ORDER
R.K. Abichandani, J. (President)
1. The appellant seeks stay of that portion of the impugned order dated 28.12.2004 passed by the Commissioner of Central Excise, Trichirapalli which is prejudicial to the appellant, pending disposal of the appeal and waiver of pre-deposit of duty of Rs. 23,10,712, and stay of its recovery till the disposal of the appeal.
2. The appellants are manufacturers of various varieties of scented powdered “supari” falling under Chapter Sub-heading No. 2107 of the Schedule to the Central Excise Tariff Act, 1985. The scented supari was packed in sachets of various sizes containing less than 10 gms of such material. These sachets were sold in the multi-piece packages and such packaged indicates the maximum retail price of the number of sachets contained in them. The packages also indicated the net weight of the contents thereof. Since the retail price of individual sachets was not mentioned on the sachets, the Department, on the ground that such price was required to be stated in individual sachets’ i.e. units contained in the packages, proceeded against the assessees under Sub-section (4) of Section 4A of the Central Excise Act, 1944 (in short the said Act) which empowered confiscation of goods and ascertaining of the retail sale price.
3. The controversy that arises in the stay application centres around the question whether there was any justification whatsoever in going behind the retail price mentioned on the packages on the ground that the retail price was not mentioned on the sachets which were contained in the packages.
4. The learned Counsel appearing for the applicant submitted that there was a mention of the net weight of the contents of the package as printed on the pouch besides the mention of the MRP in the context of the number of sachets contained in such pouch/package. He demonstrated before us plastic pouches/packages on which the necessary particulars regarding the MRP in the context of the number of sachets contained therein were mentioned. The learned Counsel argued that even though only the number of sachets was mentioned against MRP, since such sachets would contain material having definite weight total of which material tallied with the net weight mentioned on the pouches, it should be assumed that MRP though mentioned against the number of sachets was, in fact, in the context of the weight of the material which was in such sachets. Relying upon the decision of the Supreme Court in ITC Ltd. v. CCE, New Delhi, , it was contended that the purpose of printing the MRP on the packages containing the sachets was to achieve standardization of prices in respect of the product of the appellant and that it was not open to the retailers to sell these packages above the printed MRP. It was pointed out that the MRP shown on the packages carried a note that the sachets were not for loose sale. Therefore, the MRP which was declared was not only in the context of the number of sachets but also in respect of the weight of their contents and, therefore, the issue regarding the retail price of individual units i.e. sachets did not arise in this case.
He submitted that, as held by the Supreme Court in ITC (supra) on inquiry was envisaged into the correctness of the MRP printed on the packages by the Excise Officer and that as far as he is concerned, his function is limited to satisfying himself whether there was a declaration made in the prescribed form. The learned Counsel drew our attention to various provisions of Standards of Weights and Measures (PC) Rules, 1977, more particularly to Rules 6,17 and 34 thereof, and also the proforma declaration under Sub-rule 2(A) of Rule 173C of the Central Excise Rules in the context of declaration of the retail sale price for package of unit/container, and submitted that, it is a multi-piece package on which a declaration of sale price was to be mentioned and that the proviso laying down the requirement that when individual pieces contained in such packages are capable of being sold separately each package shall bear a declaration as to the quantity and sale price thereon could not be invoked against the applicant, in view of Sub-rule (2) of Rule 17 which provides that if individual pieces contained in the packages do not carry retail sale price, such packages shall carry a declaration that they are not intended for retail sale. He submitted that there was admittedly a declaration that individual pieces were not intended for loose sale. On the basis of Rule 34, he submitted that the said Rules were inapplicable to any package containing a commodity, if the net weight or the measure of the commodity was of 20 gms, or 20 ml, or less, if sold by weight or measure. He maintained that the sachets need not mention the price as required by the Rules, even assuming that for any quantity larger than that mentioned in Rule 34(b) price of the unit was required to be so mentioned. It was also argued that since no manner was prescribed by the rules for ascertaining the price as required by Sub-section (4) of Section 4A the retail price was worked out illegally.
5. The learned authorised representative for the Department referring to the provisions of Section 4A (4) of the said Act vehemently argued that it required retail sale price to be mentioned not only on the multi-piece packages but also on the smaller packets i.e. sachets which were contained in such packages. It was contended that if the goods were removed without declaring the retail price on the smaller packets, the Department would be justified in proceeding under Sub-section (4) of Section 4A of the said Act and such goods were liable to be confiscated, besides undertaking the procedure of fixing retail sale price of the goods in the prescribed manner.
6. Sub-section (4) of Section 4A of the said Act contemplates confiscation of the goods and ascertainment of the retail sale price where the excisable goods specified under Sub-section (1) of Section 4A are removed from the place of manufacture without declaring the retail sale price of such goods on the packages or when incorrect retail price is declared.
7. Under the show cause notice dated 2.4.2004 the assessee was required to show cause as to why the differential duty amounting to Rs. 1,80,99,180 as worked out in Annexure B (copy of which unfortunately is not annexed with the show cause notice placed in the Paper Book supplied by the appellant), for the period from 1.3.2000 to 31.12.2003 should not be demanded from them under Section 11(A)(1) of the Act. Sub-section (4) of Section 4A as it stood prior to the amendment by Section 137 of the Finance Act, 2003 (32 of 2003) w.e.f. 14.5.2003, provided that if the manufacturer removed any excisable goods under Sub-section (1) without declaring the retail sale price of such goods on the packages, or declares a retail price which does not constitute the sale consideration for such sale etc., such goods shall be liable to confiscation. Under Explanation I as it stood prior to the amendment (w.e.f. 14.5.2003), ‘retail sale price’ was defined so as to mean “the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes local and otherwise, freight, transport charges, commission…. and the price is the sole consideration for such sale”. Since the period covered by the show cause notice was from 1.3.2000 to 31.12.2003 the provisions of Section 4A(4) as they stood prior to the amendment made therein with effect from 14.5.2003 would be relevant, though the learned counsel during his arguments referred only to the provision as amended from 14.5.2003 which was placed in the compilation separately supplied to the Court for his arguments. The unamended provision of Sub-section (4) of Section 4A did not provide that “the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purpose of this Section” as was provided in the amended Section 4A(4) w.e.f. 14.5.2003.
8. In the present case, admittedly, retail sale price was mentioned on the packages as MRP only in the context of the number of sachets contained therein. While under Sub-section (1) of Section 4A, reference is made to the provisions of Standards of-Weights and Measures Act, 1976, rules made thereunder, and also to any other law which in relation to any goods requires a declaration on the package of such goods the retail sale price thereof all the provisions of that Act and the Rules made thereunder cannot be catapulted in the provisions of Section 4A of the Central Excise Act. The SWM Act, 1976 was enacted “to establish standards of weights and measures to regulate interstate trade or commerce in weights, measures and other goods which are sold or distributed by weight, measure or number, and to provide for matters connected therewith or incidental thereto”. The reference to the provisions of the SWMA is relevant only in the context of identifying the goods for which valuation is required to be done under Section 4A and not under Section 4.
9. Sub-section 4(A) of Section 4 uses the expression “packages” which, in the present case, would be multiple-piece packages on which the MRP was mentioned. The requirement of the proviso to Rule 17 of the SWMA (Packaged Commodities) Rules, 1977 made under that Act, that if individual pieces contained in the multiple-piece package are packaged separately are capable of being sold separately, the declaration as to the quantity and sale price thereof should also be made on such individual pieces, has to be read in the context of the other provisions of those Rules and, prima-facie, it appears to us that such a requirement need not be catapulated in Sub-section (4) of Section 4A which only speaks of declaration of maximum retail sale price on the packages. It is the packages containing the sachets which were sold in retail for the MRP declared on such packages. In the context of the provisions of Section 4A which have a bearing on the valuation of the excisable goods with reference to retail sale price, when the retail sale price was indicated in respect of the number of units contained in the package on the package as required for the purpose of declaration, no other requirement of declaring retail price on the units contained in the packages can be super-imposed under Sub-section (4) of Section 4A merely because the SWM (PC) Rules, 1977 contained a proviso that where individual pieces of multi-piece packages were capable of being separately sold, each such piece should bear a declaration of quantity and price of the unit.
10. We are, therefore, satisfied that the applicant has made out a prima facie case in its favour for grant of conditional stay of the impugned order. We make it clear that whatever we have stated hereinabove for the purpose of the disposal of the stay application, will have no bearing on the issues that may be argued at the time of final hearing. In order to safe guard the interests of the Revenue, we, while staying the impugned order, deem it proper to make it conditional on the applicant’s depositing a sum of Rs. 7 lakhs which the applicant is directed to deposit, with the adjudicating authority, having regard to the facts and circumstances of the case, and report compliance in six weeks from today. This application stands disposed of accordingly.