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TMI Blog2024 (7) TMI 476X X X X Extracts X X X X X X X X Extracts X X X X ..... gs commenced based on the show cause notices issued to the respondent-assessee. The first show cause notice issued on 22nd April 2004, pertains to a brief period in April 2003. The second show cause notice is of 31st May 2004 covering the period from May 2003 till December 2003. By a notification dated 1st March 2002 issued under sub-section (1) of Section 4A of the Excise Act, tobacco was notified by including the same at Sr.no.24A in the Notification with effect from 1st March 2003. The allegations made in both the show cause notices are similar. The show cause notice dated 22nd April 2004 was supplemented by an addendum dated 10th June 2004. The allegation against the respondent-assessee in the show cause notices was that the assessee was packing 33 pouches of 6 gms each of chewing tobacco and one pouch of 15 gms of chewing tobacco in a larger poly pack. It is alleged that MRP (maximum retail price) of Rs. 1 per pouch is mentioned on the pouches carrying a quantity of 6 gms, and MRP of Rs. 3 was mentioned on the pouch carrying 15 gms quantity. It is alleged that on the larger poly pack, a weight of 213 gms and MRP of Rs. 36 was mentioned. It is alleged in the show cause notice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a declaration on the poly packs confirms the requirement of Rule 6 and Rule 16 of Chapter II of the said Rules, and therefore, poly packs were intended for retail sale. The order further records that the sale price was mentioned on the poly pack, which was not the requirement of Rule 29 of the said Rules, which deals with declarations on the wholesale packages. However, the Commissioner held that the assessee's HDPE bags, which contain 100 larger poly pack packages and do not declare the sale price, would be wholesale packages. The Commissioner rejected the respondent's contention that the poly packs were not sold in retail by holding that whether the manufacturer sold them in retail or not is relevant and what is material is whether the goods were intended for retail sale. 4. By the impugned judgment, the Tribunal held that the decision of the Madras High Court in the case of Varnica Herbs1 was not a binding precedent. The Tribunal relied upon a decision of this Court in the case of Commissioner of Central Excise, Vapi v. Kraftech Products Inc. (2008) 12 SCC 321. The Tribunal proceeded to set aside the Commissioner's order. SUBMISSIONS 5. The learned counsel appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emption under Rule 34(b) of the said Rules will not apply. As can be seen from Clause (b) of Rule 34 of the said Rules, the exemption will apply to any package containing a commodity if the net weight of the commodity is 10 gms or less and if the same is being sold by weight. The stand of the respondent-assessee in reply to the show cause notices is that though the poly packs may have MRP printed on it, it was never intended for retail sale. Moreover, the respondent was packing 100 poly packs in one HDPE bag, and the HDPE bags were sold to distributors. The weight of the chewing tobacco in one poly pack or HDPE bag is more than 10 gms. Therefore, Rule 34(b) of the said Rules has no application. 8. As far as facts are concerned, even in the order-inoriginal passed by the Commissioner, which was impugned before the Tribunal and in particular, clause (d) of paragraph 16, it is accepted that the respondent is packing 100 poly pack packages in one HDPE bag. 9. The real controversy is whether the commodity sold by the respondent will attract Section 4A of the Excise Act. Subsection (1) of Section 4A of the Excise Act reads thus: "Section 4A. Valuation of excisable goods with referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dual packages of similar commodities but are not identical in quantity. The question is whether the package made by the respondent was intended for retail sale. 13. Rule 2(x) of the said Rule defines "wholesale package", which reads thus: "(x) "wholesale package" means a package containing- (i) 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 labelled as required under the rules." 14. Now, we turn to the order-in-original and the findings recorded therein. The Commissioner held that Rules 6 and 16 form a part of Chapter II of the said Rules and, therefore, apply to the packages intended for retail sale. The Commissioner found that the poly packs contained a declaration in terms of both Rule 6 and Rule 16. The Commissioner referred to the format of declaration to be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g (it has also been admitted by them in the reply to Show Cause Notice that their HDPE bag is a wholesale package), therefore, this larger polypack package containing the declaration "MAX UNIT SALE PRICE" cannot be considered as a wholesale package but can be considered only a group package intended for retail sale. Only the HDPE bag of the assessee, which contains 100 larger polypack packages and does not contain declaration of sale price, would be a wholesale package." ( emphasis added ) 17. In so many words, the Commissioner held that an HDPE bag containing 100 poly packs does not contain a declaration of selling price and therefore, it would be a wholesale package. There is no finding recorded that what is distributed or sold by the respondent is a poly pack containing 33 plus one small pack. The respondent's case that 100 poly pack packages are being put in one HDPE bag has been accepted by the Commissioner. Therefore, the respondent is selling HDPE bags containing 100 poly packs each to the distributors and dealers. The said Rules do not require the display of price on such HDPE bags. Even assuming that 100 poly packs were retail packages, HDPE bags would be covered by t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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