Per: P.G. Chacko
1. In this appeal filed by the Revenue, the short question arising for consideration is whether the subject goods was assessable to duty of excise in terms of Section 4 of the Central Excise Act as claimed by the assessee or in terms of Section 4A of the Act as claimed by the Revenue. The respondent was clearing baby power (50 grams) to M/s.Nestle (India) Ltd., for free distribution by the latter with their product Cerelac 400 grams. They paid duty on such clearance as per the transaction value declared by them. According to the department, the product, classifiable under SH 3304.00 and having been notified under Section 4A of the Central Excise Act should have been assessed to duty under the said provision of law. On this basis, a show-cause notice was issued for recovery of differential duty (difference between the MRP-based duty determined after abatement in terms of Section 4A and the duty paid by the assessee in terms of Section 4). The demand was contested by the assessee. In adjudication of the dispute, the original authority confirmed the demand of duty against the assessee and imposed on them penalties. The appeal preferred by the assessee against the order of adjudication was allowed by the Commissioner (Appeals).
2. Before the lower appellate authority, the assessee had inter alia cited two earlier orders of the Commissioner (Appeals) viz., order-in-appeal No.YPP/819 to 821/SRT/2002 dated 06/09/2002 and order-in-appeal No.M-II/352/2002 dated 22/10/2002. They also relied on Board’s Circular No.625/16/2002-CX dated 28/02/2002. The Commissioner (Appeals) held that Section 4A was applicable only where the goods were printed with MRP and sold as such as per the requirements of the Standards of Weights and Measures Act and the Rules made thereunder. It was also noted that the Board had clarified in a Circular dated 11/08/97 that, even where the product was printed with MRP though not so required under the above Act, it remained out of the purview of Section 4A and hence would be covered under Section 4 only. After noting that the MRP mentioned on the package in question had been struck out, the appellate authority found the product to have been cleared for sale on non-MRP basis. In the result, the duty paid by the assessee in terms of Section 4 was accepted and the differential duty demand worked out under Section 4A of the Act was set aside.
3. The ld. SDR for the appellant has made an attempt to distinguish the case of Jayanti Food Processing (P) Ltd., Vs. CCE, Rajasthan (2007 (215) ELT 327 (SC) by pointing out that no MRP was affixed on the package considered by the apex court unlike in the instant case. The ld. Counsel for the respondent submits that the MRP printed on the package was struck out and, therefore, the goods were cleared without display of MRP thereon. On this basis, it is submitted that, by virtue of Rule 34 (a) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1997, the subject goods was exempt from the requirement of any MRP having to be affixed on the package and, consequently, it fell outside the purview of Section 4A of the Central Excise Act. The ld. Counsel has further pointed out that order-in-appeal No.819-821/SRT/2002 dated 06/09/2002, which was relied on by the assessee before the lower appellate authority has since been affirmed by this Tribunal vide order No.A/2055/WZB/AHD/2007 dated 08/08/2007 in appeal No.E/3831/2002 (CCE Surat Vs. VVF Ltd.)
4. In the case of VVF Ltd., Johnson baby soap, on which no MRP was affixed and which was sold to Nestle (India) Ltd., was held to be assessable to duty of excise in terms of Section 4 of the Central Excise Act inasmuch as the baby soap was sold to Nestle (India) Ltd., for a contract price for free gift to the ultimate consumers along with Nestle’s own products. On the basis of these facts, after noting the Board’s Circular No.625/2002 ibid, the Commissioner (Appeals) set aside the order of adjudication and held the goods to be assessable to duty of excise under Section 4 of the Central Excise Act. The decision of the Commissioner (Appeals) was affirmed by this Tribunal in the cited case. It appears, the Tribunal’s decision in the case of VVF Ltd., has been accepted by the department.
5. We have also found strong support to the assessee’s case from the apex court’s judgement in Jayanti Foods Processing case. In that case, the Counsel for the assessee had relied on Rule 34 (a) of the Standards of Weights and Measures (Packaged Commodities) Rules and pointed out that the goods in question was completely covered under the said Rule inasmuch as the package specifically declared that it was specially packed for Pepsi who wanted to supply the item as a free gift to ultimate consumers. The argument was accepted by the apex court.
6. In the instant case, admittedly, the baby powder was sold by the assessee under an agreed price to Nestle (India) Ltd., who, in turn, distributed the same as free gift along with their own product (Cerelac 400 Gr.) to their customers. Though MRP was printed on the package, it was scored off so that effectually the clearance of the goods was without display of any MRP. Again, admittedly, the clearance by the assessee was made to an industry (Nestle) by way of servicing the industry by making it possible for them to supply the item as free gift to their own customers. This factual situation squarely attracted Rule 34 (a) and consequently the baby powder fell outside the purview of Section 4A of the Central Excise Act. The duty paid by the assessee in terms of Section 4 is in order.
7. In the result, the appeal of the Revenue gets dismissed.