TaxTMI 
TaxTMI 
2007 (11) TMI 206
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....ssioner in Para 5-23 are reproduced herein below: "5. The issue involved in the instant appeal is the filing of declarations under Rule 173C w.e.f. 6-6-2000 and 10-8-2000 based on which clearance were effected by the appellants during the period from June, 2000 to March, 2001. A Show Cause Notice was issued to the appellants alleging that the value declared by the appellant's under Rule 173C of C.E. Rule was not correct. The appellants had adopted the value after deducting an amount equivalent to 40% of the MRP and also deducting excise duty from the MRP of the goods cleared from 6-6-2000 to 31-3-2001 in contravention of the provisions of Section 4A read with Notification No. 9/2000 CECM dt. 1-3-2000. Since the only permissible deduction from the MRP is 40% of MRP allowed as abatement under Notification No. 9/2000-C.E. (N.T.), dt. 1-3- 2000, the value adopted for all the clearances from 6-6-2000 to 31-3-2001 should have been Rs. 2,88,26,942/- instead of Rs. 2,32,19,036/- as calculated by the-appellants. The Show Cause Notice proposed to demand differential duty of Rs. 8,54,274/- on the differential value Rs. 56,07,906/-. The Deputy Comm....
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....omputed in accordance with Notification No. 9/2000-CE (N.T.), dt. 1-3-2000 by allowing 40% abatement from MRP and all the clearances of paints & varnishes effected by the appellants are required to be governed by valuation under Section 4A of Central Excise Act, 1944. 6. In view of the foregoing, the Deputy Commissioner held that the appellants had under-valued their goods to the extent of Rs. 56,07,906/- as appellants had arrived at the value by deducting 40% of MRP and the excise duty from the MRP while the only permissible deduction available to them was 40% abatement from the MRP. Hence the duty component on the same would be Rs. 8,54,274/- which is the differential duty under Section 4A of Central Excise Act, 1944 in a consequence. Further the Deputy Commissioner also held the appellants' liable for penalty under Rule 173Q of Central Excise Rules, 1944. 7. The appellants in their submissions submitted the following 'contention' against the findings of the Deputy Commissioner: The appellants had filed declarations under Rule 173C(2A) of the Central Excise Rules, 1944 wherein the appellants have declared the values in respect of packages of paints & varnishes meant: ....
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....0 ltrs/200 ltrs in barrels in loose condition cannot be treated as retail pack aged sale. It is only a wholesale, bulk sale and hence does not fall under the provisions of the rules governing packaged goods intended for retail sale. In respect of sales to their customers in retail packs, the provisions of Rule 29 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 have been scrupulously followed and is not in conflict with the provisions of Schedule V issued under Rule 12(2) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The commodity paints & varnishes is packed up to 20 ltrs only for retail sale and also by all the manufacturers of the said commodities. The adjudicating authority's contention that Rule 5 read with Schedule III are not followed and the clearance effected over and above the retail packages are liable for assessment under Section 4A is totally incorrect and erroneous, as any sales in bulk quantity, without pre-packed condition can only be governed under the provisions of Section 4 of the Central Excise Act, 1944. 11. Goods intended for retail sale are packed strictly in manner presented in Sl. No. 20 of ....
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.... the purview of Section 4 of Central Excise Act, 1944 for the purpose of assessment and payment of duty or under Section 4A of the Act. As per Section 4A(1) the Central Government specifies the goods to which it is required under the provisions of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 or the rules made there-under or under any law for the time being to declare on the package thereof the retail sale price of such goods to which the provisions of Sub-section (2) will apply. Under Section 4A(2) the goods in Sub-section (1) being excise goods with reference to value contained in Section 4 would be the retail sale price declared on such goods less such amount as abatement. Under Section 4A(3) the Central Government for the purpose of calculating the abatement allowable under Sub-section (2) take into account the amount of duty of Central Excise, Sales tax and other taxes if any payable as such goods. Notification No. 9/2000-C.E. (N.T.), dt. 1-3-2000 determined the rate of abatement as 40% under Section 4A(2) in the particular period. 14. The Deputy Commissioner in the impugned order categorized all the three modes of clearances effected by t....
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....peal are sold by the appellant in loose in bulk of 100 ltrs/200 ltrs in barrels. These have more characteristics of bulk sales rather than of retail. An illustration of such an Identification can be adduced from Standards of Weights and Measures (General) Rules, 1987 wherein certain measuring instruments have been prescribed in the Standards of Weights and Measures (General) Rules, 1987 for measuring liquid volumetric contents of certain commodities presumed in bulk. The capacity of such instruments called "bulk meters" vide Part III Rule 1 (b) of the Rules, stipulates that it shall not have a capacity of measure below 100 ltrs in other words this would mean that the sale in loose of 100/200 ltrs each can be construed as bulk sales, hectic I find these goods are more in consonance falling under the provisions to wholesale package" under Chapter III of the Standards of Weights and Measure (Packaged Commodities) Rules, 1977 being sold in loose in bulk of volume of 100 ltrs/200 ltrs a barrel to their customers, who are intermediaries and wholesale dealers who sell these goods in loose conditions to ultimate consumers or to job work contractors. Wholesale package in terms of Rule....
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....the Central Excise Act, 1944 or (under Section 3(2) of the Central Excise Act, 1944, if tariff values have been fixed for commodity). thus there could be instances where the same notified commodity would be partly assessed on the basis of MRP u/s. 4A or partly on the basis of normal price (prior to 1-7-2000) or transactions value (from 1-7-2000) under Section 4 of the Central Excise Act, 1944." 22. Bulk sales of telephone instruments and ice-creams to hotels, restaurants have been cited in the circular as examples, emphatically clearing the clouds of misconception in the assessment of the like goods, which is to required to be done only under Section 4 of Central Excise Act, 1944. 23. In view of the above I find that the order passed by the Deputy Commissioner that the goods cleared as loose sales of 100 ltrs or in 200 ltrs. in volume (only) are chargeable for duty with reference to value in terms of Section 4A(2), as untenable and I order for assessment in respect of such goods with reference to transaction values in accordance with Section 4 of the Central Excise Act, 1944 only. Imposition of penalty thereby under Rule 173 also naturally fails. ORDER  ....