By TIOL News Service

MUMBAI, OCT 17, 2017: THE appellants are engaged in the manufacture of Maggie Noodles, Ketchups/sauce and Maggie extra taste falling under sub-heading 1902.00 and 2103.10 to the Schedule to CETA, 1985.

The appellant entered into an agreement with M/s. Tata Tea ltd., for sale of Maggi Noodles of pack size 96* 100 gms to M/s Tata Tea Ltd., who were to distribute the said pack along with their final products Tata Tea by offering one pack of Maggie Noodles 96 * 100 gms free with every pack of Tata tea of a particular pack sold by them.

During the relevant period, the appellant themselves cleared Maggi Atta Noodles of pack size 96 * 100 gms as free packs with the Maggi Hot & Sweet Sauces manufactured and cleared by them.

On the said free pack, the appellant printed the words "Free. Not for Sale".

As regards the supplies made to Tata Tea on the basis of agreement, on the pack, no MRP was mentioned and a declaration was made on the pack - "free with Tata Tea".

The appellants discharged excise duty on the assessable value under Section 4 of the CEA, 1944, based on the contract price agreed between the appellants and Tata Tea Ltd.

SCNswere issued demanding differential CE duty and alleging that Maggi Noodles is covered under SH 1902.10 and, therefore, the assessable value for such clearances ought to have been determined u/s 4A (MRP basis).

The adjudicating authority confirmed the demand and the same was upheld by the Commissioner(A) relying on the decision in the appellant's own case reported as 2004-TIOL-280-CESTAT-MUM.

Therefore, the appellant is before the CESTAT.

It is submitted that the said relied upon decision has been reversed by the Supreme Court in favour of the appellants and reported as Jayanti Food Processing (P) Ltd. – 2007-TIOL-150-SC-CX. Further, on identical issue for the subsequent period in the appellant's own case, the Tribunal following the Supreme Courtjudgement(supra) further passed an order No. A/94519/16/EB dated 03/11/2016 - 2017-TIOL-770-CESTAT-MUM therefore, the issue is no longer res integra .

The Bench while reproducing in verbatim paragraphs 4 to 39 of the apex court order observed –

"4. … We find that the dispute relates to the valuation of promotional pack of Maggi Noodles, which are not sold as such, whereas the same is supplied free of cost either by the appellant or by Tata Tea Ltd. On the pack no MRP mentioned and the packs also bore the mention that "Free not for sale". Therefore, the provisions of Standards of Weights and Measures Act, 1976 and Rules made there under do not apply in such supplies. Therefore, the valuation of such goods cannot be done under Section 4A of Central Excise Act, 1944. The appellants have correctly valued the goods under Section 4…"

In fine, the impugned order was set aside and the appeal was allowed.

(See 2017-TIOL-3718-CESTAT-MUM)