Holding

Rule 34(b) exemption applies to multi‑piece packages sold by weight with net weight ≤10 g, so assessment is under Section 4 and the CBEC circular has no legal effect.

Summary

The appellant, Commissioner of Central Excise, challenged the assessee M/s Kraftech Products Inc.'s claim of exemption from excise duty on hair‑dye packed in three 3‑gram sachets per packet (total 9 g). The assessee argued that, under Rule 34(b) of the Standards of Weights and Measures (Packaged Commodity) Rules, 1977, the commodity was sold by weight and, because the combined net weight was ≤10 g, it qualified for exemption and should be valued under Section 4 of the Central Excise Act, 1944. The revenue contended that the exemption did not apply to multi‑piece packages and relied on a 1999 CBEC circular stating otherwise. The Supreme Court held that the package clearly disclosed weight, the intention to sell by weight was explicit, and Rule 34(b) exemption applied despite the multi‑piece nature. The circular was deemed without legal basis. Consequently, the assessment must be made under Section 4, not Section 4A, and the revenue’s appeal was dismissed while the assessee’s appeals were allowed.

Issues considered

The applicability of Rule 34(b) exemption to a multi‑piece package whose combined net weight is ≤10 g.
Whether the 2 Nov 1999 CBEC circular limiting the exemption to non‑multi‑piece packages is legally binding.
Whether the sale of the commodity is by weight/measure, thereby invoking valuation under Section 4 rather than Section 4A of the Central Excise Act.
Whether the requirement of declaring retail sale price under Rule 6 and Rule 17 applies to such multi‑piece packages.

Legislation cited

Central Excise Act, 1944s. 11A, s. 4, s. 4A

Subjects

Central ExciseRule 34 exemptionmulti‑piece packageretail sale priceSection 4 vs Section 4AStandards of Weights and MeasuresCBEC circularexcise duty valuation

Judgment

[2008] 5 S.C.R. 251

-I
COMMISSIONER OF CENTRAL EXCISE, VAPI A
v.
M/S. KRAFTECH PRODUCTS INC.
(Civil Appeal No. 2597 of 2005)
MARCH 14, 2008
B
-./ (S.B. SINHA AND V.S. SIRPURKAR, JJ.)

Central Excise Act, 1944; Ss. 4 & 4A/Standard of Weights
and Measures (Packaged Commodity) Act, 1976/Standard of
Weights and Measures (Packaged Commodity) Rules, 1977; c
rr. 2, 6, 12 & 17 and Schedule V appended thereto/Circular
dated November 2, 1999 issued by CBEC:
Goods packed in multi piece package -'"- Declaration of
retail price on package - Requirement of - Levy of excise
duty in terms of s. 4 or s. 4A of 1944 Act - Applicability of D
exemption clause under r. 34 of the Rules - Held: Commodity
--, in question being sold in multi piece package displaying
weight contained therein - Thus, intention of assessee to sell
the commodity by weight explicit - Exemption clause
contained in r. 34 of Rules would apply if the commodity is sold E
by weight/measure "'- Hence, Appellate authority as also the
Tribunal were right in holding that assessees were eligible for
exemption ulr.34 of the Rules, and thus, entitled to assessment
u/s. 4 of the 1944 Act.
Sale price on packages - Circular dated November 2, F
1999 issued by CBEC -Applicability of- Held: Not applicable
- issuance of Circular in terms of opinion of the Law Ministry
observing that the exemption under r.34(b) of the Rules not
applicable to multi piece packages is not based on any legal
principle. G
Respondent-assessee was manufacturer of hair-dye
and was selling it by packing in pouches of three, each of
., -+ the pouch containing 3 gm. of the commodity in question .

251 H
252 SUPREME COURT REPORTS [2008] 5 S.C.R.

A Assessee, for the purpose of payment of excise duty,
made valuation of the comm1:>dity in question in terms of
s.4 of the Central Excise Act, 1944. Revenue served show-
cause Notices to it demanding differential amount of the
duty as exemption as claimed in terms of r.34 of the
B Standards of Weights and Measures (Packaged
Commodity) Rules, 1977, not available to it. The demand
was confirmed by the authorities. Appeal preferred by the
assessee was allowed by the appellate authority. Appeal
preferred thereaginst by thE! Revenue was dismissed by
c the Tribunal holding that since the combined weight of
the 3 units of the impugned goods is less than the
prescribed weight of 20 gms. the Commissioner (Appeals)
has rightly concluded in his impugned order that the
assessees are eligible for exemption under the said Rule
D 34 and consequently they are entitled to assessment
under Section 4 of the Central Excise Act, 1944 instead of
under Section 4A of the said Act. Hence the present
appeals.
Revenue contended that the commodity in question.
E is being sold in 3 sachets, each one of them can be sold
separately, Rule 34 of the Rules will have no application; .
that how the product is known in the market, should be
the test to find out as to how it is sold whether in unit or
by weight or measure; and that the notices under Section
F 11A of the Act having beem issued beyond the period of
six months, the same were barred by limitation.
Assessees submitted that keeping in view the
provisions of Rule 12(2) c1f the Standards of Weights and
Measures (Packaged Commodity) Rules, the commodity
G can be sold by weight or measure. It was so intended to
be done as the weight o'f each sachet has been notified
on the packet; that the dEicision of the Madras High Court
in the case of Vamica Herbs was rendered per incuriam as
has been held by a larger Bench of the Tribunal in
H : Commissioner of Central Excise, Mumbai vs. Uirson
.._ -
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 253
M/S. KRAFTECH PRODUCTS INC.

Cosmetics Ltd. : 2006 (198) E.LT. 508 (Tri.-LB). A
-/
Dismissing Civil Appeal Nos. 2597, 2575, 2703, 2704
of 2005; 325 - 326 of 2006 filed by the Revenue and
allowing Civil Appeal Nos. 1029, 5069-5073 of 2004 and
Civil Appeal No. 1174 of 2007 filed by the assessees, the
Court B
HELD: 1.1 It is beyond any doubt or dispute that the
commodity in question is being sold in 'multi piece
package'. Identical quantity of commodity is packed in
each sachet. Yet again admittedly three sachets are c
packed in one packet. The weight of three sachets is 9
gms, that is, less than the prescribed weight of 10 gms.
(Para - 15) [263-C, D]
1.2 The packet describes the commodity in question.
It not only discloses the weight contained in each sachet D
but also discloses the weight contained in the packet of
three sachets. In view of Schedule V appended to the
Standards of Weights and Measures (Packaged
Commodity) Rules, therefore, the intention of the
manufacturer. to sell the commodity by weight is explicit. E
(Para - 16) [263-E, F]
1.3 Rule 17 of the Rules provides for additional
declarations to be made on multi-piece packages. It
envisages declaration of the quantity and the sale price
thereof on each of the packets when the quantity is sold F
in the multi-piece package. Requirements of Rule 17 have
been complied with. Section 4A of the Act would apply
only when it is statutorily required to apply the provisions
of the Rules. (Para - 17) [263-G, HJ
G
2.1 Rule 34 of the Rules contains an exemption
clause. The exemption clause would apply if the
commodity is sold by weight or measure, subject of
.. -+ course to the condition that the net weight of the
commodity is 10 gms. or less. This legal requirement in H
254 SUPREME COURT REPORTS [2008] 5 S.C.R.

A this case also stands complied with. The appellate I-
authority as also the Tribunal, th1~refore, were right in their
decisions. (Para - 18) [264-A, BJI
2.2 A Circular Letter dated 2:"d November, 1999 issued
by the Central Board of Excise & Customs wherein
B purportedly for the purpose o1f clarification of doubt in
regard to the claim made by certain manufacturers that
there were no statutory requirements for declaration of
retail sale price on such packages under the Standards
of Weights and Measures Act, '1976 and the Rules framed
C thereunder, it was opined by the Law Ministry that the
exempUon under rule 34(b) i~; applicable to a package
containing a. commodity and this exemption does not
appear to be applicable to multi piece packages.
(Para - 19) [264-C, D; 265-B]
D
2.3 The opinion of the La1w Ministry is not based on
any legal principle. Evidently in so doing it did not take
into consideration the effect of Rule 12 of the Rules. It
proceeded on the premise that Rule 34(b) would be
applicable to a package containing a commodity and as
E such the exemption would mot be applicable to "multi
piece package". "Multi piece! package" in terms of Rule
. 2(j) is also a package containing a common commodity.
To hold it otherwise would bE! violating the plain language
of the statutory Rules. (Para - 20) [265-F-G]
. F
2.4 Rule 34(b) provides for exemption -from the
application of the Rules.The expression contained therein
"that nothing contained in these rules shall apply to any
package containing a commodity" is of wide amplitude~
G There cannot be any doubt whatsoever that Rule 34 would
apply in a case of this nature if it is sold by weight or
measure. The respondents not only do so, they are
permitted to do in terms of Schedule V read with sub-rule
(2) of Rule 12 of the Rules. (Para - 21) [265-H; 266-A, B] +- ...-

H Jayanti Food Processing (P) Ltd. v. Commissioner of C.
COMMISSIONER OF CENTRAL EXCISE, VAPI v. . 255
M/S. KRAFTECH PRODUCTS INC.

Ex., Rajasthan 2007 (215) E.L.T. 327 (S.C.) - relied on. A
2.5 Each package offered to sell to the customer by
the assessee contains three sachets. Net weight of all the
three sachets are stated thereon. It is a "multi piece
package" which is capable of being offered to sell as such
only because a package is a "multi piece package", the 8
same cannot be taken out of the umbrage of exemption
clause contained in Rule 34 of the Rules. Why the
commodity cannot independently be sold either by weight
or measure is beyond comprehension particularly when
Rule 12(2) permits the same. The illustration appended to c
Rule 2(j) bring out a clearer picture. It states that the
combined net weight shall be taken into consideration for
the purposes mentioned therein. After combined weight
is taken into consideration for the purpose of applicability
of the Rules, there is no reason as to why the said purpose D
shall not be considered to be a relevant factor for applying
-....-., the exemption provision. Assuming Rule 2(j) was
otherwise vague or unambiguous, illustration appended
thereto brings out the true meaning and purport thereof.
(Para - 23) [267-F-H; 268-A, BJ E
Commissioner of Central Excise, Mumbai vs. Uirson
Cosmetics Ltd. : 2006 (198) E.L.T. 508 (Tri.-LB) - approved.
Varnica Herbs vs. C.B.E.&C., New Delhi : 2004 (163)
E.. L.T. 160 (Mad.) - disapproved. F
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 2597
of 2005.
From the final Order No. A/699/WZB/2004/C-I dated 10/
5/2004 of the Customs, Excise & Service TaxAppellate Tribunal, G
West Zonal Bench, Mumbai in Appeal No. E/293/2003-MUM.
WITH
.. ..... Civil Appeal Nos. 2575, 2703-2704 of 2005; 325-326 of
2006, 1029, 1174, 5069-5073 of 2007.
H
256 SUPREME COURT 'REPORTS [2008] 5 S.C.R.

\--
A Binu Tamta (for B. Krishna Prasad) for the Appellant.
Ravinder Narain, Sonu Bhatnagar, Ajay Agarwal, Mallika
Joshi, Rajan Narain and Monish Panda (for M.P. Devanath) for
the Respondent.

8 The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Interpretation of Rule 34 of the Standards
of Weights and Measure$ (Packaged Commodity) Rules, 1977
is in question in these appeals which arise out of the judgments
and orders dated 101h May, 2004 and 23rd March, 2005 passed
c in Appeal No.E/293/03-MUM and E/182-183/04-NB(A) by the
Customs Excise and Service Tax Appellate Tribunal, Mumbai
and Customs Excise and Service Tax Appellate Tribunal, New
Delhi respectively.
2. We, however, may notice the factual matrix of the matter
D
from C.A. No.2597 of 200~i.
f ~

3. Respondent manufactures hair dye. It is packed in
pouches each containing 3, gms .. 3 pouches (sachets) are sold
in·one packet The net we!ight of each pouch, as also the net
E weight of the commodity in 3 pouches and the maximum rate is
printed on the pouches.
4. Valuation of exciseable goods for purposes of charging
the duty of excise is laid down in Section 4 of the Central Excise
Act, 1944 in the following terms:
F
"4. Valuation of E!XCisable goods for purposes of
charging of duty 1:>f excise:
I

(1) Where under this Act, the duty of excise is chargeable
on any excisable goods with reference to value, such value
G shall, subject to the other provisions of this section, be
deemed to be -
{a) the normal pric:e thereof, that is to say, the price at .J.~ •

which such goods are ordinarily sold by the assessee to
a buyer in the course of wholesale trade for delivery at the
H
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 257
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]

time and place of removal, where the buyer if not a related A
person and the price is the sole consideration for the sale."
5. Section 4A of the Act provides for mode of valuation
envisaged under Section 4. It reads as under :-
"4A. Valuation of excisable goods with reference to B
retail sale price:
(1) The Central Government may, by notification in the
Official Gazette, specify any goods, in relation to which it
is required, under the provisions of the Standards of
Weights and Measures Act, 1976 or the Rules made c·
thereunder or under any other law for the time being in
force, to declare on the package thereof the retail sale
price of such goods, to which the provisions of sub-section
(2) shall apply.
D
(2) Where the goods specified under sub-section (1) are
~- . excisable goods and are chargeable to duty of excise
with reference to value, then, notwithstanding anything
contained in section 4, such value shall be deemed to be
the retail sale price declared on such goods less such
E
amount of abatement, if any, from such retail sale price as
the Central Government may allow by notification in the
Official Gazette.
(3) The Central Government may, for the purpose of
allowing any abatement under sub-section (2), take into F
account the amount of duty of excise, sales tax and other
taxes, if any, payable on such goods.
(4) If any manufacturer removes from the place of
manufacture any excisable goods specified under sub-
section (1) without declaring the retail sale price of such G
goods on the packages, or declares a retail sale price
.... which does not constitute the sole consideration for such
,;
sale, or tampers with, obliterates or alters any such
declaration made on the packages after removal, such
goods shall be liable to confiscation. H
258 SUPREME COURT REPORTS [2008] 5 S.C.R.

A Explanation 1: For the purposes of this section, "retail ~-

sale price" means the maximum price at which the
excisable goods in packaged form may be sold to the
ultimate consumer and includes all taxes local or otherwise,
freight, transport charges, commission payable to dealers,
B and all charges towards advertisement, delivery, packing,
forwarding and the lilke, as the case may be, and the price
is the sole consideration for such sale.
Explanation 2:

c (a) Where on the package of any excisable goods more
than one retail sale~ price is declared, the maximum of
such retail sale pricEi shall be deemed to be the retail sale
price for the purposes of this section.
(b) Where different retail sale prices are declared on
D different packages for the sale of any excisable goods in
packaged form in different areas, each such retail sale
price shall be the retail sale price for the purposes of ".
valuation of the excisable goods intended to be sold in the
area to which the mtail sale price relates."
E 6. Indisputably, the commodity in question is governed
under the Standards of Weights and Measures (Packaged
Commodity) Act, 19?Ei. Indisputably again the Central
Government in exercise of the powers conferred upon it by
Sectio~ 83 of the Act framed Rules known as the Standards of
F Weights and Measures ![Packaged Commodity) Rules, 1977
(the Rules).
7. Huie 2 contains the interpretation section. A distinction
is made in regard to "combination package", "group package"
and "multi-piece packagEi".
G
Multi-piece package is defined in Rule 20) to mean :-
0) "multi-piece package means a package containing two
or more individually packaged or labeled pieces of the + '
same commodities of identical quantity, intended for retail
H .
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 259
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]

sale, either in individual pieces or the package as a whole; A
Illustration.- A package containing "5 toilet soap cake,
net weight 20 g each, total net weight 100 g" is a multi-piece
package."
8. Rule 6 provides for declarations to be made on every B
package, which reads as under:-
"6. Declaration to be made on every package.-
(1) Every package shall bear thereon or on a label securely
affixed thereto a definite, plain and conspicuous c
declaration, made in accordance with the provisions of
this chapter as to-
(a) the name and address of the manufacturer, or where
the manufacturer is not the packer, of the packer or with
the written consent of the manufacturer, of the manufacturer; D

~·
(b) the common or generic names of the commodity
contained in the package.
Explanation.- Generic name in relation to a commodity
means the name of the genus of the commodity, for E
example, in the case of common salt, sodium chloride is
the generic name;

(c) the net quantity, in terms of the standard unit of weight
or measure of the commodity contained in the package or
where the commodity ls packed or sold by number, the F
) number of the commodity contained in the package;
(d) the month and year in which the commodity is
manufactured or pre-packed;
[(e) ***](omitted by GSR 521 (E) dt. 26-6-1995) G

(f) the [retail sale price] of the package;
..-. (g) where the sizes of the commodity contained in the
"" package are relevant, the dimensions of the commodity,
contained in the package and if the dimensions of the H
260 SUPREME COURT REPORTS [2008] 5 S.C.R.

A different pieces are different, the dimensions of each such
different piece;
(h) such other matters as are specified in these rules:"
Rule 12 provides for the manner in which the declaration
B of quantity shall be expre,ssed, sub"rule (2) whereof reads as
>
under:-
"12. Manner in which declaration of quantity shall be
expressed. -

c (1) ' ......
(2) Except in the cases of commodities specified in the
Fifth Schedule, the declaration of quantity shall be in terms
of the unit of -
(a) mass, if the commodity is solid, semi-viscous or mixture
D
of solid and liquid;
f ·•
(b) length, if the commodity is sold by linear measure;
(c) area, if the commodity is sold by area measure;
E (d) volume, if the commodity is liquid or is sold by cubic
measure; or
(e) number, if the commodity is sold by number:
Provided that in the case of solid commodity contained
F in a free-flowing liquid which is sold as such, the declaration
of quantity shall be in terms of the drained weight of such .i
solid commodity."
Schedule V appended to the Rules specifies the
commodity in packaged form which may be sold by weight,
G measures or numbers as shown against the commodity, item
No.25 whereof reads as under :-
"25. Cosmetics including creams, Weight or measure ...... "
shampoo, lotions and perfumes."
H Rule 17 of the Rules mandates additional declarations to
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 261
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]
_.,
be made on multi-piece packages. A
9. Admittedly the valuation of the commodity for the
purpose of payment of excise duty was carried out in terms of
Section 4 of the Act. Respondent, however, was served with
eight show cause notices dated 29th August, 2001, 25th March,
2001, 4th July, 2001, 3rd September, 2001, 30th October, 2001, B
ath January, 2002, 27th March, 2002 and 15th May, 2002 in terms
of Section 11A of the Act asking it as to why:-

(i) Differential Central Excise duty should not be
demanded and recovered under the provisions of c
Section 11A(1) of the Central Excise Act, 1944.

(ii) Penalty should not be imposed under Rule 173Q of
Central Excise Rules 1944/now Rule 25 of the
Central Excise (No.2) Rules, 2001.
D
(iii) Interest due under Section 11AA/11AB of the Act,
.,__ .. should not be charged/recovered from them."
Cause was shown to the said notices.
10. The Deputy Commissioner, Central Excise, Division-
E
II, Vapi by two separate orders dated 25th October, 2001 and
12th July, 2002 rejected the contention of the respondent that it
was entitled to exemption by operation of the Rules in respect
of their product and confirmed the demand of Central Excise
duty and imposed a penalty of equal amount as proposed in
the show cause notices . F

• 11. Appeals preferred thereagainst by the assessee/
respondent to the Commissioner (Appeals) were allowed by
an order dated 24th October, 2002. Appeal preferred by the
appellant before the Customs Excise and Service Tax Appellate G
Tribunal, Mumbai was dismissed by reason of the impugned
judgment dated 10th May, 2004 stating:-

~ - "2. The main ground of the Departmental appeal is that
the exemption under the said Rule 34 does not apply to a
case where several units are packaged together. We have H
262 SUPREME COURT REPORTS [2008] 5 S.C.R.

A · perused the relevant provisions under the Rule 34. The ,_
exemption under the same clearly applies to any package
containing a commodity ifthe net weight of the commodity
is 20 gms. or less. The language of the rule does not
warrant the interpretation sought to be placed by the
B department that since the package contains 3 units, the
exemption under the rule is not available. We are of the
view that since the combined weight of the 3 units of the
impugned goods is less than the prescribed weight of 20
gms. the Commissioner (Appeals) has rightly concluded
c in his impugned order that the respondents are eligible for
exemption under the said Rule 34 and consequently they
a1·e entitled to assessment under Section 4 of the Central
Excise Act, 1944 instead of under Section 4A of the said
Act."
D 12. The judgment of the appellate authority as also the
Tribunal have been questioned by the department contending
that as admittedly the commodity is sold in 3 sachets, each one ' ..,
of them can be sold separately, Rule 34 of the Rules will have
no application. How the product, according to the learned
E counsel for the appellant, is known in the market, should be the
test to find out as to how it is sold whether in unit or by weight or
measure. Strong reliance in this behalf has been placed on a
decision of this Madras High Court in Varnica Herbs vs.
C.B.E.&C., New Delhi: 2004 (163) E.. L.T. 160 (Mad.)
F 13. Mr. Ravinder l'Jarain and Mr. Monish Panda, learned
counsE~I appearing on behalf of the respondents, on the other
i.
hand, would submit that keeping in view the provisions of Rule
12(2) of the Rules, the commodity can be sold by weight or
measure. It was so intemded to be done as the weight of each
G sachet has been notifiE~d on the packet. It was submitted that
the decision of the Madras High Court in Varnica Herbs (supra)
was rendered per incuriam as has been held by a larger Bench
of the Tribunal in Commissioner of Central Excise, Mumbai
vs. Uirson Cosmetics Ltd. : 2006 (198) E.L.T. 508 (Tri.-LB).
- ~

IH
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 263
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]

~· It was furthermore submitted that the notices under Section A
11A of the Act having been issued beyond the period of six
months, the same were barred by limitation.

14. The commodity is in powder form. It is sold in a multi
piece package. Admittedly the product is packed in small
packets each containing three sachets. Each sachet discloses B
. the weight of its contents. The packet containing the three
~
sachets also disclose the total weight and the number of sachets.
The weight of the product in each sachet is admittedly below 3
gms.
c
15. It is beyond any doubt or dispute that the commodity in
question is being sold in 'multi piece package'. Identical quantity
of commodity is packed in each sachet. Yet again admittedly
three sachets are packed in one packet. The weight of three
sachets is 9 gms, that is, less than the prescribed we[ght of 10
D
gms .
...
,. ' 16. Rule 12, as noticed hereinbefore, provides for the
manner in which declaration of quantity shall be expressed. Sub-
rule (2) of Rule 12 would not apply to the commodities mentioned
in Schedule V. Item No.25 of Schedule V provides for a E
declaration to be expressed in terms of weight or measure. The
packet describes the commodity in question. It discloses also
the weight. It not only discloses the weight contained in each
sachet but also discloses the weight contained in the packet of
three sachets. In view of Schedule V appended to the Rules, F
therefore, the intention of the manufacturer to sell the commodity
. by weight is explicit.

17. Rule 17 provides for additional declarations to be made
on multi-piece packages. It envisages declaration of the quantity
· and the sale price thereof on each of the packets when the G
quantity is sold in the multi-piece package. Requirements of
Rule 17 have been complied with. Section 4A of the Act would
~
apply only when it is statutorily required to apply the provisions
of the Rules.
H
264 SUPREME COURT REPORTS [2008] 5 S.C.R.

A 18. R·ule 34 contains an exemption clause. The exemption -1-
clause would apply if the commodity is sold by weight or
measure, subject of course to the condition that the net weight
of the commodity is 10 gms. or less. This legal requirement in
this case also stands complied with. Once it is held that the
B Rules have no application in respect of the commodity as
marketed and sold by the respondent, Section 4A of the Act will
have no application. The appellate authority as also the Tribunal, .
in our opinion, therefore, were right in their decisions.
19. Our attention, however, has been drawn to a Circular
c Letter dated 2nd November, 1999 issued by the Central Board
of Excise & Customs wherein purportedly for the purpose of
clarification of doubt in regard to the claim made by certain
manufacturers that there were no statutory requirements for
declaration of retail sale price on such packages under the
D Standards of Weights aind Measures Act, 1976 and the Rules
framed thereunder, it was stated :-
.,
I .,
"Rule 6 of the aforesaid rules requires declarations of
CE~rtain particulars to be made on every package intended
for retails sale. Retails sale price of the package is one
E such detail to be declared by a manufacturer/ packer.
Further rule 17 ('1) provides for declaration of certain
additional details in respect of multi-piece packages such
as sale price of the multi-piece package and the number
of individual pieces of the commodity contained in such
F packages. Howev1er under rule 34, exemption in respect
of certain packages have been provided. In particular sub
rule (b) to rule 34 provides that the MRP provisions do not ..
apply to a package containing a commodity if the net
weight or measum of a Commodity is 10 grams or 1Oml
G or less, if sold by weight or measure. Some manufacturers
have claimed that the multi-piece package containing
individual pieces of less than 10 grams or 1Oml or less,
even though the net quantity of such multi-piece package
;;.
I
exceeds 10 grams or 1Oml would be covered by the above
H exemption. Hence they would not required to be assessed
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 265
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]

to excise duty on the MRP prices under section 4A of A
Central Excise Act, 1994

3. The matter has been examined in consultation with
the Law Ministry. The Law Ministry has given the opinion
that the exemption under rule 34(b) is applicable to a
package containing a commodity and this exemption does B
y

i
not appear to be applicable to multi piece packages.

4. Based on the above opinion of the Law Ministry, it is
clarified that the declaration of retail sale price of multi-
piece packages and individual pieces contained in such c
multi-piece package (if such individual pieces are capable
of being sold separately) is statutorily required under rule
17 (1) of the Standards of Weights and Measures
(Packaged Commodities) Rules, 1977.

5. In view of the above statutory requirements for D
declaration of retail sale price under the Standards of
...
... ; Weights and Measures (Packaged Commodities) Rules,
1977 for multi-piece packages, it is clarified that in respect
of multi-piece packages of a commodity intended for retail
sale and which are notified under section 4A, they shall be E
assessed to excise duty under the provisions of section
4A of Central Excise Act, 1944."

20. The opinion of the Law Ministry is not based on any
legal principle. Evidently in so doing it did not take into
consideration the effect of Rule 12. It proceeded on the premise F
that Rule 34(b) would be applicable to a package containing a
commodity and as such the exemption would not be applicable
to "multi piece package". "Multi piece package" in terms of Rule
20) is also a package containing a common commodity. To hold
it otherwise would be violating the plain language of the statutory G
Rules.

21. Rule 34(b) provides for exemption from the application
. ~
of the Rules. The expression contained therein "that nothing
contained in these rules shall apply to any package containing
H
266 SUPREME COURT REPORTS [2008] 5 S.C.R.

A a commodity" is of wide amplitude. There cannot be any doubt
whatsoever that Rule 34 would apply in a case of this nature if it
is sold by weight or measure. The respondeqts not only do so,
they are permitted to do in terms of Schedule V read with sub-
rule (2) of Rule 12 of the Rules.
B 22. In Jayanti Food Processing (P) Ltd. v. Commissioner
of C.Ex., Rajasthan [2007 (215) E.L.T. 327 (S.C.)], wherein one
of us (Sirpurkar, J.) was a member, this Court stated the law,
thus:

c " ... \Ne have already explained earlier that the nature of
salei is of no consequence. The material consideration is
that such sale should be in a 'package' and there should
be a requirement in the SWM Act or the Rules made
thereunder or any other law for displaying the MRP on
such package. We find the requirement to be only under
D
Rule 6(1 )(f) which applies to 'retail package' meant for
'retail sale'. What is required to be printed under Rule
6(1 )(f) is the 'retail sale price' of the package. 'Retail sale
.,
I
.
price' is defined under Rule 2(r) and it suggests that the
'retail sale price' meians the maximum price at which the
E commodity in packaged form may be sold to the ultimate
consumer. The Rule~ further suggests the manner in which
.the 'retail sale price' shall be mentioned on the package.
It is the case of the appellant that the four litres pack was
not meant to be sold as the package to the ultimate
F consumer and the sale was only to the intermediary or as
the case may be, to the hotel. If that was so, then there is
no necessity much less under Rule 6(1 )(f) to mention the
'retail sale price' on the package."
G. In Varnica Herbs (supra) whereupon reliance has been
placed by the learned counsel for the appellant, the Madras High
Court opined :-
"13. The next contention of the learned counsel for the
petitioner is that thei effect of the circular is to whittle down
H the exemption contemplated under Rule 34(1 )(b)of the
I
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 267
MIS. KRAFTECH PRODUCTS INC. (S.B. SINHA, J.]

Rules. Relying upon the said rule, it is the contention of the A
petitioner that since the weight of the individual package
is 8 grams, which is less than 10 grams, the petitioner is ·
not expected to declare MRP or the net weight of the
individual package. It is also the contention of the petitioner
1
that merely because sachets are placed in a mono-carton 8
..,' that would not make the pack a multi-piece package and
Rule 17 is not applicable."

Construing Rule 2(j) read with Rule 6 the learned Judge
opined:-
c
"15. A perusal of these provisions makes it clear that
articles kept in separate pouches by the petitioner can be
termed as multi piece package and such pouches can be
sold individually in single piece or together in a mono-
carton of six pouches. The contention of the petitioner that
D
exemption under Rule 34 would be applicable is not
"1
v."' acceptable. Even though the net weight is less than 10
grams, it is evident that article is not intended to be sold
either by weight or by measure as contemplated under
Rule 34(b). The contention that clarification issued by the
respondent No.1 has the effect of whittling down the E
exemption granted under Section 34 is not at all
acceptable."

23. We have noticed hereinbefore that each package
offered to sell to the customer contains three sachets. Net weight F
of all the three sachets are stated thereon. It is a "multi piece
package" which is capable of being offered to sell as such only
because a package is a "multi piece package", the same cannot
be taken out of the umbrage of exemption clause contained in
Rule 34 of the Rules. Why the commodity cannot independently
(
G
be sold either by weight or measure is beyond our
comprehension particularly when Rule 12(2) permits the same.
The illustration appended to Rule 20) bring out a clearer picture.
It states that the combined net weight shall be taken into
consideration for the purposes mentioned therein. After
H
268 SUPREME COURT REPORTS [2008] 5 S.C.R.

A combined weight is taken into consideration for the purpose of ~

applicability of the Rules, there is no reason as to why the said
purpose shall not be considered to be a relevant factor for
applying the exemption provision. Assuming Rule 2U) was
otherwise vague or unambiguous, illustration appended thereto
B brings out the true meanin9 and purport thereof. The reasoning
adopted by the Madras High Court in Varnica Herbs (supra) '·
does not appeal to us. ....

It was rendered per incuriam. It was held to be so in Urison
Cosmetics Ltd. (supra) by a Larger Bench of the Customs Excise
c and Service Tax Appellate~ Tribunal. We agree with the said
opinion of the Tribunal.
24. For the reasons abovementioned the impugned
judgment does not warrant any interference. The Civil Appeal
Nos. 2597, 2575, 2703-2704 of 2005, 325-326 of 2006 fail and
D
are dismissed with costs. Counsel's fees assessed at Rs.
25,000/- in each case.
Civil Appeal Nos. 102:9, 5069-5073 of 2007 [Re: M/s. Aero
'!
' .
Pharma (Silvassa) Inc.]
E
25. The assessee manufactures Lip Smoother. Each unit
contains 4.3 ml. They make a package of 72 pieces of lip .,._
smoother. The Revenue proceeded on the basis that a package !
containing 72 pieces of lip smoother would be a multi-piece
package.
F
Civil Appeal No. 1174 of 2007 [Re: M/s. Alfa Packaging]
26. The assessee manufactures Shampoo which is
packed in sachets. Each sachet contains shampoo below 10
ml. It is packed in a carton containing more than 500 pieces.
G Such carton, according to the Revenue, is a multi-piece
package.
When a lip smoother or a shampoo is packed in a carton
keeping in view the quantity contained therein, the same cannot
be said to be for retail sale. No person would ordinarily purchase
H
COMMISSIONER OF CENTRAL EXCISE, VAPI v. 269
M/S. KRAFTECH PRODUCTS INC. [S.B. SINHA, J.]

+ for one's own use 72 lip smoothers or 500 pieces of shampoo. A
Thus, it is not a case where the goods are being sold in
multi-piece package. Each sachet or each lip smoother must
be sold as a unit.
27. Civil Appeal Nos. 1029, 5069-5073 of 2007 and Civil B
Appeal No. 1174 of 2007 are allowed with costs. Counsel's
fees assessed at Rs. 25,000/- in each case.
S.K.S. Civil Appeal Nos. 2597, 2575, 2703,
2704 of 2005; 325-326 of 2006 dismissed;
Civil Appeal Nos. 1029, 5069-5073 of 2004 C
and Civil Appeal No. 1174 of 2007 allowed.

..."