2015 (8) TMI 1049 - SC - Central Excise

Supreme Court affirms tribunal's decision on auto bulb classification under Central Excise Tariff Act

COMMISSIONER OF CENTRAL EXCISE, JAIPUR Versus ALWAR LAMPS PVT. LTD.

The Supreme Court upheld the Customs, Excise & Service Tax Appellate Tribunal's decision classifying auto bulbs under Entry 8539.10 of the Central ... Valuation of auto bulbs - MRP based value u/s 4A or transaction value u/s 4 - the bulbs sold by the respondent are sold to the industrial units at a retail price less than ₹ 20 per bulb, the CESTAT has concluded that the goods would fall under Entry 8539.10. It is not in dispute that the bulbs are sold in the packaged form. - However, retail sale price (RSP) was not mentioned - Held that:- there was no necessity to mention this retail price on the bulbs sold in the packaged form in view of Rule 34 of The Standards of Weights and Measures (Packaged Commodities) Rules, 1977, which gives an exemption in respect of certain packages and would include the category of goods sold by the respondents. - Section 4A in its wholesome form would not be applied in its entirety in cut and paste form. The relevant portion of the said Section, in view of Note 7A incorporates the meaning of ‘retail sale price’ which alone would apply. - Decision in the case of Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan [2007 (8) TMI 3 - Supreme Court] distinguished - Decided against Revenue. Issues:Classification of goods under Central Excise Tariff Act, 1985 - Entry 8539.10 or 8539.90.Analysis:The judgment concerns the classification of auto bulbs manufactured by the respondents under the Central Excise Tariff Act, 1985. The dispute revolves around whether the bulbs should be classified under Entry 8539.10 or 8539.90. The Revenue contended that the goods fell under Entry 8539.90, attracting a higher duty rate of 16%, while the assessee claimed classification under Entry 8539.10, with a lower duty rate of 8%. The Revenue issued a show cause notice demanding excise duty and penalties. The Commissioner upheld the demand, emphasizing the absence of Maximum Retail Price (MRP) on the bulb packaging, citing Chapter 85 Note 7A. Subsequently, the respondent appealed to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), which ruled in favor of the respondent, quashing the demand and penalties.The CESTAT's decision was based on a thorough analysis of Chapter 85 Note 7A in conjunction with Section 4A of the Central Excise Act, defining 'retail sale price.' The Explanation under Section 4A clarifies the components included in the retail price. The CESTAT concluded that since the bulbs were sold to industrial units at a retail price below Rs. 20 per bulb and were packaged, they should be classified under Entry 8539.10. The CESTAT highlighted that the absence of MRP on the packaging did not affect the classification. Moreover, Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, provided an exemption for certain packaged goods, including those sold to industrial units as raw materials.The judgment also referenced the case of Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan, which was cited by the Revenue. However, the court distinguished this case, emphasizing that Rule 34 exempted the respondent from mentioning MRP on the packages, making the cited judgment irrelevant. The court clarified that Section 4A should be interpreted in conjunction with Chapter 85 Note 7A, focusing on the definition of 'retail sale price.' Ultimately, the Supreme Court agreed with the CESTAT's decision, dismissing the appeal and upholding the classification of the auto bulbs under Entry 8539.10. Additionally, other related appeals were also dismissed in line with the main judgment, maintaining consistency in the decisions.