2006 (2) TMI 565 - AT - Central Excise

Summary

Issues:
1. Demand of duty based on valuation of goods under Section 4A of the Central Excise Act for ice-cream supplied as a free gift.
2. Prima facie case of the appellants in view of a previous Tribunal decision regarding valuation of goods distributed as free gifts.
3. Justification of impugned order based on the Standards of Weights and Measures Act and Rules framed thereunder.
4. Granting waiver of pre-deposit and stay of recovery in respect of the duty amount.

Analysis:
1. The judgment deals with a demand of duty amounting to Rs. 2,42,976 imposed on the appellants for supplying ice-cream as a free gift along with retail sale of ice-cream in plastic boxes. The dispute arises from the differential valuation of the goods under Section 4A of the Central Excise Act. While the goods in plastic boxes were assessed by the party themselves under Section 4A and duty-paid accordingly, the free gift goods were assessed under Section 4 of the Act. The Department sought to assess the free gift goods on MRP basis under Section 4A, leading to the raised demand, upheld by lower authorities.

2. The Tribunal considered the appellants' prima facie case in light of a previous decision in G.S. Enterprises v. Commissioner of Central Excise, Jaipur, where goods distributed as free gifts were held to be liable for valuation under Section 4 and not under Section 4A. Despite the Department's civil appeal against this decision being admitted by the Supreme Court, there was no stay of operation of the Tribunal's order. The Tribunal distinguished another case, Nestle India Ltd. v. Commissioner of Central Excise, Goa, and found that the ratio of the decision in G.S. Enterprises supported the appellants' position, leading to the grant of waiver of pre-deposit and stay of recovery.

3. The impugned order was sought to be justified by the Department based on the provisions of the Standards of Weights and Measures Act and the Rules framed thereunder. However, the Tribunal found that the decision in Nestle India Ltd. case, which the Revenue relied on, was distinguished in the G.S. Enterprises case. The Tribunal's decision in G.S. Enterprises appeared to support the appellants' case, emphasizing the importance of the previous Tribunal's ruling in determining the valuation method for goods distributed as free gifts.

4. Ultimately, considering the appellants' prima facie case and the supporting precedent, the Tribunal granted waiver of pre-deposit and stay of recovery in respect of the duty amount demanded from the appellants. This decision was made after hearing both sides and analyzing the submissions presented, emphasizing the significance of the Tribunal's previous rulings in similar cases to guide the valuation process for goods supplied as free gifts.