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2023 (3) TMI 534 - AT - Central ExciseValuation of export goods - method of valuation - Section 4A or Section 4 of Central Excise Act, 1944? - toothbrushes supplied in bulk in the carton to the principal manufacturer for further supply as under promotional scheme/ offer to supply the same free of cost with their toothpaste - HELD THAT - There is no dispute on the fact of the present case that appellant are manufacturing tooth brush and supplying to their principal manufacturer M/s. Hindusan Unilever Ltd. Prime Healthcare Products. In some of cases the tooth brush is packed in retail pack and MRP, is affixed on it. On such goods, the appellant is discharging duty under section 4A on MRP based valuation, on which there is no dispute. The other type of supply is the tooth brush are packed in bulk quantity in loose form in a carton and supply to their principle manufacturer. The principle manufacturer use this brush for their promotional scheme and the same is packed in a combo pack of tooth paste and this tooth brush. In this case, the tooth brush is not meant for retail sale but it is for supply under promotional scheme. The appellant is also clearing the said goods in bulk form in a carton. Therefore, as per standards of weights and measure Rules, the appellant are not under legal obligation to affix the retail sale price on this supplies. Therefore, the valuation of tooth brush when supplied in bulk quantity in carton was rightly valued under Section 4 of the Central Excise Act, 1944. This very issue has been considered by this Tribunal in the case of M/S CONTEMPORARY TARGETT PVT LTD VERSUS C.C.E. S.T. -VADODARA-I 2019 (5) TMI 871 - CESTAT AHMEDABAD where it was held that the tooth brushes supplied by the appellant which is not for retail sale but for free supply by the tooth paste manufacturer will not be valued under Section 4A in the hands of the appellant - the value adopted by the appellant under Section 4 is correct and legal which does not need any interference. The impugned order is not sustainable. Accordingly, the same is set aside - Appeal allowed.
Issues Involved:
1. Whether the valuation of toothbrushes supplied in bulk for promotional schemes should be done under Section 4A or Section 4 of the Central Excise Act, 1944. Detailed Analysis: Issue 1: Valuation of Toothbrushes Supplied in Bulk for Promotional Schemes The central issue in the case is whether the valuation of toothbrushes supplied in bulk to principal manufacturers for promotional schemes should be governed under Section 4A or Section 4 of the Central Excise Act, 1944. Arguments by the Appellant: The appellant argued that the supply of toothbrushes in loose bulk form does not require compliance with the Standards of Weights and Measures Act, 1976, and the associated rules for affixing the retail sale price (RSP). Therefore, the goods supplied to their principal manufacturers should not be governed by Section 4A for valuation purposes. The appellant cited a similar case involving M/s. Contemporary Targett Pvt Ltd, where the Tribunal decided in favor of the assessee. Arguments by the Respondent: The respondent reiterated the findings of the impugned order, asserting that the valuation should be done under Section 4A. Tribunal's Findings: The Tribunal carefully considered the submissions and reviewed the records. It was undisputed that the appellant manufactured and supplied toothbrushes to principal manufacturers, some of which were packed in retail packs with MRP affixed, and others were supplied in bulk without retail packing. The toothbrushes supplied in bulk were used by the principal manufacturers for promotional schemes and were not meant for retail sale. The Tribunal noted that under the Standards of Weights and Measures Rules, there was no legal obligation for the appellant to affix the retail sale price on bulk supplies. Consequently, the valuation of toothbrushes supplied in bulk was correctly done under Section 4 of the Central Excise Act, 1944. The Tribunal referenced the case of Jayanti Food Processing (P) Ltd. vs. Commissioner of Central Excise, Rajasthan, where the Supreme Court ruled that goods supplied for promotional purposes without retail sale packaging should be valued under Section 4 and not Section 4A. The Tribunal also cited the Mumbai Bench's decision in the case of Nestle India Limited, where promotional packs of Maggi noodles supplied free with Tata Tea were not bearing MRP and were valued under Section 4. Conclusion: The Tribunal concluded that the toothbrushes supplied by the appellant, which were not for retail sale but for free supply by the toothpaste manufacturer, should not be valued under Section 4A. The valuation adopted by the appellant under Section 4 was deemed correct and legal. Order: The impugned order was set aside, and the appeal was allowed. The Tribunal pronounced the decision in the open court on 07.02.2023.
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