TaxTMI 
TaxTMI 
2017 (10) TMI 203
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....and cleared by them. On the said free pack the appellants printed the words Free. "Not for Sale". As regards the supplies made to Tata Tea on the agreement, on the pack no MRP was mentioned and declaration was made on the pack "free with Tata Tea". The appellants have discharged excise duty on the assessable value under Section 4 of the Central Excise Act, 1944, based on the contract price agreed between the appellants and the Tata Tea Ltd. Accordingly, the appellants have determined the assessable value under Section 4. Show-cause notices covering the period January and Februrary 2005 were issued to the appellants alleging that the Maggi Noodles is covered under sub-heading 1902.10 and therefore, the assessable value for such clearances ought to have been determined under Section 4A (i.e. based on the MRP), accordingly, the demand of differential duty was raised. The adjudicating authority confirmed the demand vide order-in-original. Aggrieved by the order-in-original, the appellant filed an appeal before the Commissioner (Appeals) who relying on the Tribunal'[s order in the appellants own case reported in 2004 (163) ELT 240 dismissed the appeal. Therefore, the appellants are ....
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....les, 1977". As would be suggestive from the title itself, Rule 1(3) provided that these Rules would apply to the commodities in packaged form which are, or are intended or likely to be sold, distributed, delivered or offered or displayed for sale, distribution or delivery, or stored for sale or for distribution or delivery in the course of inter-State trade and commerce. Definition of "retail dealer" under Rule 2(o) is as under : "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." Definition of "retail package" under Rule 2(p) is as under : "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". Definition of "retail sale" under Rule 2(q) is as under : "retail sale", in relation to a commodity, means the sale, distribution or delivery of ....
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.... retails sale". Rule 6(1) provides for the declaration to be made on every package and sub-rule (f) thereof is as under : "(f) the "retail sale" price of the package" Rules 15 and 16 pertain to the declarations required to be made on combination packages and group packages. A glance at these rules suggests that the sale price is required to be mentioned on both. Rule 17 deal with multi-pieces packages also requiring to declare the sale price on the same. Rule 23(1) and (2) provide as under : "23. Provisions relating to wholesale dealer and retail dealer" (1) No wholesale dealer or retail dealer shall sell, distribute, deliver, display or store for sale any commodity in the packaged form unless the package complies within all respects, the provisions of the Act and these Rules. (2) No retail dealer or other person including manufacturer, packer and wholesale dealer shall make any sale of any commodity in packed form at a price exceeding the retail sale price thereof. Explanation : For the removal of doubts, it is hereby declared that a sale, distribution or delivery by a wholesale dealer to a retail dealer or other person is a "r....
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....ed on such a broad proposition. We have already indicated the scope of Section 4A above. On that basis and in the light of the various provisions under the SWM (PC) Rules as also in the light of some of the circulars which were relied upon by the parties and referred to in the impugned orders of the Tribunal, we would now proceed to decide the individual cases. 8. We would first deal with the appeals filed by the assessees against the order of the Tribunal wherein the Tribunal has found that the valuation and assessment should be under Section 4A of the Act rejecting the contention of the assessee that it should be under Section 4 of the Act. Civil Appeal No. 2819 of 2002 9. The assessee is engaged in manufacturing of ice-cream falling under sub-heading 2105 of the Central Excise Tariff Act, 1985. It used to supply the ice-cream in four litres pack to the Catering Industry or as the case may be hotels, the hotel used to sell the said ice-cream in scoops. The assessee used to specifically display on the said packs that the pack was not meant for "retail sale". The ice-cream contained in the said pack of four litres used to be sold in unpacked form by the h....
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....er submits that once the MRP was displayed on the pack, it was obvious that the pack was meant for retail sale and ice-cream having been included in the notification under Section 4A(2), the assessment would have to be under Section 4A as held by all the three authorities including the Tribunal. Learned Counsel further supported the reasoning given by the Tribunal regarding non-applicability of Rule 34 of SWM (PC) Rules. Lastly, the learned Counsel contended that the said Board Circular dated 28-2-2002 was further clarified by Circular dated 17-1-2007 bearing No. 843/1/2007-CX. Learned Counsel very heavily relied on Para 4 of the said circular and contended that since the lis was continuing, there was no question of any benefit being given under the Board Circular dated 28-2-2002 and the matters would have to be governed by the Circular dated 17-1-2007. 12. We have already referred to the facts appearing in the orders of the authorities below which suggest that at one point of time the assessee used to display the MRP on the four litres pack voluntarily. Shri Subba Rao very heavily relied on this fact. We do not think that merely because the assessee displayed the MRP on t....
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....tand the scope thereof. In order that the package should be properly described as a "retail package", the sale has to be through the "retail sale" for consumption by an individual or a group of individuals. In the present case, admittedly, the sale of the package was only to the hotel. It may be that the hotel may ultimately sell the commodity therein, i.e., the ice-cream (not the package) to the individuals or the group of individuals. This was not a sale in favour of an individual or group of individuals. We would have to understand the scope of the term consumer used in Rule 2(o) to be the individual or group of individuals who consume the commodity. It is undoubtedly true that for a sale being a "retail sale" it need not contain material for the consumption of a single individual only, it can be for a group of individuals also. However, a hotel to which the package is supplied cannot be covered in the term individual or group of individuals as contemplated in Rule 2(p) defining "retail package". We have already explained earlier that the nature of sale is of no consequence. The material consideration is that such sale should be in a package and there should be a requirement in ....
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....tated is (a) name and address of the manufacturer (b) identity of commodity and (c) total number of retail packages or net quantity. Shri Ravindra Narain is quite justified inrelying on Rule 2(x) and Rule 2(q). The Tribunal does not refer to these vital Rules. 16. There is one more substantial reason supporting the appellant. Shri Ravinder Narain invited our attention to Rule 34 in Chapter V of SWM (PC) Rules which provides for exemptions. We have quoted Rule 34 earlier. The Rule has now been amended. However, under the unamended Rule there is a specific declaration that the SWM (PC) Rules shall not apply to any "package" containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of "servicing any industry, mine or quarry". Learned Counsel points out that the package which is sold by the assessee mentions that it is specially packed for the exclusive use of the catering industry. Learned Counsel further argues that such package was for the purposes of servicing the hotel industry or catering industry as the case may be. Learned Counsel is undoubted....
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....the exclusive use of the hotel was, also for the purpose of "servicing that industry". If that is so, then the SWM (PC) Rules would not apply at all. 17. The Tribunal has given very narrow meaning to Rule 34 by firstly holding that ice-cream is not a "raw material". There the Tribunal was right but the Tribunal was not right by holding that the words servicing any industry were not applicable to "such package". We, therefore, accept the arguments of the learned Counsel and reject the contention raised by Shri Subba Rao. If that is so, the appeal would have to be allowed and it would have to be held that Section 4A will not apply to the ice-cream sold by the assessee. 18. This takes us to the last argument regarding the applicability of the Circular dated 28-2-2002. However, it is not necessary for us to delve on that issue in view of the findings which we have recorded earlier holding that the assessment would have to be under Section 4 of the Act and not under Section 4A. In fact the tenor of the notification is to the same effect. However, considering the fact that the notification came after the order of the Tribunal and further it was sought to be explained by....
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....e required to print the MRP on each chocolate as the SWM (PC) Rules and more particular Rule 6(1)(f) would be applicable to them. Learned Counsel, however, says that his contention is restricted only to the supply made by the assessee to Pepsico. He points out that the said chocolates were not being sold by the manufacturer in retail but were supplied to another company under a contract and the purchaser company was not to sell the said chocolates as the chocolates but to offer as a free gift along with its product, namely, a 1.5 litres bottle of Pepsi. Learned Counsel also criticized the order of the Tribunal. Learned Counsel also relied on the aforementioned Board Circular dated 28-2-2002. 23. The Tribunal formulated a question as to whether the package of KITKAT sold by the appellant to M/s. Pepsico India Holdings Ltd., under a contract of Rs. 4.80 per KITKAT are required to be assessed at that price in terms of Section 4 of the Act or the assessable value of the same is required to be arrived at in terms of Section 4A of the Act. The Tribunal while accepting the case of the Revenue simply went on to hold that once the goods are specified items under Section 4A(1) of th....
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....soap free with on box of surf." Para 6 of the notification is as under : "It is, therefore, clarified that, in respect of all goods (whether notified u/s. 4A or not) which are not statutorily required to print/declare the retail sale price on the packages under the provisions of the Standards of Weight & Measures Act, 1976, or the Rules made thereunder or any other law for the time being in force, valuation will be done u/s. 4 of the CE Act, 1944 (or under Section 3(2) of the Central Excise Act, 1944, if tariff values have been fixed for the commodity). Thus, there could be instances where the same notified commodity would be partly assessed on the basis of MRP u/s. 4A and partly on the basis of normal price (prior to 1-7-2000) or transaction value (from 1-7-2000), u/s 4 of the CE Act, 1944." Learned Counsel very heavily relied on the last sentence of Para 6 of the notification and pointed out that the KITKAT chocolate though a notified commodity, need not, in all cases be assessed under Section 4A. According to the learned Counsel stated that this had a direct reference to Entry 4 in Para 1 of the Circular which we have extracted above. Our attention was....
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....uty (sic) with reference value, then such value shall be deemed to be the retail sale price declared on such goods, less amounts of abatements etc. As we have already observed that Weights & Measures Act requires chocolate manufactured by the appellant to be printed with MRP on the same, we are of the view that the duty of excise on such goods is required to be assessed in terms of the MRP. The only exception where a manufacturer can deviate from the general rule of printing of MRP on the package is Rule 34 of Standards of Weights & Measures (Packaged Commodity) Rules, 1977." We are afraid the law is too broadly stated here. It may be that chocolates manufactured by the appellant are required to bear the declaration of MRP but that cannot be true of all the chocolates. In this the Tribunal has ignored Para 6 of the aforementioned circular dated 28-2-2002 wherein it is specifically provided that there would be instances where the same notified commodity would be partly assessed on the basis of MRP under Section 4A and partly on the basis of normal price prior to 1-7-2000 or transaction value from 1-7-2000. Again merely because the goods are specified items under Section 4A(....
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....ven as a free gift, would be of no consequence as even if the appellant itself intended to give the bar of KITKAT as a free gift to its customers along with other item, the appellant would not be in a position to claim that there is no assessable value of the goods and as such no duty of excise shall be charged on the same. The logic is clearly faulty. In the given circumstances, the appellant would undoubtedly be assessable to duty under Section 4 of the Act. It is not as if the appellant would be totally exempt from paying any duty on such goods. It was rightly contended before the Tribunal that the thrust of Section 4A is on the packages and not on the commodity and it is only where the goods are sold in the packages that the section would be attracted. The submission was undoubtedly right. The Tribunal, while rejecting this submission, has clearly ignored the language of Section 4A(1) of the Act. 29. It was then suggested that the free gift by Pepsi to its customers would amount to distribution and would, therefore, be amounting to retail sale and the package of KITKAT would be "retail package". However, what is material is the definition of "retail sale price". The re....
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.... Civil Appeal No. 1385 of 2005 Civil Appeal No. 3847 of 2005 Civil Appeal No. 6425 of 2005 31. The next group of appeals that we take into consideration is in relation to the sale of telephones by the companies like ITEL, BPL Telecom, Himachal Exicom and Uniword Telecom. In all the cases the Tribunal has found in favour of the assessees holding on the facts that the assessment should be under Section 4A and not under Section 4. The Revenue pleaded that the assessment should be under Section 4 of the Act (perhaps for attracting more revenue). In arriving at this conclusion, the Tribunal took note of the factual situation that all the telephone instruments were specified goods under Section 4A of the Act and that all the telephone instruments were packed and every package declared the MRP thereupon. 32. It is an admitted case that all these telephone manufacturing companies sold the instruments (Push Button Telephones) to Department of Telecommunications (hereinafter referred to as the DoT ), Mahanagar Telephone Nigam Limited (hereinafter referred to as the MTNL ) and Bharat Sanchar Nigam Limited (hereinafter referred to as the BSNL ). The ....
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.... bulk the valuation should be under Section 4 of the Act. We have already explained earlier the scope of Section 4A suggesting that the Section would apply to the package if it is required under SWM Act and the Rules made thereunder to declare the MRP thereon. We are not in a position to accept the arguments of learned Counsel that merely because there is a bulk sale to DoT, MTNL and BSNL, the assessment should be under Section 4 of the Act. We again mention it at the cost of repetition that the nature of sale is not important, what is important is the requirement of printing the MRP on the packages. It was not and indeed cannot be disputed that these telephones are also sold in the retail market in the same form and the same package and that there is a requirement of printing the MRP on each package of the Push Button Telephone. Learned Counsel Shri Subba Rao also did not dispute before us the necessity of printing the MRP on the package of each telephone which is sold in the market. If that is so, the package would be covered under the relevant SWM (PC) Rules. We do not find anything in the SWM (PC) Rules that where a customer purchase a large number of packages, such bulk purcha....
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....edly, DoT, MTNL & BSNL provided these instruments, after they have purchased the instruments, to the individual customers, though not by way of a sale but for their use. The "package", therefore, undoubtedly be a "retail package". It was further suggested, relying on the definition of retail sale price in Rule 2(r) that DoT, MTNL & BSNL are not the ultimate consumers as contemplated in the definition. We are afraid even there the definition is not being read properly as it cannot be said that DoT, MTNL & BSNL are not the ultimate "consumer". The purchasers, in this case, undoubtedly, used the telephone instruments for supply to their customers on rental basis or on some other basis. It cannot be, therefore, said that they would be excluded from the term ultimate "consumer". It was thereafter contended that the MRP was not printed whereas it is asserted on behalf of the learned Counsel for the assessees that each package was carrying the MRP and duty was paid with reference to the MRP and this is how the goods were cleared. We are not prepared to accept a bald statement made before us that the packages did not have the MRP on them as from the orders of the Tribunal we do not find su....
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....ntract price and not on MRP in the earlier part. In the facts and circumstances of the case, there will be no order as to costs. Civil Appeal No. 2877/2005 Civil Appeal No. 6168/2005 Civil Appeal No. 5840/2006 35. These appeals filed by the Revenue Department are against the Electrolux Kelvinator Ltd., and Electrolux India Ltd. These cases pertain to the valuation of the Refrigerators manufactured by the assessees. It is a common plea that after the manufacture of these Refrigerators, they are sold to the Bottling Companies like Pepsi, Coca Cola and other soft drink manufacturers under the contract. It is further admitted position that all the Refrigerators which are sold are packed in a package declaring the MRP on them. The MRP and the contract price are different. It was the claim of the assessees that they have paid the duty under Section 4A(1) of the Act on the MRP. The goods are specified goods under Section 4A(1) of the Act. However, because of the abatements they have to bear lesser duty which abatements are not available to the contract price. Therefore, if the duty is assessed on the basis of the contract price under Section 4 of the Ac....
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....no reason to take any different view. Nothing was stated before us by Shri Subba Rao as to why we should take any different view in this matter. In that view we would chose to dismiss the appeal filed by the Department but without any order as to costs. Civil Appeal Nos.6559-60/2005 37. These appeals are in respect of Mineral Water bottles. The manufacturer used to pack 12 200 ml. bottles in a single package and used to mention the MRP on the said package. The assessee was paying the duty under Section 4A(1) of the Act. The Tribunal, relying on the judgment in Jayanti Food Processing Pvt. Ltd. v. CCE, Jaipur [2002 (141) E.L.T. 162] held that the assessment was bound to be under Section 4A(1) and not under Section 4 of the Act as the package amounted to a retail package in view of the provisions of Rule 2(p) of the SWM (PC) Rules. On that basis the Tribunal came to the conclusion that the valuation was bound to be under Section 4A(1) and not under Section 4 of the Act. Aggrieved by that, the Department has come up before us in the present appeals. Shri Subba Rao, learned Counsel appearing on behalf of the appellant Revenue drew a parallel with 'Jayanti Food'....
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.... 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". There would be, therefore, no question of application of Rule 2(x)(i). Rule 2(x)(ii) will also not apply as this does not amount to a commodity sole to an intermediary in bulk so as to enable such intermediary to sell, distribute or deliver, the said commodity to the consumer in smaller quantities. The concerned period regarding which the show cause notice was given is April, 2002 to September, 2002. Therefore, Rule 2(x)(iii) which came by way of an amendment into 2000 would also have to be considered. However, even that clause is not applicable as the said package though contains more than 10 bottles, those bottles cannot be viewed as the retail package nor is there any rule requiring labelling the said retail package and declaring the price thereof. In fact there is no price involved as it is specifically written on the "package not meant for sale". It is, therefore, obvious that the package containing 12 bottles cannot, therefore, be viewed as a wholesale "package". Once that position is clear, ther....