CX – Valuation - Just because appellant has mentioned 'exclusively for industrial use' and 'not to be sold in loose', Rule 34 cannot be compulsorily applied - unless assessee claims exemption from printing MRP under Rule 34 of SWM Rules, MRP is required to be printed - Appeal allowed: CESTAT
By TIOL News Service
AHMEDABAD, JUNE 05, 2013: THE company manufactures self adhesive tapes [heading 3919] and these are notified for assessment u/s 4A of the CEA, 1944.
The appellants filed declaration u/r 173C for declaring MRP and the AV and cleared the goods to industrial users and traders also. The packages bore the remark 'for industrial use'.
The jurisdictional authorities alleged that as per rule 34 of SWAM Rules the appellants are not required to print MRP as it is a raw material specially packed for exclusive use of any industry. Hence, the assessment of duty shall be under section 4 and not under section 4A.
The Joint Commissioner set aside the demand on the ground that -
+ The adhesive tapes are not raw materials but are packing materials. Therefore, they are not exempt from printing MRP under rule 34 of SWM Rules, 1977.
+ Inasmuch as even if the products are sold to industrial customer, the goods once notified under rule 4A shall be assessed to duty under section 4A.
+ Following Tribunal judgments were relied upon –
++ Jayanti Food Processing Pvt. Ltd. (2002-TIOL-49-CESTAT-DEL)
++ ITEL Industries Pvt. Ltd. Vs. CCE, Calicut (2003-TIOL-218-CESTAT-BAN) upheld by Supreme Court (2007-TIOL-150-SC-CX).
The Revenue appeal was allowed by the Commissioner (A) on the ground that -
+ The Products manufactured by the appellants are raw materials and same are packed and packages contain the words "for exclusive user of industry". Therefore, as per rule 34, the appellants are not required to print MRP. Hence, the product should be assessed on value under section 4.
+ The products are not meant for industrial use. Therefore, the goods are to be assessed on the basis of section 4 Price.
+ The demand is not time barred as the appellants have not mentioned in the declaration under rule 173(C) that the goods are meant for industrial use only. The same amounts to suppression of fact.
The Bench after extracting the contents of Rule 34 observed –
"6. … As a general Rule, all packaged commodities are required to be printed with MRP and exceptions are specified in Rule 2 and Rule 34. From the observations in respect of telephone instruments and the refrigerators made by the Hon'ble Supreme Court, it becomes clear that once MRP is required to be affixed and it is affixed, the assessment has to be done under Section 4A only. Further, the provisions of Section 4A of Central Excise Act, 1944 also provide that what is required for assessment under Section 4A is coverage of the product under SWM Act and the rules there under and the requirement of marking MRP on the package. It is for the assessee to claim exemption if assessee does not want assessment to be made under Section 4A or assessee does not want to affix MRP on the package. It has to be noted that according to Rule 34 of SWM Rules, assessee need not affix the MRP only when it is clearly marked on the package that the goods have been specially packed for the exclusive use of an industry as a raw material or for the purpose of servicing any industry. Therefore, to avoid the requirement of printing MRP, a manufacturer is required to indicate on the package itself that the goods are made exclusively for industrial use as a raw material. Just because the appellant has mentioned "exclusively for industrial use" and "not to be sold in loose", Rule 34 cannot be compulsorily applied. The question arises whether Enforcing Department can say that the words "industrial use" are found and therefore it is sufficient to take out the goods from coverage of SWM Rules. In the light of the decision of the Hon'ble Supreme Court cited by us above and in the light of provisions of Section 4A of Central Excise Act, 1944 and the provisions of SWM Rules especially Rule 34, we do not find that an assessee can be forced or can be said to be not covered by Rule 34 of SWM Rules. Another factor relevant would be the provision in the Rule itself that "if the marking on the package unambiguously indicates" this clause would clearly show that a manufacturer has a choice of making a claim for not printing MRP on the package or chose the above of printing MRP. If he makes a choice to take the benefit of Rule 34, he is bound to print on the package the words specified in the Rule and to show it to the Legal Metrology Department & to Central Excise Department that he is eligible for exception made under Rule 34 and he is not required to print MRP. We feel that the stand taken by the Revenue that Rule 34 can be compulsorily applied cannot be sustained.
7. The next issue is department has taken a view that the product is not meant for retail sale at all and therefore it cannot be assessed under Section 4A. For this purpose, the ld. counsel relied upon the decision of the Tribunal in the case of ITEL Industries Pvt. Ltd. (2003-TIOL-218-CESTAT-BAN). It was observed in that case by the Tribunal that "Further, there is no requirement under Section 4A or under Packaged Commodities Rules that goods covered by this provision should actually be sold in retail. The definition of 'Retail Sale" under Rule 2 specifically covers "distribution disposal" other than through sale also. The amplitude and coverage of the Packaged Commodities Rules extend to goods packed for disposal other than through sale also." The definition of the retail sale is reproduced as under:
"Retail Sale", in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer;"
The rule makes it quite clear that the retail sale definition is vide enough to cover the transaction in question and therefore unless an assessee claims exemption from printing MRP under Rule 34 of SWM Rules, the MRP is required to be printed and assessable value has to be determined under Section 4A of Central Excise Act, 1944.”
In fine, it was held that the goods were correctly assessed by the assessee u/s 4A of the CEA, 1944 and since the issue was decided on merits in favour of the appellants, the question of penalty or confirmation of demand does not arise.
In passing: By the way, s.4A was inserted in the CEA, 1944 on 14.05.1997 to garner more revenue in respect of specified commodities than that which was being collected u/s 4 of the CEA, 1944.
(See 2013-TIOL-837-CESTAT-AHM)
