Central Excise – Valuation – 100 chocolates packed in a Plastic Bag – Wholesale or Retail pack? Sour Sweets - Revenue Loses in Supreme Court
INDIVIDUAL chocolate weighing about 5 gms are wrapped in a printed plastic film. These wrapped chocolates are packed in a wholesale pack in a jar weighing about a kg or plastic bag weighing about 500 gms. The assessee's contention is that individual chocolates are not attracted by Section 4A of the CEA as they weigh less than 5gms. The wholesale package also does not get attracted because they are not for retail sale. The Department's contention is that the wholesale packets are indeed for retail sale and so should get assessed under Section 4A.
In fact before a Larger Bench, the ingenious SDR produced such packets and jars which she had bought in retail from a corner shop. She argued that anybody can buy these packs in retail and now a days nobody buys one toffee; they buy a packet containing about 100 toffees. While one Member wanted to know if she would get reimbursement for the toffees she bought and distributed in the Court, another Member objected to her introducing evidence at this late stage.
This issue had already entered the portals of four Zonal benches of the CESTAT and the Supreme Court.
In Swan Sweets Ltd vs Commissioner – , the Tribunal held that these goods are not covered under the MRP assessment.
In Loknath Prasad Gupta vs Commissioner of Central Excise – , the Tribunal took a similar decision in the case of chewing tobacco pouches packed in a bag. The Tribunal also referred to the Swan Sweets case.
The Tribunal Larger Bench in Commissioner of Central Excise vs Urison Cosmetics Ltd - , had taken a similar view and this was also mentioned in the Loknath case.
The Supreme Court agreed with the Larger Bench in Commissioner of Central Excise vs Kraftech Products Inc -
The Tribunal in Central Arecanut & Cocoa Marketing & Processing Co-Op. Ltd. vs. C.C.E. Mangalore, - , followed the Swan Sweets case and held that “individual toffees weighing 5.5 gms as well as packs of 100 such pieces do not attract assessment under Section 4A of the Act.”
This case was appealed to the Supreme Court by the Revenue and the appeal was dismissed by the Supreme Court on 15.09.2008.
The Revenue had appealed in the other cases of Swan Sweets and Loknath Prasad Gupta and the Supreme Court by the present order dismissed all these appeals. The Swan Sweets case had other parties like Makson Confectionery and Cadbury India .
The Supreme Court held that “In view of the order of this Court dated 15th September, 2008, dismissing C.A. No. 7559 of 2008 (D.19192/2008), preferred by the Revenue against the order of the Tribunal in the case of Central Arecanut & Cocoa Marketing & Processing Co-Op. Ltd. vs. C.C.E. Mangalore, , the issue raised in the appeals is no more res integra . In view of the said decision, with which we are in respectful agreement, there is no merit in these appeals, which are dismissed accordingly.”
Has the issue reached finality? No chance!
In Roys Industries Ltd vs Commissioner of Central Excise, Hyderabad IV – , the Bangalore Bench of the Tribunal did not agree with the Swan Sweets decision and referred the matter to the Larger Bench. It is understood that the Larger Bench has already decided the issue in favour of Revenue. And the Division Benches have to decide the cases based on the Larger Bench. But why did it go to a Larger Bench when there was already a decision of the Larger Bench approved by the Supreme Court? Apparently the referring Bench did not have the benefit of the Larger Bench or Supreme Court. But by the time the second Larger Bench delivered its decision, all these were available and any decision rendered by this second Larger Bench without considering the earlier Supreme Court decision upholding the judgment of the first Larger Bench would be per incuriam and a Larger Bench itself deciding this issue for a second time would be violating the principle of res judicata – well that is another story – the second larger bench order is not yet available and we have been trying to get a copy of it as soon as possible, but now with the Supreme Court decision, this has only academic interest.
Now what does Roys Industries do? Go to the Supreme Court or file an ROM with the Tribunal as already there were two decisions, one of the Supreme Court and the other of the Larger Bench of the Tribunal (approved by the Supreme Court) against Revenue.
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