TaxTMI 
TaxTMI 
2026 (3) TMI 843
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.... 1.2 The Appellant is a manufacturer of tyres, tubes and flaps falling under Chapter 40 of the Central Excise Tariff Act, 1985 and was operating multiple manufacturing units across the country. It is not in dispute that certain categories of high-end tyres, which were fully wrapped and bore MRP stickers, were assessed under Section 4A. The present dispute concerns tyres, tubes and flaps that were inserted together and secured with two or three plastic carry straps, allegedly for safety during transportation. 1.3 The Department formed a view that such strapped tyres, tubes and flaps constitute "pre-packaged commodities" within the meaning of Section 2(l) of the Legal Metrology Act, 2009 read with the Legal Metrology (Packaged Commodities) Rules, 2011 and that, therefore, the goods were liable to assessment under Section 4A read with Notification No. 49/2008-CE (NT). Investigation culminated in issuance of Show Cause Notice dated 06.04.2019 invoking extended period under Section 11A(4) and proposing revaluation under Section 4A. 1.4 The Commissioner confirmed the demand holding that the impugned goods satisfy the conditions laid down by the Hon'ble Supreme Court in Jayanti Food....
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....her argued that quantification is erroneous, particularly in respect of exports and certain plant-wise calculations. 5. The Special Counsel for the Department supported the impugned order and further submitted that: - 5.1 Once tyres, tubes and flaps are inserted and strapped together, they are sold as a unit in predetermined quantity and therefore satisfy the definition of "pre-packaged commodity". 5.2 Rule 2(k) and Rule 6 of the Packaged Commodities Rules require declaration of retail sale price once goods are meant for retail sale. The expression "or otherwise" in Rule 2(g) is wide enough to include strapping. 5.3 Revenue relies upon Whirlpool India Ltd. (supra) and contends that once goods are specified under Notification No. 49/2008-CE (NT), valuation must follow Section 4A. 5.4 On limitation, Department submits that identical products were valued differently under Section 4 and 4A, evidencing deliberate suppression. 6. We have heard both sides at considerable length and perused the records and authorities cited. 7. The appeal raises substantial questions concerning the interface between central excise valuation and the Legal Metrology regime, the applicabi....
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....st be sold in a package; there must be a statutory requirement under the weights and measures law to declare retail sale price on such package; the goods must be specified by notification under Section 4A(1); and valuation must be based on the declared retail sale price less abatement. The Court emphasised that these conditions are cumulative and not alternative. Failure of any one condition renders Section 4A inapplicable in case of excisable goods. 9.4 Above ratio of Jayanti Food Processing was reiterated and reinforced in Whirlpool India Ltd. v. Union of India, 2007 (218) ELT 167 (SC), wherein the Supreme Court held that the applicability of Section 4A depends fundamentally on the existence of a statutory mandate to declare retail sale price under the governing weights and measures law. The Court clarified that the triggering factor is not whether the manufacturer in fact declares RSP or fixes an internal MRP, but whether the law requires such declaration. If there is no statutory requirement, Section 4A cannot be invoked. 9.5 We find that these decisions establish beyond doubt that Section 4A is not an independent charging provision. It is contingent upon the Legal Metrol....
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...., words must be interpreted in their commercial sense and not stretched to achieve perceived policy objectives. The concept of "package" must therefore be understood in its ordinary commercial meaning. Commercially understood, packaging involves enclosure or containment. A plastic carry strap does not enclose, contain, wrap or box the goods. It merely secures. 9.10 The factual evidence on record demonstrates that the tubes and flaps are inserted into tyres and secured at two or three points by thin plastic carry straps. The straps cover only a minimal portion of the tyre surface - approximately 1.4% to 3.3% and do not create any enclosure. The tyre remains fully exposed. There is no carton, no shrink-wrap, no sealed covering and no receptacle. The strapping is undertaken to prevent displacement during handling and transport. Such securing for logistical convenience cannot be equated with placement "in a package". 9.11 The Revenue contends that because the tyre, tube and flap are cleared together as a composite set in predetermined quantity, they must be regarded as pre-packaged commodities. This argument conflates pre-determined quantity with packaging. The statute requires b....
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....y to binding precedent. No such distinguishing feature has been demonstrated by the Revenue. 9.16 The Revenue also placed reliance upon Notification No. 49/2008-CE (NT) and Board Letter No. 167/38/2008-CX-4 dated 16.12.2008. However, the notification merely specifies goods to which Section 4A may apply. It does not dispense with the statutory requirement under the Legal Metrology Act. Section 4A operates only "in relation to which it is required" under the Legal Metrology law to declare RSP. The notification cannot enlarge the scope of the charging provision. 9.17 The reliance placed on internal marketing circulars fixing MRPs for various States is equally misconceived. Internal fixation of MRPs or recommended retail prices does not create a statutory obligation to declare RSP on the package. Section 4A is triggered by statutory mandate, not by internal pricing policy. Many goods sold loose have recommended retail prices; that fact alone does not render them pre-packaged commodities. 9.18 Section 4A results in a deeming fiction substituting actual transaction value with a notional RSP-based value. Such deeming provisions must be strictly confined to cases where statutory p....
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....s of the Hon'ble Supreme Court. 10.4 In Anand Nishikawa Co. Ltd. v. CCE, 2005 (188) ELT 149 (SC), the Supreme Court categorically held that suppression of facts must be wilful and deliberate. The Court observed that mere omission to disclose information is not suppression unless there is deliberate withholding of information with intent to evade duty. The Court emphasised that something positive other than mere inaction or negligence is required before the extended period can be invoked. 10.5 Similarly, in Pahwa Chemicals Pvt. Ltd. v. CCE, 2005 (189) ELT 257 (SC), the Supreme Court held that where the dispute relates to interpretation of law and all material facts are known to both parties, the extended period cannot be invoked. The Court clarified that if the assessee has disclosed primary facts and the dispute is only about their legal consequences, it would not amount to suppression. 10.6 These decisions lay down two fundamental principles: first, that suppression must be wilful and deliberate; and second, that where the dispute is interpretational and facts are disclosed, extended limitation is not invokable. 10.7 Applying these principles to the present case, we fi....
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....l Metrology law and the scope of Section 4A. It is not a clandestine practice but a legal position. 10.12 The fact that the Appellant applied Section 4A to certain clearances militates against the allegation of intent to evade. If the intention was to avoid Section 4A altogether, the Appellant would not have applied it in any case. The selective application based on packaging status indicates a bona fide understanding rather than a device to evade duty. 10.13 The Revenue has also relied upon internal marketing circulars fixing MRPs and argued that non-printing of MRP on strapped goods evidences intent to evade. This argument again overlooks that Section 4A is triggered not by internal MRP fixation but by statutory requirement under the Legal Metrology law. The Appellant's consistent position has been that strapped goods are not pre-packaged commodities and therefore not required to declare MRP. Whether that position is correct or not is a matter of legal interpretation; it does not ipso facto establish suppression. 10.14 It is also significant that the issue involves interpretation of the Legal Metrology Act, 2009 and the Packaged Commodities Rules, 2011. The Ministry of C....
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....e of a plausible view adopted by the assessee supported by earlier clarifications and subsequently affirmed by this Tribunal in Apollo Tyres Ltd. (Supra)., reinforces the bona fide nature of the Appellant's conduct. 10.19 The jurisprudence is clear that extended limitation cannot be invoked in cases of bona fide interpretational disputes. The Supreme Court in Pahwa Chemicals and Anand Nishikawa has consistently held that mere interpretational disputes cannot justify invocation of the extended period. The burden to establish the existence of fraud, wilful misstatement or suppression with intent to evade duty lies squarely upon the Revenue. 10.20 In light of the foregoing analysis, we find that the essential ingredients of Section 11A(4) are not established. There is no evidence of fraud, collusion, wilful misstatement, or deliberate suppression with intent to evade duty. The dispute is fundamentally interpretational, relating to the applicability of Section 4A vis-à-vis Section 4 in the context of the Legal Metrology Act. 10.21 Accordingly, invocation of the extended period under Section 11A(4) is unsustainable. Issue (ii) is answered in favour of the Appellant. ....