2009 (6) TMI 789 - AT - Central Excise

Summary

Issues:
Assessment under Section 4A of the Central Excise Act based on MRP printed on offer packs, differential duty demand, penalty imposition, interpretation of the concept of levying excise duty, applicability of Jayanti Food Processing case, goods not intended for retail sale, circular issued by CBEC on items supplied free with another item as a marketing strategy.

Analysis:
The case involved the assessment of shaving cream under Section 4A of the Central Excise Act due to the presence of a printed MRP of Rs. 15 on offer packs, despite the assessable value being declared at Rs. 2.50 per unit under Section 4. The appellant had cleared the product as an offer pack, leading to a demand of Rs. 16,85,520 as differential duty, along with a penalty. The Commissioner (Appeals) allowed the appeal filed by the respondents, prompting the Revenue to appeal the decision.

The learned SDR argued that excise duty should be levied based on the price charged to customers, emphasizing that the ultimate customer had to pay Rs. 15 for the pack when purchasing Ayurvedic Oil. He contended that the appellant's actions were aimed at avoiding correct excise duty payment by deliberately clearing shaving cream as offer packs. On the other hand, the appellant's advocate referred to the Jayanti Food Processing case, highlighting that the shaving cream was not sold separately but provided as a free offer with Ayurvedic Oil, similar to the scenario in the Supreme Court decision regarding mineral water bottles not intended for resale.

Upon considering the arguments, the Tribunal noted that the issue was covered by the Supreme Court's decision in the Jayanti Food Processing case. The goods in question were not meant for retail sale but were supplied in bulk as free offers to consumers. Additionally, reference was made to a Circular issued by the CBEC, stating that items supplied free with another item as a marketing strategy do not require an MRP to be printed. Given the alignment of the case with the Circular and the Supreme Court ruling, the Tribunal found no merit in the Revenue's appeal and consequently rejected it.

In conclusion, the Tribunal upheld the Commissioner (Appeals)' decision, emphasizing that the shaving cream packs were not intended for retail sale and were provided as free supplies to consumers. The judgment highlighted the relevance of the Supreme Court precedent and the CBEC Circular in determining the applicability of excise duty in cases involving items supplied free with other products as part of a marketing strategy.