Small-package exemption defeats MRP-based duty demand where the department cannot prove clear, quantifiable non-exempt clearances.

MRP-based duty under section 4A could not be sustained on branded spit tobacco pouches of 4 gram and 9 gram where the packages fell within the small-package exemption under Rule 34(1)(b) of the Packaged Commodities Rules. The record did not show any reliable, quantifiable clearances of 15 gram pouches, and the department failed to produce a pouch-wise breakup or credible duty computation to support the demand. In the absence of supporting material, the exemption applied and any doubt was resolved in favour of the assessees, so the demand was set aside.

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Issues: Whether the duty demand on 4 gram and 9 gram pouches of branded spit tobacco could be sustained under MRP-based valuation under section 4A, in view of the exemption for small packages under Rule 34(1)(b) of the Packaged Commodities Rules.

Analysis: The duty demand was founded on section 4A, but the Tribunal found that packages containing 4 gram and 9 gram quantities fell within the exemption under Rule 34(1)(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The record did not establish any quantifiable clearances of 15 gram pouches, and the department produced no reliable pouch-wise breakup or duty calculation to support the allegation. In the absence of supporting material, the demand could not be sustained, and any doubt was resolved in favour of the appellants.

Conclusion: The duty demand under section 4A was not attracted for the 4 gram and 9 gram pouches, and the appeals were allowed in favour of the assessees.

Ratio Decidendi: Where the department fails to prove quantifiable clearances outside the exemption, MRP-based duty under section 4A cannot be upheld against small packaged goods covered by the statutory exemption.

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