Packaged Drinking water – omitted from Section 4A assessment
An enlightened netizen sent us this ‘packaged mail'.
Under the six digit classification in Central Excise Tariff, Packaged Drinking Water was classifiable under heading 2201.19 of the CETA'85.
All goods falling under Chapter heading 2201.19 and 2202.19 were notified for assessment under Section 4A (MRP based assessment) and the abatement available was 50% as prescribed in terms of notification 13/2002-CE(N.T), dated 01.03.2002.
With the advent of the eight digit Tariff w.e.f 28.02.2005, ‘ Packaged Drinking Water' came to be classified under heading 2201 90 90 of the CETA'85.
Incidentally, the MRP notification 13/2002- CE(N.T) remained unchanged and continued to hold fort.
So, although there was no such heading 2201.19 in the 8-digit classification, yet the MRP notification was applicable to ‘Packaged drinking water' in view of notification 5/2005- CE( N.T), dated 24.02.2005.
The notification 13/2002-CE( N.T) dated 01.03.2002 came to be superseded by Notification 2/2006-CE( N.T), dated 01.03.2006 and the description of goods covered under MRP assessment under Chapter 22 were as under –
S. | Chapter or heading | Description of goods | Abatement as |
|---|---|---|---|
(1) | (2) | (3) | (4) |
25. | 2201 10 10 , 2201 90 | Mineral waters | 50% |
26. | 2201 10 20 or | Aerated waters | 42.5% |
Although there is a mention of heading 2201 90 90 under which Packaged Drinking Water falls for classification, the description of the goods mentioned in the notification only refers to “Mineral Waters” and “Aerated Waters”.
Section 4A (1) requires that the Central government by notification specify the goods that are to be subjected to MRP based assessment. The opening clause of the notification 2/2006-CE( N.T) [supra] reads –
“…the Central Government hereby specifies the goods mentioned in Column (3) of the Table below and falling under Chapter or heading or sub-heading or tariff item of the First Schedule to the Central Excise Tariff Act, 1986 (5 of 1986) mentioned in the corresponding entry in column (2) of the said Table, as the goods to which the provisions of the said sub-section (2) shall apply…”
So, the fact is that although there are a couple of headings/sub-headings referred to in column no. 2 and which can cover “Packaged Drinking Water”, it is only ‘Mineral Water' that is classifiable under heading 2201 10 10 and 2202 1090 that is subjected to MRP assessment.
The above notification continued till the advent of the new notification 14/2008- CE( N.T) dated 01.03.2008 that superseded notification 2/2006-CE( N.T ).
Here the entries pertaining to Mineral Waters and Aerated Waters appears thus –
S.No. | Chapter, | Description of goods | Abatement |
(1) | (2) | (3) | (4) |
24. | 2201 or 2202 | Mineral waters | 48 |
25. | 2201 or 2202 | Aerated waters | 40.5 |
Notification 49/2008- CE( N.T ) dated 24.12.2008 superseded notification 14/2008-CE( N.T) and as far as the above two entries are concerned, the only thing that changed were the abatement rates which now became 45 and 40 respectively.
So, the question that begs for an answer is – Whether Packaged Drinking Water is a notified commodity under Section 4A of the CEA'44 and whether the same is to be assessed in terms of the Retail Sale price?
Incidentally for the period from 28.02.2005 to 28.02.2006 is concerned, it is apparent that the ‘Packaged Drinking Water' is to be assessed in terms of the RSP u/s 4A of the CEA'44 in view of the fact that notification 13/2002- CE(N.T) dated 01.03.2002 was in existence till 28.02.2006 and the notification 5/2005-CE(N.T), dated 24.02.2005 saved the day.
Through the DDT column, I request that the Board takes cognizance of this apparent and inadvertent drafting error in removing Packaged Drinking Water from MRP assessment.
If at all the Audit and Investigation Wings get a whiff of this controversy and raise all kinds of possible demands, the benign Board may like to restrain them till matters are sorted out.
Netizens may also like to offer their views.