CX - Powder Hair Dye sachets of 3 gms. packed in mono carton containing 6 or 8 sachets is a retail package: CESTAT
By TIOL News Service
KOLKATA, AUG 08, 2017: THE appellants are engaged in the manufacture of Powder Hair Dye (PHD) liable to Central Excise duty under CETH3305. PHD is packed in sachets of 3 gms. 6/8 such sachets are put in a mono-carton. The sachets as well as mono-cartons have printed MRP.
The dispute in the present appeals is relating to the valuation of PHD cleared by the appellant - whether under Section 4 or Section 4A of CEA, 1944.
The Department held a view that the appellants were wrongly discharging duty by valuing the product under Section 4A (MRP based valuation), whereas the duty should have been discharged under Section 4 of the CEA, 1944.
In the first round of proceedings, the demands were confirmed along with penalties.
The Tribunal, vide final order dated 30/07/2015- 2015-TIOL-2224-CESTAT-KOL opined that the issue needs to be referred to the Legal Metrology Department and, therefore, remanded the matter.It was also observed that the valuation adopted by the Revenue in terms of Section 4 is also erroneous.
In denovo proceedings, the demands were re-computed by the adjudicating authority.
Against these orders, the appellant is again before the CESTAT.
Both sides justified their stand.
The Bench noted that the reference made by the appellant on 04/12/2015 is very elaborate and contained all the facts relevant in the case;that on such reference, the Deputy Director of Legal Metrology Unit, Government of Sikkim inter alia clarified -
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“…It is further clarified that, a Mono Carton containing 6 or 8 sachets the total Net Weight if it contains 6 Sachets is 18 gms and if it contains 8 Sachets is 24 gms respectively. Under the proviso of Sub-Rule (a) of Rule 26 read as ‘Provided that the declaration in respect of Maximum retail price and net quantity shall be declared on the packages containing 10 gms to 20 gms or 10 ml. to 20 ml.
Hence a Mono Carton containing 6 or 8 sachets is a retail package and shall have to comply the Chapter II of all the Provisions wherever applicable of the Legal Metrology (Packaged Commodities) Rules 2011 including Mandatory Declarations and also Net Quantity requirement.”
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The CESTAT also observed that the appellants had also made reference to the Legal Metrology Division, Department of Consumer Affairs, Government of India on 06/11/2015 and whereupon the following clarification was received -
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“2. Further, it is to state that clause (iii) of Rule 2 (r) of the Legal Metrology (Packaged Commodities) Rules, 2011 provides inter alia that a package containing less than 10 retail package is not a wholesale package. In such an eventuality, the mono carton containing 6 or 8 sachets is a retail package and therefore is required to carry all mandatory declarations as provided under Rule 6 of the said rules.”
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The Tribunal, therefore, concluded that in view of the categorical clarifications issued by the Competent Authoritythere was no merit in the conclusion drawn by the Original Authority.
It is also viewed that the whole exercise was revenue neutral as the appellants were operating under area based exemption eligible for refund of duty paid subject to fulfillment of all the procedural requirements.
The impugned orders were set aside and the appeals were allowed.
In passing: As for the reference made by the department and the report received, the Bench quipped -
“...However, the copy of reference made by the Revenue is not available in the records. The opinion given on 16/09/2015 by the Deputy Director would indicate that the whole focus is on the sachet with net weight of 3 gms. In the absence of contents of reference made by the Revenue, we are not clear as to what type of facts are presented and what type of query has been made by the Revenue, which resulted in the said opinion.”
(See 2017-TIOL-2826-CESTAT-KOL)
