Packaged cosmetics under 10 grams fall within Rule 34 exemption and escape retail sale price-based excise valuation.

Hair dye cosmetics packed in sachets of less than 10 grams were treated as exempt under Rule 34 of the Packaged Commodities Rules because the governing standards regime requires cosmetics to be sold by weight or volume and the commodity in the package is the relevant unit for declaration and sale. On that basis, section 4A of the Central Excise Act did not apply, as retail sale price valuation is triggered only where a notification and a legal requirement to declare the retail sale price exist. The Tribunal also treated the contrary observation in the earlier Madras High Court decision as per incuriam for being unsupported by the relevant provisions.

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Issues: Whether hair dye cosmetics packed in sachets of less than 10 grams were exempt under Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, so that valuation under section 4A of the Central Excise Act, 1944 would not apply, and whether the contrary observation in the Madras High Court decision could be followed as binding precedent.

Analysis: Section 4A applies only where the goods are specified by notification and there is a legal requirement to declare retail sale price on the package under the Standards of Weights and Measures Act, 1976 or the rules made thereunder. The Tribunal held that the relevant commodity was the hair dye contained in the sachets, not the sachets themselves, and that the statutory scheme under the Standards of Weights and Measures Act, 1976 and the Packaged Commodities Rules, 1977 treats the commodity in the package as the subject of declaration and sale. It further relied on the Fifth Schedule and the rules requiring cosmetics to be sold by weight or volume, and concluded that cosmetics weighing less than 10 grams fall within the Rule 34 exemption. The contrary observation in the earlier High Court decision was treated as unsupported by the relevant provisions and therefore per incuriam.

Conclusion: Goods of the described kind were exempt under Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, and section 4A of the Central Excise Act, 1944 did not apply.

Final Conclusion: The matter was sent back to the referring Bench for disposal in accordance with the above views.

Ratio Decidendi: Where the governing standards law requires cosmetics to be sold by weight or volume, packaged cosmetics of less than 10 grams are exempt under Rule 34 and are not subject to section 4A valuation based on retail sale price.

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