1998 (6) TMI 201 - AT - Central Excise

Summary

Issues:
1. Inclusion of the value of straws supplied with the beverage 'Frooti' in the assessable value of the product.

Analysis:
The central issue in this appeal before the Appellate Tribunal CEGAT, New Delhi was whether the value of straws provided with the beverage 'Frooti' should be considered in the assessable value of the product. The adjudicating authority had concluded that the value of the straw should indeed be included in the assessable value of 'Frooti' as it was deemed essential for the product's marketability. However, the appellant challenged this decision, arguing that the straw was not a necessary component for consuming 'Frooti' as the beverage could be consumed by pouring it into a glass as indicated on the packet. The appellant highlighted that the sale of straws as a percentage of 'Frooti' sales varied from 7.17% to 53.50%, indicating that the product could be sold and marketed without the straw.

The appellant further relied on a previous judgment of the Tribunal in the case of CCE, Pune v. Kishore Pump, Pune, to support their argument. They contended that just like an electric motor was not considered an integral part of a P.D. pump in the mentioned case, the straw should not be considered an essential component of 'Frooti'. The appellant emphasized that the sale of straws was optional for customers, and therefore, the value of the straw should not be included in the assessable value of 'Frooti'.

On the other hand, the respondent, represented by the learned SDR, argued that the increasing percentage of straw usage with 'Frooti' sales indicated that the straw had become an integral part of the product over time. The respondent contended that unlike the situation in the Kishore Pump case, where an extra charge was levied for the electric motor, no additional charge was imposed for the straw with 'Frooti'. Therefore, the respondent asserted that the value of straws should be included in the assessable value of 'Frooti'.

After considering the arguments from both sides, the Tribunal concluded that the value of straws should not be included in the assessable value of 'Frooti'. The Tribunal found that the straw was not necessary for the sale of 'Frooti', as indicated on the product packet and supported by the sales figures provided by the appellant. The Tribunal deemed the adjudicating authority's finding that 'Frooti' was non-usable and non-marketable without the straw as erroneous and lacking evidence. Consequently, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.