TMI Blog2019 (10) TMI 633X X X X Extracts X X X X X X X X Extracts X X X X ..... xcise Appeal No. 10929 of 2019-DB, Excise Appeal No. 11737 of 2017-DB, Excise Appeal No. 12113 of 2016-DB - FINAL ORDER NO. A/11912-11914/2019 - Dated:- 15-10-2019 - HON BLE MEMBER ( JUDICIAL ), MR. RAMESH NAIR And HON BLE MEMBER ( TECHNICAL ), MR. RAJU For the Appellant : Shri Jitu Motwani, Adv. For the Respondent : Shri Sameer Chitkara, Addl., Commr. (AR) ORDER RAMESH NAIR The brief facts of the case are that the appellant are engaged in manufacture of Tooth Brushes falling under chapter 96 of the First Schedule to Central Excise Tariff Act, 1985. It was noticed that they had cleared the tooth brushes in combo pack/bulk/naked condition to manufacturer of Toothpaste for free distribution by inserting the brush in the tooth paste pack. The tooth brushes classified under Chapter sub-heading No. 9603 2100 of Central Excise Tariff Act, 1985 were assessed by the appellant on transaction value based on contract price under Section 4 of the Central Excise Act, 1944. The tooth brushes mainly cleared to M/s Colgate Palmolive (India) Limited or M/s Advance Oral Care and Professional and Oral Care Product Pvt. Ltd. The case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n decided as under:- Civil Appeal No. 1738 of 2004 20. This takes us to the next appeal which is filed by Nestle India Ltd. The appellant M/s. Nestle India Ltd., are engaged in the manufacture of wafers covered with milk chocolate under the brand name 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 the chocolate so purchased at that price by M/s. Pepsico was meant for free supply of the same along with one bottle of Pepsi of 1.5 litres in pursuance 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, thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP. 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 not apply to the case of the assessee. The Tribunal also relied upon the first Explanation to Section 4A of the Act and came to the conclusion that even if a portion of goods is sold at a lower rate than the MRP affixed thereon, the assessable value in respect of such percentage of goods will not be lowered on that ground. The Tribunal also referred to the advertisements issued by Pepsico wherein it was displayed that KITKAT worth ₹ 12 will be given free with one 1.5 litres bottle of Pepsi. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Commissioner of Central Excise, Ludhiana v. Pepsi Foods Ltd. - 2005 (186) E.L.T. 603 wherein a view has been taken, relying on the aforementioned circular, that the packet of Lays (Potato Chips) which was to be supplied 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 to be distinguished in the impugned judgment of the Tribunal on the ground that there appeared a price printed on labels affixed on Pepsi bottle and sold by M/s. Varun Beverages indicating that KITKAT worth ₹ 12 is given free with the said Pepsi Bottle. In our view this printing of the price 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he matter (sic) as before such goods are brought in the arena of Section 4A(1), there would have to be the satisfaction of a particular condition that the packages of such goods are required under the SWM Act and the Rules made thereunder to declare the MRP. The Tribunal has even erred in holding that the circular dated 28-2-2002 is not applicable to the present case. A cursory glance at the circular would suggest that it is applicable to the present case where two commodities have been sold as a market strategy. 28. Shri Subba Rao also heavily relied on Para 9 of the impugned judgment and further relied on the first Explanation of Section 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 have actually been sold at a lower ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cific. It requires the retail sale price of the package be printed or displayed on the 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(v), Rule 6(1)(f) will not be attracted and thus such package would not be governed under the provisions of SWM (PC) Rules which would clearly take such package out of the restricted arena of Section 4A(1) of the Act and would put it in the broader arena of Section 4 of the Act. 30. Shri Lakshmi Kumaran lastly relied on Rule 34(a) of the SWM (PC) Rules and pointed out that the case was completely covered under that Rule since firstly the package in this case specifically declared that it was specially packed for Pepsi . The thrust of the argument was that there appears such declaration on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries Pvt. Ltd. v. CCE reported in 2004 (163) E.L.T. 219 in which case the sale of telephones by the telephone manufacturing companies to DoT, MTNL BSNL was considered and it was held that the duty will be under Section 4A of the Act and not under Section 4. Relying on that decision, the Tribunal in Civil Appeal No. 2877/2005 has held in favour of the assessees. It is also held by the Tribunal that Rule 34(a) of SWM (PC) Rules would not be attracted in these cases. In short the Tribunal has held that these cases are identical with the cases involving the sale of telephone. We have already approved the judgment of the Tribunal pertaining to the sale of telephones in the earlier part of this judgment. We do not see any reason to take a different view in case of the Refrigerators. It was feebly stated by Shri Subba Rao that the assessees have paid the duty based on contract price and not on the MRP. We do not think so as there is material placed before us by the learned Counsel appearing for the assessees that the duty has been paid not on the contract price but on the MRP. However, we leave it open to the Department to take an action in accordance with law if it is found that the du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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