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M/s Castrol India Ltd. Versus CCE-Kol-VI

Valuation of goods - whether the additional quantity of manufactured lub. Oil cleared in the bonus/promo packs during the relevant period i.e. from 01.4.1998 to 31.3.2008, would attract duty on pro-rata basis of the MRP declared on the packs - Held that:- Levy of excise duty on goods produced or manufactured in India is a Constitutional concept and could be located at entry 84 of List-I to VII Schedule to the Constitution of India. Levy and collection of the Central Excise duty, now known as CEN .....

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goods manufactured and cleared from the factory. - Prior to 01.7. 2000 the value of the goods chargeable to ad valorem rate of duty, was determined on the basis of normal whole sale price at which such goods are sold; however, after 01.7. 2000, transaction value has become the basis to ascertain the assessable value

Manufactured lubricating oils has been notified under The Standards of Weights and Measures Act read with relevant Rules, accordingly, the assessable value of the said goo .....

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partment about the compliance of the requirement of the provisions of The Standards Weights and Measures Act and the Rules made thereunder. The Appellant is at liberty to ascertain its own MRP of the goods depending on the market conditions and required to affix the same on the packing, subject to the condition that in selecting the MRP for determination of value and payment of duty, in the event more than one MRP is fixed on the pack, as prescribed in section 4A of Central Excise Act, 1944, the .....

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the additional quantity cleared as bonus quantity, in the same pack, is added to the MRP affixed on the said bonus pack, then the declared MRP will increase accordingly, which the appellant had not realized from its customers; also no such allegation has been levelled in the notice nor confirmed in the impugned order that the Appellant has collected any amount in addition to the MRP declared. No merit in the impugned order, consequently, the same is set aside - Decided in favour of assessee. - .....

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er chapter 27 of CETA, 1985 and are subjected to ad valorem rate of duty. The products manufactured by the appellant are notified under The Standards of Weights & Measures Act, 1976 & Rules made thereunder, hence, the said goods are subjected to assessment for valuation under Section 4A of Central Excise Act, 1944. 3. The appellant during the relevant period i.e. 01.4.1998 to 31.3.2008 cleared unit quantity of goods in their normal pack affixing the MRP; as well as with some additional q .....

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in the same pack. On adjudication, differential excise duty of ₹ 1,30,14,474/- had been confirmed and penalty of equal amount was imposed under Section 11AC of Central Excise Act, 1944, along with direction for recovery of interest under Section 11AB of Central Excise Act, 1944. Hence, the present appeal. 4. Shri D.Arvind, ld.C.A. for the appellant submits that during the relevant period their product was notified under The Standards Weights and Measures Act read with the Standards of Weig .....

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denoting it as bonus packs. Citing an example, he submits that a regular pack if contains 5 ltrs. of lub. oil affixed with a MRP of say ₹ 500/- and for promoting sale of this product, in the same pack, with the same MRP of ₹ 500/-, 5.5 ltr was sold, instead of 5 ltr.. Similarly, sometimes they offer a reduction in the MRP containing the same quantity. For example, the pack of 1 ltr. of product, affixed with a MRP say ₹ 100/- then the promotional packs of the same product pack .....

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er, hence, the MRP affixed on these packs should be the basis for determination of value under Sec.4A. The excise duty is paid on this promotional packs, considering the MRP affixed on it after availing the abatement, allowed under the relevant Notification, as the assessable value. It is his submission that the additional quantity contained in the packs are cleared on payment of duty and it is incorrect to allege that this additional quantity was cleared without payment of duty. It is his submi .....

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a Food and Agro Ltd. vs. CCE, Noida - 2003 (156) ELT 488 (Tri.-Del.), CCE, Bangalore-III vs. Himalaya Adrat Co. - 2009 (243) ELT 101 (Tri.-Bangalore). 5. Further he has submitted that the decision of the Larger Bench in the case of Indica Laboratories Pvt.Ltd. vs. CCE, Ahmedabad - 2007 (213) ELT 20 (Tri.LB) is not applicable to the facts of the present case, inasmuch in that case the appellants are manufacturer of P & P Medicines falling under chapter 3003 of CETA and were indicating the MRP .....

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se. 6. Per contra, the ld.A.R. (Commissioner) for the Revenue submitted that the additional quantity cleared in the promo packs had not suffered duty, inasmuch as, when a comparison is made between the bonus/promo packs and the normal pack, even though at the same MRP printed on both, but, the price at which unit quantity of Lub. oil was made available to the customers, was different. It is his submission that therefore the MRP arrived at and affixed on the packages of bonus/promo pack is not th .....

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d in the promo pack are definitely chargeable to duty and since the product is notified under The Standards Weights and Measures Act, hence its value is calculated on the basis of MRP declared for the unit quantity of the product in the normal packs, less the abatement as per the applicable Notification. 7. Heard both sides and perused the record. The limited issue involved in the present case for determination is: whether the additional quantity of manufactured lub. Oil cleared in the bonus/pro .....

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ion 3 of the Central Excise Act,1944 lays down that there shall be a duty called CENVAT be levied on goods produced and manufactured in India and collected in the manner specified under the Act and Rules made thereunder. The said provision reads as: SECTION 3. Duties specified in the [[First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985] to be levied. - (1) [There shall be levied and collected in such manner as may be prescribed, - (a) [a duty of excise to be called th .....

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r one is described as specific rate of duty and the later one is as ad valorem rate of duty. Specific rate of duty is independent of the value, that is the price at which it could be sold; similarly, the value is independent of the physical characteristics of the goods i.e. its volume, weight, length etc.. Both methods are mutually exclusive. In the present case, the lubricating oils are subjected to ad valorem rate of duty. In other wards, it is the value of the goods which is relevant for dete .....

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xcise. - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall - (a) in a case where the goods are sold by the assessee, for delivery at the time and place of the removal, the assessee and the buyer of the goods are not related and the price is the sole consideration for the sale, be the transaction value; (b) in any other case, including the case where the goods are not sold, be the v .....

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icial Gazette, specify any goods, in relation to which it is required, under the provisions of the [Legal Metrology Act, 2009 (1 of 2010)] 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, notwithstandi .....

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b-section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place .....

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es, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. - For the purposes of this section, - (a) where on the pack .....

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sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates.] 12. In the present case, the manufactured lubricating oils has been notified under The Standards of Weights and Measures Act read with relevant Rules, accordingly, the assessable value of the said goods are to be determined as per section 4A of Centr .....

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lso applicable to normal pack, containing lesser quantity. In other words, the differential quantity between the normal pack and bonus had been cleared without payment of duty. 14. From the impugned Order, we find that in confirming the demand, the ld. Commissioner has advanced a two fold reasoning. He has observed that since the additional quantity is provided in the bonus/promo pack for the purpose of promotion of sales, which is nothing but attributable to advertisement expenses, hence, duty .....

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y of lub. Oil contained in the said pack. 15. We are unable to persuade ourselves to accept any of the aforesaid reasoning. The first one is fallacious inasmuch as the ld. Commissioner has himself observed that the present goods are notified under section 4A and its assessable value is to be determined under Sec.4A and not under section 4 of the Central Excise Act, 1944; hence, the additional quantity or reduction in price from the declared MRP allowed by the Appellant to promote their business .....

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d to ascertain the correct MRP. In the present case, there is no dispute about the fixation of MRP on the bonus/promo pack and no objection has been raised by the department about the compliance of the requirement of the provisions of The Standards Weights and Measures Act and the Rules made thereunder. The Appellant is at liberty to ascertain its own MRP of the goods depending on the market conditions and required to affix the same on the packing, subject to the condition that in selecting the .....

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principles of valuation laid down for determination of value under Sec. 4 of CEA,1944. Accepting the contention of the revenue, if the pro rata value attributable to the additional quantity cleared as bonus quantity, in the same pack, is added to the MRP affixed on the said bonus pack, then the declared MRP will increase accordingly, which the appellant had not realized from its customers; also no such allegation has been levelled in the notice nor confirmed in the impugned order that the Appell .....

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