CENTRAL ARECANUT AND COCOA Vs. CCE

JUDGEMENT

(1.) THE Central Arecanut and Cocoa Marketing and Processing Co -operative Limited, Puttur, (Campco) has filed this appeal against the order of the Commissioner (Appeals), Mangalore. In the impugned order, the Commissioner (Appeals) affirmed the order of the original authority demanding differential duty of Rs. 22,63,506/ - along with interest and imposing penalty of Rs. 2,25,000/ - on Campco. The demand was on account of revision of assessment applying MRP to clearances of packs containing about 100 'Eclairs' brand chocolates manufactured for Nestle during 20.02.2003 to 24.07.2003 on jobwork basis. Campco had paid duty on these clearances adopting the Ujagar Prints formula of cost construction method.

(2.) IN the appeal before us seeking to vacate the impugned order, Campco has taken the plea that eclairs chocolates cleared in packets containing 100 or more pieces were wholesale packages. The individual toffees packed in the wholesale packages were sold in retail by the retailers. The toffees weigh 5.5 gms per piece. In terms of Rule 34 of the Weights and Measures (Packaged Commodities) Rules, 1977, packages containing goods of weight 10 gms or less when sold by weight are not required to carry on the package its retail sale price. As per Rule 2(x) 'wholesale package' includes 'packages containing 10 or more than 10 retail packages provided that retail packages are labeled' as required under the rules. As per the statutory provisions the appellant was not required to print the sale price of the individual piece (weighing 5.5 gms) on the wholesale packages under the provisions of Standards and Weights and Measures Act, 1976 and the Packaged Commodities Rules, 1977. Though sugar confectionary of CSH 1704.90 and 18.03 were notified as goods to which provisions of Section 4A(2) relating to MRP based assessment applied during the material period, as the goods cleared were in wholesale packages containing individual sweets each weighing 5.5 gms, the duty demand on assessment of the goods under Section 4A was not sustainable. They also referred to various Circulars of the Board to the effect that MRP based assessment had to be followed only in respect of goods which were legally required to display on its package, the MRP as per Standards of Weights and Measures Act, 1976 and the Packaged Commodities Rules, 1977. It was also argued that the goods cleared were not multi -piece packages defined under Rule 2(j) of the Packaged Commodities Rules supra. The goods when they left the factory were not intended for retail sale. They summarized their arguments as follows: A reading of Rule 34 along with Rule 2(x) would clearly show that packages containing 10 or more retail packages would come within the definition of wholesale package and the individual retail packages in the wholesale package do not have to bear the MRP since they are covered by Rule 34 which excludes them from the Packaged Commodity Rules. Hence, the PC Rules would not apply to the subject goods and hence are excluded from Section 4A.

(3.) LD . Counsel relied on the ratio of the decision of the Tribunal in Swan Sweets Pvt. Ltd. v. CCE Rajkot reported in 2006 (198) ELT 565 (Tri. -Mum.), wherein it was decided that the wholesale package weighing 500 gms containing chocolates weighing 4 gms each (for retail sale) did not attract MRP based assessment. In that case the Tribunal also decided that as per the definition contained in Rule 2(j) of Packaged Commodities Rules, 'Multi -piece pack' was a package of individual pieces, which as a whole as well as individual pieces placed inside, should be intended for retail sale. She also invited our attention to the decision of the Larger Bench of the Tribunal in CCE Mumbai v. Urison Cosmetics Ltd. , which dealt with a similar commercial practice involving hair dye in powder form. In that case it was decided that 'Godrej' brand hair dye in pack of 3 sachets of 3 gms each did not require to be valued on the basis of MRP under Section 4A of the Act.