Per C.N.B. Nair : The appellants are a manufacturer of biscuits. This product is liable to central excise duty based on MRP under Section 4A of the Central Excise Act, 1944. While selling certain varieties of biscuits, the appellants supplied small quantities of certain other varieties free. Under the impugned order, duty has been demanded in respect of such "free" supplies.

2. It is the contention of the appellants that free supplies in question are in the nature of discounts and that discounts are eligible for deduction in terms of this Tribunal's order in the case of Kothari Detergents (P) Ltd. vs. C.C.E., Kanpur - 1998 (27) RLT 850 (CEGAT)=1998 (104) ELT 513. Learned Counsel for the appellants also has brought to our notice a Circular No. 673/64/2002-CX, dated 28.10.2002 [reported in 2002 (53) RLT M25] issued by the Central Board of Excise Customs in the context of MRP based assessment. Sub-para (iv) of para 4 of that Circular states, "If an individual item is supplied free in the multi-pack and has no MRP printed on it, the MRP printed on the multi-pack will be taken for purposes of valuation under Section 4A.'' Learned Counsel has explained that in the present case, the free supplied item does not contain any MRP on it. It is his submission, therefore, that the issue is covered by the clarification of the Board also.

3. We have perused the records and have heard the learned SDR also. With regard to quantity discounts this Tribunal observed as under:

"6. Going by the facts and the decision of the three Member Bench of the Tribunal in Bombay Latex Dispersions Pvt. Ltd. the real question is whether the gift or delivery was really in the nature of trade discount for the benefit of the wholesaler. The decision does not make any distinction between a case where the gift articles are bought-out items or items different from the excisable goods and the case where the gift articles or the additional articles supplied are of the same kind as excisable goods. The ultimate question is what exactly is the price which the wholesale dealer is required to pay to the manufacturer. If 13 units of excisable goods are supplied to a wholesaler who would pay on the price of only 12 units, it is in the nature of trade discount by way of quantity discount. Trade discount may be in cash or in kind. There is nothing in principle to suggest any differentiation between trade discount in kind of goods identical to excisable goods or of goods different from excisable goods. Where the additional goods supplied are identical to the excisable goods, one may call the same quantity discount in kind. Where the articles are dis-similar, nevertheless, it would be an instance of discount in kind though not quantity discount. The delivery of the additional number of article or a different kind of article for which separate price is not charged would go to the benefit of the wholesaler and constitute wholesaler's margin. Any amount or equivalent given to a wholesaler as margin would be a trade discount admissible for deduction as long as it satisfied the other conditions, such as being known at the time of removal and being available to all wholesalers. When a manufacturer who supplies a particular number of units of excisable goods supplies those goods along with certain articles stated to be gift articles or bonus articles without charging a separate price therefore, the manufacturer would not meet the cost of such articles from his own pocket. He would have spread the cost of the gift or bonus articles in the cost structure of excisable goods delivered to the wholesaler. In principle we find it difficult to draw any differentiation between a case where a manufacturer supplies 13 units for the price of 12 units and the case where a manufacturer supplies 12 units and another article of some value for the price of 12 units of excisable goods. Both are instances where the wholesaler parts with an article of some value in favour of the manufacturer, without