ORDER
T.K. Jayaraman, Member (T)
1. This appeal has been filed against OIA No. 91/2005 CE dated 29.3.2005 passed by the Commissioner of Central Excise (Appeals) Bangalore. The appellants manufacture various types of chemicals used for cleaning by domestic and industrial consumers. The chemicals meant for domestic use were cleared on payment of duty under Section 4-A of the Central Excise Act 1944. Revenue proceeded against the appellants on the ground that the goods in question were governed by the Standards of Weights and Measures Act 1976 and consequently duty is liable to be discharged under provisions of Section 4-A of the CE Act. Therefore, differential duty of Rs. 1,24,600/- was demanded by the Original Authority. The Commissioner(Appeals) upheld the Orders of the Original authority and passes the impugned order. The appellants strongly challenge the impugned order and have come before this Tribunal for relief.
2. Shri G. Shivadas learned advocate appeared for the appellants and Shri Ganesh Havanur learned SDR for the Revenue.
3. The Learned advocate urged the following points.
1) Displaying a sample package, the learned advocate drew our attention to the declaration in the carton that the goods are meant for industrial use only. The total contents of the package is 11.1 Kgs. The package contains bottles containing different chemicals. The individual bottles carry a declaration that they are not to be sold loose and they do not carry any price declaration on the same. The package has to be sold as a whole and the contents cannot be sold separately. Hence, the packages satisfy all the conditions of Rule 34 of the Packaged Commodities Rules and as such the provisions of packaged commodity rules do not apply to the packages in dispute cleared by the appellants. If the provisions of packaged commodities rules do not apply, then the manufacturer is not required to declare a retail price of the goods on the package under provisions of Standards of weights and Measures Act 1966. When that is the case, the duty cannot be demanded under Sect n 4-A. The Board vide Circular dated 28.2.02 has clarified that Section 4(A)(1) would not apply even if the manufacturer declares MRP of goods on package when it is not mandated by packaged commodities rules.
3. The finding of the authorities that Rule 34 would apply only if one commodity is packed and not when more than one commodity is packed is without any basis. As the phrase in the said rule is on the marking and its purposes and not on the number of commodities.
4. The lower authorities have placed reliance on Circular No. 673/64/04 CX dated 28.10.02 and consequently considered the package in question as a multi piece package in much as neither the inner packages nor the whole package is intended for retail sale.
5. The appellants have not contravened any of the rules as alleged. There was no suppression or mis-declaration. There was no intention to evade payment of duty. Hence, penalty is not sustainable.
6. Since payment of duty itself is not sustainable, levy of interest under Section 11AB, is also not sustainable.
4. Learned SDR reiterated the orders of the lower authorities. We have gone through the records of the case carefully. The package in question contained the remark that the same is meant only for industrial use. The Commissioner (Appeals) has made observation that Rule 34 would be applicable only if one commodity is in the package and not when more than one commodity are packed. In our view, this is not sustainable because, “Pre-packed commodities” in Standards of Weights and Measures Packaged commodities Rules 1997 is defined as follows:
Pre-packed commodity with its grammatical variations and cognate variation means a commodity ( or article or articles) which, without the purchaser being present, is placed in a package of whatever nature, so that the quantity of the product contained therein has a predetermined value and such value cannot be altered without the package or its lid or cap, as the case may be, being opened or undergoing a perceptible modification, and the expression ‘package’ wherever it occurs, shall be construed as a package containing a pre-packed commodity
The above definition, permits more than one commodity in a package. When there is a specific remark that the package is meant for industrial use, and the inner contents cannot be sold in loose form, Rule 34 will not be applicable. Since the goods are for retail sale, they cannot be considered as multi-piece packages. In these circumstances, the valuation under Section 4-A appears to be correct. Hence, the appeal is allowed with consequential relief.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)