Customs, Excise and Gold Tribunal - Bangalore
The Commissioner Of Central Excise And ... vs Hindustan Coca Cola Beverages Pvt. Ltd. on 19 July, 2006
ORDER T.K. Jayaraman, Member (T)
1. Revenue has filed this appeal against Order-in-Appeal No. 95/2004 dated 13.5.2004 passed by the Commissioner of Customs and Central Excise (Appeals), Cochin.
2. The Respondents manufacture aerated waters, which are cleared in unit containers viz., bottles of 200 ml, 300 ml, 500 ml etc. For purposes of valuation, the goods are notified under Section 4A of Central Excise Act 1944. They had filed price declarations under the relevant rules and declared the MRP of Coca Cola 500ml PET Bottle at Rs. 11.25 for clearance exclusively to M/s. Hindustan Lever Ltd. M/s. HLL was actually purchasing the above goods for their free offer scheme with the sale of flora oil by them. Revenue proceeded against the Respondent on the ground that the valuation should be done under Section 4 and not under Section 4A as the goods were ultimately supplied free of charge by HLL to their customers. The Adjudicating Authority confirmed a demand of Rs. 90,026/-. The Respondents went in appeal to the Commissioner (A). The Commissioner (A) gave a finding that valuation of the goods in the present case would be governed by Section 4A. Therefore, he set aside the order of the lower authority and passed the impugned order.
3. Revenue is aggrieved over the impugned order on the following grounds.
(i) For valuation under Section 4A a retail sale is a must. If there is no sale to the ultimate consumer Section 4A valuation is not applicable. In the present case, the goods are not sold to the ultimate consumer but were supplied free. Hence valuation under Section 4A is not applicable here.
(ii) CESTAT in the case of Bharti Systel Ltd. v. CCE, Chandigarh has held that telephone instruments sold in bulk to DOT and MTNL who in turn provide the same on rental basis to their subscribes should be valued under Section 4 and not under 4A irrespective of the fact that the instruments were also sold at MRP in open market. The above decision is in conformity with Board's Circular dated 28.2.2002 issued after examining the matter with law ministry.
(iii) The CESTAT's decision rendered in the case of Nestle India Ltd. v. CCE relied on the Commissioner (A) has not attained finality, as the Department has appealed against that decision to Hon'ble Apex Court.
4. Shri R.K. Singla, learned JCDR appeared for the Revenue and Shri Jaykumar, learned advocate appeared for the Respondents.
5. We have gone through the records of the case carefully. The Commissioner (A) in his findings has stated that the impugned commodity is specified under Notification issued under Section 4A(1). This commodity is also governed by Standards of weights and Measures Act 1976 and the Rules framed thereunder. Therefore, on the sale of the 500 ml Coca Cola bottles the Respondents are required to declare the retail sale price of the goods. He has stated that it is immaterial what M/s. HLL does with the goods once the sale between them has taken place. For the above reasons, the valuation of the goods would be governed by Section 4A. The Commissioner (A) has cited Nestle's case where more or less similar facts are involved. The Tribunal has given a finding as follows:
Sub-section (1) of Section 4A empowers the Central Govt. to specify in goods in relation to which the manufacturer is required to declare the retail sale price of such goods on the package under the provisions of Standards of Weights & Measures Act, 1976. It is not disputed by the appellant that the packages of 'Kitkat' being manufactured by them are covered by the provisions of Standards of Weights & Measures Act. In other words there is a statutory requirement under the provisions of said Standards of Weights and Measures Act to declare the detailed sale particulars on the packages. If that be so, the provisions of Section 4A get attracted. Now the question arises as to whether the said provision would apply even where the identical packs of the same goods are not being sold by the manufacturer in retail, but are being supplied to another person under a contract for further supply of the same as a free gift along with other item. (emphasis supplied) Sub-section (2) of Section 4A refers to the goods specified under Sub-section (1) without making any distinction as to whether such goods are actually sold in retail or not. Once the goods are specified items under Section 4A(1) and are excisable goods chargeable duty to with reference to value, then such value shall be deemed to be the retail sale price declared on such goods, less amounts of abatements, etc. As we have already observed that Standards of Weights and Measures Act requires chocolate manufactured by the appellant to be printed with MRP on the same, we are of the view that the duty of excise on such goods is required to be assessed in terms of the MRP. The only exception where a manufacturer can deviate from the general rule of printing of MRP on the packages is Rule 34 of Standards of Weights and Measures (Pack. Comm.) Rules, 1977.
5.1 The reasoning of the Commissioner (A) in the impugned order appears to be sound. The same is confirmed by the decision of the tribunal in the Nestle case. The fact that the above decision is under challenge by Revenue the Apex Court is not a proper ground for not following it, especially when the same has not been stayed. In these circumstances, we do not find any merit in Revenue's appeal. The same is rejected.
(Operative portion of this Order was pronounced in open court on conclusion of hearing)