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TMI Blog2024 (2) TMI 1017X X X X Extracts X X X X X X X X Extracts X X X X ..... ne streamlining and consolidation through amendments as did the respective Rules framed thereunder. The specific bar on retail sale on packages cleared by appellant is adequate discharge as evidence of overriding intent with fact prevailing over presumption of intent. Consequently, for the period preceding commencement of Legal Metrology (Packaged Commodities) Rules, 2011, the impugned notification does not apply to goods cleared by the appellant. - For the period thereafter, such intent does not circumscribe packages deployed anywhere in chapter II of Legal Metrology (Packaged Commodities) Rules, 2011 and, therefore, does not restrict the empowerment of notifying of goods for the purpose of section 4A(1) of Central Excise Act, 1944. The substantive distinction between deemed circumscribing of packages for the enforcement of rule 5 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and absence of such curtailed meaning of package for requirement to comply with rule 6 of Legal Metrology (Packaged Commodities) Rules, 2011 makes for the difference in interpreting the extent and reach of power conferred on the Central Government to resort to retail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for retail sale during the former period is evident despite which they resorted to abatement from retail sale price even though not entitled thereto. Nothing has been brought on record to evince that such intent, espoused in the markings, was not prompted by clear appreciation of the legal limitation on the jurisdiction of the Central Government to notify goods for alternative assessment - there are no reason to interfere with the penalty mandated under section 11AC of Central Excise Act, 1944. Appeal allowed in part. - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) And HON BLE MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Rajesh Ostwal, Advocate and Ms Hanisha Jatania, Chartered Accountant for the appellant Shri Sunil Kumar Katiyar, Assistant Commissioner (AR) for the respondent ORDER PER: C J MATHEW In this appeal of M/s General Mills India Pvt Ltd, against order [order-in-original no. 26/CEX/2013 dated 12th September 2013] of Commissioner of Central Excise, Customs and Service Tax, Nashik, the grievance, stemming from fastening recovery of ₹ 96,35,073 under section 11A of Central Excise Act, 1944, along with applicable interest under section 11AB o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted to only in relation to clearances effected to such as conform to (b) industrial consumer means those consumers who buy packaged commodities directly from the manufacturer/packers for using the products in their industry for production, etc. in the Rules supra. 4. It was also contended that the final disposition by their distributors would not be known at the time of clearance and that implication of channelizing of the impugned goods into the distributor stream is concurrent exclusion from sale to industrial consumer , which, being exception to mandate of affixing of details prescribed by the extant Rules, cannot be reversed merely from not having availed such privilege. Reliance was placed on the decision of the Hon ble High Court of Bombay in Larsen and Toubro v. Union of India [2012 (275) ELT 153 (Bom)] which distinguished the exceptions referred to supra. It was pointed out that the distinction drawn by the Tribunal, too, in HPL Electric Power Ltd v. Commissioner of Central Excise [2018 (12) GSTL 36 (T)] stood affirmed by the Hon ble Supreme Court upon dismissal of appeal of Revenue. According to him, the scope of the exception had also been determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusion of the class of consumers spelt out therein is beyond question. He urged that the intent of the manufacturer, manifested by the bar on retail sale, which sufficed to evince lack of coverage under retail sale price regime should not be overlooked. He further argued that bakers were, in any case, not final consumers but producers of cakes and bakes that were sold to consumers. 6. From the records and oral submissions, certain undisputed facts emerge. The appellant had been manufacturing cake mix and bakery mix in packages which, by and large, found its market among bakeries who were procuring these, mostly, through distributor network and some directly. The goods, having been incorporated in notification no. 49/2008-CE(NT) dated 24th December 2008, were being cleared by recourse to retail sale price assessment mandated by section 4A of Central Excise Act, 1944. The rival stands posit that the intent of the law relating to such assessment has been incorrectly perceived inasmuch as the extent of reach of the law has been misconstrued. Inherent in the dispute is common ground that such products if sold for home use would be assessed within the ambit of retail sale pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that bakeries are not consumers and that central excise jurisdiction was enabled to go beyond the notification under section 4A(1) of Central Excise Act, 1944 to ascertain, on the facts of each clearance, requirement of declaring retail sale price in furtherance of consumer protection. 8. The demand for the disputed period straddles two governing enactments by reference to which levy of duties of central excise on retail sale price , less permitted abatement, was enabled. Till the notification of Legal Metrology (Packaged Commodities) Rules, 2011 with effect from 1st April 2011, Standards of Weights and Measures (Packaged Commodities) Rules, 1977 , issued under the authority of The Standards of Weights and Measures Act, 1976, was in force even after the parent statute was substituted by the Legal Metrology Act, 2009. Both the laws have undergone streamlining and consolidation through amendments as did the respective Rules framed thereunder. 9. The scheme of legislation differed only in some particulars but it is worth noting that the earlier of the two had been in force for very long before it was brought to bear on valuation for assessment to central excise duties. It may ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of the 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 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 less such abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. that the impugned notification came to be issued. The enabling provision supra, contemplates a two stage process, viz., that of identifying all, or some, of the goods that, under the other law , was required to declare retail sale price on the package first and, to the extent of these being excisable as well as chargeable to duty with reference to value, the default resort to section 4 of Central Excise Act, 1944 be substituted by deemed value, as specified and assessed to duty subject to abatement allowed, at the second stage. As the impugned notification has enumerated goods, in terms of chapter/heading/sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/packers for using the product in their industry for production, etc. in the said Rules, added to the former with the latter reflected as 3. Applicability of the Chapter The provisions of this chapter shall not apply to, - (a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg; and (b) packaged commodities meant for industrial consumers or institutional consumers Explanation: For the purposes of this rule,- (i) institutional consumer means ..; (ii) industrial consumer means the industrial consumer who buy packaged commodities directly from the manufacturer for use by that industry. in the Legal Metrology (Packaged Commodities) Rules, 2011 without the former, pertain to declaration requirements of rule 5 of chapter II among which is retail sale price that triggers the machinery of retail sale price assessment. 11. The details, as found in rule 5 of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 and rule 6 of Legal Metrology (Packaged Commodity) Rules, 2011 respectively, are several; among these, and relevant for operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sumption of intent. Consequently, for the period preceding commencement of Legal Metrology (Packaged Commodities) Rules, 2011, the impugned notification does not apply to goods cleared by the appellant. 14. For the period thereafter, such intent does not circumscribe packages deployed anywhere in chapter II of Legal Metrology (Packaged Commodities) Rules, 2011 and, therefore, does not restrict the empowerment of notifying of goods for the purpose of section 4A(1) of Central Excise Act, 1944. The substantive distinction between deemed circumscribing of packages for the enforcement of rule 5 of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and absence of such curtailed meaning of package for requirement to comply with rule 6 of Legal Metrology (Packaged Commodities) Rules, 2011 makes for the difference in interpreting the extent and reach of power conferred on the Central Government to resort to retail sale price assessment. Consequently, all commodities in pre-packaged form, to the extent incorporated in the impugned notification, are subject to assessment on retail sale price less abatement as prescribed therein after March 2011. 15. Bot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponsibility for conformity of the commodity with the description. As we have premised supra, consumer protection laws are not dovetailed to tax compliance but tax laws have latched on to the consumer protection laws for a low price ride. Therefore, the scope of the impugned notification is not curtailed, for purposes of intended coverage, by availability of such option to comply or dispense with declaratory and accountability obligations in the face of recorded compliance. 16. Furthermore, the adjudicating authority has excluded the market catered to by the impugned goods by reading down consumer as ultimate customer which finds very limited deployment in the Rules. It is not in (q) retail sale , in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer; in rule 2 of The Standard Weights and Measures (Packaged Commodities) Rules, 1977 or as unaltered continuation in rule 2 (l) of The Legal Metrology (Packaged Commodities) Rules, 2011 that consumer is so qualified but in (p) retail package means ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... umers, which were the recipients of goods impugned therein, are not final consumers because the goods are subject to further sale in that very form. The facts of the present case are totally at variance as the goods impugned here lose the form in which they have been cleared by the appellant in the hands of those erroneously held as not being final consumers even on the admitted reality that customers of bakeries are in the market for cakes and bakes which would render the bakeries to be the final consumer. In re Ewac Alloys Ltd, the dispute had its genesis in breach of Standards of Weights and Measures (Packaged Commodity) Rules, 1977 in which the claim of exception from the rigour of rule 5 therein was allowed on acceptance of the plea of the petitioner in writ proceedings that notice under the enforcement provisions was, at the threshold, not warranted. That dispute had nothing to do with assessment in accordance with section 4A of Central Excise Act, 1944 which flows from the remit, limited as it is, to draw upon goods required to declare retail sale price to direct assessment away from the default mechanism of section 4 of Central Excise Act, 1944. 18. The relianc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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