Per Archana Wadhwa : The appellants are engaged in the manufacture of crisp wafer finger covered with milk chocolate under brand name 'Kitkat' falling under chapter 19 of CETA, 1985. Inasmuch as the said product is a specified item under the provisions of Section 4A of Central Excise Act, 1944, the duty on the said chocolate was being paid by the appellant in terms of the said Section 4A based upon the retail sale price, after claiming deductions on account of abatements. There is no dispute about the assessable value of the Kitkat sold in the market in retail.

2. The dispute relates to the sale of Kitkat to M/s. Pepsico India Holdings Ltd. under a contract where the agreed price of the same packet was Rs. 4.80. The said product purchased by M/s. Pepsico India Holdings Ltd. was meant for free supply of the same along with one bottle of Pepsi of 1.5 litre as a sales promotion scheme. The appellant cleared the disputed goods after payment of duty at Rs. 4.80 per Kitkat in terms of Section 4, after filing due declarations. However, the department entertained a view that the appellant was required to declare the retail sale price of the Kitkat in question under the provisions of Standards of Weight and Measures Act, 1976 and since the said product is specified under the provisions of Section 4A, they were required to pay the duty on the said product on the basis of the MRP declared on the packages and not on the basis of the contract price in terms of Section 4.

3. On the above basis the appellants were served with a show cause notice dt. 14.8.2001 raising demand of duty of Rs. 48,95,370/- along with proposal to impose penalty upon the appellant and confirmation of interest. The appellant contested the proposal to determine the assessable value in terms of Section 4A and contended that since there was no statutory requirement to declare maximum retail price (hereinafter referred to as MRP) under the provisions of Standards of Weight Measures Act, 1976 in respect of Kitkat to be distributed free along with 1.5 litres Pepsi per bottle, the provisions of Section 4A were not attracted. The above contention of the appellant was not accepted by the Commissioner who confirmed the demand of duty as proposed in the notice along with confirmation of interest and imposition of personal penalty of identical amount under the provisions of Rule 173Q of Central Excise Rules, 1944. Hence the present appeal.

4. We have heard Shri V. Sridharan, ld. adv. appearing for the appellant and Shri Hitesh Shah, ld. SDR for the Revenue. The appellants' main contention is that since the 'Kitkat' packages in question were not meant for retail sale in the market, it cannot be said that the said packages were notified items under the provisions of Section 4A. He submits that in respect of free supply of items along with another item, there is no statutory requirement to declare the MRP under the provisions of the Standards of Weights Measures Act, 1976 or the rules therein or any other law for the time being. Inasmuch as there is no requirement to declare the MRP, Central Govt. is not empowered to specify such goods for assessments under Section 4A and as such the provisions of Section 4A are not applicable. Ld. adv. has also drawn our attention to the definition of "retail sale" and "retail price" as also to the "retail package" as defined under Rule 2 (q), Rule 2 (r) Rule 2 (p) of Standards of Weights Measures (Packaged Commodity) Rules, 1977 and has submitted that a reading of the above rules show that a package meant for sale through retailer for consumption of an individual or group of individual would qualify for term "retail package". As such when a package is not meant for sale but to be distributed free for promoting sale of aerated waters, it is not a retail package and there is no statutory requirement to declare MRP on the same, in which case the provisions of Section 4A would not apply.

5. Our attention has also been drawn to the Board's Ci