Small cosmetic sachets under the weight threshold fall outside retail price valuation and are assessable under section 4.

Hair dye sold in sachets of less than 10 grams was treated as falling within rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 because cosmetics were required to be sold by weight or volume and the relevant package was below the prescribed threshold. On that basis, there was no legal requirement to declare retail sale price on the package, so section 4A of the Central Excise Act, 1944 did not apply and valuation was to be under section 4 instead. The contrary High Court view was regarded as not binding because it did not consider the specific cosmetic packaging requirements.

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Issues: Whether hair dye sold in sachets of less than 10 grams was required to be valued under section 4A of the Central Excise Act, 1944 on the basis of retail sale price, or whether it was exempt under rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and assessable under section 4.

Analysis: Section 4A applies only when the goods are specified by notification and there is a legal requirement under the Standards of Weights and Measures Act, 1976 or the rules made thereunder to declare retail sale price on the package. The commodity in question was a cosmetic, and the relevant statutory scheme required cosmetics to be sold by weight or volume. The provisions governing packaged commodities were read to mean that the commodity contained in the sachet, and not the individual sachet as a package, was the relevant item for determining the legal requirement. Rule 34 exempted packages containing commodities of ten grams or ten millilitres or less when sold by weight or measure. The contrary view in the cited High Court decision was treated as not binding because it did not notice the specific provisions requiring cosmetics to be sold by weight or volume.

Conclusion: Small packs of cosmetic hair dye weighing less than 10 grams were held to fall within rule 34 and outside section 4A; valuation under section 4A was therefore not applicable.

Final Conclusion: The reference was answered in favour of the assessee on the valuation issue, and the matter was sent back to the referring Bench for disposal in accordance with these views.

Ratio Decidendi: Where a packaged cosmetic is statutorily required to be sold by weight or volume, a package containing less than the prescribed threshold is exempt under rule 34, and section 4A of the Central Excise Act, 1944 does not apply.

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