ORDER
S.L. Peeran, Member (J)
1. These appeals arises from Order-in-Appeal No. 41/2005 dated 29.4.2005 confirming Order-in-original No. 12/2005 dated 31.1.2005 and Order-in-Appeal No. 12/2005 dated 18.2.2005 confirming Order-in-Original No. 61/2004 dated 27.9.2004 passed by the Commissioner (A), Bangalore.
2. The appellants were manufacturing biscuits falling under chapter Heading No. 19.05.11 of CET and were discharging Excise Duty on the value of the goods determined with reference to the retail price as per Section 4A of the Central Excise Act, 1944 read with Notification No. 5/2001 (NT) dated 1.3.2001. The Revenue proceeded to re-assess the goods in terms of provisions of Schedule III of Standard of Weights and Measurements (Packing Commodity) Rules, 1977 read with Section 4A of Central Excise Act and have re-determined the duty. The appellants contested the case and submitted that the provision of Standard of Weights and Measurement Act cannot be applied to the present case. However, their pleas were rejected.
2. The learned Counsel submits that this very issue came up for consideration in their own case and the matter has been decided in their favour by Final Order No. 1994/2006 dated 30.11.2006. He places a copy of this order. He pointed out that this decision relied by him refers to large number of judgments rendered on this very issue. He submits that this ratio applies and the appeal be allowed with consequential relief.
3. Heard learned JDR who reiterated the grounds taken by Revenue.
4. We have carefully considered the submissions. This very issue in this appeal was subject matter in Final Order No. 1994/2006 dated 30.11.2006 in assessee’s own case. The findings recorded in Para 6 to 6.4 is reproduced herein below.
6. We have gone through the records of the case carefully. The reasoning of the lower authorities for holding that assessment should be done under Section 4 and not Section 4A is as follows.
According to Rule 5 of the Standards of Weights and Measures (Packaged Commodities) Rules “no person shall pre-pack or cause or permit to be pre-packed, any commodity for sale, distribution or delivery except in such standard quantities as are specified in relation to that commodity in Schedule-III”, further, Sub-rule 6(1)(F) ibid requires that the retail sale price of such specified goods should also be declared. The implication of this provision is that the commodity should be packed in specific quantities as declared in Schedule-III. Reference to Schedule-III shows that the biscuits to which these provisions apply should be packed in quantities of 25g, 50g, 75g, 100g, 150g, 200g, 250g, 300g and thereafter in multiples of 100g upto 1 kg. It is therefore, evident that any package containing biscuits in excess of 1 kg. is not specified in the said Schedule-III. In such a situation where a person packs biscuits in a package in excess of one kg, there is no requirement of declaration of the retail sale price. Hence, in the present case, the goods are not covered by the provisions of Standards of Weights and Measures Rules 1977 and Standards of Weights and Measures Rules 1976. In view of the above finding, the lower authority has come to the conclusion that Section 4A would not be applicable to the impugned products.
6.1 We are afraid that the conclusion reached by the lower authorities is not correct for the reason that they had not read Rule 5 completely. Therefore, we are reproducing Rule 5 of the Standards of Weights and Measures (PC) Rules, 1977 completely.
RULE 5 – Specific commodities to be packed and sold only in standard packages – On and from the commencement of these rules, no person shall pre-pack, or cause or-permit to be pre-packed, any commodity for sale, distribution, or delivery except in such standard quantities as are specified in relation to that commodity in Schedule-III:
Provided that the Central Government may, if it is satisfied that for any technical or mechanical reason it is not possible to pre-pack any commodity in the standard quantities specified in Schedule-III, authorize the pre-packing of such commodities in such quantities as it may specify.
[Provided further that nothing in this rule shall disallow any person from packing any commodity specified against serial numbers 1, 2, 3, 18 and 18A in column 2 of the Third Schedule in any quantity beyond the maximum standard quantity specified in column 3 of that Schedule.]
A careful reading of the above Rule shows that biscuits which are in Sl.No. 3 in Schedule-III can be packed in any quantity beyond the maximum standard quantity. Therefore, the reasoning of the lower authorities is incorrect. The appellants are at liberty to pack the biscuits in quantities of more than 1 kg. for retail sale.
6.2 Apart from the above, if the commodity is to be exempted from the above Rules, it should be by way of Rule 34 of the Standards of Weights and Measures (PC) Rules, 1977. Rule 34 deals with exemption in respect of certain packages. For example, if the commodity is packed specially for the exclusive use of any industry as raw material, then there is no need for following the Rules like affixing the maximum retail price, etc. In the present case, Revenue has not shown that biscuits would come under Rule 34. In our view, in the present case, the statutory conditions for adopting valuation under Section 4A of the Central Excise Act have been fulfilled in the following manner.
(i) The impugned commodity biscuit have been notified by the Central Government under the provisions of the Standards of Weights and Measures Act 1976 to declare on the package the retail sale price.
(ii) Notification under Section 4A has also been issued in respect of biscuits.
(iii) Biscuits are not exempted from the Standards of Weights and Measures (PC) Rules under Rule 34 of the Rules.
6.3 In these circumstances, the appellants have correctly discharged their duty liability in terms of Section 4A. In this connection, we rely on the decision of the Tribunal rendered in the case of Itel industries Pvt. Ltd. v. CCE, Calicut wherein it is held that if the packages in question are not exempt under Rule 34, the good will be liable to be valued under Section 4A and not under Section 4 of the Central Excise Act. It has been made very clear that the fact that goods are sold in bulk under a contract cannot be the criteria for valuation. If such a view is taken, then most consignments will be out of Section 4A because sale to first tier of trade of goods covered by Packaged Commodities Rules take place in wholesale quantities. Further, there is no requirement under Section 4A or under Packaged Commodities Rules that goods covered by this provisions should actually be sold in retail. In the above decision, the decision of the Tribunal rendered in the case of Jayanti Food Processing Pvt. Ltd. v. CCE has been followed.
6.4 Summing up, in view of the fact that the impugned goods viz., biscuits are notified under Section 4A and are not exempted under Rule 34 of the Packaged Commodity Rules, their valuation would be under Section 4A only. Further, there is no requirement in respect of biscuits that they cannot be packed in packages weighing more than 1 kilogram in view of the second proviso to Rule 5 mentioned above. Thus, we allow the appeal with consequential relief, by setting aside the impugned order.
The above ratio clearly applies to the facts of this case. Respectfully following the ratio of the above cited judgment, the impugned orders are set aside and the appeals are allowed.
(Pronounced and dictated in open Court)