TMI Blog2016 (12) TMI 1125X X X X Extracts X X X X X X X X Extracts X X X X ..... icial ) 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 M/s. Agro Tech Foods Ltd. under an agreement. As per the agreement the Maggie Noodles supplied on the contract price are to be distributed by the buyer under Sales Promotion Scheme. Accordingly they have to provide the pack of Maggie Noodles along with Sundrop Oil freely. The each pack of the product bear the word Free Not For Sale and conspicuously printed no MRP on such pack. The appellants due to the above reason valued their goods under Section 4 as the goods are not for retail sale. Show cause 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of their Sales Promotion Scheme. The appellant cleared the disputed goods after payment of duty at ₹ 4.80 per chocolate in terms of Section 4 of the Act after filing the due declaration on the premise that since the chocolates were being sold to M/s. Pepsico, this was not a retail sale and on such chocolates supply there was no requirement 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 provisions of SWM Act and the Rules made thereunder. The Commissioner did not accept this and confirmed the demand. The appellant having failed in its appeal before the Tribunal has now approached this Court by way of this appeal. 21. The Tribunal came to the conclusion that the duty was rightly demanded in terms of Section 4A of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 as it is offered free as a gift by Pepsi, which purchased the same from the assessee on contract basis. 25. As against this the learned Counsel Shri Subba Rao supported the order of the Tribunal and pointed out that this could be viewed as a retail sale . He adopted the reasoning given by the Tribunal on the definition of retail sale holding that the transaction in the present case amounting to retail sale since the chocolates were meant for distribution for consumption by an individual or group 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 referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice on the labels of Pepsi would be of no consequence for the simple reason that it is clearly meant for the advertisement of Pepsi and the MRP is not printed on the chocolate. It may be a move on the part 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 earlier judgment in Pepsi Food s case, therefore, has to be ignored as not relevant to the controversy. Once that position is clear, we are left with the notification alone and the aforementioned ruling in Pepsi s case. If the ruling has not been challenged by the Department, the same becomes binding as against the Department. Similar is the situation of the circular. The circular becomes binding as held in the case of Dhiren Chemical Industries (supra). 27. The Tribunal in Para 8 of its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein, the assessable value in respect of such percentage of goods will not be lowered on the ground that they have actually been sold at a lower rate. In our opinion the thrust of the Explanation I is not as the Tribunal has shown but is more on as to what retail price should be. The explanation provides that the retail price , i.e., the maximum price would include all taxes, local or otherwise, freight, transport charges, commission payable to dealers and all charges towards advertisements, delivery, packing, forwarding and the like. The further thrust of the explanation is on the notion that the price 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 purchased a particular bottle of Pepsi (1.5 litres). The Tribunal has further expres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y declared that it was specially packed for Pepsi . The thrust of the argument was that there appears such declaration on the package of KITKAT and secondly it was for the purpose of servicing Pepsi thereby satisfying both the conditions for applicability of Rule 34(a). The Tribunal has rejected this argument in a very casual manner by observing : Admittedly, the situation in the present case is not covered by any of the conditions noticed in the said Rule 34. Learned Counsel Shri Laxmi Kumaran pointed out that there was no question of the application of SWM (PC) Rules apart from any other reasons, because of the applicability of Rule 34. We accept the argument. After-all if the contract of the chocolates was for the purpose of advertising of a particular product of the particular industry, it would be covered within the expression servicing any industry . We have already dilated upon the expression servicing any industry in the earlier part of our judgment. Those observations would similarly apply to the present appeal also. With the result this appeal has to be allowed by setting aside the order of the Tribunal. We accordingly allow this appeal without any order as to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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