1. By the impugned order, ld. Commissioner of Central Excise confirmed total differential duty demand of about Rs. 2.26 crores against the assessee in adjudication of three SCNs covering the periods Feb-Dec' 2003, Jan' 2004 & Feb-Dec' 2004. He also imposed a penalty of Rs. 25 lakhs on the party. The present application seeks waiver of predeposit and stay of recovery in respect of the duty and penalty amounts.
2. After examining the records, we note that the above demand of duty is on the goods cleared by the assessee to M/s. EMAMI Ltd. and that these goods can be broadly categorized as follows: (i) goods which were supplied in bulk to EMAMI with MRP printed and crossed and with the inscription "free, not for sale".
(ii) goods packed in pouches/sachets with net content of less than 10 ml. and supplied to EMAMI.The assessee valued all the goods under Section 4 of the Central Excise Act and paid duty accordingly. According to the department, all the goods were liable to be assessed under Section 4A of the Act on the basis of MRP read with Notification No. 13/2002-CE (NT). Hence the demand of differential duty. The amounts of duty demanded in the above two categories are Rs. 2,17,91,090/- and Rs. 8,05,533/-respectively, totalling to about Rs. 2.26 crores.
3. Ld. Senior Advocate and ld. SDR were also heard. It appears from their submissions that, in respect of the, goods cleared by the assessee to EMAMI in the first category, the department called for clarifications from the Controller of Legal Metrology. The reply given by the Controller of Legal Metrology is available on record and we have perused the same. The Controller's clarification reads as under: I am to further clarify that there is no specific provision either in the Standard of Weight and Measures Act. 1976 or in the Standard of Weights and Measures (PC) Rules 1977 prohibiting free supply of goods along with other consumer items. Therefore there seems to be no legal bar in making declaration as "Free not for sale" in respect of the goods supplied free of cost. Since the shampoo and Fairness cream in question are not intended for retail sale but to be distributed free of cost to the ultimate consumer along with other goods there is no need to indicate MRP on the tube and package containing such Shampoo and fairness cream under the provision of the Standards of Weights and Measures Act 1976 and the Standards of Weights and Measures (PC) Rules. 1977 made, there under. Similarly, there seems to be no legal bar in scoring off the MRP with an intent to supply such items free of cost along with the other consumer items.
There is no dispute regarding the authority of the Controller of Legal Metrology to state/certify as to how specified excisable goods are affected by the provisions of the Standards of Weights and Measures (PC) Rules 1977. We find that, in terms of specific clarification given by the Controller of Legal Metrology, the assessee has a prima facie case against assessment of their goods in the first category under Section 4A of the Central Excise Act. Hence there will be waiver of predeposit and stay of recovery in respect of duty of Rs. 2,17,91,090/-. However, the position is different in respect of the goods in the second category. In respect of these goods, it was argued by ld. Sr. advocate that, as the goods were sold by volume (net contents of 3 ml, 6 ml etc., in sachets) less than 10 ml, they were eligible for the exemption contained in Rule 34(1)(b) of the SWM (PC) Rules. Ld. SDR countered by submitting that the sachets containing the goods were sold not by weight or volume but by number and hence the exemption under Rule 34(1)(b) was not available to them. It was claimed by ld. counsel that, as the goods were cleared in the form of strips, each strip consisting of several sachets, packed in cartons, the clearance has to be treated as having been made on wholesale basis, not requiring to be assessed under Section 4A of the Central Excise Act.
Ld. SDR, on the other hand, submitted that the goods cleared by the assessee in the above form fell within the definition of "multi-piece package" under Rule 2(j) of the SWM (PC) Rules and hence they required to be assessed on MRP basis only.
4. After giving careful consideration to these submissions, we find that the assessee has not been able to make out a prima facie case against the demand of duty raised on the goods in the second category.
Stay Order No. 836 & 837/2005 dt. 23.9.2005 passed by this bench in the case of Cavin Care Pvt. Ltd and Anr. v. CCE Pondicherry seems to support the submission made by ld. SDR. In the circumstances, we are unable to grant waiver of predeposit and stay of recovery in respect of the duty demanded on the goods in the second category. The lower authority has imposed a penalty of Rs. 25 lakhs on the assessee. Prima facie, the assessee has a good case against a major part of this penalty inasmuch as they have made out prima facie case against a major part of the demand of duty. Having considered all aspects of the case, we direct the assessee to predeposit Rs. 10 lakhs (Rupees Ten lakhs only) within 4 weeks and report compliance on 13.2.2006. On such deposit, there will be waiver of predeposit and stay of recovery in respect of the balance amount of duty and penalty.
(operative part of the order was pronounced in open court on 30.12.2005)