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2005 (10) TMI 140 - AT - Central ExciseProcess amounting to manufacture or not - Method of Valuation - section 4A of the CE Act of 1944 or not - sale of dandruff shampoo of 200 ml with a free offer of 100 gm face wash gel and dandruff shampoo of 120 ml with a free offer of 50 gm face wash gel - two products would be tied together a new label could be put to the bound products and the new price was printed on the label - HELD THAT - The appellants receive the gel and the shampoo in bulk and repack them in retail packages. Thereafter the shampoo along with the free gel is bound together and the label is fixed on the product. We agree with the contention of the appellant that this process amounts to manufacture as per Chapter Note 5 to Chapter 33. Further it is seen that both the products are covered under Section 4A and Standards of Weights and Measures Act. The ratio of OSWAL FATS OILS VERSUS COMMISSIONER OF CENTRAL EXCISE CHANDIGARH 2003 (1) TMI 180 - CEGAT NEW DELHI is squarely applicable in that case bindis were packed along with soaps for free supply to buyers of soap. It was held that the additional package of bindis had no connection to the price of soap the price of bindis is not includable in the assessable value of soap. In the SURYA FOOD AND AGRO LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE NOIDA 2003 (7) TMI 114 - CESTAT NEW DELHI it was held that when selling certain quantities of biscuits the appellant supplied small quantities of certain other varieties free and in such situation the value of free supplies is not includable in the assessable value. Since the Revenue has not contested that the products in question are covered under Section 4A and Standards of Weights and Measures Act it is held that the products are assessable under Section 4A. In view of the decided case laws there will not be any duty liability on the gel supplied free hence there is no merit in the impugned order - appeal allowed.
Issues:
- Whether the process of binding face wash gel and dandruff shampoo amounts to manufacture. - Applicability of CBEC Circular No. 673/64/2002. - Classification of products under Section 4A of the CE Act. - Valuation rules for products sold together. - Legal implications of selling products as a combination package. - Duty liability on free products provided with the main product. Analysis: 1. The issue of whether the process of binding face wash gel and dandruff shampoo amounts to manufacture was contested. The appellant argued that as per Chapter Note 5 to Chapter 33, activities like repacking from bulk packs to retail packs or adopting treatments to render products marketable constitute "manufacture." The tribunal agreed with the appellant's contention, stating that the process undertaken by the appellant indeed amounted to manufacture under the relevant provisions. 2. The applicability of CBEC Circular No. 673/64/2002 was raised as a point of contention. The appellant cited a decision by Delhi CESTAT in a similar case to support their argument that selling dissimilar products together is covered under the provisions of the circular. The tribunal considered this argument in conjunction with the classification of products under Section 4A of the CE Act and Standards of Weights and Measures Act to determine the assessability of the products. 3. The classification of products under Section 4A of the CE Act was crucial in this case. The appellant contended that the products in question fell under specific classifications and that the valuation rules should be applied accordingly. The tribunal examined the classification of the products and their compliance with relevant legal requirements to decide on the duty liability. 4. Valuation rules for products sold together were discussed, emphasizing the legal implications of selling products as a combination package. The tribunal considered various case laws cited by the appellant to support their argument regarding the valuation and duty liability of the products sold together as a package. 5. The legal implications of providing free products with the main product were also analyzed. The tribunal examined the case laws cited by the appellant, including the decision of the Supreme Court, to determine that there would be no duty liability on the free products supplied along with the main product. This analysis led to the tribunal allowing the appeal with consequential relief based on the established legal principles and precedents cited during the proceedings.
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