NESTLE INDIA LTD. Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE applicant is engaged in the manufacture of Noodles, Ketchup, MAGGI etc. In respect of MAGGI Noodles intended for retail sale, the applicants are required to declare M.R.P. on the packets and to determine the assessable value under Section 4A of the Central Excise Act. They have entered into an agreement with M/s Agro Tech Foods Ltd. who are the manufacturer of refined vegetable oils and atta for purchase of MAGGI Masala Noodles from the appellants which were distributed by them free alongwith their product 'ATFL Sundrop 1 Ltr.' by offering one pack of MAGGI Masala Noodles 100 gm free with every pack of ATFL Sundrop 1 Ltr. Sold by them. The price for the sale of MAGGI Masala Noodles to ATFL was negotiated and agreed between ATFL and the applicants. On the above referred free packs the appellants printed the words "Free Not for Sale" and no M.R.P. was printed on such packs. Such free packs were assessed under Section 4 of the Central Excise Act and no objection was taken by department. However, in terms of new contract entered into by the appellants with ATFL during the year 2003 the wholesale price of promotional pack of MAGGI Masala Noodles was agreed to as Rs. 5.45 per pack inclusive of sales tax, excise and transport cost for delivery at specified warehouse depots of ATFL. As this was an all inclusive price, the applicant claimed excise duty and freight as deduction from Rs. 5.45 as allowed for clearances under Section 4 of the Act and accordingly arrived at the assessable value. No M.R.P. was declared on the packages of such MAGGI Masala Noodles. The appellants were however issued a show Cause notice Stating that since MAGGI Masala Noodles is covered under sub -heading 1902.10, the assessable value for such clearances ought to be determined under Section 4A and not Section 4 and demanded differential amount of Rs. 9,01,236/ -. Duty was confirmed by the Joint Commissioner who also imposed penalty of equivalent amount and was upheld by Commissioner (Appeals).

(2.) THE learned advocate for the appellants submitted that the Commissioner has relied upon the decision of Tribunal in the case of Nestle India Ltd. v. Commissioner of Central Excise, Goa in which it was held that where M.R.P. was required to be printed or chocolates manufactured by appellants as per Standards of Weights and Measures Act, 1976 duty of excise is required to be assessed in terms of M.R.P. under Section 4A of the Central Excise Act, 1944 even if chocolates were supplied as a free gift with another item. He submitted that subsequently the Tribunal has in the case of G.S. Enterprises v. Commissioner of Central Excise, Jaipur 2004 (172) E.L.T. 32 (Tri. -Del.) and Commissioner of Central Excise, Ludhiana v. Pepsi Foods Ltd. distinguished Nestle India case in as much as in these cases M.R.P. was not declared on the packages which were meant free supply and not for sale and has held that the packets which do not contain any M.R.P. and bears the text 'Free and not for retail sale' then goods are liable to be assessed under Section 4 of the Central Excise Act, 1941. He also referred to the Boards Circular No. 625/16/2002 -CE dated 28.02.2002 which also clarify that in respect of items supplied free with another consumer items as marketing strategy assessment may be made under Section 4 if the assessee is not required to display the M.R.P. under Standard Weight and Measures Act.

(3.) THE learned D.R. on the other hand submitted that the decision passed in the case of Pepsi Foods and G.S. Enterprises are not correct as under the Standard Weight and Measures Act the exemption are provided under Section 34 only which has been discussed in the Nestle India case (cited supra) and the only exemption is in respect of packets which are specially packed for exclusive use of any Industry as a raw material or for the purpose of servicing any Industry, mine or quarry. Since the present case does not fall in this category they are required to declare M.R.P. and hence assessment have to be made under Section 4A. The learned advocate Shri Nambirajan for the appellants submitted that the matter regarding assessment under Section 4 or 4A are pending with the Supreme Court and once the decision are in their favour pre -deposit of duty and penalty should be waived.