Customs, Excise and Gold Tribunal - Mumbai
The Commissioner Of Central Excise vs Godrej Industries Ltd. on 27 January, 2006
Equivalent citations: 2006(109)ECC74, 2006ECR74(TRI.-MUMBAI)
ORDER Archana Wadhwa, Member (J)
1. The dispute in the present appeal of the revenue relates to the valuation of "Cinthol Lime Fresh", and "Cinthol Scent Fresh" toilet soaps manufactured by the respondents and supplied free with Dabur Vatika Oil, Hit, Double Diamond Tea and Sargam Tea.
2. The assessee's contention is that the valuation of the said goods should be in accordance with the provisions of Section 4 of the Central Excise Act, Revenue is of the view that since the said toilet soaps are covered under Section 4A, they should be assessed to duty on the basis of the MRP after abatement. The goods were cleared by the manufacturer as per the contract price with their buyers on the ground that they were meant for free distribution along with other products and were not meant for retail sale to the ultimate customer.
3. The original adjudicating authority, by holding that the product should be assessed to duty under Section 4A of the Central Excise Act, confirmed the demands against the assessee as also imposed penalty. However, on appeal against the above order, the Commissioner (Appeals) accepted the assessee's stand and observed that the MRP mentioned on the package has been struck out by the assessee and the wrapper mentioned that the same is free with other products, the provisions of Section 4A will not apply. He has further observed that the said Section apply, when the goods are sold under MRP, as per the requirements of the Standards of Weights and Measures Act and Rules made there under. Accordingly, he set aside the original order and allowed the appeal. Hence the present appeal filed by the revenue.
4. After hearing both sides duly represented by Shri S.S. Bhagat, Ld. SDR and Shri R Ravindran, Ld. Advocate, we find an identical situation was considered by the Tribunal in the case of Nestle India Ltd., v. CCE, Goa reported in 2004 (65) RLT 910 (Tri-.Mum). The Tribunal observed that chocolates, which were specified items, under Section 4A and were required to be printed with MRP as per stands of Weights and Measures Act, were required to be assessed in terms of the MRP under the said Section even if the same were supplied as free gift with another item. The various pleas raised by the assessee in that case were considered and not found favour with by the Bench. We also take note of another decision of the Tribunal in the case of BPL Telecom (P) Ltd., v. CCE, Cochin reported in 2004 (60) RLT 664 (Tri.-Bang.) laying down that once the goods are notified under Section 4A, the same are to be assessed on the basis of MRP, irrespective of the fact that what is the actual price of the same. The Tribunal observed that telephone instruments in that case were cleared in terms of the Packaged Commodities Rules and MRP was declared on the individual cartons. The fact that they were sold in wholesale to big customers against the contract basis is altogether irrelevant for the purposes of their excise valuation. It was further observed that the sale contract price in wholesale cannot constitute distinguishing criterion for valuation under Section 4A or Section 4, because it is normal that all goods, irrespective of whether they fall for valuation under Section 4A or Section 4 of the Central Excise Act, enter trade through wholesale sale at agreed prices. There is no requirement under Packaged Commodities Rules or under Section 4A of the Central Excise Act that goods covered by those provisions should actually be sold in retail. Similarly, in the case of Intel Industries Pvt Ltd. v. CCE, Calicut , it was held, by majority decision that telephone instruments notified under Section 4A would be assessed to duty under the said Section 4A even when the same are cleared on contract price.
5. As against the above decision, our reference has been drawn to another decision of the Tribunal in the case of G.S. Enterprises v. CCE, Jaipur laying down that razors distributed free along with shoe polish would be assessed to duty under Section 4 and not under Section 4A ibid. However, it is seen that the said case is distinguishable, inasmuch as there was no declaration regarding MRP on the razor packs as observed by the Bench. Accordingly, we are of the view that the ratio of the above decision is not applicable to the present case.
6. As we have already noticed that the Tribunal in the case of Nestle India Ltd., has considered an identical situation and has held that the provisions of Section 4A would be applicable in case of goods notified under the said Section and printed with MRP irrespective of the fact that they are meant for free distribution, we set aside the impugned order of the Commissioner (Appeals) and allow the appeal filed by the revenue by restoring the order of the original adjudicating authority confirming demand of duty of Rs. 16,49,487/-.
7. However, as regards the penalty, we observed that the Tribunal in the case of Nestle India Ltd., referred supra has held that the dispute revolves around bonafide legal interpretation of production of law and no malafide intention can be attributed to the assessee. The penalty was accordingly set aside in that case. For the similar reason, we do not find any justification for imposing penalty upon the appellants. Accordingly, the penalty of Rs. 3 lakhs imposed upon the respondents is not being confirmed.
(Pronounced in Court on 27/1/06)