| SooperKanoon Citation | sooperkanoon.com/44866 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Ahmedabad |
| Decided On | Feb-14-2007 |
| Judge | A Wadhwa, V T M. |
| Reported in | (2007)(117)ECC79 |
| Appellant | Mul Dentpro Pvt. Ltd. |
| Respondent | C.C.E. |
2. The dispute is regarding the method of valuation to be adopted in respect of products such as shampoos and ayurvedic cosmetic creams. The Commissioner has taken the view that excise duty was required to be paid by the appellant under the provisions of Section 4A of the Central Excise Act as the products in question were multi piece packages and not in terms of Section 4 of the Act under which the appellant company had paid duty.
4. The relevant facts in brief are that the appellant manufacture the products namely, Fair & Lovely Ayurvedic Costmetics Cream, Ayush Shampoo & Ayush Hair Oil Clinic Plus falling under chapter No. 33 of the schedule to the Central Excise Tariff Act, 1985; packs in sachet/pouch containing weights/measures below 10 mg/ml duly printed with maximum retail price on each sachet/pouch and cleared in corrugated boxes which are multi piece package as defined under Rule 2(j) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
5. The goods of Chapter No. 33.04 and 33.05 are notified under Section 4A of the Central Excise Tariff Act, 1985.
6. It is not in dispute that the goods fall under Chapter No. 33.04 and 33.05 and vide Notification No. 13/02-CE(NT) dated 1.3.02, they have been notified for the purpose of MRP based valuation under Section 4A of the said Act. The relevant portion of Section 4A which envisages a condition when MRP based assessment has been adopted is reproduced below: 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, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of Sub-section (2) shall apply.
7. The Board's clarification on the application of Section 4A based assessment is contained in Circular No. 411/44/98-CX dated 31st July, 1998 and the relevant portions are reproduced below: I am directed to say that doubts have been raised as regards charging of excise duty with reference to maximum retail price under Section 4A if Central Excise Act, 1944 in cases where MRP is not required to be affixed on packings, as a statutory requirement under the Standards Weights and Measures Act, or any other Law for the time being in force, even though some manufacturers may voluntarily be affixing the MRP on such packings.
2. Instructions were issued by the Board vide letter F.No. 341/64/97-TRU, dated 11^th August, 1997 clarifying that Sub-section (1) of Section 4A applies only when the MRP is required to be indicated under the provisions of Standards Weights and Measures Act, 1976 or under any other law for the time being in force. In other words, Section 4A applies only when there is statutory requirement of affixing the MRP. Accordingly, in case a manufacturer voluntarily affixes MRP which is not statutorily required then the excise duty on goods in such packings shall not be charged on the basis of Section 4A of the Central Excise Act, 1944.
8. In other words, there may be occasions where even when the commodity has not been notified for the purpose of Section 4A, the manufacturers may on their own indicate the MRP in retail pack and in such a situation, the assessment is to be determined not based on Section 4A but based on Section 4 read with the Valuation Rules. In the present case, no doubt, the commodity, as such, in a broad sense has been notified under Section 4A. However, Rule 34 of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977 provides certain exemption from the requirement of bringing of MRP. The relevant portion is reproduced below: 34. Exemption in respect of certain packages. - (1) Nothing contained in these rules shall apply to any package containing a commodity if- (b) the net weight or measure of the commodity is ten grams or ten milliliters or less, if sold by weight or measure .
9. In this case, the contention of the appellants is that they are governed by exemption under Rule 34 of the Standards of Weights and Measures Act, 1977 and therefore, not required to print MRP and therefore, valuation method prescribed under Section 4A is not applicable in their case. This identical issue has been considered earlier by the Larger Bench of the (198) ELT 508 (Tri-LB) and held that in such case, Section 4A valuation will not be applicable. The relevant portion of the order is reproduced below: 15. Considering submissions from both sides as well as the cited case laws, we are of the opinion that in view of specific legal requirements under the SWMR that cosmetics are to be sold by weight or volume, quantities of cosmetics weighing less than 10 gms. even though contained in multi-pack sachets, will be exempt under Rule 34 of SWMR and consequently Section 4A of the CEA will not have any application to such multi-packs. We are also of the view that the observation of the Hon'ble Madras High Court in Varnica (cited supra) to the effect that hair dyes are not intended to be sold by weight or measure can not be taken as a binding precedent as it has been rendered per incuriam without noticing the legal provisions to the contrary which require such goods to be sold by weight or volume.
10. In view of the above, following the ratio of the order in the case of C.C.E., Mumbai v. Urison Cosmetics Ltd. cited supra and taking note of the fact that they are not legally required to print MRP in the packets/pouches weighing/measuring below 10gm/10 ml., the appeal is allowed.
(Operative part of the order was pronounced in the open Court at end of hearing on 14.2.2007).