2007 (9) TMI 68 - AT - Central Excise

Demand Alleged that appellant valued their product was lowered than normal price on the ground that the price at which regular pack cleared also set same price for promotional pack tribunal consider as sales promotion activity and set aside the demand

Summary

Issues:
1. Reduction of assessable value of product Rin and supply of bought out item Vim along with each cake of Rin.
2. Recovery of duty on the differential value of Rin cleared during September 97.
3. Claim by Hindustan Lever Limited (HLL) that Vim supplied was a marketing strategy and not a consideration for Rin sold.
4. Bar on the limitation of the Show Cause Notice dated 31-7-1998.
5. Interpretation of case laws supporting HLL's appeal.
6. Assessment of demand sustainability based on consideration received and limitation period.

Analysis:
1. The case involved Hindustan Lever Limited (HLL) reducing the assessable value of Rin Supreme 250 gms and supplying Vim 200 gms bar along with each cake of Rin. Invoices were raised to ensure the aggregate price did not exceed the assessable value of Rin before revision.

2. The Department sought to recover duty on the differential value of Rin cleared in September 1997, claiming the pre-revised price of Rin as the normal price. The Commissioner dropped the proposals, stating that HLL did not collect excess consideration and that Vim was a trade discount. The Department appealed, alleging short levy and seeking confirmation of the proposals.

3. HLL argued that they only realized the declared price for Rin, with Vim being a sales promotion gimmick. They contended there was no mis-declaration or short levy, emphasizing that Rin was not sold at any other price during the material time.

4. The issue of limitation arose, with HLL asserting that the Show Cause Notice issued in July 1998 to recover short levy on clearances made in September 1997 was time-barred.

5. HLL cited case laws where they had declared lower assessable values for products sold with free items, emphasizing that as long as there was no extra consideration, the promotional pack's assessable value should be based on the price actually charged.

6. The Tribunal found that HLL had cleared Rin at the declared price, including Vim as part of a sales promotion strategy. The demand for duty was deemed unsustainable both on merits and limitation grounds. The Tribunal upheld the impugned order, citing the case laws supporting the treatment of free gifts as admissible trade discounts.