MRP-based valuation excluded for free-distribution baby powder; transaction value under excise law applied instead.

Baby powder cleared to another manufacturer for free distribution with a companion product, with the printed MRP struck off, was treated as goods cleared without display of an MRP. On those facts, the clearance fell within Rule 34(a) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977, so MRP-based valuation under Section 4A of the Central Excise Act did not apply. The goods were assessable on transaction value under Section 4, and duty assessment under Section 4 was upheld.

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Issues: Whether the baby powder cleared by the assessee to Nestle for free distribution with another product was assessable under Section 4 of the Central Excise Act or under Section 4A of the Central Excise Act.

Analysis: The package carried an MRP which was struck off, so the goods were effectively cleared without display of any MRP. The clearance was made to an industry for onward supply as a free gift to consumers, bringing the case within Rule 34(a) of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. On these facts, the goods did not attract MRP-based valuation under Section 4A and were assessable on the transaction value under Section 4.

Conclusion: The goods were not assessable under Section 4A and the assessee's duty assessment under Section 4 was upheld.

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