2024 (4) TMI 221 - AT - Central Excise

Short payment of Central Excise duty - clearance of refrigerator with Washing Machine and Refrigerator with VCD as combination pack on combination MRP rather than combined MRP of the individual items - HELD THAT - The issue is no longer res-integra. In the appellants own case Delhi Bench of this Tribunal in VIDEOCON INTERNATIONAL LTD. VERSUS COMMISSIONER OF C. EX. NOIDA 2012 (12) TMI 920 - CESTAT NEW DELHI has held In this case admittedly the combination packs of Referigerator with water purifiers Refrigerators with washing machines or CTVs with VCD players are not actually packed in a bigger package. The combination packs in this case have to be treated as combination sales as a marketing strategy under which on purchase of two items refrigerator with washing machines refrigerator with water purifier or CTVs with VCD players the price charged is less than their individual MRP. Such combination sales in our view cannot be treated as combination pack or packaged commodity as understood in SWM Rules and have to be treated as sale of individually packed items at a combined price. There are no merits in the impugned order - appeal allowed.

Summary

Issues Involved:
1. Demand of Central Excise Duty.
2. Interest on the demanded amount.
3. Imposition of penalty.
4. Valuation of combination packages under Section 4A of the Central Excise Act, 1944.
5. Applicability of previous judgments and legal precedents.

Summary:

1. Demand of Central Excise Duty:
The appeal was directed against the Order-in-Appeal No.271/APPL/NOIDA/11 dated 23.11.2011, which upheld the Order-in-Original No.29-30/N-IV/2004 dated 30.11.2005. The Order-in-Original confirmed the demand of Central Excise duty amounting to Rs 6,96,172/- short paid on goods cleared in combination packs during April 04 to October 04, u/s 11A of the Central Excise Act, 1944.

2. Interest on the Demanded Amount:
The impugned order also demanded interest on the above amount in terms of Section 11Ab of the Central Excise Act, 1944.

3. Imposition of Penalty:
A penalty of Rs 6,96,172/- was imposed on the appellant u/s 11AC of the Central Excise Act, 1944.

4. Valuation of Combination Packages under Section 4A:
The main issue was whether the valuation of combination packages should be under Section 4A of the Central Excise Act, 1944. The appellant was clearing "refrigerator with Washing Machine" and "Refrigerator with VCD" as combination packs on "combination MRP" rather than the combined MRP of the individual items, resulting in short payment of Central Excise duty. The Tribunal found that combination packages have not been mentioned in the notification under Section 4A, and thus, such combination packs cannot be valued under the MRP-based valuation procedure laid down under Section 4A of the Act.

5. Applicability of Previous Judgments and Legal Precedents:
The Tribunal referred to the judgment in the appellant's own case reported at [2013 (295) ELT 624 (T-Del)], which held that duty on combination packs should be calculated based on individual MRPs of the items. The Tribunal also cited the Supreme Court's decision in the case of Himalaya Drug Company [2015 (324) ELT 9 (SC)], which supported the assessment based on individual MRPs when sold in combination packs.

Conclusion:
The Tribunal found no merit in the impugned order and allowed the appeal, following the legal precedents that required the valuation of combination packs based on the individual MRPs of the items involved. The appeal was pronounced in open court on 02 April, 2024.