TaxTMI 
TaxTMI 
2016 (2) TMI 533
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....rmed as technical products (hereinafter referred to as products) without assessing them under the provisions of Section 4 of the Central Excise Act and assessing the same under the provisions of Section 4A of the Central Excise Act, 1944. On completion of the investigation, a show-cause notice dated 19.6.2009 was issued to the respondent directing them to show cause as to why differential Central Excise duty aggregating to Rs. 21,26,07,051/- as per the Annexure to the show-cause notice should not be demanded and recovered for the products cleared during June, 2004 to 30th April, 2009 and why the amount should not be appropriated which has been paid by them and penalties be not imposed on the respondent as also various individuals. 2.1 The respondent assessee contested the show-cause notice as also other noticees on the merits of the case as well as on limitation. The adjudicating authority after following the due process of law, dropped the proceedings initiated by the show-cause notice and held that the products were correctly valued. 2.2 Aggrieved by the said order, the Revenue preferred an appeal before the Tribunal. The Tribunal by an order dated 21.5.2012 set aside the imp....
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....finition of words Dealers, pre-packed commodity, retail dealer, retail package, retail sale, wholesale dealer and wholesale package from the said Rules and submit that the products did not pass test of any of the definition of retail package, as the said products are cleared by the respondent for the consumption of professionals in salon and hence, it is not a retail sale or a retail package. (iv) It is also his submission that there is no independence or right to the dealers or the respondent herein to sell the technical products anywhere else, except the salons, which is confirmed by the packages on which there is mention for use of professionals in salon. It is his submission that the adjudicating authority has erred in coming to the conclusion that the provision of rule is irrelevant as to who consumed the goods. It is his submission that Standards of Weight and Measures (Package Commodity) Act, 1976 (hereinafter referred to as said Act) clearly states that the provisions are made with respect to the packaged commodities is for consumer protection. (v) The adjudicating authority has not appreciated the fact that there is no allegation in the show-cause notic....
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....also not correct as the said opinion was taken without informing the facts of the case to Legal Metrology Department. It is his submission that the products sold by salons are treated as retails product and thus they are to be exclusively used by salon would be technical products not intended for sale and would be covered by the provisions of Section 4 of the Central Excise Act and not Section 4A as being followed by the respondent assessee. It is his submission that the Legal Metrology Department by final letter dated 15.5.2010 withdrew its letter dated 9.3.2009. (ix) It is his further submission that he is relying upon the judgment of the Apex Court in the case of Jayanti Foods Processing (P) Ltd. Vs. CCE, Rajasthan - 2007 (219) ELT 327 (SC) for the proposition that in the said case, products which were considered were more or less identical to the case in hand. It is his further submission that the intention needs to be gauged by the literature printed on the product, which in this case indicates the technical product are not intended for retail sale. It is his submission that for this proposition, he relies upon the judgment in the case of Swan Sweets Pvt. Ltd. - 006 (1....
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....tors to be consumed by the Salons and Beauty Parlors and such packages were indicating the RSP at which the same can be sold. It is his submission that provisions of Rule 2(q) read with Rule 6 of the said Rules would mean that sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals. The salons use these goods for benefit of the customers and hence sale to such individual customers are retail sale. He would place reliance on the meaning of the word consumer, which means a person who buys the goods and uses it and person who use the original products and submit that it can be inferred that the consumer was a person and such a sale was retail sale. (ii) It is his submission that where any definition is provided for ascertaining the correct meaning, the same should be construed as in common parlance or trade or commercial parlance and in their popular sense. It is his further submission that the expression any other consumer appearing in definition of retail sale meant for either an individual or a group of individual and was wide enough to cover the natural person ....
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.... that affixing of MRP on the goods and valuation in terms of Section 4A of the Central Excise Act is correct. (vi) It is submitted that the provisions of rules relating to exemption from declaration of retail sale price were not applicable to the technical products prior to 14.1.2007 as sale to salons were retail sale as it is specifically mentioned on the packages and the literature thereunder for professional use only or not to be resold in public should not be mixed with declaration made under Rule 34 of the Rules. It is his submission that the said declaration on the professional technical products were specifically mentioned for the use by the professionals and they did not claim any exemption as they considered that salons were consumers and sale to such salon is retail sale. It is his submission that the declaration on the package merely restricted the class of retail buyers and should not be considered that the technical products were not indeed meant for retail sale, mixing the class of retail buyers. The declaration is made merely to identify who can use the technical products under the provisions of Rules. It is his submission that once conditions were satisfie....
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....they should have checked up with the respondent earlier. It is his further submission that method or rule as adopted by the respondent was not suppressed as full co-operation was extended to the authority during investigation. Further the issue that respondent could have had a bona fide belief, supported by various judgments and clarifications. (x) It is his further submission that the show-cause notice has not stated any reason as to why the authorities believed that the respondent had willfully contravened the provisions of Central Excise Act or rules made thereunder. It is his submission that if no tax is payable, interest and penalty is also not payable and further that no penalty is payable for the non-payment of tax, which was due to bona fide belief. (xi) For the proposition that the respondent is consumer or is institutional consumer and whether the goods are required to be valued under the provisions of Section 4 or 4A of the Central Excise Act, he relies upon the following decisions: - (a) Laxmi Engineering Works Vs. PSG Industrial Institute (1995) 3 SCC 583 (b) H & R Johnson (India) Pvt. Ltd. 2014 (306) ELT 645 (Tri-Mum) &nbs....
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.... the professional technical products, as a matter of policy, are only sold to salons and beauty parlors and are not allowed to be sold to retailers for direct sale to consumers. The products are purchased by the salon and beauty parlors through the dealers of the respondent. 6.3On ground of such factual matrix, it is necessary to reproduce relevant provisions of rule 2 of said Rules which are as under: - (o) "retail dealer" in relation to any commodity in packaged form means a dealer who directly sells such packages to the consumer and includes, in relation to such packages as are sold directly to the consumer, a wholesale dealer who makes such direct sale; (p) "retail package" means a package containing any commodity which is produced, distributed, displayed, delivered or stored for sale through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals; (q) "retail sale" in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or group of individuals or any other consumer; (a) Institutio....
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....hrough their dealers to the customers. The issue was whether the switch gears which were mainly used by large residential complex, commercial buildings and industries and which could be installed by licensed electrical contractors only were meant for retail sale and whether the switch gear products were governed by the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 or whether they were assessable under Section 4. These products also bore the declaration as "specifically packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry and not intended for retail sale." The period involved was both prior to 14.01.2007 and thereafter. "In our opinion, the rules required the MRP to be shown only if it is a pre-packed commodity. A mere declaration under Rule 34(a) since deleted, that it is not meant for consumption by an individual by itself cannot result in holding that it is not a retail package. Stress however, was sought to be placed on the 3rd type of definition in the judgment of the Supreme Court which was "A statement of required conduct by a third party". The, declaration made by the petitioners....
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....prohibited by the Electricity Rules, that\however, would only mean that a person qualified under the rules can Install the; same for the consumer who may hove purchased the package. There is, therefore, no prohibition on such society purchasing the product and installing it through a licensed person. They are the ultimate consumers. Similarly another consumer who is qualified may purchase the commodity and install the commodity directly. Such a consumer will not cease to be a consumer because the retell package IS not consumed by such purchaser but supplied to some other consumer. The act of purchase and use also make such purchaser the ultimate consumer. Yet another person may purchase the retail package and use it in combination with other goods, as an illustration to make a switch board. Such a consumer cannot be said not to be the ultimate consumer. Such a consumer also consumes the commodity. Such consumer may market or sell it as another commodity thereby loosing its original distinct character. All such consumers whether they be institutional or industrial will also be covered by chapter-II. Even the ordinary dictionary mea' g makes a purchaser a 'consumer'. We, ....
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....spute that may arise whether the product is covered under the provisions of RSP/MRP or otherwise. In paragraph 7 of the said Circular, CBE&C has clarified as under: - "7. The Standards of Weights & Measures Act, 1976, and the rules made there under, are administered by the State Governments. Instances of dispute could arise between the deptt. and the assessee as to whether, in respect of a particular commodity/transaction, the assessee is exempted from declaring the retail price or not. In case of such doubt a clarification may be obtained from the concerned Deptt. (generally the Metrology Deptt.) of the State Government." It can be seen from the above reproduced clarification given by the Board that letter of the Dy. Controller of Legal Metrology cannot be brushed away as being got by suppressing any facts. Learned AR has sought to assail the said clarification by stating that Legal Metrology Department has withdrawn the said letter. We find from the records that the clarification issued by the Dy. Controller, Legal Metrology was withdrawn on 9.3.2010 while the adjudicating authority has passed the order on 5.3.2010. We are unable to understand the logic of the Revenue as to h....
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....water in packs of 12 bottles is more 'applicable in this case. The Supreme Court held in the context of Rule 34, PC Rules prior to 14.01.2007, that 38 Jet Airways supplied the said bottles to their passengers and thus there is no further sale by the Jet Airways of these bottles. Therefore, it is obvious that after the first sale bottles go directly to the "ultimate consumers." In our considered view the above said findings are correct from the facts of the case and the judgment of apex Court in the case of Jayanti Foods Processing (supra) squarely applies. 6.8 We also find that the issue as to whether the consumption of product by the salons would amount to consumption by consumer has been answered by the Hon'ble Supreme Court in the case of Laxmi Engineering Works Vs. P.S.G. Industrial Institute (supra), wherein their Lordships were considering the definition of word "consumer" as mandated in Consumer Protection Act. Though the issue in that case was in respect of definition of the "consumer" as per the Consumer Protection Act, the ratio laid down by their Lordships helps us to decide as to who can be the consumer. The adjudicating authority has correctly recorded the fi....
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....les, 1977 would automatically fall in the category of retail products to which Section 4A applies. It is irrelevant as to who consumes them. Thus the attempt to identify whether the consumer is a service industry or, an ultimate consumer does not help the case of the department. As is already stated, since these products are sold through dealers for consumption by the salons and in some cases to their customers and provided none of them are directly sourced from the manufacturers, none of these products would fall under the category institutional consumers or industrial consumers as defined under Rule 2A." 6.10 In our considered view and in the facts and circumstances of the case, it is clear from the records that the products professional technical products are sold by the appellant through the dealers and wholesalers to the salons and beauty parlors for their consumption, the fact which is not disputed in the appeal. If that be so, we find that the learned adjudicating authority was correct in holding that the respondent was not in error in discharging the duty liability on the clearance made by them of these products to salons and beauty parlors under the provisions of Section....
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....n case the goods are intended for retail sale and not otherwise. The goods sold to institutional buyers at the contract price are not meant for retail sale. Such goods are sold to the institutional buyers and are not intended for sale directly to the consumers. The provisions of Section 4A, therefore, are not attracted as there is no requirement under the Rules to declare retail sale price on the packages meant for such sale. Thus, mere affixing MRP on packages supplied to institutional buyers does not constitute retail sale as MRP is required to be affixed only in the case of retail sale and not in the case of wholesale sale or bulk sale to the institutional buyers. 4. The Revenue also relied upon the CB.E. & C Circular dated 31-7-1998 wherein it was stated that in case a manufacturer voluntarily affixes MRP, which is not statutorily required, then the Central Excise duty on goods in such packages shall not be charged on the basis of Section 4A of the Act. 5. Revenue further relied upon another Board's Circular dated 28-8-2002 wherein it was stated that Section 4A of the Act is applicable in respect of those cases only where the manufacturer is legally obliged to print th....
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....d. 13. The issue is no more res integra and has been elaborately dealt with by this Court in 'Jayanti Food Processing (P) Ltd. v. Commissioner of Central Excise, Rajasthan' [2007 (8) SCC 34 = 2007 (215) E.L.T. 327 (S.C)] in the following terms :- "32. It is true that if the unamended section is to be made applicable, the ice cream pack of four litres would certainly be covered under Section 2-A.However, Rule 3 explains that provisions of Chapter II would apply to packages intended for "retail sale" and expression "package" wherever it occurs in the Chapter shall be construed accordingly. It is, therefore, clear that the "package" which was sold by the assessee could not be termed as "retail package" nor the sale thereof be termed as a "retail sale" and as such there was no requirement of mentioning the "retail sale price" on that package. All this has been completely missed in the order of the Tribunal. 33. On the other hand the package in question would certainly come within the definition of "wholesale package" as defined in Rule 2(x)(ii) as it contained the commodity (ice cream) and was sold to intermediary (hotel) for selling the same to the consumer in small q....