2008 (2) TMI 103 - AT - Central Excise

Tribunal exempts wholesale toffee packages from MRP assessment under Weights & Measures Act.

The Tribunal allowed the appeal, ruling in favor of the appellant on the basis that wholesale packages containing individual toffees were not subject to ... MRP based assessment - wholesale package - multi-piece package - intended for retail sale - Packaged Commodities Rules, 1977 - Standards of Weights and Measures Act, 1976MRP based assessment - wholesale package - multi-piece package - intended for retail sale - Packaged Commodities Rules, 1977 - Whether clearances of wholesale packages containing about 100 individual chocolates each weighing 5.5 gms are liable to valuation under the MRP-based assessment provisions of Section 4A of the Act. - HELD THAT: - The Tribunal applied the ratio of Swan Sweets Pvt. Ltd. wherein it was held that a 'multi-piece pack' under the Packaged Commodities Rules, 1977 envisages that both the individual pieces and the package as a whole must be intended for retail sale. If the package as a whole is not intended for retail sale but only the individual pieces are intended for retail sale and are packed together for convenience of distribution, the package is a wholesale package and not a multi-piece package attracting MRP based assessment. The facts of the present case are identical: individual toffees weighing 5.5 gms were packed in wholesale packages of about 100 pieces which were not intended to be sold as a retail package to the ultimate consumer. In view of the statutory scheme under the Standards of Weights and Measures Act, 1976 and the Packaged Commodities Rules, 1977, and consistent Tribunal precedent, such wholesale packs are excluded from assessment under Section 4A of the Act. [Paras 5, 6]The clearances of the wholesale packages of chocolates (100 pieces of 5.5 gms each) are not liable to MRP based assessment under Section 4A; appeal allowed.Final Conclusion: Following the Tribunal's earlier ratio in Swan Sweets Pvt. Ltd., the appeal is allowed and the demand and penalty founded on MRP-based assessment in respect of the wholesale packages of chocolates cleared between 20.02.2003 and 24.07.2003 are set aside. Issues:- Appeal against order demanding differential duty, interest, and penalty on the basis of MRP assessment for clearances of chocolates in wholesale packages.- Interpretation of statutory provisions regarding wholesale packages and MRP-based assessment under the Weights and Measures Act and Packaged Commodities Rules.- Comparison with previous Tribunal decisions on similar cases involving wholesale packages and MRP assessment.- Consideration of whether the wholesale packages containing individual sweets were intended for retail sale and subject to MRP-based assessment.Analysis:1. The appeal was filed against an order demanding differential duty, interest, and penalty on the basis of MRP assessment for clearances of chocolates in wholesale packages. The appellant argued that the individual toffees packed in wholesale packages were not required to bear MRP as per the Weights and Measures Act and Packaged Commodities Rules. They contended that the wholesale packages containing 100 or more pieces fell under the definition of wholesale packages as per Rule 2(x) and were exempt from MRP requirements under Rule 34.2. The appellant relied on the decision in Swan Sweets Pvt. Ltd. vs. CCE Rajkot, where it was held that wholesale packages containing chocolates for retail sale did not attract MRP-based assessment. They also referred to the decision in CCE Mumbai vs. Urison Cosmetics Ltd. regarding a similar commercial practice with hair dye. The appellant argued that the wholesale packages in question were not multi-piece packages intended for retail sale, as per Rule 2(j) of the Packaged Commodities Rules.3. The JCDR cited the decision in Roys Industries Ltd. vs. CCE Hyderabad, where the Tribunal interpreted 'multi-piece package' and considered whether packages containing several chocolates should be assessed under Section 4 or 4A of the Act. The Tribunal in that case concluded that retail sale could include purchases by individuals or groups, and the intention for retail sale depended on the distribution and sale organization.4. Upon careful consideration of the case records and submissions, the Tribunal found that the facts of the instant case were similar to the Swan Sweets Pvt. Ltd. decision. The Tribunal reiterated that individual toffees and packs of such toffees did not attract assessment under Section 4A of the Act if they were not intended for retail sale. Following the precedent set in the previous decision, the Tribunal allowed the appeal filed by the appellant.5. The Tribunal pronounced the operative part of the order on 22.02.08, ruling in favor of the appellant based on the interpretation of statutory provisions, previous Tribunal decisions, and the intention behind the distribution and sale of the wholesale packages containing individual sweets.