Case Law Details
Case Name : CCE , Delhi Vs M/s Shakti Zarda Factory (India) Pvt. Ltd. (CESTAT Delhi)
Appeal Number : Excise Appeal Nos. 59089 of 2013 and 1840 of 2007 with C.O. No. 61731 of 2013
Date of Judgement/Order : 19/02/2016
Related Assessment Year :
[Arising out of the Order-in-Appeal No. 101/CE/D-II/2013 dated 03/05/2013 passed by the Commissioner (Appeals), Central Excise Commissionerate, New Delhi and No. 48-CE/DLH/2007 dated 30/03/2007 passed by Commissioner (Appeals), Central Excise, Delhi II.]
Brief of the case:
The New Delhi bench of CESTAT in the above cited case held that tobacco manufactured and packed in small pouches of 6-7 grams and again packed in a bigger packet are not subject to valuation based on retail price as the small pouches weighing less than 10 gms are exempt from requirement of fixation of retail sale price under Rule 34 of the Standards of Weight & Measurement Act.
Facts of the case:
- The assessee is engaged in manufacturing of chewing tobacco. in pouches of 6 gms. and 7 gms. These are then packed in multiples of 52/42/40/32 pouches in a plastic bag and are cleared on sale. Revenue pointed out that since the small pouches containing 6 gms. and 7 gms. are together put in a bigger pouches, the entire product should be considered as multi-piece packages covered by the MRP Regulations in terms of Standards of Weights & Measures (Packaged Commodity) Rules,1977.
- The adjudicating authority in its order assessed such clearance at retail sale price as per Sec 4A of the Central Excise Act and accordingly, confirmed a demand for Rs. 12,02,410/- and imposed equal penalty.
- On appeal to Commissioner (Appeals) , the appeal of assessee was allowed who held that the products sold by the respondent is not a multi-piece package . The individual pouches containing 6 gms. and 7 gms. Of chewing tobacco are not governed by the SWM Rules in view of the exemption under Rule 34 of the said Rules. Aggrieved by this, the Revenue filed appeal before tribunal.
Contention of the Assessee:
- The Chewing Tobacco manufactured by the assessee are put in pouches of below 10 gms. and many such pouches are put in wholesale package and cleared for sale. The package containing many small pouches are not intended for retail sale but are only wholesale packages.
- The pouches are packed in retail packages of 6 gms. and 7 gms. and as such goods with net weight below 10 gms. were exempt from declaring net weight and MRP on the packages. This is clear from the provisions of Rule 34 (b) of Standards of Weight & Measurement Rules.
Held by CESTAT:
- The point of dispute in the present case is the valuation of tobacco manufactured and cleared by the assessee whether under Sec 4 or Sec 4A of the Central Excise Act. The tribunal on a similar issue in the case of CCE, Rohtak vs. Gupta Tobacco Co. held that the goods packed in pouches and put in bulk packs are only weighing less than 10 gms. and hence are not governed by Standards of Weight & measurement Act and rules made thereunder.
- The Hon’ble Supreme Court also in the case of CCE, Vapi vs. Kraftech Products 2008 (224) E.L.T. 504 (S.C.) held that if the net weight of the commodity marketed and sold by the assessee is 10 gms. or less, they are not governed the RSP based assessment.
- Further, legal Metrology Unit of Government of India, New Delhi have clarified that packages below 10 gms. are totally exempt from purview of SWM Rules. Packages containing 10 or more retail packages are considered as wholesale packages and need not carry retail sale price declaration.