Implication of excise duty on 1+1 offers in case of MRP based assessable goods:
If MRP is printed even on the free item, duty is attracted on such free item [Indica Laboratories v. CCE (2007) 213 ELT 20 – CESTAT]. However, if the free item is given in a combi-pack, and only one MRP is specified for the combi-pack, only that one MRP will be considered for computing excise duty [CCE v. Himalaya Drug Company (2009) 243 ELT 101 – CESTAT, and Calcutta Chemicals v. CCE (2008) 229 ELT 117 – CESTAT]. Also, in a multi-pack, if MRP is mentioned only on one product and the other is supplied free, the other free product will not be considered for excise duty computation [Icon Household Products v. CCE (2007) 216 ELT 579 – CESTAT]
Therefore, it would be advisable not to mention MRP on the such individual products, have them bundled as combi-pack and have only one MRP printed on the combi-pack.
Implication of excise duty on quantity discounts to distributors
Once a product is covered under MRP provisions, quantity discount or free supply is not applicable. Excise duty is payable on entire quantity (including free supply). Also, when MRP provisions apply, transaction value is not relevant [Indica Laboratories v. CCE (2007) 213 ELT 20 – CESTAT]. CBEC has endorsed this judgement vide its circular No.938/28/2010-CX dated 29th Nov,2010.
Implication of excise duty on free samples
As per CBEC circular No.813/10/2005-CX dated 25th Apr, 2005, in case of samples distributed free, valuation is to be done on the basis of Rule 4, i.e., at the price at which such goods are being sold at that time (sale value). However, if samples are not distributed free, but intended for sale later, MRP based valuation provisions will apply as usual
Implication of excise duty on having two MRPs in a product (but one is scored out)
Where there are 2 MRPs on a package and one MRP (showing higher price) is scored out inorder to show consumer that they would be saving by purchasing the product, such scored out MRP is to be ignored for the purpose of valuation [CBEC Circular No. 673/64/2002-CX dated 28th Oct, 2002]