By TIOL News Service

MUMBAI, APRIL 25, 2018: IN this Revenue appeal, the issue is whether the products classified by the assessee under CSH 2102.90 and 2108.99 are liable to be assessed u/s 4A of the CEA, 1944 with reference to the printed MRP or u/s 4 of the CEA, 1944 as urged by the assessee.

A Show Cause Notice was issued to the respondent-assessee demanding duty of Rs.1,16,52,588/- for the period August 2004 to March 2006 on two separate counts – (a) that some of the products had been misclassified by the Respondent and (b) that in respect of the products in dispute which were admittedly classifiable under Chapter 21, the assessee had erroneously valued the goods under Section 4 even though the correct provision for valuing them was Section 4A of the CEA, 1944.

The demand was confirmed by the original authority but dropped by the Commissioner(A) and, therefore, this Revenue appeal.

The primary ground taken is that the Department had challenged the orders of the State Government (granting exemption to the assessee under rule 34 of SWAM PCR, 1977) by filing a Writ Petition bearing stamp No. 12771/2008 in the Bombay High Court.

The assessee respondent gave an overview of the entire case -

+ On the issue of classification, the assessee claimed that the issue hasbeen resolved by the Tribunal in its favour - 2006-TIOL-1970-CESTAT-MUM, which order was accepted by the Revenue as no appeal was filed against the same.

+ As regards valuation, the assessee contended that the provisions of Standards of Weights & Measures (Packaged Commodity) Act, 1976, was not applicable as the goods in dispute were being cleared in woven sacks from the factory each containing 25 kg each (in the case of baking powder and custard powder) and 6 kgs in the case of Vanilla powder. It was pleaded by the assessee that such large bags were exempted from the requirements of printing of MRP by virtue of Rule 34 of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977.

+ Furthermore, as per CBEC Circular No. 625/16/2002-CX dated 28.2.2002, any question relating to interpretation of Standard of Weights & Measures Act, 1976 and the Rules made thereunder had to be decided in accordance with the interpretation made by the Legal Metrology Department of the State Government which were administering the said Act and which view is binding upon the Central Excise authorities.

+ In the assessee's own case, the Food & Civil Supplies and Consumer Protection Department of the Government of Maharashtra had, by an Order dated 26.9.2005 held that the assessee was entitled for the benefit of exemption under Rule 34 of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 in respect of the disputed products.

+ Another Order dated July 20, 2007 was passed by the Minister (F.C.S & CP), Government of Maharashtra on proceedings initiated for review of the earlier order dated 26.9.2005, at the instance of the Controller of Legal Metrology, affirming the said Order dated 26.9.2005.

+ Against these two orders dated 26.9.2005 and 20.07.2007, the Commissioner of Central Excise, Pune II, filed a Writ Petition No.4334 of 2008 before the Bombay High Court, which also came to be dismissed by the High Court on 18.2.2009, thus bringing an end to the dispute on the question whether the products were governed by the provisions of Standard of Weights & Measures (Packaged Commodities) Rules, 1977. And, apparently, no further appeal appears to have been made against the said judgment.

The CESTAT considered the submissions and observed that the said Writ Petition (Stamp no. 12771 of 2008) was later numbered as Writ Petition No. 4334 of 2008 and the same has been dismissed by the Bombay High Court.

It was also observed –

“…Now, in view of the High Court's order since Section 4A is inapplicable and determination of value has to be done under Section 4, there is nothing in the matter which needs further examination. If the Revenue was aggrieved by the judgment of the Hon'ble Bombay High Court, it ought to have challenged the judgment before the Hon'ble Supreme Court, which it had not done. The present appeal which was filed on July 01, 2009 records that a Writ Petition filed by the Revenue is pending in the High Court. This assertion is incorrect as the Writ Petition had already been disposed of on 18.2.2009 . It is obvious that the appeal has been filed by the Revenue in a routine manner without application of mind as it ignores the fact that the said Writ Petition had already been rejected by the Hon'ble High Court much before filing of the appeal.”

The Revenue appeal was dismissed.

(See 2018-TIOL-1322-CESTAT-MUM)