2006 (7) TMI 409 - AT - Central Excise

Summary

Issues:
Assessment of excise duty under Section 4A vs. Section 4 for promotional packs of MAGGI Masala Noodles.

Analysis:
The case involved the assessment of excise duty on promotional packs of MAGGI Masala Noodles under Section 4A or Section 4 of the Central Excise Act. The appellants, engaged in manufacturing Noodles and Ketchup, had entered into an agreement with another company for the sale of MAGGI Masala Noodles. Initially, the free packs of noodles distributed with the other company's product did not have an M.R.P. printed on them, and they were assessed under Section 4 without objection from the department. However, a new contract in 2003 led to the negotiation of a wholesale price for the promotional packs, inclusive of taxes and transport costs. The department issued a show cause notice claiming that since the noodles fell under a specific sub-heading, the assessable value should be determined under Section 4A, demanding a differential amount of excise duty and imposing penalties.

The advocate for the appellants argued that subsequent tribunal decisions had distinguished cases where M.R.P. was not declared on packs meant for free supply, leading to assessment under Section 4 instead of Section 4A. He also referred to a Board's Circular supporting this interpretation. On the other hand, the Departmental Representative contended that exemptions under the Standards of Weights and Measures Act were limited and that M.R.P. declaration was mandatory, necessitating assessment under Section 4A. The appellants sought a waiver of pre-deposit pending a Supreme Court decision favoring their position.

The Tribunal, after considering the submissions, found the appellants' case similar to previous decisions favoring assessment under Section 4 for packs without an M.R.P. declaration. Despite an appeal pending in the Supreme Court in a related case, the Tribunal acknowledged a prima facie case in the appellants' favor and consequently waived the pre-deposit of duty and penalty, staying recovery pending the appeal's disposal.