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2015 (10) TMI 1554 - AT - Central ExciseClassification of goods - MRP based Valuation - Section 4A - free supply of items - Invocation of extended period of limitation - Held that:- Regarding re-classification of chloromint under Heading No.30.03, it is clear that the second show cause notice, which resulted in the impugned order, was issued after the matter was already agitated by an earlier notice dated 4.3.2005, which finally entered in settlement of the case vide order dated 20.11.2005 - The fact that the appellant was classifying the product under Heading No. 1704 was always in the knowledge of the Department through ER-1 Returns, classification, declarations, letter dated 5.11.97 and also the demand and settlement of the demand as discussed earlier in the latter period. As such, we find that the demand for excise duty on Chloromint indicating extended period is not sustainable because of application of time bar under Section 11 A of Central Excise Act, 1944. Regarding valuation of free supply items when the goods are subjected to MRP based assessment, we find strong force in the appellant's plea that the retail packing in these cases are the jars, which bear the MRP declaration as per the legal requirements and also clear indication to the effect that numbers of free pieces inside the said pack - Jar. The retailers could be selling individual pieces (not having MRP printed on them to the individual ultimate consumers) is no reason to disregard the retail sale pattern observed by the appellant. - CBEC vide Circular dated 28.10.2002 clarified that if an individual item is supplied free in the multi pack and has no MRP printed on it, the MRP printed on the multi pack will be taken for the purposes of valuation under Section 4 A. We find that the case law and the clarification of the Board are applicable to the present situation and as such, we hold that the demand of central excise duty in respect of such free items is not sustainable. The lower authority had disallowed the discounts only on the ground that the same are referred to as promotional schemes and not as quantity discounts. We find that all discounts are basically promotional schemes. This could not be the reason for disallowing a discount if all other conditions are fulfilled. The nature of these transactions is that certain extra numbers of items are supplied free which can very well be considered as quantity discounts since they are known before hand. There is no reason to deny such abatement from assessable value and as such, we find that the demand of differential duty on this ground is not sustainable. - Decided in favour of assesee.
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