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TMI Blog2009 (3) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... The goods were manufactured and cleared under the brand name, like VIDEOCON , SANSUI , AKAI , KENSTAR , etc. All these goods are specified for assessment under Section 4A of the Central Excise Act, 1944 on the basis of Maximum Retail Sale Price, declared on the package. On scrutiny of the accounts maintained by the appellants and the documents, it was observed by the Central Excise officers that the appellants cleared some of their goods, by devising a method of Combined MRP under a scheme called Combination Scheme . The price under Combined MRP when examined was found to be lesser than the aggregate of MRPs of individual consumer goods when cleared separately. It was also further observed that the appellants have adopted a procedure of clearing two or three different excisable goods falling under different chapters under a single rate of MRP and claimed abatement from the MRP - for e.g., (a) Refrigerator was sold in combination with Microwave oven (b) Colour Television was sold in combination with VCD Player or DVD Player. A detailed scrutiny was undertaken and various statements were recorded and statement of one of the main dealer was also recorded. On culmination of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not be imposed on them under Rule 25 of Central Excise Rules, 2002 for contravention of the provisions of various Acts and Rules mentioned supra. The appellants resisted the show cause notices on various grounds. The main ground taken by the appellants before the lower authority is that they are covered by various decisions of the Tribunal on identical issue and that the combination price which was declared by them is very clear that one of the products is given free. Further, statement recorded by the authority in respect of one of the dealers is not sufficient as there are approximate 12000 dealers all over India and that, due to stiff competition in the market, they evolved marketing strategy by giving one item free along with the main product. The Adjudicating authority after granting personal hearing to the appellants and after considering the issue involved in this case came to a conclusion that the appellants are in error in discharging their duty liability on the combined price, on two different items and have violated the provisions of Section 4A of the Act and the Standards of Weights and Measure Act, 1976 and the rules made thereunder. Coming to such a conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o purchase another item along with TV. In the instant case, the combined MRP of two items is lesser than the aggregate MRP of the each item not packed in a unified package. The facts of the above case are different to the instant case and hence are not relevant to the present case. 33. Further, the noticees contended that there is no substance in the allegation of the department that prices are lowered with a view to evade duty as there was no flow back of extra consideration in any form from the dealers. The contention that though the price was lowered, there was no flow back of extra consideration is not relevant because, the very mode of packing i.e., goods packed in individual packages does not conform to the provisions of Combination Package under SWMR,1977. As per SWMR, 1977 Combination Package is a package, containing two or more individual packages or individual pieces or dissimilar commodities and Multi Piece Package means a package containing two or more individual packaged or labeled pieces of the same commodities of identical quantity, either in individual pieces or the package as a whole. It is not in dispute that the assessees cleared each product separately pac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dividual pieces of similar commodity contained thereto and the sale price of the multi piece package. In case, individual pieces contained in multi piece package, are packed separately and are capable of being sold separately, each piece shall bear thereon a declaration as to the quantity and the sale price thereof. If individual pieces contained in the package do not carry retail sale price, it shall carry a declaration that they are not intended for retail sale. The above provisions of Rule 17 of SWMR do not cover the situation where each commodity is packed separately and offered for sale. In the instant case, the noticees declared combined MRP on mother package and cleared the second item along with mother product. Further, noticees quoted the provisions of Rule 15 of SWMR, which contemplate additional declaration to be made on combination package in respect of the each commodity contained therein and also the sale price of the combination package. The above provisions of SWMR contemplate that combination package should consist of two or more dissimilar commodities in single package. In other words, the said provisions are not applicable to those cases, where each commodity is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ack would be considered for payment of duty on the multi-pack under Section 4A. This clause will apply to only those multi-packs where the MRPs, both on the multi-pack and each of the individual items comprising the multi-pack, are clearly visible (e.g. soaps, powders, tooth pastes etc.). Only then can Explanation 2(a) to Section 4A apply . In the instant case, the detachable stickers put on the second product were found to be easily removable enabling the retail dealers to sell the said goods based on MRP of individual packages cleared originally under Combination Scheme resulting in short payment of excise duty. Further, as stated by Shri Shiv Agarwal, the customer does not bother about stickers and MRPs mentioned on the stickers attached to the said products he compares the said goods with comparable goods and bargain the price, which will be Market Operated Price, irrespective of the Combined MRP which is not known to him. The combination scheme loses its validity even at the godown stage itself, as there is no one to one correlation of combination goods as clarified by the retailer, to the extent that the goods were sold individually by ignoring the combination scheme alto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing the provisions of SWMR, 1977 by not correlating one product of the combination scheme with the other and by not declaring MRP on each of the package. Hence, the demand was not issued on presumptions assumptions as alleged by the appellants. 38. Noticees contended that Mr. Agarwal, is one of the dealers out of 12000 and his single statement cannot be considered as candid evidence for framing allegations. The statement of Mr. Agarwal was taken on record only to the extent that the subject goods were capable of being sold at market operating price on removal of the detachable stickers, by breaking the combination scheme adopted by the noticees. The_basic point here is the capability of the goods being sold individually and not as to how many dealers have given such statement. Thus the contention that only one dealer has given such statement and that can be made as basis for issuing SCN is not acceptable. Now I proceed to examine the case laws cited by the noticees. 39. The ratio of the decision of the Hon ble Tribunal in the case of Hindustan Coca Cola Beverages Pvt. Ltd. v. CCE is not applicable to the facts and circumstances of this case for the reason that the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the Hon ble Tribunal rejected the claim of the manufacturer. With regard to valuation of Razor supplied free with a tuck of 7 O clock blades, the Hon ble Tribunal held that Razors and blades are required to be valued based on their MRP in view of notification issued under Section 4A of Central Excise Act, 1944. When these disposable razors are packed and sold singly their MRP is Rs. 10/- per piece. The razors packed in the combination packing are the same as those razors sold under MRP of Rs. 10/-. In such a situation, the razor in question would be correctly assessable based on the MRP of Rs. 10/-. In this case, the razors and blades were packed together with MRP of Rs. 23/- under combination package. In the instant case of the noticees, the two commodities were not even packed together to call it as a combination package under SWMR, 1977. The combination scheme devised by the noticees is different from combination package per the provisions of SWMA/SWMR in a much as only a package is defined under SWMA/SWMR and not a scheme . Thus, I find that the decision of the Hon ble Tribunal on valuation of razors and blades based on MRP of each commodity is relevant and applicable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d submits that there are provisions in respect of giving free item, of dissimilar commodities. He drew our attention to the Board s Circular No. 673/64/2002-CX., dated 28-10-2002 and submits that Central Board of Excise Customs (CBEC) itself has clarified in case of multi-piece package that the duty liability has to be discharged on MRP affixed on the package. It is the submission that the Board s Circular would also apply to the combination package . It is the submission that the issue is squarely covered in favour of the assessee/appellants by the following Tribunal s decision :- (i) Vinayaka Mosquito Coil Manufacturing Co. v. CCE [2004 (174) E.L.T. 107 (Tri. - Bang.)] which has been affirmed by the Hon ble Supreme Court as reported in - 2005 (181) E.L.T. A183 (S.C.)] (ii) Himalaya Drug Company v. CCE [2006 (195) E.L.T. 109] (iii) Icon Household Products (P) Ltd. v. CCE [2007 (216) E.L.T. 579] (iv) Calcutta Chemicals Co. Ltd. v. CCE [2008 (229) E.L.T. 117 (Tribunal) = 2008 (86) RLT 829] The learned Counsel also submits that the intention of the appellants in devising this kind of scheme was due to stiff competition in market for sale of various commodit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also her submission that Section 4A (2) of the Central Excise Rules, 1944 is squarely applicable to the present case. Drawing our attention to Section 4A (2), she submits that abatement of goods are covered under the provision of sub section (1) of Section 4A. There is provision only to discharge duty liability based on the MRP and abatement thereof. She submits that the decision of the Tribunal in the case of Indica Laboratories Pvt. Ltd. v. Commissioner of Central Excise, Ahmedabad [2007 (213) E.L.T. 20 (Tri. - L.B.)] squarely covers the issue in favour of the Revenue. She also relies on the decision of the Tribunal in the case of G. S. Enterprises v. Commissioner of Central Excise, Jaipur [2002 (144) E.L.T. 387 (Tri. - Del.)] and submits that the said decision has been confirmed by the Apex Court as reported in 2003 (151) E.L.T. A297. She submits that the impugned order is correct and legal and the appeals of the appellants are to be rejected. 6. In rejoinder, the learned Counsel submits that if it is the contention of the Revenue, that sub section 4A (2) is applicable to this case, it is the submission that there is no retail sales price declared by the appellants on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , by notification in the Official Gazette specify any goods, in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub section (1) are excisable goods and the manufacturer - (a) removes such goods from the place of manufacture, without declaring the retail sale pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 639/30/2002-CX., dated 24-5-2002 to the effect that one an MRP is scored out, (even if it remains visible) and another MRP printed on the package, it could not be said that the package has two MRPs printed on it, since the scored out MRP could not be considered as an MRP either by the seller or by the consumer. Hence the scored out MRP is to be ignored. 4. I am also directed to say that there is no uniformity in valuation of multi-piece packages, consisting of 2 or more consumer items of the same kind, with MRP printed both on the individual items and the multi-pack. For valueing such multi-packs it is clarified that :- (i) if the individual items comprising the multi-pack have clear markings that they are not to be sold separately or are packed in such a way that they cannot be sold separately, then the MRP indicated on the multi-pack would be considered for payment of duty u/s 4A. (ii) if the individual items do not contain any such inscription (that they are not to be sold separately) and are capable of being sold separately at the MRP s of the pieces comprising the multi-pack would be considered for payment of duty on the multi-pack under section 4A. This clause will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bipack bearing MRP of Rs. 36/- which is also printed on the MRL container shall be the basis for assessment of the combipack and the LVD supplied free in the multipack need not be separately assessed to duty. In this view of the matter, we find the impugned order not sustainable. We also find that an identical issue came up before this Bench in the case of Vinayaka Mosquito Coil Manufacturing Co. v. CCE, Bangalore [2004 (174) E.L.T. 107 (Tri. - Bang.)] wherein, it was held as under :- 2. We have heard both sides. We find that it cannot be disputed that with every twelve coils one coil was supplied free, as seen from letters addressed by the assessee to the Department through out the entire period in dispute. Further the position is clarified by the audit report wherein it has categorically accepted that the assessee is giving one case free for every twelve cases and each case contains ten packets of coils. The contention of the appellants that in the case of a free supply there is no sale and therefore the provisions of Section 4A are not attracted, is well found. In the light of the above factual position, the ratio of the Tribunal s order in Surya Food and Agro Ltd. v. CCE, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Act, 1944 (1 of 1944); (b) retail sale price means the retail sale price as defined in Section 4A of the Act; and (c) Words and expressions used in these rules and not defined but defined in the Act or any other rules made under the Act shall have the meaning as assigned therein. RULE 3. The retail sale price of any excisable goods under sub section (4) of Section 4A of the Act, shall be determined in accordance with these rules. RULE 4. Where a manufacturer removes the excisable goods specified under sub-section (1) of Section 4A of the Act, - (a) without declaring the retail sale price on the packages of such goods; or (b) by declaring the retail sale price, which is not the retail sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or (c) by declaring the retail sale price but obliterates the same after their removal from the place of manufacture, then, the retail sale price of such goods shall be ascertained in the following manner, namely:- (i) if the manufacturer has manufactured and rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said decision is reproduced :- 9. It can be seen from the above reproduced rule that it was in context of the definition of person liable for paying the Service Tax . This provision in itself may not suffice revenue to direct the appellant to discharge the service tax liability as service receiver, on the face of the fact that notification under Section 68(2) of the Finance Act, 1994, was issued by the Central Government only on 31-12-2004. If the contention of the learned SDR is to be accepted, then there was no necessity for the Government to issue Notification No. 36/2004-S.T. notifying the service receiver from non-resident having no office, to pay Service tax, as receiver. By issuing the said Notification, Central Government intended to tax the service receiver from non-resident, with effect from 1-1-2005, which, in corollary would be that no service tax is payable by this category prior to 1-1-2005. If that by so, then the amount paid by the appellant is not a tax, which the revenue cannot kept with it. 10. Another point raised by the learned SDR was that one of the dealer of the appellants in his statement recorded under Section 14, has clearly stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges would stand justified. As such, it cannot be said that the appellants have sold the T.V. set at a higher price than the declared maximum retail price. 32. We find force in the appellant s contention that the six instances cannot be said to be a clinching evidence against the appellant, especially in the fact of denial of cross examination of the said dealers to the appellants. There is also no averment in the show cause notice that the extra amount collected by the dealer has flown back to the manufacturer. Even the statement of the dealers have not indicated anything to that effect. At this stage, we may take note of the Tribunal s decision in the case of I.T.C. Ltd. v. CCE - 1998 (104) E.L.T. 151 wherein dealing with the identical situation, it was observed that where there were million dealers, M/s. ITC cannot be held responsible for the tendency of the retailer to charge higher than the approved prices so as to secure larger margin. It is only in case where the declaration has been made by the manufacturer which can be proved to be fake by production of sufficient evidence, the sale price has to be discarded. However, the said price which has been adhered to by the max ..... X X X X Extracts X X X X X X X X Extracts X X X X
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