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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 ..... Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/Central Excise Rules, 2002. 1.4 Appeal No. E/661/2005 is by Shri William S. Pinckney, MD of Amway challenging penalty of Rs. 5,00,000/- under Rule 209(A) of Central Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/Central Excise Rules, 2002. 1.5 All these appeals arise out of common impugned Order No. 12/2005, dated 11-5-2005 passed by the Commissioner. As the facts and legal issues involved are common, the appeals are disposed of by this common order. 2. Heard both sides extensively. 3. The brief facts of the case are as follows :- (a) The appellant-assessee is a manufacturer of Satinicque shampoo, dish drops, G & H lotion, G & H body shampoo, LOC High Suds and Car wash, all excisable commodities. These goods are manufactured for supply to Amway. They were discharging the duty on the value under Section 4 of the Central Excise Act, 1944. (b) The Central Excise Department conducted certain investigations into the valuation adopted by the appellants. The appellants are packing their products into unit packing of sachets of 5 ml, 4 ml and 8 ml and in turn pack 20/30 such sachets (unit packing) into one outer. They ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned goods are manufactured by the assessee for Amway. The box also carried the declaration "sold only by Amway distributors". (b) The assessee discontinued packing in mono-carton box for different products at different points of time. In respect of LOC High Suds, it was discontinued from December 2002, in respect of Dish Drops, Satinique Dandruff Control & Conditioner, Satinique Dandruff Control Shampoo the same was discontinued from January 2003, in respect of G & H body Lotion the same was discontinued from June 2003, in respect of G & H Body Shampoo it was discontinued from August 2003, in respect of Satinique 2 in 1 Shampoo & Conditioner it was discontinued from July 2004. After discontinuing the mono-carton box, they were cleared in shipper bag which carried 540-900 sachets in one shipper. (c) The allegation in the show-cause notice relates to packing in mono-carton box and does not refer to the shipper carrying 540-900 sachets. However, the Commissioner has confirmed the demand of duty for the period from August 1999 to June 2004 including the period when the impugned goods were supplied in shipper bag and therefore, he travelled beyond the show-cause notice which is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate the actual mode of packing giving a clear reference to the quantity of the goods that were packed in a container being cleared as such from the factory gate in their daily stock account or any other statutory record. Therefore, the same is in clear violation of provisions of Rule 173B of Central Excise Rules. He further submits that the description in the invoices was quite misleading giving an impression that sachets were sold without any further initial packing other than the cases. There is MRP indicated in the internal correspondence of AMWAY in the form of price list in respect of packages in 30 numbers. In view of the above, he submits that invocation of extended period and imposition of penalties on the appellants are justified. 6.1 We have carefully considered the submissions from both sides and perused the records. The following issues arise for consideration. (a) Whether mono-carton containing 20 or 30 sachets can be considered as retail pack 'Multi-piece Pack' to be sold in retail? (b) Whether in respect of 'Multi-piece Package', the weight of all pieces to be taken into consideration to consider the eligibility of the exemption under Rule 34? (c) Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e net weight or measure of the commodity is twenty grams or twenty millimeters or less, if sold by weight or measure." Section 4A of the Central Excise Act "SECTION 4A. Valuation of excisable goods with reference to retail sale price. - (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relied upon by the appellants in matters relating to applicability of assessment under Section 4A. Gists of the relevant decisions are discussed below. (a) The Tribunal in the judgment dated 25-1-2006 in the case of Swan Sweets Pvt. Ltd. v. CCE, Rajkot [2006 (198) E.L.T. 565 (Tri.-Mum.)] considered assessment of Toffy Max Caramel/Chocolate each weighing about 4 gms. with MRP of 50 paise printed on individual packing and 125 units put up in polybag or about 1 kg put up in a jar. It was held that the impugned goods are sold by weight in the market and not by pieces/number. It was further held that - "Under the circumstances, 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 said Rules." With the above findings, the proposal to assess the goods under Section 4A was rejected. (b) Larger Bench of the Tribunal in their decision dated 7-2-2006 in the case of CCE v. Urison Cosmetics Ltd. [2006 (198) E.L.T. 508 (Tri.-LB)] considered the applicability of assessment under Section 4A in respect of a pack of three sachets of 3 gms each of Hair Dye. The department contended that it was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Varnica Herbs (supra) considered the case of hair dye cleared in mono-cattoons, each containing 8 gms sachets in respect of one category and in respect of another category in each mono-carton containing 10 sachets of 4 gms each held as under : "10. In the present case, it is the appellant's claim that their products were sold in sachets, and not in mono-cartons, to the ultimate consumers. The mono-cartons were only intended to be used by the retailer as a convenient receptacle for the sachets to be sold in retail. The products in sachets were sold by weight only. We find that these pleadings of fact have not been rebutted by the Revenue. Admittedly, each sachet contained less than 20 gms, of hair dye. Therefore, by virtue of Rule 14(1)(b), the appellant was not required to comply with other provisions of the SWM (PC) Rules as held in Urison Cosmetics (supra)." (f) Tribunal in the decision dated 22-2-2008 in the case of Central Arecanut & Cocoa Marketing & Processing Co-op. Ltd. v. CCE, Mangalore [2008 (226) E.L.T. 369 (Tri.-Chennai)] the issue of valuation of package containing 100 or more pieces of 'Eclairs' brand chocolate each weighing 5.5 gms. and held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) dealt with the products identical to the products in the present case which were also marketed by Amway and held that no evidence has been put forth by the Revenue to show that the packages in dispute were being sold directly to the ultimate consumers. With the above finding, the Tribunal held that the packages in which the products were sold could not be considered as multi-piece packet and allowed the appeal of the assessee seeking assessment under Section 4 of the Act. (i) Tribunal vide the decision dated 13-2-2009 in the case of Commissioner of C. Ex. v. Caress Beauty Care Products (supra) considered the issue of clinic plus shampoo of 8 ml sachet in strip of 16 Nos. and 60 strips being kept in corrugated box. The department contended that the same should be treated as multi-piece packet and valuation under Section 4A should be adopted. This submission has been rejected. 7.2 A close analysis of the above decisions throws up the following ratios/guidelines for deciding when Section 4A valuation should be adopted. (a) Merely because the goods are specified items under Section 4A(1) that by itself will not be sufficient to assess the value under Section 4A(1). (b)"The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 20 or 30 sachets can be considered as 'Multi-Piece Pack' to be sold in retail. If it is treated as 'Multi-Piece Package', the weight of all pieces to be taken into consideration and then, the exemption under Rule 34 shall not be applicable. However, the department has not adduced any evidence to show that mono-carton containing 20/30 sachets were being sold in retail to the ultimate consumers. Further, the department has not obtained any opinion of Metrology Department who are the authorities who implement the SWM Act and the PC Rules to support their contention that mono-carton containing 20 or 30 sachets can be considered as 'Multi-Piece Pack' to be sold in retail. 8.3 Obviously in the present case, the entire goods are being sold to Amway and the said sale is in wholesale. Amway have claimed themselves to be a multi-level marketing company whose business was based on sponsorship and distributor retailing and that they were selling through distributors. The distributors who buy from Amway could not be treated as ultimate consumers. If that be so, there was no need for printing elaborate details regarding individual sachet price, quantity contained in such sachets. It has also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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