2011 (6) TMI 547 - AT - Central Excise

Transaction value based valuation or MRP based valuation - Section 4 or section 4A - respondent has cleared the mango avakai pickles without declaring the MRP - product was distributed for sale promotion and they determined the assessable value under Section 4 of the Central Excise Act 1944 Held that - pickles in question was not intended for retail sale, as per Rule 3 of Standard of Weight and Measurement (Package Commodity) Rules does not apply and MRP is not required to be affixed on the impugned goods, valuation as per Section 4A is not required. As the respondent has cleared the goods on transaction value to M/s Nestle and same has been clarified by the Board circular no. 625/15/02-CE dated 28.2.2002, Appeal filed by the revenue is dismissed

Summary

Issues:
1. Alleged contravention of provisions of Section 4A read with rule 9(1) by the respondent.
2. Demand raised for differential duty due to failure to declare MRP on mango avakai pickles.
3. Appeal against the adjudication order by the Commissioner (Appeals).
4. Interpretation of Notification no. 46-20/95 and its applicability to the product in dispute.
5. Valuation of goods intended for free distribution and not for retail sale.
6. Application of Rule 3 of Standard of Weight and Measurement (Package Commodity) Rules.
7. Clarification regarding the requirement of MRP declaration for goods not intended for retail sale.

Analysis:
1. The case involved an appeal by the revenue against the respondent, engaged in pickle and ketchup manufacturing, for allegedly contravening Section 4A read with rule 9(1) by clearing mango avakai pickles without declaring the MRP. The respondent claimed the product was not for retail sale but for free distribution to M/s Nestle.

2. A show-cause notice was issued for demanding differential duty, which was confirmed by the adjudicating authority but set aside by the Commissioner (Appeals), leading to the revenue's appeal. The revenue argued that the product fell under MRP-based value as per Notification 46-20/95, emphasizing the requirement to fix MRP and pay duty accordingly.

3. The respondent's counsel contended that products meant for retail sale had MRP declared under Section 4A, while goods for free distribution, like the mango avakai pickles in question, were cleared on transaction value without MRP. The lower appellate authority upheld this stance, stating that valuation under Section 4A was not necessary for goods not intended for retail sale.

4. The Tribunal considered Rule 3 of Standard of Weight and Measurement (Package Commodity) Rules, noting that it applied to packages for retail sale. The CBEC circular clarified that goods not requiring MRP declaration should be valued under Section 4, as in the case of the pickles distributed for free. The Tribunal upheld the lower authority's decision, dismissing the revenue's appeal and affirming the respondent's correct valuation method for goods intended for free distribution.