2007 Supreme(SC) 1097

2007(6) Supreme 317
Supreme Court of india
(From CEGAT)
Ashok Bhan & V.S. Sirpurka, J.
Jayanti Food Processing (P) Ltd. — Petitioner
versus
Commissioner of Central Excise, Rajasthan — Respondent
Appeal (civil) 2819 of 2002, 2150-2151 of 2004, 1144 of 2004, 1738 of 2004, 1385 of 2005, 2877 of 2005, 3847 of 2005, 6168 of 2005, 6425 of 2005, 6559-60 of 2005, 498
of 2006, 4754 of 2006, 5840 of 2006
Decided on : 22-08-2007

important points
A hotel cannot be covered under the term individual or group of individuals, nature of sale notwithstanding. Hotel being hospitality industry, supply of the four litres packs of ice-cream to it is covered by exemption under rule 34 of SWAM Rules, 1977.
Chocolate packages specifically to be distributed free to consumers of Pepsi, and no sale being involved, Rule 6(x)(ii) is attracted. Further, the commodity being specifically meant for and supplied to a industry, rule 34 is attracted. When a package containing any commodity is produced, distributed, displayed, delivered or stored for sale for consumption by an individual or group of individuals, it would be a retail package.

Headnote:(a)Central Excise Act, 1944 – Section 4A – Factors relevant for applicability of section 4A laid down, bulk sale being immaterial. (Paras 2 and 6)

       (b)Central Excise Act, 1944 – Section 4 and 4A r/w rules 34, 15, 16 and 17, Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Where there is a general exemption like Rule 34, SWM (PC) Rules, such goods and/or packages of such goods shall not be covered by Section 4A (1) & (2) of the Act – However, all such packages which are covered under Chapter II, more particularly under Rule 6(1)(f), Rules 15, 16 and 17, would be governed under Section 4A as such packages are required to declare the retail sale price on the packages. (Para 5)

       (c)Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Rules 2(o), 2(p) and 6(1)(f) – Consumer means an individual or group of individuals who consume the commodity – A hotel cannot be covered under the term, nature of sale notwithstanding – Therefore, the package of four litres ice-cream could not be termed as retail package, nor its sale would be retail sale – As such there was no requirement of printing retail sale price. (Paras 13 and 14)

       (d)Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Rules 2(x)(ii), 29 and 34 – The four litres ice-cream package comes within the definition of wholesale package to which rule 29 applies which does not require the price to be displayed on the package – Further, Hotel being hospitality industry, supply of the four litres packs of ice-cream to it is covered by exemption under rule 34 – Therefore Section 4A of the Act would not apply to the four litres packs of ice-cream supplied by the appellant. (Paras 15 to 17)

       (e)Central Excise Act, 1944 – Section 4A – Company contracting to supply chocolates in bulk to another company for their sales promotion scheme and claiming it not to be retail sale, claiming exemption from section 4A – Chocolates manufactured by the appellant may be required to bear the declaration of MRP but that cannot be true of all the chocolates – Para 6 of the relevant circular specifically providing that the same notified commodity may be partly assessed on the basis of MRP under Section 4A and partly on the basis of normal price prior or transaction value – Thrust of Section 4A being on the packages and not on the commodity, it is only where the goods are sold in the packages that the section would be attracted. (Paras 27 and 28)

       (f)Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Rules 6(1)(f) and 34; and section 4A, Central Excise Act, 1944 – If there is no sale involved of the package, there would be no question of Rule 6(1)(f) being attracted – Instantly, the chocolate packages specifically to be distributed free to consumers of Pepsi, and hence no sale was involved– Further, the commodity being specifically meant for and supplied to Pepsico, rule 34 was attracted – Hence Section 4A was not attracted. (Para 29)

       (g)Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Rules 2(o), 2(p) and 6(1)(f) – The telephone manufacturing companies sold the instruments (Push Button Telephones) to DoT, MTNL and BSNL who in turn did not sell these instruments to the general public but instead provided the instruments on rental basis or otherwise to their customers, meaning thereby that there was no further sale of these instruments – These telephones were specified goods and were bound to be valued for assessment with reference to the retail price under Section 4A of the Act. (Para 32)

       (h)Standards of Weights & Measures (Packaged Commodities) Rules, 1977 – Rules 2(o), 2(p) and 6 – Merely because there is a bulk sale to DoT, MTNL and BSNL, the assessment cannot be made under Section 4 of the Act – The nature of sale is not important, what is important is the requirement of printing the MRP on the packages – The retail sale does not have to be only through the#19;retail sale agencies or other instrumentalities – When a package containing any commodity is produced, distributed, displayed, delivered or stored for sale for consumption by an individual or group of individuals, it would be a retail package – Instantly, DoT, MTNL & BSNL provided these instruments, after they have purchased the instruments , to the individual customers, though not by way of a sale but for their use – The package, therefore, is retail package. (Para 33)

       (i)Central Excise Act, 1944 – Section 4A – In absence of the packages contained a declaration that they were specially packed for a particular industry for servicing the same applicability of Rule 34 is completely ruled out – Hence the same cannot be exempted from operation of Section 4A. (Para 34)

       (j)Central Excise Act, 1944 – Section 4A – Twelve mineral water bottles were packed in a wrapper and the wrapper contained the MRP price though the bottles themselves did not have the price – The view taken by the Commissioner (Appeals) and the Tribunal that the MRP was correctly mentioned and as such the assessment should have been under Section 4A approved. (Para 38)

       Facts of the case :

       All these 15 appeals can be classified in two groups. Two appeals are filed by the Assessees challenging the order of Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as the Tribunal), they being CA 2819/2002 filed on behalf of Jayanti Food Processing (P) Ltd., for sale of Ice-creams and CA 1738/2004 filed on behalf of Nestle India Limited pertaining to KITKAT Chocolates. The remaining appeals are filed by the Commissioners of Central Excise from various places and they are CA 2150-51/2004 and CA6425/2005 against ITEL Industries, CA 1144/2004 and CA 4754/2006 against BPL Telecom Ltd., CA 1385/2005 against Himachal Exicom Communication Ltd. These appeals by themselves formulate into one group relating to the sale of telephone instruments by the assesses. CA 2877/2005, CA6168/2005 and CA5840/2006 against Electrolux Kelvinator and Electrolux India relate to the sale of Refrigerators. Further CA6559-6560/2005 against Explicit Trading and Marketing Pvt.Ltd., pertain to the sale of bottled mineral water. Lastly CA498/2006 against Ramani Power Cables Pvt., Ltd. relate to the sale of Electric Filament Lamps.

       All these appeals pertain to the interpretation of Section 4 and 4A of the Central Excise Act, 1944 and the provisions of Standards of Weights & Measures Act, 1976 (‘the SWM Act’) as also the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 (‘the SWM (PC) Rules’). In the appeals filed by the Assessees, Jayanti Foods and Nestle India the Tribunal has accepted the contention of the Department that these Assessees should be assessed under Section 4A while the contention of the Assessees is that they should be assessed and taxed under Section 4 of the Act. In the appeals filed by the Department pertaining to sale of Telephone Instruments, the contention of the Department is that they should also be taxed and assessed under Section 4 and not under Section 4A of the Act as ordered by the Tribunal. Similar is the case in respect of appeals pertaining to the sale of Refrigerators where the Tribunal has ordered the assessment under Section 4A of the Act. In the case of sale of Bottled Mineral Water while the Tribunal has ordered the assessment under Section 4, the Department suggests that the assessment should be under Section 4A of the Act. Lastly CA 498/2006 pertain to the sale of Electric Filament Lamps where the assessment is ordered under Section 4A of the Act. In short unless an authoritative interpretation is handed out, it will not be possible to settle the issues between the assessees and the Department. In respect of some of the items, as the assessment under Section 4A is less, the same is being insisted upon by the Assessee while in some cases the assessment being more beneficial under Section 4, the Assessees insisted on the assessment under Section 4 of the Act. Eventually the stand of the Department is to the contrary. All these appeals, therefore, would depend upon the interpretation of the scope of Section 4A which is inextricably connected with the provisions of PC Rules under the SWM Act.

       Findings of the Court :

       Rules 2(o), 2(p), 6, 29 and 34 interpreted to adjudicate the disputes.

       Result : Civil Appeal Nos. 2819/2002 and Civil Appeal No. 1738/2004 are allowed and Civil Appeal Nos. 2050-51/2004, 1144/2004, 4754/2004, 1385/2005, 3847/2005, 6425/2005, 2877/2005, 6168/2005, 5840/2006, 498/2006 and 6559-60/2005 are dismissed.