In a significant legal battle, Original Name and the Revenue Department faced off in a case revolving around packaging regulations. The Supreme Court’s recent judgment sheds light on crucial aspects of the dispute, impacting future interpretations of similar cases. Dive into the details of the case and explore the implications of this landmark ruling.
Facts
- Show cause notices allege packing of chewing tobacco pouches into larger poly packs for retail sale.
- Allegation of mentioning weight and MRP on the larger poly pack.
- Respondent contends that poly packs are not group packages as per Rules.
- Notification issued under Section 4A of the Excise Act included tobacco.
- Assessee clears only HDPE bags to distributors or dealers.
- The Commissioner held that HDPE bags containing 100 larger poly packs without a sale price declaration would be treated as wholesale packages.
- The Tribunal decided that the Madras High Court’s ruling in the Varnica Herbs case was not binding.
- The Commissioner emphasized that the intention of retail sale, not the actual sale, determines the classification of goods.
- The Tribunal cited the Commissioner of Central Excise, Vapi v. Kraftech Products Inc. case to support its decision.
- The Tribunal set aside the Commissioner’s order based on the above reasons and interpretation of the relevant rules.
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Arguments
- Learned counsel for the appellant argued that the decision in Commissioner of Central Excise, Vapi, is not applicable in this case as it involved a different product packaging scenario.
- The appellant’s counsel highlighted that the total weight of the package in the Vapi case was 9 gms, falling under the exemption under Section 34(b) of the Rules.
- The counsel emphasized that since poly packs are not sold by weight or measure, Rule 34(b) does not apply.
- It was argued that the respondent was selling a group package for retail sale, justifying the application of Section 4A by the Commissioner.
- The appellant’s counsel pointed out that the Tribunal failed to consider the detailed factual analysis done by the Commissioner.
- The learned counsel representing the respondent supported the impugned judgment.
- The respondent’s counsel urged that the principles laid down by the Court in the case of Commissioner of Central Excise, Vapi, will squarely apply.
- The respondent’s counsel stated that there is no need to interfere with the impugned judgment as it takes the correct view.
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Analysis
- The Commissioner held that an HDPE bag containing 100 poly packs does not require a declaration of selling price, hence classified as a wholesale package.
- No findings exist that the goods sold are individual poly packs, but rather HDPE bags containing 100 poly packs each.
- The respondent’s claim of selling HDPE bags with 100 poly packs was accepted by the Commissioner.
- The Rules do not mandate displaying prices on HDPE bags as they fall under the definition of wholesale packages.
- Even if the poly packs were considered retail packages, HDPE bags would still be classified as wholesale packages.
- The larger poly pack with weight and MRP printed on it was seen as a group package intended for retail sale by the Revenue.
- The criteria for Section 4A applicability hinges on the requirement for declaring retail prices on the package as per the Standards of Weights and Measure Rules.
- The question is whether the packages made by Original Name were intended for retail sale as per Rules definitions.
- The Commissioner’s analysis focused on whether the goods were intended for retail sale, regardless of the MRP mention on the poly packs.
- There is no rejection of Original Name’s assertion that 100 poly pack packages are being packed in one HDPE bag.
- Rule 34(b) exemption for weight under 10g does not apply to the chewing tobacco sold by Original Name in poly packs and HDPE bags.
- The judgment concludes that only the larger poly pack containing the declaration ‘MAX UNIT SALE PRICE’ is deemed a group package for retail sale, not the HDPE bags.
- The Commissioner’s finding leans towards the intention of retail sale due to the MRP mention on the poly packs and the absence of it on the HDPE bags.
- Retail sale is defined in Rule 2(q) of the said Rules as the sale, distribution, or delivery of a commodity through retail sales agencies or other instrumentalities for consumption by individuals or groups of individuals.
- For a transaction to be considered retail sale, the commodity must be intended for consumption by an individual, group of individuals, or any other consumer.
- The definition of retail sale underscores the focus on individual or collective consumption of the commodity being sold, distributed, or delivered.
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Decision
- Appeals dismissed
- No order as to costs
Case Title: COMMR.OF CEN.EXC.-II Vs. M/S MIRAJ PRODUCTS P.LTD. (2024 INSC 470)
Case Number: C.A. No.-000143-000147 – 2010
