Unit container exemption for skimmed milk powder survives intermediate bulk handling and outer transport packing.

Exemption under Notification No. 33/83-C.E. applied to skimmed milk powder packed for sale in containers of not more than 1 kilogram. Receipt of the goods in loose 25-kilogram bags for testing was only an intermediate stage and did not alter the relevant commercial unit. The smaller unit containers retained their identity even when placed in larger outer cartons for despatch, because outer packing was treated as transport or presentation packaging rather than the sole unit of sale. Printing statutory particulars on the outer pack did not change the character of the inner qualifying containers, and the exemption could not be denied when the notification's terms were otherwise satisfied.

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Issues: Whether skimmed milk powder packed in containers of not more than 1 kilogram was entitled to exemption under Notification No. 33/83-C.E. when the goods were first received in loose 25 kilogram polythene bags for testing and thereafter repacked into smaller unit containers, and whether packing the smaller containers inside larger cartons or outer packs deprived the assessee of the exemption.

Analysis: The exemption applied to skimmed milk powder if it was packed for sale in a container containing not more than 1 kilogram net. The receipt of the powder in loose 25 kilogram bags was found to be only a temporary stage for testing and was not the relevant commercial unit for sale. The smaller packs of 1 kilogram or less retained their identity even when placed in larger outer packs for despatch, since such outer packing was merely a mode of transport and presentation and did not convert the larger outer pack into the sole unit of sale. The fact that particulars required under food regulations were printed on the outer pack did not change the character of the inner unit containers. The benefit of an exemption notification cannot be denied on an assumed legislative intention when the terms of the notification are satisfied.

Conclusion: The small packs of 1 kilogram or less satisfied the notification and the exemption could not be denied merely because they were first handled in loose 25 kilogram bags or subsequently placed in larger outer packs.

Final Conclusion: The demand and penalty were unsustainable because the assessee was entitled to the exemption for skimmed milk powder packed in unit containers not exceeding 1 kilogram.

Ratio Decidendi: Where an exemption notification grants relief to goods packed for sale in unit containers up to a specified weight, the exemption cannot be denied merely because the goods pass through an intermediate bulk stage or are later placed in larger outer packs for despatch, so long as the qualifying unit container remains the relevant unit of sale.

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