2018 (4) TMI 1156 - AT - Central Excise

Demand of duty - free supplies - additional quantity packed in jar on which duty has been paid on MRP of the price of the Jar - Section 4A of the CEA, 1944 - Held that - identical issue decided in the case of M/s Perfetti Van Melle India Pvt Ltd Versus Commissioner of Central Excise, Delhi-III 2015 (10) TMI 1554 - CESTAT NEW DELHI where the issue has already been decided in the favour of the appellants holding that these free supplies are within the jar and on the MRP of Jar, the appellants are correctly paying duty under Section 4A of the Central Excise 1944. On these additional supplies made free, the appellant is not required to pay duty - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Demand of duty on additional quantity packed in a jar on which duty was paid on MRP of the jar.
- Interpretation of Section 4A of the Central Excise Act, 1944 regarding duty payment on additional free supplies in jars.
- Adjudication of demand, interest, and penalty on appellants for additional free supplies made in jars.
- Applicability of previous tribunal decisions and circulars on valuation of free supplies in jars.
- Consideration of promotional schemes and quantity discounts in determining duty liability.

Analysis:
The appeal before the Appellate Tribunal CESTAT Chandigarh involved a dispute over the demand of duty on additional quantity packed in a jar, for which duty had already been paid on the MRP of the jar. The appellants, engaged in manufacturing sugar confectionery, cleared goods packed in jars with additional free supplies. The Revenue contended that duty was required on these additional supplies under Section 4A of the Central Excise Act, 1944. Two show cause notices were issued, leading to the confirmation of duty demand, interest, and penalty on the appellants. The tribunal considered the submissions and referred to a previous case where it was held that free supplies within the jar, covered by the MRP of the jar, did not attract additional duty under Section 4A. The tribunal emphasized that the nature of transactions involving free supplies as part of promotional schemes could be considered quantity discounts, warranting no additional duty liability.

In the earlier case referenced by the tribunal, it was established that the MRP printed on the jar encompassed both the main product and any additional free items inside, thus no further duty was required on these free supplies. The tribunal rejected the Revenue's argument for additional duty on promotional free supplies, affirming that such supplies within the jar and covered by the MRP did not necessitate duty payment. The tribunal also highlighted a circular clarifying that in cases of individual items supplied free in a multi-pack without an MRP, the MRP of the multi-pack would be used for valuation under Section 4A. Consequently, the tribunal concluded that the appellants were correctly paying duty under Section 4A for the free supplies within the jar, setting aside the impugned orders and allowing the appeals with any consequential relief.

In summary, the tribunal's judgment clarified the interpretation of Section 4A regarding duty liability on additional free supplies packed in jars where duty was paid on the MRP of the jar. By referencing previous decisions and circulars, the tribunal held that free supplies within the jar covered by the MRP did not attract additional duty, considering them as part of promotional schemes or quantity discounts. The appellants were relieved from the duty demand on these free supplies, emphasizing compliance with Section 4A of the Central Excise Act, 1944.