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2015 (10) TMI 1554 - CESTAT NEW DELHI

2015 (10) TMI 1554 - CESTAT NEW DELHI - 2015 (330) E.L.T. 684 (Tri. - Del.) - Classification 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 .....

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xcise 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 .....

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s 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 a .....

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ran The appellants are engaged in the manufacture of sugar confectionery, chewing gum, chloromint, etc. The present appeal is against the order-in-original No.02/PP/CE/2007 dated 28.02.007. The appeal is basically against the demand of central excise duty consequent on re-classification of chloromint under Heading No.30.03 and certain under valuation of Section 4 as well as MRP based items cleared by the appellants. The issue involved and the amount involved can be summarized in the following ta .....

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er Section 4 with other Section 4 items 1.2.2005 to 31.10.2005 83,379/- 81,379/- 2. The appellants contested the demand on chloromint merely on the ground of limitation under Section 11A of the Central Excise Act. They are not contesting the classification of chloromint as Ayurvedic Medicine under Heading No.30.03. 3. The demand for the period 1.3.2003 to 31.01.2004 was raised vide notice dated 6.2.2006 invoking extended period of demand alleging suppression, fraud, etc. The appellant's plea .....

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nufactures of Chloromint and there has been a dispute regarding the classification of the said products, which was a subject matter of demand and settlement clearly will show that all the facts are in the knowledge of the Department and there is no case of suppression whatsoever. 4. The appellant relied on the Hon'ble Supreme Court's decision in the case of Nizam Sugar Factory reported in 2006 (197) ELT 465 (SC) 5. On the second issue regarding free supply of items along with items subje .....

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that the individual pieces inside the Jar do not bear MRP on them. The appellant also submitted a copy of the printed wrapper of the Jar. It is their contention that the cost of free supply is duly included in the MRP affixed on the Jar and there is no case made out that they have collected any amount over and above the MRP declared from the dealers or retailers. 7. Regarding the next issue of additional items given as free in respect of the goods covered by Section 4 valuation like chloromint, .....

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in-original. He contested the appellant's plea that the Jars are to be considered as retail packings. He submitted that there could be sale of individual items contained in the Jar to the ultimate consumers. In other words, if a jar contains 100 pieces + 10 pieces as free if individually sold, retailer gets price of 110 pieces. Hence, he argued that the value of 110 pieces should be taken for excise purpose. When asked specifically regarding declaration of MRP on the Jars, the ld. AR fairly .....

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ause 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 ld. Commissioner's observations, that the appellant should have of their own re-examined the issue of classification of Chloromint in the light of the Hon'ble Supreme Court's decision in the case of Warner Hindustan Ltd. is mis-leading and cannot be a ground for allegin .....

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ourt's observation in the case of Nizam Sugar Factory (supra) reproduced below is very relevant:- "Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authoriti .....

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at 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. 12. 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 piec .....

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had occasion to examine a similar situation in the case of Vinayaka Mosquito Coil Mfg. Co. Vs. CCE -2004 (174) ELT 107 (Tribunal). In that case, the Tribunal held that in case of free supply, there is no sale as the provisions of Section 4 A is not attracted. The Civil appeal filed by the Revenue against the said CESTAT's order was dismissed by the Hon'ble Supreme Court. It is also seen that CBEC vide Circular dated 28.10.2002 clarified that if an individual item is supplied free in the .....

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