2017 (10) TMI 203 - AT - Central Excise

Valuation - free sample given along with the main product - promotional pack of Maggi Noodles, which are not sold as such, whereas the same is supplied free of cost either by the appellant or by Tata Tea Ltd. - whether to be valued under Section 4 of the Central Excise Act, 1944 or under Section 4A? - appellant cleared Maggi Atta Noodles of pack size 96 100 Gms as free packs with the Maggi Hot & Sweet Sauces manufactured and cleared by them. On the said free pack the appellants printed the words Free. Not for Sale. As regards the supplies made to Tata Tea on the agreement, on the pack no MRP was mentioned and declaration was made on the pack free with Tata Tea, and determined the assessable value under Section 4. Held that - On the pack no MRP mentioned and the packs also bore the mention that Free not for sale. Therefore, the provisions of Standards of Weights and Measures Act, 1976 and Rules made there under do not apply in such supplies. Therefore, the valuation of such goods cannot be done under Section 4A of Central Excise Act, 1944. The appellants have correctly valued the goods under Section 4 - The very same issue has been considered by the Hon ble Supreme Court in the case of Jayanti Food Processing (P) Ltd. 2007 (8) TMI 3 - Supreme Court , where it was held that SC prescribes the ruling for proper valuation in 14 different but identical appeals in a single judgement - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Valuation of promotional pack of Maggi Noodles.
2. Applicability of Section 4A of the Central Excise Act, 1944.
3. Relevance of the Standards of Weights and Measures Act, 1976 (SWM Act) and related Rules.
4. Interpretation of previous judgments and their applicability to the current case.

Issue-wise Detailed Analysis:

1. Valuation of Promotional Pack of Maggi Noodles:
The appellants, engaged in manufacturing Maggi Noodles, entered into an agreement with Tata Tea Ltd. to distribute promotional packs of Maggi Noodles free with Tata Tea products. The appellants also distributed free packs of Maggi Atta Noodles with their sauces, marking these packs as "Free. Not for Sale." The appellants discharged excise duty based on the contract price under Section 4 of the Central Excise Act, 1944. Show-cause notices were issued, alleging that the valuation should be under Section 4A based on the Maximum Retail Price (MRP), leading to a demand for differential duty.

2. Applicability of Section 4A of the Central Excise Act, 1944:
The adjudicating authority and Commissioner (Appeals) upheld that the valuation should be under Section 4A, based on a previous Tribunal decision. However, the appellants argued that the Supreme Court in Jayanti Food Processing (P) Ltd. v. CCE (2007) had reversed this decision, establishing that promotional packs not meant for sale should not be valued under Section 4A.

3. Relevance of the Standards of Weights and Measures Act, 1976 (SWM Act) and Related Rules:
The Tribunal reviewed the applicability of the SWM Act and related Rules, particularly focusing on definitions such as "retail dealer," "retail package," and "retail sale price." The Tribunal concluded that since the promotional packs were not sold but distributed for free, the provisions of the SWM Act and Rules requiring MRP declaration did not apply. This interpretation was supported by the Supreme Court's decision in Jayanti Food Processing, which clarified that goods not intended for retail sale do not fall under Section 4A.

4. Interpretation of Previous Judgments and Their Applicability to the Current Case:
The Tribunal relied heavily on the Supreme Court's ruling in Jayanti Food Processing, which established that promotional packs distributed for free are not subject to valuation under Section 4A. This precedent was applied to the current case, leading to the conclusion that the appellants correctly valued the goods under Section 4.

Conclusion:
The Tribunal found that the valuation of promotional packs of Maggi Noodles should be done under Section 4, not Section 4A, as the packs were not meant for retail sale and did not require MRP declaration under the SWM Act and related Rules. The impugned order was set aside, and the appeal was allowed, aligning with the Supreme Court's decision in Jayanti Food Processing. The issue was deemed no longer res integra, affirming the appellants' method of valuation.