Makson Pharmaceuticals (i) Pvt Ltd VERSUS C.C.E. &  S.T.-Bhavnagar

Customs, Excise & Service Tax 

Appellate Tribunal West Zonal

Bench At Ahmedabad

REGIONAL BENCH- COURT NO.3

Excise Appeal No.1234 of 2011

 

(Arising out of OIO-14-28/BVR/COMMISSIONER/2011 Commissioner of Central Excise-BHAVNAGAR)	dated	19/07/2011 passed by
Makson Pharmaceuticals (i) Pvt Ltd		VERSUS
C.C.E. & S.T.-Bhavnagar

WITH

Excise Appeal No.1273 of 2011

(Arising out of OIO-14-28/BVR/COMMISSIONER/2011 dated 19/07/2011 passed by Commissioner of Central Excise-BHAVNAGAR)

C.C.E. & S.T.-Bhavnagar Appellant

Plot No.6776/B-1. Siddhi Sadan, Narayan Upadhyay Marg,

Beside Gandhi Clinic, Near Parimial Chowk, Bhavnagar, Gujarat-364001

VERSUS

Makson Pharmaceuticals (i) Pvt Ltd Respondent

Rajkot Highway, Surendranagar, Gujarat

APPEARANCE:

Shri B.L. Narasimhan & Shri Ishan Bhatt, Advocates for the Assessee Shri Tara Prakash, Deputy Commissioner (AR) for the Revenue

 

CORAM: HON’BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON’BLE MEMBER (TECHNICAL), MR. C.L. MAHAR

 

Final Order No. A/ 11102-11103 /2023

 

 

RAMESH NAIR

DATE OF HEARING: 13.03.2023 DATE OF DECISION: 03.05.2023

 

In department’s appeal no. E/1273/2011, the issues involved is whether sugar confectionary weighing less than 10 grams individually wrapped and sold in poly bag/pet jars of 500 grams/1kg is liable to be assessed for excise duty on MRP basis under Section 4A as contended by the

 

department or to be assessed on transaction value under Section 4 of Central Excise Act, 1944 as claimed by the assessee.

1.1 In assessee’s appeal no. E/1234/2011, the issue involved is that whether Section 11D of Central Excise Act, 1944 can be invoked in the facts and circumstances of the case where the duty charged under Section 4A in the invoice is returned to the customer by way of issuing credit notes upon payment of excise duty under Section 4 shown in the ER-1 return for the month of January, 2006.

2. The brief facts of the case are that the aforesaid appeal no. E/1273/2011 has been preferred by the Commissioner of Central Excise & Service Tax, Bhavnagar against the impugned order-in-original no. 14- 28/BVR/COMMISSIONER/2011 dated 19.07.2011, the department has preferred an appeal against the portion of the order by which the learned Commissioner has dropped the proceedings for total duty of Rs.5,19,87,168/- under 15 show cause notices for the period from January, 2006 to December 2009 on the ground that goods are liable to be assessed under Section 4 of the Central Excise Act, 1944 as contended by the assessee. The assessee has preferred an appeal against that part of the order by which the learned Commissioner has confirmed the demand of Rs.16,79,841/- under Section 11D of the Central Excise Act, 1944 on the ground that the company has collected excise duty from buyers as assessed under Section 4A of the Central Excise Act and while they have paid lesser duty to the government under Section 4 of the Central Excise Act, 1944.

2.1 The assessee is engaged in the manufacture of sugar confectionaries falling under Chapter 17 of the Central Excise Act, 1944 the assessee is manufacturing and selling confectionaries of various brand names such as M/s. Nestle India Ltd and others. The clearance in question are made under jar pack (1 kg) or poly bag (500 gm) containing multiple individual confectionaries. The individual confectionaries are wrapped in a printed plastic film. The weight of the individual confectionary is about 4 gm/3gm or

9.375 gm in case of Polo Mini Mint including the weight of the wrapper. The confectionaries are thereafter packed in wholesale packs i.e. plastic jar pack or plastic poly bag. The weight of the wholesale package is around 1 kg in the case of jar pack and 500 gm in the case of poly bags. MRP is printed on the confectionaries. The assessee assessed their clearance under Section 4 of the Central Excise Act, 1944 i.e. on the transaction value.

 

3. The case of the department is that the valuation of confectionary should be taken on the basis of wholesale packs like poly bags and jar whereas, the claim of the assessee is that in terms of Rule 34 of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (SWM Rules), since the weight of the individual confectionary is less than 10 gm, there is no requirement under the law to declare MPR on individual sugar confectionary and consequently, in respect of the individual confectionary the provision of Section 4A for the purpose of Central excise valuation, shall not apply.

3.1 The adjudicating authority considering the judgment of the tribunal in the appellant’s own case which was subsequently upheld by the Hon’ble Supreme Court dropped the proceedings on the issue of valuation whether Section 4 of 4A will apply. Being aggrieved by the said portion of the order, the revenue filed the appeal bearing no. E/1273/2011 and against the confirmation of demand under Section 11D in respect of the differential duty valuation between Section 4 and 4A, the assessee filed the appeal no. E/1234/2011.

4. Shri Tara Prakash, learned Deputy Commissioner (AR) appearing on behalf of the revenue appellant in respect of appeal No. E/1273/2011 reiterates the grounds of appeal. He submits that though earlier in the assessee’s own case the matter was decided in their favour which was upheld by the hon’ble Supreme Court however, due to amendment in Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (SWM Rules) with effect from 13.01.2007, the benefit of the earlierjudgment shall not be applicable to the assessee. As regard the assessee’s appeal, he reiterates the finding of the impugned order.
5. Shri B.L. Narasimhan and and Shri Ishan Bhatt, learned counsels appearing on behalf of the assessee in respect of the revenue’s appeal no. E/1273/2011 submits that the issue is squarely covered by the decision of the tribunal in their own case in M/s. Swan Sweets Pvt. Ltd. reported at2006 (198) ELT 565 which was upheld by the Hon’ble Supreme Court reported at 2010 (259) ELT 5 (SC). As per the said judgment, the wholesale pack of 500 gm or 1 kg is not a retail pack therefore, the MRP of wholesale pack cannot be taken for the valuation in terms of Section 4A whereas, the individual confectionary which is less than 10 gm should be considered and as per Rule 34 of Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (SWM Rules) i.e. exemption from affixing the retail sale price on

 

the goods of less than 10 gms, the valuation under Section 4A is not correct.

6. We have carefully considered the rival submissions and perused the records. The revenue’s appeal is only on the ground that by amendment dated 13.01.2007 in Rule 2(j) of the SWM (PC) Rules, 1977 the earlier judgmentin the appellant’s own company is  In this regard, we reproduce Rule 34 (b) which has prevailed prior to 13.01.2007 and subsequent to that which reads as under:-

Before 13.01.2007

 

Rule 34. Exemption in respect of certain packages

Nothing contained in these rules shall apply to any package containing a commodity if,-

• …….
• the net weight or measure of the commodityis twenty grams or twenty mililitres or less, if sold by weight or measure.

 

 

 

After 13.01.2007

 

Rule 34. Exemption in respect of certain packages

Nothing contained in these rules shall apply to any package containing a commodity if,-

• …….
• thenet weight or measure of the commodity is ten gram or ten mililitre or less, if sold by weight or measure.

 

 

 

In view of the above rule, which was prevailing throughout the period involved in the present case, there is a clear provision that in case of the product of less than 10 grams, there is no requirement for affixing retail sale price. Since in the earlier decision of the Hon’ble Supreme Court it was categorically held that for the purpose of assessment, individual confectionary has to be taken and not the wholesale pack. The individual confectionary is undisputedly below the weight of less than 10 gram and in terms of Rule 34(b) of SWM (PC) Rules, 1977 there is no requirement for affixing the retail sale price. The said product cannot be taken under the ambit of Section 4A of Central Excise Act,1944.

 

• In revenue’s appeal, emphasis was made on the amendment of Rule 2(j) of SWM (PC) Rules, 1977, we reproduce the rule prevailing prior to 13.01.2007 and the amended Rule post 13.01.2007.

2. Definitions

In these rules, unless the context otherwise requires-

(j) “net quantity”, in relation to commodity contained in a package, means the quantity by weight, measure or number of such commodity contained in that package, excluding the packaging or wrapper;]

From the above substitution of Rule 2(j) of SWM (PC) Rules, 1977, we do not find any adverse effect in the principle of law on the issue in hand laid down by the Hon’ble Supreme Court. Despite the substitution of Rule 2(j), the provision of Rule 34(b) of SWM (PC) Rules, 1977 remain intact, according to which there is no requirement for affixing/printing retail sale price on the package of the goods of less than 10 gram therefore, we do not find any substance in the revenue’s appeal. The law laid down by the Hon’ble Supreme court in the appellant’s own case shall continue to be applicable in the present case also. The relevant order of the Hon’ble Supreme Court in the appellant’s own case is reproduced below:-

2. In view of the order of this Court dated 15th September, 2008, dismissing No. 7559 of 2008 (D.19192/2008) [2008 (232) E.L.T.

A107 (S.C.)], preferred by the Revenue against the order of the Tribunal in the case of Central Arecanut & Cocoa Marketing & Processing Co-Op. Ltd. v. C.C.E., Mangalore, 2008 (226) E.L.T. 369 (Tri.-Chennai), the issue raised in the appeals is no more res integra. In the said order, the Tribunal relying on its earlier decision in the case of M/s. Swan Sweets Pvt. Ltd. [2006 (198) E.L.T. 565 (Tribunal)], one of the respondents in the present appeals had held that a package containing about 100 or more individual pieces of an article, like „Eclairs‟ brand chocolates etc., each weighing 5.5 grams would qualify for exemption under Rule 34 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 and will not attract assessment under Section 4A of the Central Excise Act, 1944.

 

3. In view of the said decision, with which we are in respectful agreement, there is no merit in these appeals, which are dismissed accordingly, with no order as to costs.

 

Civil Appeal No. 1290/2007

 

4. In view of the decision of this Court in Civil Appeal No. 7559 of 2008 (D.19192 of 2008), affirming the decision of the Tribunal in the case of Central Arecanut & Cocoa Marketing & Processing Co-Op. Ltd. v. C.C.E., Mangalore, 2008 (226) E.L.T. 369(Tri.-Chennai), this appeal is

 

 

 

Civil Appeal No. 5856/2006

 

5. Having regard to the fact that the revenue involved in the case is stated to be less than Rs. 15,000/-, we decline to entertain the appeal. The same is dismissed accordingly, keeping open the question of law sought to be raised in the appeal.

 

In view of the above order of the Hon’ble Supreme Court, the issue is no more res-integra accordingly, the revenue’s appeal is liable to be dismissed.

• As regard the assessee’s appeal, wherein they have challenged the confirmation of demand by the adjudicating authority under Section 11D, we find that though the appellant have raised invoice showing the total excise duty in terms of Section 4A but since the differential duty demand i.e. between Section 4 and Section 4A was not sustained, the same was held to have been collected by the assessee from their customer accordingly, the demand was confirmed under Section 11D. On the submission of the appellant and on the perusal of record, it is clear that the assessee though raised invoices showing duty under Section 4A but in respect of the differential duty they have issued credit note to their customers and consequently the said amount was not collected. In this regard, for ease of reference we reproduce provision of Section 11D as under:-

SECTION [11D. Duties of excise collected from the buyer to be deposited with the Central Government. — (1) Notwithstanding anything to the contrary contained in any order or direction of the Appellate Tribunal or any Court or in any other provision of this Act or the rules made thereunder, [every person who is liable to pay duty under this Act or the rules made thereunder, and has collected any amount in excess of the duty assessed or determined and paid on any excisable goods under this Act or the rules made thereunder from the buyer of such goods] in any manner as representing duty of excise, shall forthwith pay the amount so collected to the credit of the Central Government.

 

[(1A) Every person, who has collected any amount in excess of the duty assessed or determined and paid on any excisable goods or has collected any amount as representing duty of excise on any excisable goods which are wholly exempt or are chargeable to nil rate of duty from any person in any manner, shall forthwith pay the amount so collected to the credit of the Central Government.]

 

[(2) Where any amount is required to be paid to the credit of the Central Government under [sub-section (1) or sub-section (1A), as the case may be,] and which has not been so paid, the Central Excise Officer may serve, on the person liable to pay such amount, a notice requiring him to show cause why the said amount, as specified in the notice, should not be paid by him to the credit of the Central Government.

 

• TheCentral Excise Officer shall, after considering the representation, if any, made by the person on whom the notice is served under sub- section (2), determine the amount due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.

 

• The amount paid to the credit of the Central Government under [sub-section (1) or sub-section (1A) or sub-section (3), as the case may be,] shall be adjusted against the duty of excise payable by the personon finalization of assessment or any other proceeding for determination of the duty of excise relating to the excisable goods referred to in [ sub- section (1) and sub-section (1A)].

 

• Where any surplus is left after the adjustment under sub-section(4), the amount of such surplus shall either be credited to the Fund or, as the case may be, refunded to the person who has borne the incidence of such amount, in accordance with the provisions of section 11B and such person may make an application under that section in such cases within six months from the date of the public notice to be issued by the Assistant Commissioner of Central Excise for the refund of such surplus ]

 

From the plain reading of the above Section 11D, it is clear that the provision of section 11D shall apply only in case where the assessee collects the duty and does not deposit to the government. In the present case, though the appellant have shown the duty in the invoice but at the same time by issuance of the credit note to the customer, said amount was not collected. Moreover, the duty was paid under protest and thereafter credit note was issued. With this fact, it cannot be said that the assessee has collected any duty and the same was not deposited to the government exchequer. In view of this fact only, it is viewed that there is no application of Section 11D in the facts of the present case therefore, the demand confirmed under Section 11D cannot be sustained.

6. As a result, revenue’s appeal no. E/1273/2011 is dismissed and assessee’s appeal no. E/1234/2011 is allowed.

(Pronounced in the open court on 03.05.2023)

 

(RAMESH NAIR) MEMBER (JUDICIAL)

 

(C.L. MAHAR) MEMBER (TECHNICAL)