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2009 (3) TMI 162 - AT - Central ExciseValuation Inclusion of value of free gifts clearance of JMG with the gift of Hand Blender valued at Rs. 56,98,800/ - Section 4A of the Central Excise Act, 1944 - held that - the hand blender contains very clear indication on the outer package that, it is being supplied free with the JMG. In addition, the package containing JMG and hand blender also shows clear indication that the hand blender is given free when JMG is purchased. Thus it is clear from the package that hand blender is not sold separately at all - the case is similar to supply of Kitkat chocolate free with Pepsi bottle and Hon ble Supreme Court held that Kitkat chocolate need not be assessed under Section 4(A). Similarly, in Sony case also, the Hon ble Supreme Court held clearly that the assessment is to be on the basis of MRP on the TV and free gifts need not be included as part of consideration to be paid in regard to TV sets as such.
Issues:
Whether the Hand Blender provided as a free gift with Juicer, Mixture, and Grinder (JMG) units should be charged Central Excise duty separately based on the MRP printed on the Hand Blender. Detailed Analysis: 1. Issue of Central Excise Duty on Hand Blender: The main issue in this case was whether the Hand Blender, given as a free gift with JMG units, should be subject to Central Excise duty separately based on the MRP printed on the Hand Blender. The appellant argued that the Hand Blender was not meant to be sold separately, and its MRP was displayed only to show the value of the free gift. They cited various legal precedents, including Supreme Court decisions, to support their contention that free gifts should not be considered part of the sale price for excise duty purposes. 2. Appellant's Argument: The appellant's advocate highlighted that the Hand Blender was clearly indicated as a free gift with the JMG units on the packaging. They presented evidence, such as cost sheets and a Chartered Accountant's certificate, to demonstrate that the MRP of the JMG units already included the cost of the Hand Blender. The appellant emphasized that there was no separate sale of the Hand Blender and, therefore, it should not be assessed separately for excise duty under Section 4(A) of the Central Excise Act, 1944. 3. Revenue's Argument: On the other hand, the Revenue argued that the presence of the MRP on the Hand Blender packaging indicated that it was required to be priced separately under the Standards of Weights and Measures Act. They contended that even if there was no direct sale of the Hand Blender, excise duty could still be charged on each removal of excisable goods. The Revenue relied on a larger Bench decision and various Tribunal cases to support their argument for separate assessment of the Hand Blender for excise duty. 4. Tribunal's Decision: The Tribunal analyzed the submissions from both sides and observed that the packaging clearly indicated that the Hand Blender was provided as a free gift with the JMG units and was not intended for separate sale. Drawing parallels with previous Supreme Court and Tribunal decisions regarding free gifts, the Tribunal ruled in favor of the appellants. They held that the Hand Blender should not be separately assessed for Central Excise duty, as it was part of a combination pack and not sold individually. Consequently, the duty demand, interest, and penalties imposed on the appellants were set aside, and the appeals were allowed with consequential relief. In conclusion, the Tribunal's decision favored the appellants, emphasizing that the Hand Blender, provided as a free gift with JMG units, should not be subject to separate Central Excise duty assessment based on the MRP printed on the Hand Blender packaging.
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