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TMI Blog2013 (4) TMI 505X X X X Extracts X X X X X X X X Extracts X X X X ..... es, 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. - E/658-661/2005 - 452-455/2012 - Dated:- 11-6-2012 - Shri P.G. Chacko and M. Veeraiyan, JJ. Shri Aqueel Sheeraji, Advocate, for the Appellant. Shri Ganesh Haavanur, Addl. Commissioner (AR), for the Respondent. ORDER Appeal No. E/658/2005 is by M/s. Sarvotham Care Ltd. (hereinafter called assessee/appellant-assessee) challenging demand of Rs. 9,92,84,896/- along with interest and penalty of equal amount imposed under Section 11AC and a penalty of Rs. 10 lakhs imposed under Rule 173Q of Central Excise Rules, 194 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise Rules, 1944. Show-cause notice also proposed penalties on Amway, Shri Mohana Krishna, Managing Director of appellant-assessee, Shri William S. Pinckney, Managing Director of Amway and a few others. Show-cause notice alleged that the packages in which the appellant-assessees were clearing the impugned products to AMWAY should be treated as Multi-piece Package and therefore, valuation under Section 4A should be adopted. It was alleged that with an intention to evade payment of duty, the appellant-assessee along with the others misdeclared the outer as a wholesale pack though it was actually meant for retail sale to their ultimate consumer. (e) The adjudicating authority held that the packages are only Multi-piece Packages and therefore, the valuation should be under Section 4A. In the impugned order, he demanded an amount of Rs. 9,92,84,897/- being the duty short paid under proviso to sub-section (2) to Section 11A of the Central Excise Act, 1944. He imposed equal penalty under Section 11AC. A penalty of Rs. 10,00,000/- was imposed under Rule 173Q. In addition, he also imposed penalties on other appellants. 4. Learned advocate for the appellants assails the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Arecanut Cocoa Marketing Processing Co-op Ltd. v. CCE, Bangalore [2008 (226) E.L.T. 369 (Tri.-Chen.)] (e)CCE v. Kraftech Products [2008 (224) E.L.T. 504 (S.C.)] (f) CCE, Chennai v. Caress Beauty Care Products [2009 (242) E.L.T. 316 (Tri.-Chen.)] (g) CCE v. B.G. Constructions [2010 (254) E.L.T. 383 (Tri.-Mum.)] (h)CCE v. Urison Cosmetics Ltd. [2006 (198) E.L.T. 508 (Tri.-LB)] (i) Swan Sweets Pvt. Ltd. v. CCE [2006 (198) E.L.T. 565 (Tri.-Mum.)] (j) CCE v. Charishma Cosmetics Pvt. Ltd. [2006 (201) E.L.T. 564 (Tri.-Mum.)] (k) Loknath Prasad Gupta v. Commissioner [2006 (204) E.L.T. 412 (Tri.-Kol.)] (l) Varnica Herbs v. CCE [2008 (221) E.L.T. 417 (Tri.-Chen.)] (m) Modern High Tech India v. CCE [2008 (221) E.L.T. 428 (Tri.-Chen.)] (n) Jayanti Food Processing (P) Ltd. v. CCE [2007 (215) E.L.T. 327 (S.C.)] (o) Varnica Herbs v. C.B.E. C. [2004 (163) E.L.T. 160 (Mad.)] (p) CCE v. ACME Health Care [2005 (189) E.L.T. 82 (Tri.-Mum.)] 5. Learned Additional Commissioner (AR) reiterated the findings and reasoning of the Commissioner. He particularly relies on the clarification contained in C.B.E. C. Circular No. 492/58/99-CX., dated 2-11-1999 issued under F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) A number of retail packages, where such first mentioned package is intended for sale, distribution or delivery to an intermediary and is not intended for sale direct to a single consumer; or (ii) A commodity sold to an intermediary in bulk to enable such intermediary to sell, distribute or deliver such commodity to the consumer in smaller quantities, or (iii) Packages containing ten or more than ten retail packages provided that the retail packages are labeled as required under the Rules. Retail package Rule 2 (p) : retail package means a package containing any commodity, which is produced, distributed, displayed, delivered or stored for sale through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals. Multi-piece package Rule 2(j). multi-piece package means a package containing two or more individuals packaged or labeled pieces of the same commodities of identified quantity, intended for retail sale, either in individual pieces or the package as a whole. Rule (29) : (29) Declaration to be made on every wholesale package - (1) Every wholesale package shall bear thereon a legible definite, plain and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1. - For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. - For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ked Wholesale Package (to be opened and said loose). It has been held that - Since the detailed pouches are 5 or 9 gms net weight of the commodity is less than 10 gms in the circumstances and in view of the provisions of Rule 34(b) of 1977 Rules, the markings was not required of a MRP on the retailed packages. After holding as above, the appeal of the party challenging assessment under Section 4A was allowed. (d) The Tribunal in the decision dated 3-9-2007 in the case of Modern Hi-tech India considered the issue of valuation relating to shampoo/cream supplied in bulk to M/s. Emami Ltd. and shampoo packed in pouches/sachets with net content of less than 10 ml. and supply to Emami Ltd. and held as under : 5. In the result, the goods of the first category supplied in bulk to EMAMI with MRP printed and crossed and with the inscription free, not for sale , are liable to be assessed only under Section 4 of the Central Excise Act and not under Section 4A of the Act. ... Insofar as the goods of the second category (shampoo packed in pouches/sachets with net content of less than 10 ml. and supplied to EMAMI are concerned, .... it was held as under : Show-cause notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A in respect of 3 pouches of 3 gms. each of hair dye sold in one packet. In the said case the net weight of each pouch, as also the net weight of the commodity in 3 pouches and the maximum rate is printed on the pouches . The Hon ble Supreme Court held as under : We have noticed hereinbefore that each package offered to sell to the customer contains three sachets. Net weight of all the three sachets are stated thereon. It is a Multi-piece package which is capable of being offered to sell as such only because a package is a multi-piece package , the same cannot be taken out of the umbrage of exemption clause contained in Rule 34 of the Rules . With the above findings, appeals of the department seeking valuation under Section 4A of the Central Excise Act were dismissed. In the same case, the Hon ble Supreme Court also considered the case of 72 pieces of lip smoother each unit containing 4.3 ml and also shampoo packed in a carton containing more than 500 pieces each sachet being less than 10 ml. The Hon ble Supreme Court held as under : The assessee manufactures shampoo which is packed in sachets. Each sachet contains shampoo below 10 ml. It is packed in a carton conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing (P) Ltd. (c) Even if a commodity is notified under Section 4A, if there is no statutory requirement under the law for declaring the MRP on the packages cleared by the manufacturer, then the assessments have to be done under Section 4 and not Section 4A. (d) The intention of the manufacturer with regard to the goods manufactured by him and the marketing pattern followed are also important to decide assessment of the goods. (e) If it is treated as Multi-Piece Package , the weight of all pieces to be taken into consideration to consider the applicability of the exemption under Rule 34. (f) If the total weight of a multi-piece retail package is more than 20 grams, the exemption under Rule 34 would not be applicable and consequently, MRP based valuation under Section 4A would apply. (g) The exemption under Rule 34 (b) of the Rules will be available in respect of a multi-piece retail package if the total weight of all the pieces in the package does not exceed the prescribed limit as held by Krafttech Products (supra) and Urison (supra). (h) Merely because goods in the form of liquid packed in pouches/ sachets are sold in numbers, it would not be that they are not sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Amway) has held that the said packages should be treated as wholesale package and not as multi-piece package and therefore, assessment under Section 4A could be sustained. 9. Thus the issue on merits is in favour of the assessee and therefore, there is no need to go into other issues. Nevertheless, we note that the decisions of the Tribunal and the Supreme Court are in favour of the assessee and in such a situation, the question of invocation of extended period of limitation and imposition of penalties on the appellants does not arise. 10. From the foregoing, the following emerges : (a) 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. (b) 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. (c) Under the circumstances, the packages under which the impugned products are sold by the appellants clearly fall within t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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