Free supplies excluded from assessable value under excise valuation rules where no sale is attributable to the free quantity.

Free quantities of mosquito coils were held not includible in assessable value under Section 4A of the Central Excise Act, 1944, because the record showed that one coil was supplied free for every twelve coils sold and no sale was attributable to the free supply. The Tribunal followed its earlier precedent on non-includibility of free supplies in valuation and treated the absence of consideration for the free quantity as decisive. On that basis, the valuation demand could not be sustained.

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Issues: Whether free supplies of mosquito coils were includible in the assessable value for the purpose of valuation under Section 4A of the Central Excise Act, 1944.

Analysis: The factual record showed that for every twelve coils supplied, one coil was supplied free throughout the disputed period, and this position was supported by the assessee's correspondence and the audit report. On that basis, the Tribunal held that the transaction involved a free supply and that the absence of sale in respect of the free quantity took the case outside the demand sought to be sustained on valuation under Section 4A. The cited tribunal precedent on non-includibility of free supplies in assessable value under Section 4A was followed.

Conclusion: Free supplies were not includible in the assessable value under Section 4A, and the demand could not be sustained.

Ratio Decidendi: Where goods are supplied free of cost and no sale is attributable to the free quantity, such quantity is not includible in assessable value under Section 4A of the Central Excise Act, 1944.

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