CESTAT Chandigarh: 4g & 9g Tobacco Pouches Not Liable to MRP-Based Valuation Under Section 4

April 8, 2026 : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Chandigarh has held that tobacco pouches weighing 4 grams and 9 grams are not subject to MRP-based valuation under Section 4A of the Central Excise Act, 1944, as such small packages are exempt from the requirement of declaring Maximum Retail Price (MRP). Consequently, valuation is to be done under Section 4 (transaction value), and the Tribunal allowed a batch of appeals filed by Shiva Tobacco Co. and others.

The Bench comprising S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) was dealing with multiple appeals arising from a common Order-in-Appeal dated 30.03.2012 passed by the Commissioner (Appeals), Delhi-III.

As per the record, the appellants were engaged in manufacturing branded tobacco products, including “spit tobacco,” and had classified the same under the relevant tariff headings. The Department alleged misclassification and contended that the goods were liable to duty under Section 4A based on MRP, relying on chemical examination reports and subsequent adjudication proceedings.

Before the Tribunal, the appellants argued that the issue of classification was secondary, as the central question was whether Section 4A could apply at all. They emphasized that the goods were sold in pouches of 4 grams and 9 grams, which fall below the statutory threshold for MRP declaration under Rule 34(1)(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977.

Accepting this contention, the Tribunal held that packages containing 10 grams or less are expressly exempt from MRP declaration requirements. It also relied on CBEC Circular No. 492/58/99-CX, which clarifies that such packages fall outside the purview of MRP-based assessment.

The Tribunal further noted that although the Department alleged manufacture and clearance of 15-gram pouches, no quantifiable evidence or records were produced. Even departmental correspondence admitted the absence of pouch-wise breakup and inability to compute duty liability. In such circumstances, the Tribunal held that mere allegations without supporting data cannot sustain a demand, and the benefit of doubt must go to the assessee.

Holding that the impugned 4 gram and 9 gram pouches are covered by the exemption under Rule 34(1)(b), the Tribunal concluded that Section 4A is inapplicable. In the absence of any allegation of under-valuation, the duty demands and penalties were set aside, and all appeals were allowed.

Case Title: M/s Shiva Tobacco Co. & Ors. v. Commissioner of Central Excise, Delhi-III
Case No.: Excise Appeal Nos. 1871–1879 of 2012