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TMI Blog2013 (10) TMI 397X X X X Extracts X X X X X X X X Extracts X X X X ..... RP of the combo pack of the CTVs and the VCD players was the MRP of CTVs only and as such, the VCD had been cleared without payment of duty. On this basis, the department issued two show cause notices dated 31-3-2004 and 8-4-2004 for demand of duty amounting to Rs. 22,10,992/- and Rs. 8,33,644/- respectively in respect of the clearances of the 4356 and 1567 VCDs respectively. The assessable value for calculation of the duty on the VCDs cleared was determined on the basis of MRP of the VCDs ascertained by the department, as no MRP had been declared by the appellant in respect of the VCDs. These show cause notices was adjudicated by a Common Order Nos. 46-47/ADDL/COM/04, dated 31-8-2000 passed by the Addl. Commissioner by which he confirmed the duty demands of Rs. 22,10,992/- and Rs. 8,33,644/- along with interest under Section 11AB and besides this, also imposed penalty of equal amount on the appellant under Section 11AC of the Central Excise Act, 1944. The duty demands were confirmed by invoking extended period of limitation to Section 11A(1) of the Central Excise Act. 1.2 The appellant filed appeals to the Commissioner (Appeals) against this order of the Addl. Commissioner, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to be included in the value of the excisable goods sold, that ratio of this judgment is squarely applicable to the facts of this case and. therefore, the value of the VCD players is deemed to be included in the value of the CTVs and hence no separate duty is required to be charged on the value of the VCD players sold as free gift along with CTVs, that the Tribunal in the case of Vinayaka Mosquito Coil Mfg. Co. v. CCE, Bangalore, reported in 2004 (174) E.L.T. 107 (Tribunal-Bang.), as affirmed by the Apex Court's judgment reported in 2005 (181) E.L.T. A183, has held that when one coil is supplied free along with sale of every 12 mosquito coil, the value of the one mosquito coil supplied free is not required to be included in the assessable value of the mosquito coils cleared, that VCD players are chargeable to the duty under Section 4A on the basis of MRP and since the VCD players had been cleared free along with certain models of CTVs, their MRP is nil, and therefore, their assessable value also become nil and hence no duty would be payable in respect of the same, that in any case, calculation of duty is incorrect as the department has adopted the price of Rs. 3325/- as MRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the records. The undisputed facts are that the appellant manufactured various models of CTVs as well as VCD players and in respect of certain models of CTVs, to promote their sale, the VCDs had been supplied free and MRP displayed for such CTVs was for sale with one VCD being supplied free. It is an admitted position on the part of the appellant that nothing has been charged from the customers for the VCD players supplied along with certain models of CTVs and the only consideration for giving free VCD player is promoting the sale of CTVs. The point of dispute is as to whether as pleaded by the Appellant, the value of the VCDs cleared is deemed to be included in the MRP and the CTVs with which those VCDs had been supplied free and accordingly, the MRP declared in respect of those CTVs is to be treated as combined MRP of the CTVs and VCD players and accordingly duty is not required to be charged separately on VCDs or whether, as pleaded by the Department, duty is to be charged on VCD. The appellant's contention is that this has to be treated as a case where the CTV and the VCD players were sold in combination under a combined MRP and, hence, in view of the judgment of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufacturer. The issue of levy of duty under Section 3 of the Central Excise Act, 1944 on the clearance of the goods manufactured by an assessee cannot be mixed with the issue of valuation under Section 4 or 4A. Therefore, the question of levy of duty on the VCDs manufactured and cleared by the appellant has nothing to do with the question whether or not the value of VCD supplied free, is deemed to be included in the value of CTVs with which the same had been cleared. The Appellant's contention that MRP of the VCD is to be taken as 'nil' and on this basis, the duty chargeable would be nil, is totally incorrect, as admittedly, the consideration for supply of VCD free is promoting the sale of certain models of CTV, while as per the definition of 'retail sale price' in Explanation-I to Section 4A, the retail sale price must satisfy the condition of the price being the sole consideration for sale. Therefore, when a product 'A' notified under Section 4A is supplied free (nil price) or at RSP less than the RSP at which the product is individually sold, for being sold in combination with another product 'B', also notified under Section 4A, with the objective of promoting the sale of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atement from the MRP. The Appellants, plea that during the period of dispute, the MRP of the VCDs, in question, was Rs. 2500/- per piece should, therefore, be examined and a specific finding on this point should be given. Besides this, whatever MRP is adopted, duty is to be charged after giving 40% abatement. The duty on the clearances of VCDs is to be requantified in this manner. However, for requantification of the duty demand, the matter would have to be remanded to the Original adjudicating authority. 9. As regards the question of penalty, since the VCD players were cleared without discharging duty liability, penalty under Rule 25(1)(a) would be attracted. However, the same would be in proportion of the quantum of the duty demand confirmed against the appellant. 10. In view of the above discussion, we hold that duty would be chargeable on the clearances of VCD players cleared for tree supply along with sale of certain models of CTVs and this duty has to be charged on the basis of the assessable value determined in terms of the provisions of Section 4A i.e. after giving the abatement from MRP of the VCD player during this period. Since there was no MRP of VCD during the period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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