2017 (8) TMI 149 - AT - Central Excise

Method of Valuation - combination pack - detergent powder and detergent cake - MRP based valuation - Revenue entertained a view that the duty liability of such retail package containing powder and cake is to be computed by taking MRP of individual items, when sold separately - Held that - Admittedly, the appellants sold combination pack, in retail, containing 1 kg. of detergent powder with 160 gm. detergent cake. The sale price of the combination retail pack is printed on the pack. The retail pack clearly indicated the MRP as ₹ 36/- which includes the price of detergent cake. In such situation, we find no justification in further adding up the value or for demand of any differential duty. In the present case, we are dealing with the combination pack of consumer product sold with a single MRP. As a marketing strategy one of the product in such combo pack is declared to be free. However, the details printed on the combination pack makes it clear that the MRP is for detergent cake also. Appeal allowed - the item declared to be sold free need not be separately assessed to duty - decided in favor of appellant.

Summary

Issues:
- Duty liability calculation for a retail package containing detergent powder and detergent cake
- Interpretation of Section 4A of Central Excise Act, 1944 and Legal Metrology (Packaged Commodity) Rules, 2011
- Applicability of MRP on a combination retail pack
- Justification for adding value or demanding differential duty
- Relevance of Circular dated 19/02/2010 of the Board in the present case

Analysis:
The appeal in this case was against the order of the Commissioner (Appeals) regarding the duty liability of a manufacturer of detergent powder and detergent cake. The issue revolved around the introduction of a composite package containing 1 kg of detergent powder with 1 detergent cake, both with a fixed MRP of ?36. The Revenue argued that duty should be calculated based on the MRP of individual items when sold separately. The original order confirmed a duty demand and penalties, which was partially upheld in the impugned order.

The appellant contended that the price realized was for the entire retail combo pack, emphasizing that the packaging complied with the law. They cited precedents to support their argument. The Authorities, however, supported the original findings. Upon reviewing the case, the Tribunal found that the facts were undisputed - the retail pack clearly indicated the MRP of ?36 for the combination, including the detergent cake. The Tribunal held that there was no justification for adding value or demanding differential duty in such a scenario.

The Tribunal highlighted that the Circular cited by the Revenue was not relevant, as it pertained to a different context. In the case of a combination pack with a single MRP, where one product was declared free as a marketing strategy, the Tribunal relied on previous decisions involving similar situations. It was established that when both items in a combo pack are sold with a declared MRP, the item declared free does not need separate duty assessment. The Tribunal's decision was supported by the Supreme Court rulings in related cases. Consequently, the impugned order was deemed without merit, and the appeal was allowed.

In conclusion, the Tribunal's analysis focused on the interpretation of relevant legal provisions, the application of MRP on combination retail packs, and the justification for duty calculation in such scenarios. The decision underscored the importance of clear packaging details and adherence to established legal principles in determining duty liability for composite products.