2018 (4) TMI 1390 - AT - Central Excise

Tribunal classifies SDIC tablets as disinfectants for retail sale under Central Excise Tariff

The Tribunal classified SDIC tablets as disinfectants packed for retail sale under Chapter 3808 of the Central Excise Tariff, based on Section Note 2 to ... Classification of goods - SDIC tablets (Sodium di-chloroisocynurate) - assessee claimed classification of the product under CETH 29336910 but Revenue was of the view that such goods are to be classified as ‘disinfectant’ under CETH 38089400 - Revenue also held that the goods are required to be charged to excise duty on MRP based valuation. Held that: - Such goods are used for disinfectanting/ sanitizing of water and hence, are in the form of disinfectants. There is also no dispute on the fact that such goods are prepared in the form of tablets and are packed in unit containers with 10, 20, 50 and 100 tablets. Undoubtedly, such packaging is meant for retail sale and individual tablets are in measured doses - the goods are packed in retail packing, and merits classification under 3808 CETH the Central Excise Tariff. Valuation of goods for purpose of charging Excise duty - Held that: - it is evident that the goods are manufactured and packed for retail sale. Even if such goods packed in retail containers are further packed in bigger wholesale packages - the goods are liable to duty in terms of MRP based assessment under Section 4A. Appeal allowed - decided in favor of Revenue. Issues:Classification of product under Central Excise Tariff - Dispute between assessee and Revenue regarding classification of SDIC tablets - Applicability of Section Note 2 to Section VI - MRP based valuation for charging excise duty - Wholesale clearance to M/s Pfizer Animal Health India Ltd.Classification of Product under Central Excise Tariff:The dispute in this case revolves around the classification of SDIC tablets manufactured by the respondent. The Revenue argued that the tablets should be classified as 'disinfectants' under CETH 38089400, packed for retail sale, based on Section Note 2 to Section VI. On the other hand, the assessee claimed classification under CETH 29336910. The Tribunal examined the nature of the goods, which are used for disinfecting water, and noted that they are packed in unit containers for retail sale. Referring to the relevant Chapter heading 3808 and Section Note 2 of the Tariff, the Tribunal concluded that the goods fall under Chapter 3808 as disinfectants packed for retail sale.Applicability of Section Note 2 to Section VI:The Tribunal emphasized the importance of Section Note 2 of Section VI in classifying goods put up in measured doses or for retail sale. It cited examples from the HSN to clarify that goods falling under specific headings due to packaging for retail sale should be classified accordingly, even if they could potentially fall under other headings. The Tribunal highlighted that disinfectants, including sanitizers, are classified under Chapter 3808 only when packed for retail sale, as explained in the HSN.MRP Based Valuation for Charging Excise Duty:Regarding the valuation of goods for excise duty, the Tribunal considered the provisions of Section 4A of the Central Excise Act. It noted that duty is to be charged based on MRP declaration under the Legal Meteorology Act and rules. Despite the respondent's argument that goods were cleared wholesale to M/s Pfizer Animal Health India Ltd., the Tribunal observed that the goods were packed in retail containers labeled with MRP, indicating they were intended for retail sale. Therefore, the Tribunal held that the goods are liable to duty under MRP based assessment, even if packed in larger wholesale packages.Wholesale Clearance to M/s Pfizer Animal Health India Ltd.:Lastly, the Tribunal addressed the issue of wholesale clearance to M/s Pfizer Animal Health India Ltd. The Tribunal determined that even though the goods were cleared wholesale, their retail packaging with labeled MRPs indicated they were intended for retail sale. Consequently, the Tribunal set aside the impugned orders and allowed the appeals filed by Revenue, restoring the orders of the Original Authorities.This detailed analysis of the judgment highlights the key legal issues, arguments presented by both parties, and the Tribunal's reasoning in resolving the classification and valuation disputes related to the SDIC tablets under the Central Excise Tariff.