2017 (9) TMI 868 - AT - Central Excise

Tribunal clarifies valuation rules for branded chewing tobacco in retail packages

The Tribunal dismissed the appeals by Revenue and partly allowed the appeal by the appellant, focusing on the interpretation of legal provisions regarding ... Valuation - branded chewing tobacco - case of Revenue is that the packages containing multiple pieces of identical packets of chewing tobacco are to be considered as a retail package - Held that: - the facts recorded in the notice itself will indicate that each one of the package having less than 10 gms. of chewing tobacco has contained all the details as per the statutory requirement like contents and unit price etc. Even the larger packages containing multiple pieces of such small packages, indicated the MRP of individual small package only. It is categorically asserted by the appellant/assessee that the bigger package containing multiple pieces of small retail package never carry any MRP for the sale of such package. In other words, there is no evidence on record to show that the larger package ‘(multi piece package)’ is ever intended to be a retail package for a retail consumer. Similar set of facts came up for consideration before the Tribunal in the case of CCE, Delhi – I Vs. Shakti Zarda Factory India Pvt. Ltd. [2017 (1) TMI 970 - CESTAT NEW DELHI], where it was held that the impugned goods cannot be subjected to as MRP based assessment under Section 4A. Consequent upon deletion of the provision of Rule 2 (j) and Rule 17 of Packaged Commodities Rules w.e.f. 14/01/2007 the impugned order correctly applied the legal provisions to determine the principles of valuation - there is no merit in these appeals by the Revenue. Penalty - Held that: - the issue is one of interpretation of legal provision including the statutory requirements as per Legal Metrology Department, there is no reason for imposition of penalty in such type of cases - penalty set aside. Appeal dismissed - decided against revenue. Issues:1. Contesting imposition of penalty and dropping of demand of differential duty under Section 4.2. Interpretation of legal provisions regarding valuation of branded chewing tobacco in multi-piece retail packages.Analysis:1. The judgment involves 23 appeals against a common impugned order of the Commissioner (Appeals), Jaipur. One appeal by the appellant/assessee contests the penalty imposition, while the other 22 appeals by Revenue contest the dropping of demand of differential duty under Section 4. The appellant is engaged in the manufacture of branded chewing tobacco subject to Central Excise duty.2. The case revolves around the assessment of branded chewing tobacco in multi-piece retail packages. The Revenue proposed assessment under Section 4A, considering the multi-piece packages as retail packages. The Commissioner (Appeals) held the appellant liable under Section 4A up to a certain date and under Section 4 thereafter, imposing a differential duty and penalty. The Revenue contested the order, arguing that the appellant should pay tax under Section 4 only from a specific date.3. The arguments presented by both sides focused on the interpretation of legal provisions, specifically Rule 2A and Rule 34(b) of the Standards of Weights and Measures (Packaged Commodities Rules), 1977. The appellant contended that the multi-piece packages should be considered retail packages, falling under Section 4A. However, the Tribunal found that the larger packages were not intended for retail sale to consumers, based on the absence of MRP for the larger package.4. Referring to a similar case, the Tribunal highlighted previous decisions supporting the appellant's position. The Tribunal emphasized that the goods cannot be subjected to MRP-based assessment under Section 4A. The judgment also cited a Supreme Court case upholding valuation under Section 4.5. The Tribunal noted the deletion of certain provisions from the Packaged Commodities Rules from a specific date, which affected the application of legal provisions for valuation. Consequently, the Tribunal dismissed the appeals by Revenue and partially allowed the appeal by the appellant, setting aside the penalty imposed for the relevant period.6. In conclusion, the Tribunal dismissed the appeals by Revenue and partly allowed the appeal by the appellant, considering the interpretation of legal provisions and the statutory requirements related to the valuation of branded chewing tobacco in multi-piece retail packages.