Valuation of Excisable Goods

[Srivatsan Krishnamachari]

Dear Learned Friends,

Kindly clarify the following query: A company manufacture several goods which are covered under central excise. In order to push up the sales of a particular product (Product A) of its,it offers another of its products (Product B) free of cost to customers/dealers as a combo by paying the applicable excise duty on the transaction value of Product(A) alone and reverse the proportionate cenvat credit taken on the inputs of the Product(B) there by not paying CED on the Product (B) while clearing the Combo (Product A+ Product B) For instance duty is paid on Thermic Jug which is cleared along with 'free Items' water bottle or say a 'Quilt' with Pillows.Is such type of transaction permissible? I heard there are quite a few decisions by Tribunals and Courts on this kind of 'Combo Offer'. Kindly let me know the correct procedure.

Thanks and Regards,

K.Srivatsan

AI Summary

Excise Duty on Combo Offers: Assessing Duty on Combined Value vs. MRP for Free Products Under Section 4. A company inquires whether offering a free product with a purchased product, while paying excise duty only on the purchased product, is permissible under central excise laws. Responses suggest that if products fall under Section 4, the combined value of the goods should be considered for duty, and cenvat credit need not be reversed. If products are valued based on MRP, the MRP less abatement should be considered. Legal precedents indicate that valuation depends on whether MRP is printed on free samples. The discussion highlights the complexity of excise valuation in combo offers.