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2016 (12) TMI 1125 - AT - Central ExciseValuation - transaction value or MRP based value - Sales Promotion Scheme - pack of Maggie Noodles supplied along with Sundrop Oil freely, each pack of the product bear the word Free Not For Sale and also did not bear MRP - whether the valuation is to be done u/s 4 or u/s 4A of the Central Excise Act? - Held that - the identical issue has been decided in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of C. Ex., Rajasthan 2007 (8) TMI 3 - Supreme Court , where it as held that the sale of goods to the buyer who used the goods not for retail sale but for free distribution under Sales Promotion Scheme, the value of the goods shall be governed under Section 4 and not Section 4A of the Central Excise Act. After-all if the contract of the chocolates was for the purpose of advertising of a particular product of the particular industry, it would be covered within the expression servicing any industry - appeal allowed - decided in favor of appellant-assessee.
Issues Involved:
1. Applicability of Section 4 vs. Section 4A of the Central Excise Act for valuation of goods. 2. Whether goods sold for free distribution under a Sales Promotion Scheme should be assessed under Section 4 or Section 4A. 3. Interpretation of relevant provisions of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. Detailed Analysis: 1. Applicability of Section 4 vs. Section 4A of the Central Excise Act for Valuation of Goods: The primary issue is whether the appellant's goods, Maggie Noodles, sold to M/s. Agro Tech Foods Ltd. for free distribution under a Sales Promotion Scheme, should be valued under Section 4 or Section 4A of the Central Excise Act. The appellant contended that since the noodles were not for retail sale and bore the label "Free Not For Sale" without an MRP, the valuation should be under Section 4. The department, however, argued for valuation under Section 4A, which pertains to goods sold in retail packaging. 2. Whether Goods Sold for Free Distribution Under a Sales Promotion Scheme Should Be Assessed Under Section 4 or Section 4A: The appellant relied on a precedent set by the Supreme Court in the case of Jayanti Food Processing (P) Ltd. vs. Commissioner of C. Ex., Rajasthan, where it was held that goods sold to a buyer for free distribution under a Sales Promotion Scheme should be valued under Section 4, not Section 4A. The Supreme Court had ruled that since the goods were not for retail sale and did not require an MRP, Section 4 was applicable. The Tribunal found that the facts of the present case were identical to the Jayanti Food Processing case, thus the same legal principles applied. 3. Interpretation of Relevant Provisions of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977: The Tribunal examined the Standards of Weights & Measures (Packaged Commodities) Rules, 1977, particularly Rule 6(1)(f), which mandates the printing of MRP on retail packages. The Tribunal noted that since the noodles were not sold in retail but were part of a promotional scheme, there was no requirement to print an MRP. The Tribunal also referred to a Board Circular dated 28-2-2002, which clarified that goods not required to declare an MRP under the SWM Act should be valued under Section 4. Conclusion: The Tribunal concluded that the appellant's case was squarely covered by the Supreme Court's judgment in Jayanti Food Processing (P) Ltd. vs. Commissioner of C. Ex., Rajasthan. The Tribunal set aside the impugned order and allowed the appeal, holding that the valuation of the Maggie Noodles sold for free distribution should be under Section 4 of the Central Excise Act, not Section 4A. Pronouncement: The judgment was pronounced in court on 15/12/2016.
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