A) ABSTRACT / HEADNOTE

This case revolves around whether the excisable goods sold by M/s Miraj Products Pvt. Ltd. attract the valuation methodology under Section 4A of the Central Excise Act, 1944, which mandates assessment based on retail sale price for certain goods. The core contention was whether the goods, particularly HDPE bags containing multiple poly packs of chewing tobacco, were intended for retail sale or classified as wholesale packages under the Standards of Weight and Measures (Packaged Commodity) Rules, 1977 (1977 Rules). The Supreme Court upheld the Tribunal’s decision, concluding that Section 4A did not apply since the HDPE bags qualified as wholesale packages and not group or retail packages under the Rules.

Keywords: Central Excise, Retail Sale Price, HDPE Bags, Group Packages, Wholesale Packages.

B) CASE DETAILS

• i) Judgment Cause Title: Commissioner of Central Excise, Jaipur-II v. M/s Miraj Products Pvt. Ltd.

• ii) Case Number: Civil Appeal Nos. 143-147 of 2010

• iii) Judgment Date: 08 July 2024

• iv) Court: Supreme Court of India

• v) Quorum: Justice Abhay S. Oka and Justice Pankaj Mithal

• vi) Author: Justice Abhay S. Oka

• vii) Citation: [2024] 7 S.C.R. 117; 2024 INSC 470

• viii) Legal Provisions Involved:

  • Section 4 and Section 4A of the Central Excise Act, 1944
  • Rules 2(g), 2(q), 2(x)(iii), and 34 of the Standards of Weight and Measures (Packaged Commodity) Rules, 1977

• ix) Judgments Overruled by the Case: None explicitly stated.

• x) Law Subjects: Taxation Law, Central Excise, and Administrative Law.

C) INTRODUCTION AND BACKGROUND OF JUDGMENT

The dispute originated from show cause notices issued to M/s Miraj Products Pvt. Ltd. by the Excise Department, alleging that their HDPE bags containing poly packs of chewing tobacco were group packages intended for retail sale. The contention arose under Section 4A of the Central Excise Act, 1944, which mandates assessment based on retail price for retail sale goods. The Tribunal’s decision, favoring the assessee, was contested by the Excise Department.

D) FACTS OF THE CASE

1. The respondent was engaged in packing 33 pouches (6g each) and 1 pouch (15g) of chewing tobacco into poly packs, which were further placed in HDPE bags (100 poly packs each).

2. Show cause notices were issued alleging that the poly packs constituted group packages intended for retail sale.

3. The department relied on Section 4A, arguing that the mention of MRP on poly packs indicated retail sale, thus attracting excise duty valuation under Section 4A.

4. The respondent contended that the poly packs were sold in HDPE bags directly to distributors and dealers and were not intended for retail sale, making them wholesale packages under the 1977 Rules.

5. The Commissioner upheld the department’s claim, asserting that the MRP declaration confirmed the retail nature of the packages.

6. The Tribunal reversed this decision, concluding that Section 4A did not apply as the HDPE bags were wholesale packages.

E) LEGAL ISSUES RAISED

• Whether the goods sold by the respondent-assessee attract Section 4A of the Central Excise Act, 1944?
• Whether the poly packs and HDPE bags qualify as group packages intended for retail sale or wholesale packages under the 1977 Rules?

F) PETITIONER’S ARGUMENTS

1. The MRP printed on the poly packs confirmed their retail sale nature.

2. The poly packs exceeded 10g, making Rule 34(b) of the 1977 Rules, which exempts packages under 10g, inapplicable.

3. The HDPE bags were argued to be group packages containing individual retail packages, as defined under Rule 2(g).

4. The Commissioner’s findings emphasized that retail sale was the intended purpose, irrespective of actual retail sales by the respondent.

G) RESPONDENT’S ARGUMENTS

1. The poly packs were sold exclusively in HDPE bags to distributors and dealers, constituting wholesale trade.

2. The poly packs were not retail packages, as they were not sold directly to consumers.

3. The HDPE bags met the definition of wholesale packages under Rule 2(x)(iii), which includes packages containing 10 or more retail packages labeled as per the Rules.

4. The Tribunal’s reliance on precedent decisions supported their contention that the retail sale provision under Section 4A did not apply.

H) JUDGEMENT

a. RATIO DECIDENDI

1. The Supreme Court upheld the Tribunal’s decision, affirming that Section 4A did not apply.

2. The Court noted that the HDPE bags containing 100 poly packs constituted wholesale packages under Rule 2(x)(iii).

3. The mention of MRP on poly packs did not automatically indicate retail sale intent unless required by the 1977 Rules.

b. OBITER DICTA

1. The Tribunal’s observation that precedents from higher courts take precedence over lower court rulings (Madras High Court in this case) was not explicitly contested.

c. GUIDELINES

The judgment clarified the following:

1. Wholesale packages under Rule 2(x) include those containing 10 or more retail packages, provided the retail packages meet labeling requirements.
2. The intended purpose of the package is crucial in determining whether it qualifies as retail or wholesale.

I) CONCLUSION & COMMENTS

The case underscores the importance of distinguishing between group packages and wholesale packages in excise law. The Supreme Court’s reliance on statutory definitions within the 1977 Rules and the factual matrix emphasizes the necessity of examining the intended purpose of the sale. It highlights the nuanced application of Section 4A, reinforcing that the mere declaration of MRP does not suffice to attract the provision.

J) REFERENCES

a. Important Cases Referred

1. M/s Varnica Herbs v. Central Board of Excise & Customs, New Delhi, 2004 (163) ELT 160 (Madras).
2. Commissioner of Central Excise, Vapi v. Kraftech Products Inc., [2008] 5 SCR 251 : (2008) 12 SCC 321.

b. Important Statutes Referred

1. Central Excise Act, 1944, Sections 4 and 4A.
2. Standards of Weight and Measures (Packaged Commodity) Rules, 1977, Rules 2(g), 2(q), 2(x)(iii), and 34.