TaxTMI 
TaxTMI 
2016 (12) TMI 1125
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....ssued by the department wherein it was contended that the excise duty has to be paid on the value arrived at as per Section 4A and not Section 4. The demand was confirmed by the adjudicating authority and the same was upheld by the Commissioner (Appeals). Therefore the appellant are before us. 2. At this stage, Ms. Anjali Hirawat, Ld. Counsel for the appellant submits that in the appellant s own case, on identical issue, the Hon ble Supreme Court in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of C. Ex., Rajasthan 2007 (215) E.L.T. 327 (S.C.), it was held that the sale of goods to the buyer who used the goods not for retail sale but for free distribution under Sales Promotion Scheme, the value of the goods shall be governed under Section 4 and not Section 4A of the Central Excise Act. In the said Supreme Court judgment the only difference was the product in the said judgment was KITKAT Chocolates which was sold to Pepsico for free supply by Pepsico to the customer along with the soft drink. In the present case, the product is Maggie Noodles but the nature of sale and further distribution freely under Sales Promotion Scheme by the buyer are identical. Therefore the....
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.... appellant having failed in its appeal before the Tribunal has now approached this Court by way of this appeal. 21. The Tribunal came to the conclusion that the duty was rightly demanded in terms of Section 4A of the Act. 22. At the outset the learned Counsel Shri Lakshmi Kumaranan accepted the position that when such chocolates are sold in the market, they would undoubtedly be required to print the MRP on each chocolate as the SWM (PC) Rules and more particular Rule 6(1)(f) would be applicable to them. Learned Counsel, however, says that his contention is restricted only to the supply made by the assessee to Pepsico. He points out that the said chocolates were not being sold by the manufacturer in retail but were supplied to another company under a contract and the purchaser company was not to sell the said chocolates as the chocolates but to offer as a free gift along with its product, namely, a 1.5 litres bottle of Pepsi. Learned Counsel also criticized the order of the Tribunal. Learned Counsel also relied on the aforementioned Board Circular dated 28-2-2002. 23. The Tribunal formulated a question as to whether the package of KITKAT sold by the appellant to M/s. Pepsico ....
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.... out that by that notification clarification was issued regarding various queries raised expressing the doubts about the assessability of the commodities under Section 4A or Section 4 of the Act. A reference is made to Para 1, Entry 4 of which is as under : "Items supplied free with another consumer items as marketing strategy. Example, one Lux soap free with on box of surf." Para 6 of the notification is as under : "It is, therefore, clarified that, in respect of all goods (whether notified u/s. 4A or not) which are not statutorily required to print/declare the retail sale price on the packages under the provisions of the Standards of Weight & Measures Act, 1976, or the Rules made thereunder or any other law for the time being in force, valuation will be done u/s. 4 of the CE Act, 1944 (or under Section 3(2) of the Central Excise Act, 1944, if tariff values have been fixed for the commodity). Thus, there could be instances where the same notified commodity would be partly assessed on the basis of MRP u/s. 4A and partly on the basis of normal price (prior to 1-7-2000) or transaction value (from 1-7-2000), u/s 4 of the CE Act, 1944." Learned Counsel very heavily relied on the....
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....inst the Department. Similar is the situation of the circular. The circular becomes binding as held in the case of Dhiren Chemical Industries (supra). 27. The Tribunal in Para 8 of its judgment has observed : "Once the goods are specified items under Section 4A(1) and are excisable goods chargeable duty (sic) with reference value, then such value shall be deemed to be the retail sale price declared on such goods, less amounts of abatements etc. As we have already observed that Weights & Measures Act requires chocolate manufactured by the appellant to be printed with MRP on the same, we are of the view that the duty of excise on such goods is required to be assessed in terms of the MRP. The only exception where a manufacturer can deviate from the general rule of printing of MRP on the package is Rule 34 of Standards of Weights & Measures (Packaged Commodity) Rules, 1977." We are afraid the law is too broadly stated here. It may be that chocolates manufactured by the appellant are required to bear the declaration of MRP but that cannot be true of all the chocolates. In this the Tribunal has ignored Para 6 of the aforementioned circular dated 28-2-2002 wherein it is specifically ....
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....or a particular value and the said chocolates were to be offered as a free gift to the one who purchased a particular bottle of Pepsi (1.5 litres). The Tribunal has further expressed that the argument that the bar of KITKAT was not to be sold by Pepsi in the retail market but was to be given as a free gift, would be of no consequence as even if the appellant itself intended to give the bar of KITKAT as a free gift to its customers along with other item, the appellant would not be in a position to claim that there is no assessable value of the goods and as such no duty of excise shall be charged on the same. The logic is clearly faulty. In the given circumstances, the appellant would undoubtedly be assessable to duty under Section 4 of the Act. It is not as if the appellant would be totally exempt from paying any duty on such goods. It was rightly contended before the Tribunal that the thrust of Section 4A is on the packages and not on the commodity and it is only where the goods are sold in the packages that the section would be attracted. The submission was undoubtedly right. The Tribunal, while rejecting this submission, has clearly ignored the language of Section 4A(1) of the Ac....