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M/s. Nestle India Ltd. Versus Commissioner of Central Excise, Goa

2016 (12) TMI 1125 - CESTAT MUMBAI

Valuation - transaction value or MRP based value - Sales Promotion Scheme - pack of Maggie Noodles supplied along with Sundrop Oil freely, each pack of the product bear the word Free Not For Sale and also did not bear MRP - whether the valuation is to be done u/s 4 or u/s 4A of the Central Excise Act? - Held that: - the identical issue has been decided in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of C. Ex., Rajasthan [2007 (8) TMI 3 - Supreme Court], where it as held that the .....

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E/1633/06 - Order No. A/94519/16/EB - Dated:- 15-12-2016 - Mr. Ramesh Nair, Member ( Judicial ) And Mr. C.J. Mathew, Member ( Technical ) Ms. Anjali Hirawat, Advocate for Appellant Shri H.M. Dixit, Asstt. Commr. (A.R) for respondent ORDER Per Ramesh Nair The appellant are engaged in the manufacture of Maggie Noodles which are cleared on payment of duty on the value as per Section 4A of the Central Excise Act. Apart from the clearance of goods for retail sale they also sell the Maggie Noodles to .....

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use notice issued 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 Processin .....

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ustomer 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 Hon ble Supreme Court judgment directly applies in the present case. 3. Shri H.M. Dixit, Ld. Assistant Commissioner (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. 4. We have carefully considered the submissions made by both the sides, we find tha .....

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ame KITKAT falling under Chapter 19 of Central Excise Tariff Act, 1985. This product is a specified product under the provisions of Section 4A and is included in the notification and accordingly the duty was being paid on the said chocolate in terms of Section 4A based upon the retail sale price after claiming the deductions on account of abatements. M/s. Nestle India entered into a contract with M/s. Pepsico India Holdings Ltd., where the agreed price of the KITKAT packet was ₹ 4.80 and t .....

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to display the maximum retail price and as such the chocolates could not be covered under Section 4A and would eventually be assessable under Section 4 of the Act. However, the Department did not accept this and it issued a show cause notice dated 14-8-2001 raising a demand of ₹ 48,95,370/- along with the proposal to impose penalty upon the appellant with interest. This proposal was contested by the assessee on the aforementioned plea that it was not required to print the MRP under the pro .....

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uired 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 w .....

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be arrived at in terms of Section 4A of the Act. The Tribunal while accepting the case of the Revenue simply went on to hold that once the goods are specified items under Section 4A(1) of the Act and are excisable goods, the chargeable duty would be required to be assessed on the MRP. The Tribunal also recorded that the only exception where a manufacturer can deviate from the general rule of printing MRP on the package would be Rule 34 of SWM (PC) Rules. It further held that the said Rule did no .....

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The Tribunal also held that the circular dated 28-2-2002 did not apply to the case of the assessee. Holding thus, the Tribunal dismissed the appeal. 24. Shri Lakshmi Kumaran firstly pointed out that the KITKAT chocolate sold to Pepsico was for free distribution along with 1.5 litre bottle of Pepsi and, therefore, there is no MRP affixed on the chocolate which accompanied the bottle. He further submits, relying on Section 2(v) of the SWM Act that there is no sale of the chocolate to the consumers .....

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p of individuals by retails sale and therefore, covered in SWM (PC) Rules. 26. At the outset Shri Lakshmi Kumaran invited our attention to the notification dated 28-2-2002 bearing No. 625/16/2002-CX. He pointed 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 .....

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ct, 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 last sentence of Para 6 of the notification and pointed out that the KITKAT chocolate though a n .....

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ied free along with Pepsi of 1.5 litre was bound to be assessed under Section 4 and not under Section 4A of the Act. Learned Counsel points out that this judgment is not challenged by the Revenue and has become final. He further suggests that in keeping with the law laid down by this Court in CCE, Vadodara v. Dhiren Chemical Industries [2002 (139) E.L.T. 3] the Department cannot now turn back and take a contrary stand. There is no doubt that the judgment of the Tribunal cited supra was attempted .....

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t of the Pepsi for advertising its product but that cannot be said to be binding vis-a-vis Nestle. What is required is the requirement under the Rules of printing the price. Therefore, the true test is not as to whether the price is printed on the labels of the accompanying product like Pepsi but whether there was a requirement under the SWM Act or the Rules made thereunder to print the MRP on the wrappers of KITKAT chocolates. The reason given by the Tribunal in Para 10 for distinguishing the e .....

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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 .....

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fically provided that there would be instances where the same notified commodity would be partly assessed on the basis of MRP under Section 4A and partly on the basis of normal price prior to 1-7-2000 or transaction value from 1-7-2000. Again merely because the goods are specified items under Section 4A(1), that by itself will not be a be all and end all of the matter as before such goods are brought in the arena of Section 4A(1), there would have to be the satisfaction of a particular condition .....

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on 4A and suggested that the retail sale price would be the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumers and includes all taxes, local or otherwise. The Tribunal has held, relying on the expression may be in contradistinction to the expression shall be that even if a portion of the goods are sold at a lower rate than the MRP affixed therein, the assessable value in respect of such percentage of goods will not be lowered on the ground that they .....

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e is the sole consideration of such sale. The Tribunal has mixed up Explanation I with Explanation II which is not permissible. This was not a case under Section 4A, Explanation II(b) because we do not find different sale prices declared on the different packages of the chocolates. The case of the assessee has been consistent from the beginning that these chocolates were sold to Pepsi under a contract for a particular value and the said chocolates were to be offered as a free gift to the one who .....

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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. .....

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he package. If there is no sale involved of the package, there would be no question of Rule 6(1)(f) being attracted. There is a clear indication in the definition of retail sale price as provided in Rule 2(r) which clearly explains that the MRP means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer. Thus, the definition of sale in Section 2(v) of the SWM Act becomes relevant. Therefore, unless there is an element of sale, as contemplated in Section 2 .....

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