Tribunal exempts duty on free supplies within MRP packs, providing relief to appellants

The Tribunal ruled in favor of the appellants, stating that duty payment on additional free supplies within a jar, covered by the Maximum Retail Price (MRP) of the jar, was not required under Section 4A of the Central Excise Act. The Tribunal emphasized that the value of free items included in a retail pack subject to MRP-based assessment need not be separately added for duty calculation. Therefore, the appellant was not liable to pay duty on the additional supplies within the jar, overturning the duty demand orders and providing relief to the appellants.

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Issues:
Demand of duty on additional quantity packed in jar on which duty has been paid on MRP of the price of the jar.

Analysis:
The appellants were appealing against orders confirming the duty demand on additional quantity packed in a jar, where duty had already been paid on the Maximum Retail Price (MRP) of the jar. The case involved the appellants, engaged in manufacturing Sugar Confectionary, clearing goods under Section 4A of the Central Excise Act, 1944. The dispute arose as the Revenue contended that apart from the confectionary in the jar, additional free supplies were also included, necessitating duty payment under Section 4A. Two show cause notices were issued, leading to the demand of duty on additional free supplies being confirmed, along with interest and penalty. The appellants challenged this decision before the Tribunal.

In a previous case concerning the appellants, the Tribunal had ruled that when goods are subject to MRP-based assessment and free items are included in the retail pack, the value of these free items need not be further added. The Tribunal emphasized that the presence of extra items for sales promotion inside a pack with MRP does not imply that these items are to be separately valued. Citing relevant case law and a circular by the Central Board of Excise and Customs, the Tribunal held that demand for Central Excise duty on such free items is not sustainable. As the issue had already been decided in favor of the appellants, confirming that free supplies within the jar, covered by the MRP of the jar, required no additional duty payment under Section 4A.

Therefore, the Tribunal ruled that the appellant was not obligated to pay duty on the additional supplies made free within the jar, overturning the impugned orders and allowing the appeals with any consequential relief. The judgment was dictated and pronounced in open court by the designated member.

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