2009 (11) TMI 381 - AT - Central Excise

Valuation- According to the Revenue, they ought to have paid duty on the basis of the combined MRP of Rs. 49/-. One of these appeals is against the differential demand of duty raised by the lower appellate authority on this basis. For the period January to March, 2000, a similar demand was raised on the assessee in respect of combi-packs of toothpaste and toothbrush, each with combined MRP of Rs. 31.50, which was the promotional price offered to the ultimate consumers. The individual MRPs of the toothpaste and the toothbrush in a combi-pack were Rs. 28.50 and Rs. 18/-. Alongside the total MRP of Rs. 46.50, the concessional MRP of the combined pack was shown as Rs. 31.50. Held that- the assessee paid duty on this basis in terms of Section 4A of the Act. They are not liable to pay any additional amount of duty on the goods in question. In the result, the demand of differential duty and penalty are set aside and these appeals are allowed.

Summary

Issues:
Challenge against demands of differential duty on combi-packs of toothpaste and toothbrush.

Analysis:
The appeals filed by the assessee challenged the demands of differential duty imposed on combi-packs of toothpaste and toothbrush. The product in question was a combination pack consisting of toothpaste and toothbrush. The toothpaste was manufactured by the appellant and packed in printed cartons with the MRP printed on them. The toothbrush was inserted in the carton at the premises of the assessee's marketing agent. The combi-packs were offered to consumers at a promotional price lower than the combined MRP of the individual products. The Revenue contended that duty should be paid based on the combined MRP of the combi-pack. The appeals were filed against the differential duty demands raised by the lower appellate authority for two different periods.

The Tribunal noted several key points: toothpaste was notified under Section 4A of the Central Excise Act, while toothbrush was not; toothbrush was chargeable to 'nil' rate of duty during the material period; the goods removed from the factory did not include any toothbrush; only one MRP for toothpaste was printed on the pack at the time of clearance from the factory; and the combi-pack was formed at the marketing agent's premises. The Revenue argued that duty should be assessed based on the MRP at which the combi-pack is sold to consumers. However, the Tribunal found that the Department's case in the show-cause notice was limited to demanding differential duty based on the toothpaste's MRP. It clarified that excisable goods must be assessed to duty in the form they are cleared from the factory. Since the toothpaste was cleared alone with a single MRP printed on the pack, the assessee had paid duty correctly under Section 4A of the Act. Therefore, no additional duty was payable by the assessee.

Consequently, the Tribunal set aside the demand for differential duty and penalty, allowing the appeals filed by the assessee.