Packaged commodities exemption for hair dye supported waiver of pre-deposit and stay on excise demand.

Prima facie applicability of Section 4A valuation was disputed where hair dye was cleared in sachets of less than 10 grams and claimed to fall within the Packaged Commodities Rules exemption for cosmetics sold by weight or volume. The Tribunal noted that a Larger Bench had treated similar hair dye multi-packs as retail packs eligible for exemption and, independently considering the rules, found a prima facie case in favour of the appellants. Waiver of pre-deposit and stay of recovery were therefore granted.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery in relation to the duty and penalty demand, having regard to the prima facie applicability of Section 4A of the Central Excise Act and the exemption under the Packaged Commodities Rules.

Analysis: The duty demand was based on valuation under Section 4A on the footing that the goods were governed by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The appellants contended that the hair dye was cleared in sachets of less than 10 grams and that cosmetics including hair dye fell within Entry 25 of the 5th Schedule to the Rules, requiring sale by weight or volume, so that the goods were exempt under Rule 34(1)(b). The Tribunal noted that a Larger Bench had already considered similar facts in relation to hair dye cleared in multi-packs and had taken the view that such packs were retail packs eligible for exemption. On that basis, and also considering the legal provisions independently, the Tribunal found a prima facie case in favour of the appellants.

Conclusion: Waiver of pre-deposit and stay of recovery were granted in favour of the appellants.

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