TaxTMI 
TaxTMI 
2025 (4) TMI 3
X X X X Extracts X X X X
X X X X Extracts X X X X
....every package bears a conspicuous declaration "Specially Packed for Exclusive Use of any Industry as a Raw Material or for the Purpose of Servicing any Industry, Mine or Quarry for Industrial Use only and not Intended to be displayed for Sale at a Retailer Outlet"; No MRP or RSP is printed on any package; though the items are notified for MRP based valuation under Section 4A of the Central Excise Act, 1944 ("Excise Act"), the appellant was of the opinion that they were not required to declare MRP under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 ("PC Rules"); therefore, Appellant discharged Excise Duty on transaction value under Section 4 of the Excise Act. 2.1. On an intelligence developed by the officers of DGCEI, Delhi Zonal Unit, investigation was conducted and statement of concerned persons of the appellant and some dealers were recorded. On completion of the Investigation, Revenue entertained an opinion that the goods manufactured by the appellant are notified under Section 4A of Central Excise Act, 1944 for assessment of duty on the basis of Maximum Retail Price (MRP), vide Notification No.13/2002- Central Excise (NT) Dated 01.03.2002, as amended ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tail outlets and are sold in number; Prior to 13.01.2007, Rule 34 of the PC Rules provided an exemption that nothing contained in in the PC Rules shall apply to packaged commodities which bear specific remark on the package that it has been specially packed for exclusive use of any industry as a raw material; the packages specifically bear the remark "for industrial use only"; therefore, the goods qualify for exemption provided in Rule 34 and thereby not covered under Section 4A of the Excise Act as held in Controls & Switchgears Contractors 2005 (183) ELT 95 (Tri.-Del.) and Revenue SLP dismissed by Hon"ble Supreme Court vide 2016 (335) ELT A109 (SC). 5. Learned Counsel for the appellants submits also that the Appellant's case is not covered by exceptions to Rule 34 as most of goods are not weighing less than 5kg in any case and are not sold in retail packages; since, Appellant's goods weigh more than 5kg, irrespective whether goods are displayed for retail sale or not, they are exempted from the PC Rules; impugned goods are not sold by number or length; goods are always packed in the package of one and ultimate consumer will buy the goods based on technical parameters and depen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n; further, goods need to be opened before sale for testing purposes; they are not covered by the PC Rules and thereby Section 4A is not applicable. 8. Learned Counsel submits further that Excise department cannot decide applicability of the SWM Act or the PC Rules on its products; it is for the authorities under the SWM Act to decide whether or not Appellant's products are covered in scope of SWM Act; no objection has been raised by the SWM Authorities as to mandatory declarations on the Appellant's products; CBEC Circular No. 625/16/2002-CX dated 28.02.2002 clarified that when there is a doubt as to availability of an exemption, clarification is to be obtained from SWM department of the State; in the case of ITC Limited 2004 (171) ELT 433 (SC), it was held that once authorities administering the adherence to SWM Act have not disputed MRP declared by the assessee, it is not open for excise authorities having jurisdiction over the assessee to challenge the MRP. 9. Learned Counsel further submits on the issue of limitation that the extended period has been invoked as a matter of routine; the ingredients of Section 11A (4) are neither discussed not applied in the present case b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e for the Revenue reiterates the findings of the impugned order. He takes us through the legal provisions under Central Excise Act,1944, provisions of the Standard of Weights & Measures Act, 1976, Standard of Weights and Measures (Packaging Commodities) Rules 1977. He submits that the switchgear products manufactured by M/s Socomec HPL are packed in cartoons affixed with labels mentioning inter alia the name of the product, catalogue number, ordering suffix, range and quantity (in numbers); a printed price list of the Appellant was in circulation with its authorized stock lists/dealers thus giving the said products a pre-determined value and a predetermined quantity is placed in the package; opening of the packages, for the purpose of testing, inspection etc, as it happens in the case of the products, in itself alter the position of it being packed; all the above facts taken together therefore appear to fulfil the conditions of Rule - 2(A) of the PC Rules; the definition of Retail sale and Retail dealer is same before and after the amendment w.e.f. 13.1.07 of PC Rules Therefore, it can be concluded that the products manufactured and sold by the appellant were in packaged form. 8....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at for the period effective from 13/01/2007, as mentioned in Stay Order dated 17/11/2011, the appellant have admitted the liability effective from 13/01/2007 as the amendment made effective from this date requires that for getting exemption from fixing MRP under PC Rules, the goods were required to be sold directly to the Industrial or Institutional consumer. Whereas, in the present case the appellant was not selling goods directly, but were selling the same through retailers/dealers. He submits that the appellant suppressed fact of clearing goods without marking MRP, otherwise on which MRP was required to be affixed; therefore, extended period was invokable under Section 11A of the Act and the appellant was liable for penal action under Section 11AC of the Act. He relies on the following judgements: * Larsen & Toubro Limited 2012(275) ELT153(Bom.) * HPL Electric & Power Limited 2018 (12) G.S.T.L. 36 (Tri. - Del.) (affirmed by the Apex Court 2018 (12) G.S.T.L. J33 (S.C.)) * Controls & Switchgears Contractors Ltd 2005(183) ELT95(Tri Del). [affirmed Apex Court 2011 (274) E.L.T. A109 (S.C.)]. * Schneider Electric India Pvt Ltd 2014 (311) E.L.T. 113 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as in circulation with its authorized stock lists/dealers; fact of opening of the packages for the purpose of testing, inspection etc does not alter the status; they are sold through dealers and in numbers; conditions of Rule - 2(A) of the PC Rules are fulfilled; * Even if the packages did contain a marking for use by industrial consumers or for service industry it would not be exempted from the purview of provisions of Rule 34 of the PC Rules; * Goods sold/displayed in retail outlets and in many cases were less than 5 kg; they are required to declare MRP; * There was no change in the process of sales of the impugned products manufactured by the appellant at the dealer level irrespective of the amendment of the PC Rules effective from 13.01.2007 14. We find that it would be beneficial to have a look at the relevant provisions of law in order to appreciate the issue. 14.1. Section 4A of the Central Excise Act, 1944 provides that: Section 4A. Valuation of excisable goods with reference to retail sale price. (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tail sale price shall be construed accordingly. Explanation 2 : For the purposes of this section,- (a) Where on the packages of any excisable goods more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price; (b) Where the retail price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price. (c) where different retail sale prices declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates. 14.2. Relevant terms as defined under Standards of Weights and Measures (Packaged Commodities) Rules, 1977 are as under: Rule 2 - Definitions In these rules, unless the context otherwise requires, -- ... (p) "retail package" means the packages which are intended for ret....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e of whatever nature, so that the quantity of the product contained therein has a predetermined value and such value cannot be altered without the package or its lid or cap, as the case may be, being opened or undergoing a perceptible modification and the expression "package" whatever it occurs, shall be construed as a package containing a pre packed commodity. Rule 2(A) w.e.f.13.01.07: prepacked commodity means commodity, which without the purchaser being present is placed in a package in a package of whatever nature, whether sealed or open, so that the commodity contained therein has a predetermined value, and includes those commodities which could be taken out of the package for testing or examining or inspecting the commodity. 14.4. Rule 34 of these Rules provides for exemptions/ exceptions, which in different periods are as follows. Prior to 13.01.2007 Rule 34. Exemptions in respect of certain packages. Nothing contained in these rules shall apply to any package containing commodity if, - The marking on the package unambiguously indicates that it has been specifically packed for the usage of any industry as a raw material for the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of being a packaged commodity. As the goods fall under Packaged Commodity Rules, valuation under section 4A is a natural corollary. On the other hand, the appellants contend that the goods are intended for sale to industrial customers; they are usable as inputs by only industrial users; they cannot be used by common customers for house hold purposes; mere fact that the impugned goods are sold through dealers and not directly to industrial or institutional users does not alter the situation. They also contend that in case they have violated any provisions of "Standards of Weights and Measures Act, 1976" and "Standards of Weights and Measures (Packaged commodities) Rules, 1977", it is for the concerned authorities to take action but not the Central excise authorities; In case of doubt the department should have sought clarification from the concerned state authorities in terms of the board circulars; there was no provision to arrive at MRP value by the department, before Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, were notified by Notification No. 13/2008- CE(NT) dated 01.03.2008; the notification being with prospective effect, for the period ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....explained under Rule 2-A would be excluded. Every other retail sale by a retail dealer of a pre-packed commodity would be covered. 28. With great respect, I find it difficult to fully agree with the reasoning in the aforesaid judgment because, as is clear from Rule 2-A, the explanation expressly states that "For the purpose of this rule" and then gives the meaning of institutional consumer and industrial consumer. On the date of Rule 2A was introduced by way of amendment into the Rules, Rule 2(p) was also substituted introducing the very same words "industrial consumer and institutional consumer" in the proviso. If the intention of the legislature that the same meaning given in the explanation is to be attributed to the definition clause also, they would not have used the word, "this rule", they would have used the word "Rule". Thus it amounts to re-writing the Rules by the Court which is not permitted in law. Keeping in mind the object with which this enactment was passed, there is a need to protect an individual consumer and certainly not the industrial consumer. When the legislature, for the purpose of Rule 2-A only, explained the meaning of institutional consumer and i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ood by self-employment and not to institutional and industrial consumers or consumers who purchase goods in large quantities. Therefore, requirement of Rule 6 is not required to be complied with by a manufacturer who sells his packaged goods to an industrial or institutional consumer through a stockist. 31. In the instant case, it is not in dispute that the petitioner is a manufacturer of industrial product. On the packet, it is expressly stated that it is meant for industrial use. The product which is manufactured by him is high end industrial welding products, such as electrodes, brazing rods, powders and fluxes. Petitioner No. 2 is their selling agent. Petitioner No. 2 is selling these through a network of stockist spread all over India, 90% of the sales are generated through the involvement of core team of sales/service engineers of petitioner No. 2 who are trained in specialized Eutectic Castolin Welding Process. These products are used in the process of reconditioning, remaking, rejuvenation and restoration of the machinery or equipment. Depending on the surface of the machinery to be welded, the particular specialized type of welding electrodes and fluxes are recomm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aration is made on the package and the appeal filed by the department against the said order of this Hon"ble Appellate Tribunal was dismissed by Hon"ble Apex Court. 6.2.3 Undisputedly no retail sale price was declared by the appellants on the package of the MCCBs. Secondly no retail sale price was required to be declared on the plugs and sockets as they were not in the packaged form. Admittedly there is no provisions in law to determine the retail sale price in the event of the retail sale price is not declared on the package. This Tribunal in the case of ABB Ltd. (supra) held that there is no provision in CTA enabling the proper officer to determine RSP in a case where the importer does not declare RSP on the imported 18. In view of the above, we find that as far as the Appellant's goods are intended for industrial use and declaration to that effect is available on the packages, a fact which is not contradicted by Revenue, there is no infirmity in the Appellant's assessing the same under Section 4 of Central Excise Act, 1944. Revenue has not made out any case for assessment under Section 4A, despite the fact that they are sold through retail outlets/dealers/ stockists.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....m the place of manufacture, without declaring the retail sale price of such goods on the packages or declaring a retail sale price which is not the retail sale price or tampering with, obliterating or altering the retail sale price declared on the package of such goods after their removal from the place of manufacture, in respect of clearances made prior to 01.03.2008, on which date the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 came into force; 20. Learned Counsel for the appellants submits that the impugned order is issued contrary to the circular issued by the CBEC to the effect that in case of any doubt on the applicability of Standards of Weights and Measures Act, 1976 or Standards of Weights and Measures (Packaged Commodities) Rules, 1977, made thereunder, the Central Excise authorities should refer the matter to the Jurisdictional Officers empowered to implement that Act. We find that CBEC, vide Circular No.625/16/2002-CX, dated 28/02/2002, clarified that 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 department an....