Supreme Court dismisses Excise Department's appeal, upholds CESTAT order regarding applicability of excise duty on packages of chewing tobacco
Justices Abhay S Oka & Pankaj Mithal [08-07-2024]

Read Order: Commissioner of Central Excise, Jaipur -II v. M/s. Miraj Products Pvt. Ltd[SC- CIVIL APPEAL NOS. 143-147 OF 2010]

LE Correspondent

New Delhi, July 10, 2024: The Supreme Court has dismissed appeals filed by the Commissioner of Central Excise, Jaipur-II against M/s. Miraj Products Pvt. Ltd in a case related to the applicability of excise duty on chewing tobacco packages.

The top court upheld the order of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), which had ruled in favor of Miraj Products. The case pertained to the issue of whether the chewing tobacco packages sold by Miraj Products were covered under Section 4 or Section 4A of the Central Excise Act, 1944.

The Excise Department had issued show cause notices to the company, alleging that the larger poly packs containing 33 pouches of 6 gms each and one pouch of 15 gms were "group packages" meant for retail sale and attracted duty under Section 4A. However, Miraj Products contended that it was selling HDPE bags containing 100 such poly packs to distributors and dealers, and these were "wholesale packages" not meant for retail sale. The CESTAT had accepted this contention and set aside the Commissioner's order demanding differential duty, interest and penalty from the company.

In its judgment, the Supreme Court noted that the Commissioner had accepted Miraj Products' submission that it was selling HDPE bags with 100 poly packs to distributors. The apex court held that even if the poly packs were assumed to be retail packages, the HDPE bags would be covered under the definition of "wholesale package" as per the Standards of Weights & Measures (Packaged Commodity) Rules, 1977.

The apex court observed that for Section 4A(1) to apply, the package should be of such nature that it attracts provisions of the said rules which mandatorily require the mention of retail price. If a package does not require mentioning the retail price as per the rules, merely mentioning the price voluntarily would not attract Section 4A(1).

Upholding the CESTAT order, the Supreme Court dismissed the appeals filed by the Excise Department.