TaxTMI 
TaxTMI 
2017 (6) TMI 155
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....appellant did not pay duty on the products offered under quantity discount and also informed the department their intention not to pay duty for the clearances made as quantity discount. They relied upon the judgement in the case of Surya Food and Agro Ltd. Vs CCE Noida - 2003 (156) ELT 488 (Tri.-Del) and also that of Vinayaka Mosquito Coil Manufacturing Co. Vs CCE Bangalore - 2004 (174) ELT 107 (Tri.-Bang.) and contended that they are not liable to pay duty on the quantity discount offered to dealers/distributes. The department did not accept the contention put forward by the appellant and issued SCN for redetermination of assessable value thereby demanding duty on such goods. After due process of law, the original authority confirmed the duty demand along with interest and also imposed penalties. 2. In appeal, the Commissioner (Appeals) upheld the same. Hence this appeal. 3. The period involved and the demand of duty, penalty etc. in the instant appeal is shown in the table below as furnished by appellant : Appeal No. Period Duty Penalty OIO OIA E/179/2007 June 2005 to Sept 2005 2,83,761/- 10,000 20/2006 dt. 31.08.2006 77/2006 dt. 30.11.2006 4. On behalf of the app....
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....We find that the entire dispute hinges on the interpretation of Section 4A of the Act. For better understanding, Section 4A as it existed during the relevant period is reproduced below : "SECTION 4A. Valuation of excisable goods with reference to retail sale price. - (1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section ....
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....s." 6.1 Thus for the purposes of valuation of excisable goods on the basis of their M.R.P value will apply only to those goods where the retail price thereof is required to be declared on the package under provisions of Standards of Weights and Measures Act, 1976 (now Legal Metrology Act, 2009) and said goods have been specified in a notification issued by the Central Government. Sub-section (2) of Section 4A makes it abundantly clear that notwithstanding anything contained in Section 4 of the Act, the value for the purpose of charging duty of excise shall be the retail sale price (M.R.P) declared on such goods, less any abatement which may be allowed by notification. 6.2 Discernably, for the purposes of Section 4A valuation, the M.R.P value declared on the package alone is deemed to be the assessable value irrespective of what the price actually paid or payable by the buyer of the goods. This important aspect of Section 4A valuation is therefore evidently different from the concept of "transaction value" adopted for value under Section 4 of the Act. In the latter instance, the Section 4 valuation is the transaction value, and as defined in sub-section 2 (d), the transaction valu....
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....he department and was dismissed by the Hon'ble Apex Court. However, on a careful analysis of the said position, the facts are evidently different. In the case of Vinayaka Mosquito Coil Manufacturing Co. for every twelve mosquito coils sold, one coil was supplied free in the same box on which MRP was affixed. The contention of the appellant therein was that in case of free supply, there is no sale and therefore provisions of Section 4A are not attracted in view of the ratio of earlier Tribunal's decision in Surya Food and Agro Ltd. case (supra). 6.9 On the other hand, both these Tribunal decisions have been analysed and discussed in length by the Larger Bench of the Tribunal in the case of Indica Laboratories Pvt.Ltd. Vs CCE Ahmedabad - 2007 (213) ELT 20 (Tri.-LB). The facts of the said case was that appellant therein gave quantity discount to various distributors and wholesale dealers. It was argued that in respect of such goods given as quantity discount, no sale is involved and therefore duty can be demanded only on the net quantity. The Larger Bench distinguished the Apex Court judgement in Vinayaka Mosquito Coil Manufacturing Co. (supra) as under : "13.2 On the basis....
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....se, it is basically the linked sale which is sale of 125 boxes at the price applicable to 100 boxes. Therefore, the claim that the goods are supplied free is not acceptable. The reliance placed by the appellant on the decision of the Tribunal in the case of Vinayaka Mosquito Coil Manufacturing Company cited supra is, therefore, misplaced. Further, we are not in agreement with the contention that if there is no sale, no duty is payable. No such ratio can be attributed to the order of Hon'ble the Supreme Court summarily dismissing the appeal against the order made by the Tribunal in Vinayaka Mosquito Coil Manufacturing. 16. We, therefore, hold that : (a) Sale is not a necessary condition for charging to excise duty. Duty becomes payable (unless otherwise exempted) in respect of every removal of excisable goods. (b) The concept of quantity discount applicable in the context of valuation under Section 4 is not applicable in determining value under Section 4A for the forgoing reasons. (c) In the present case, the sale is for the gross quantity at the net price and the claimed free supply is not meant for the ultimate customer; such quantity claimed to be given also carried M....