By TIOL News Service

MUMBAI, MAY 06, 2016: THIS is a Revenue appeal.

'Glue' is cleared in packs of 20 comprising 8 gram cylinders and 'correction fluid' in pens of 8 millilitres and 10 millilitres capacity in packs of 20 and 10 pieces each. The original authority found that the sticks of glue containing 10 grams each are not within the ambit of the exemption from declaration of retail selling price in Rule 34 (Exemption in respect of certain packages) of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and that the larger package of 20 pieces were also required to conform to prescription in Rule 17 (Additional declarations to be made on multi-piece packages) supra. Likewise, in relation to 'correction pens', it was held that the sale, being in numbers, is not covered by the exemption in Rule 34 supra which is restricted to goods sold by weight and volume. Resultantly, the demand of CE duty of Rs.2,87,485/- was confirmed by the original authority.

The first appellate authority, relying on the decision of the Tribunal in Swan Sweets Pvt Ltd & others v. Commissioner of Central Excise, Rajkot/Gwalior - 2006-TIOL-229-CESTAT-MUM, controverted the finding of the original authority by holding that these were 'wholesale packages' and hence not required to carry retail selling price prescribed in Rule 17. The finding of the original authority that 'correction pens' were sold by number was held to be untenable by the first appellate authority as the measurement unit referred to in the schedule to the CETA, 1985 is in kilograms.

After considering the elaborate submissions by both sides, the Bench observed -

++ There is no finding that the secondary packing containing the 'glue sticks' and 'correction pens' had retail selling price declared on them. Nor is there any allegation that the said goods were displayed for sale to the ultimate consumer in the secondary packing. Consequently, the packages are not 'multi-piece packages' as it was, apparently, not the intent of the manufacturer to sell the goods to the ultimate consumer in the secondary packing. And as retail selling price is not declared on the secondary packages, section 4A of Central Excise Act, 1944 is not applicable. The pieces inside the secondary packing are, apparently, intended for sale only as individual pieces at the last point of sale to the ultimate consumer.

++ These individual pieces did not have the retail sale price declared on them; however, the net weight or measure contained in each of the 'sticks' and 'pens' do not exceed 10 grams and 10 mililitres respectively. They are, therefore, covered by the exception in Rule 34 (b) Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and declaration on the piece is merely voluntary.

++ The original authority had proceeded on the ground that 'correction pens' are never bought by weight by a customer but is always perceived as purchasable only in numbers. That may be so from the point of view of the consumer, but, in accordance with our discussion of this aspect supra, that viewpoint is not relevant to the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

++ The exemption provision in Rule 34 does expressly qualify the threshold of grammage and millilitrage with the clause 'if sold by weight or measure'. The original authority has contrived to fit 'correction pens' within the exclusion of numbers from the exemption provision with his theory of consumer behavior. This is flawed reasoning. Pre-packaged commodities are, undoubtedly, bought as packages but that does not render the declaration of weight or measure on the package to be irrelevant. If it were irrelevant, there would no reason for such elaborate prescription of data, including weight, on the packaging in the Rules and Rule 34 also would be otiose. The original authority appears to have confused the outer packing in the shape of a 'pen', which is merely the container, with the material inside. Therefore, the 'sticks' and 'pens' containing commodities that are below the threshold prescribed for compliance with the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 are beyond the ambit of Section 4A of Central Excise Act, 1944.

The Revenue appeal was dismissed.

Now, for some blatant truths about the Revenue appeal as evinced by the Bench -

•  None of the grounds of appeal are legally tenable or logically appealing.

•  Review under section 35B of Central Excise Act, 1944 is a power conferred upon high authorities to call for, scrutinize and direct appeal against orders that do not appear to be legal and proper.

•  Impliedly, all orders are to be subject to such ascertainment but, in practice, appeals are filed only against orders that have been decided by the first appellate authority against Revenue.

•  Recourse to the jurisdiction of the Tribunal is, thereby, thrust upon an assessee whose contentions have been upheld by Commissioner (Appeals) which is a senior position in the tax hierarchy. Hence, the conferment of powers of review upon an equally senior level whose wisdom is presumed to be doubled by sheer force of numbers.

•  Half-hearted review or abdication of the power in favour of levels deemed to be incompetent on account of experience and maturity is gross contravention of the responsibility that accompanies conferment of power.

•  For Revenue, such appeals do not cause incremental burden but they do impose additional costs on the assesse even when the matter has been decided in their favour. This power to appeal is, therefore, to be exercised with appropriate sagacity and consideration.

•  Hectoring by us may not be visited with appropriate course correction. That consummation can be achieved only by the supervisory authorities. We do hope that the Central Board of Excise & Customs does take note of dereliction of responsibility on the part of its senior functionaries in the discharge of their statutory duties that load such burden on the assesse.

Wishful thinking: Simplicity is the ultimate sophistication - Leonardo da Vinci

(See 2016-TIOL-1089-CESTAT-MUM)