b) The appellants further submit that the valuation under Section 4A cannot merely be resorted to because of the production of goods are notified under the Notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e term 'consumer' has not been defined either in the Central Excise Act, 1944 or in the Central Excise Tariff Act, 1985. In the absence of the statutory definition of the word 'Consumer', it is necessary to understand the meaning of the term as defined in the dictionaries and as interpreted by the Courts, from time to time. The word 'Consumer' is defined in Black's Law Dictionary as follows : "One who consumes. Individuals who purchase, use, maintain and dispose of products and services. Users of the final product". The word "Consumer" has been defined in the book - Words and Phrases of Excise and Customs - 2nd Edition by S.B. Sarkar of Centax Publications Pvt. Ltd., New Delhi-110 003, as follows :- "Consumer means user of an article (Opp. Producer). Purchaser of goods or services. 'Consumer goods' means those used directly (especially domestically) not in manufacturing etc. - (page 366). The Pocket Oxford English Dictionary defines the word "Consumer" as follows :- "One who consumes, esp. One who uses a product; person who buys or uses goods or services". As explained above, in the instant case, the impugned wholesale packages containing the confectionary are sold to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10 numbers of such pouches/packages, therefore, are clearly exempt from the declaration of MRP. Any declaration of a recommended price is merely an advice to the wholesale trade or a voluntary declaration and cannot form the basis of valuation of these packages under Section 4A of the Central Excise Act, 1944. The status of such wholesale pouches of 500 gms. and that of the wholesale jars of 720 gms. as 'wholesale packages' is, therefore, very clear. The appellants further submit that while sugar confectionary is chargeable to duty on a MRP basis under the provisions of Section 4A, it is very clear that even under Section 4A, the declaration of MRP must be mandated by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. It is clear from the provisions of Rule 29 ibid, that wholesale packages need not bear the MRP. As explained above, the impugned goods are not normally purchased by an 'ultimate purchaser' as it is not feasible for such a consumer to consume candies of the same flavour on one consuming occasion. It is further submitted that small packages of confectionery weighting less than twenty grams if sold by weight are clearly exempt from the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 4A of the Central Excise Act. Hence a declaration made under Rule 17(1) of the SWMR of certain additional details in respect of the impugned packages such as sale price and the number of individual pieces of the commodity contained in such packages is not tenable. It is, therefore, the submission of the appellants that these poly packs and pet jars weighing 500 gms. and 720 gms. and above are clearly "wholesale packages" as they are not purchased by retail customers/ultimate consumers. The decision in the impugned Order-in-Appeal that the exemption given in Rule 34(1)(b) of the PCR would not be available to the impugned products as the same are being sold in pieces/numbers and not by weight is completely misplaced in as much as the impugned products, as explained above, are cleared from the appellants' factory either in pouches of 500 gms. and in jars of 720 gms. and above which are sold in the wholesale market as such, which is a mandatory requirement that as per the National Industrial Classification, the sugar confectionary is required to be sold in Kgs., i.e. by weight. This clearly shows that the impugned goods are sold by weight in the market and not by pieces/numbers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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