Customs, Excise and Gold Tribunal - Tamil Nadu
Icon Household Products (P) Ltd. vs Cce on 2 July, 2007
Equivalent citations: 2007(122)ECC97, 2007(148)ECR97(TRI.-CHENNAI), 2007(216)ELT579(TRI-CHENNAI)
ORDER P. Karthikeyan, Member (T)
1. The subject appeal is directed against the Order-in-Original No. 16/2006 dated 31/08/06 of the Commissioner of Central Excise, Pondicherry. In the impugned order, the adjudicating authority demanded excise duty and education cess totalling Rs. 1,04,32,970/- under Section 11A(2) of the Central Excise Act '44 (the Act) along with interest thereon from M/s. Icon Household Products Pvt. Ltd (hereafter IHPPL). He also imposed penalty under Section 11AC on M/s. IHPPL equal to the duty amount demanded.
2. The facts of the case are that M/s. IHPPL manufactured and cleared Mosquito Repellant Liquid (MRL) of 25 ml in a plastic container along with Liquid Vapourising Device. (Mortein Power Booster, hereafter referred to as LVD). The mosquito repellant liquid falling under Chapter Sub-heading No. 3808.10 of the first Schedule to CETA 1985 and liquid vaporizing device falling under chapter Sub-heading No. 8516.00 of the said Schedule are notified for MRP based assessment in terms of Section 4 A of the Act. The MRP of Rs. 36/- appears on the plastic container which holds the repellent liquid. The LVD is packed along with the plastic container with mosquito repellent liquid. The MRP of Rs. 36/-is also printed on the package containing both MRL and LVD. The assessee paid duty based on MRP of Rs. 36/- for this combination package which also carried the declaration "machine free". During the material period Januar, 2005 to November, 2005, the assessee had manufactured and cleared the impugned goods on job work basis for M/s. Reckitt Benckiser India Ltd., demand relates to the LVD, computed on cost construction basis under Section 4 of the Act.
3. The Commissioner decided that the assessee had discharged the duty only on MRL and had evaded duty on LVD. He found that the MRP of Rs. 36/- printed on the package represented the MRP of MRL and did not include the value of LVD. He relied on the decision of the CESTAT in the case of G.S. Enterprises v. CCE Jaipur . In that case, the appellants M/s. Gillet Presto International (GPI) manufactured razors on job work basis for M/s. Indian Shaving Products Ltd (M/s. ISPL). M/s. ISPL supplied tucks of five "7 O'clock" blades to M/s. G.S. Enterprises for packing along with GPI razors as a combination package. The MRP of five tucks of "7 O'Clock" blades was Rs. 23/- and that of GPI razors was Rs. 10/-. M/s. G.S. Enterprises availed cenvat credit of duty paid on tucks of five blades as well as on other materials and after packaging cleared the combination package adopting the MRP of Rs. 23/-, on the basis that the razors were given free with the blades in a combination package and MRP of blades shall be the MRP for the combination package. In that case, the Tribunal had found that razors and blades being goods notified for assessment under Section 4 A of the CEA, the razors had also to suffer duty based on its MRP of Rs. 10/- when cleared in combination with blades based on the MRP of razors.
4. During hearing, Ld. Consultant appearing for M/s. IHPPL reiterated the grounds taken in the appeal. The appellants manufactured what they called Mortein Redlight Combipack. On the combipack, MRP was printed as Rs. 36/- in compliance with the requirement of provisions of Standards of Weight and Measures (Packaged Commodities) Rules, 1977. It was submitted that the combipack was manufactured and cleared by the assessee on which the assessee had paid applicable duty based on MRP of Rs. 36/- printed on the package. The goods involved were both notified under Section 4 (A) (1) for MRP based assessment. Rs 36/- was the MRP of both the goods packed. Commissioner's inference that the MRP of Rs. 36/- applied only to MRL and did not cover LVD was misconceived. The appellants charged Rs. 36/- for both the goods and did not collect anything more towards LVD and discharged duty on the amount charged. In the case relied upon by the Commissioner, the assessee had manufactured only one item. The other item had been received by it from the principal manufacturer and used for packing along with the manufactured item. The Tribunal decided that the assessee could not avail credit on the item received as the same was merely packed along with the manufactured goods. In such a situation, the question of considering the combination package for the purpose of assessment could not arise. The facts of the present case were distinguishable. The CBEC Circular dated 28/10/2002 on assessment of multi-piece package bearing MRP squarely covered the case of the appellant. The appellants relied upon the decision in the case of Surya Food and Agro Ltd. v. CCE 2003 (156) ELT 488 (Tri.), and Vinayaka Mosquito Coil Manufacturing Co. v. CCE 2004 (174) ELT 107 (Tri.). The Ld. Counsel submitted a copy of the Tribunal's decision in Himalaya Drug Co. v. CCE Bangalore-III reported in 2006 (195) ELT 109 (Tri.-Bang.) and submitted that the issue involved was settled by the said decision.
5. Ld. SDR supported the reasoning followed by the Commissioner in the impugned order. She also cited case law, CCE, Mumbai v. Godrej Industries Ltd. 2006 (200) ELT 348 (Tri. - Mum) and G.S. Enterprises v. CCE Jaipur in support of the plea that duty demand on LVD under Section 4 was in accordance with law. The LVD was supplied free like the physician's sample and was assessable to duty as per Section 4 of the Act. She also informed that no appeal was filed by the department against the Himalaya Drug Co. case decision (supra).
6. We have carefully considered the case records and the rival submissions. In the instant case, the MRL and LVD are notified under Section 4A(1) of the Act. LVD is always sold in combipack with MRL. The plastic container containing MRL bears MRP of Rs. 36/- which is also the MRP printed on the combipack. We find that as per Circular No. 673/64/2002-CX dated 28.10.2002, the CBEC had clarified that when two or more consumer items of the same kind notified under Section 4A are sold in a multipack, on one of which no MRP is printed, the MRP printed on the multipack will be taken for the purposes of valuation of the multipack under Section 4A. We find that as held in Surya Food and Agro Ltd. v. CCE (supra) the principle laid down in the Circular will apply also to a case where two dissimilar consumer items both subject to MRP based assessment are cleared in a combipack. Where an individual item is supplied free with no MRP printed on it, the MRP printed on the combipack should be taken for the purpose of valuation under Section 4A. In the instant case, LVD is not sold singly but only in a combipack with MRL. Therefore, in the instant case, the combipack 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.
7. In the G.S. Enterprises case (supra), relied on by the Commissioner, both the razor and the blade packets sold in combipack were also sold separately with MRP marked on the packs. The assessee had received tucks of five blades from the principal manufacturer to pack it along with razors manufactured by it for free supply. Tribunal decided that the blades had to suffer duty based on MRP. In the instant case both the items in the combipack are manufactured by the assessee. Therefore, the ratio of G.S. Enterprises (supra) is not applicable to the subject case. In the CCE, Mumbai v. Godrej Industries Ltd. case, the manufacturer of the goods Cinthol toilet soaps had sold them under contract for free supply by the principal manufacturer along with Dabur Vatika oil etc. The Tribunal decided in that case that toilet soaps being notified for MRP based assessment and the MRP printed on it, duty had to be paid on the basis of its MRP. We find that these decisions deal with cases different on facts from those of the subject case.
8. In the Himalaya Drug Co. case (supra), the appellants had cleared shampoo and gel in combination packages. Both the products are covered under Section 4A and the Standards of Weights and Measures Act. Gel was supplied free in the combipack and MRP was printed on the package. The Tribunal decided that in that case, the combipack was to be assessed under Section 4A and that there was no duty liability on the Gel supplied free. In that case the Asst. Controller of Legal Metrology had certified that the products sold together should also comply with the requirements of Standards of Weights and Measures Act and hence, product shampoo sold with face wash gel was covered under the said Act. Such package was defined under the said Act as a combination package and not as multi package. We find that the above case law squarely covers the subject case. In view also of the ratio of this decision we set aside the impugned order and allow the appeal filed by the assessee.
(Operative portion of the order pronounced in open Court on 2.7.07)