2024 (7) TMI 678 - AT - Central Excise

Method of Valuation - Section 4 or Section 4A of the Central Excise Act, 1944 - toilet soaps - Applicability of MRP on goods sold to Canteen Stores Department (CSD) under Ministry of Defence - HELD THAT - CSD comes under the category of institutional consumer and hence covered by Rule 2A of Standards Weights Measures (Packaged commodities), Rules, 1977 - the value of the goods has to be determined under Section 4 of Central Excise Act, 1944. Appeal allowed.

Summary

Issues:
1. Valuation of goods under Section 4A of the Central Excise Act, 1944.
2. Applicability of MRP on goods sold to Canteen Stores Department (CSD) under Ministry of Defence.
3. Interpretation of Standards of Weights & Measures Act, 1976 and Rules made thereunder in relation to valuation of goods.
4. Application of Circular dated 28.02.2002 in determining the requirement of affixing MRP on goods.
5. Determination of whether goods sold to CSD qualify as retail sale under legal metrology statutes.

Analysis:
1. The case involved a dispute regarding the valuation of toilet soaps under Section 4A of the Central Excise Act, 1944. The appellant, engaged in soap manufacturing, availed cenvat credit but cleared goods to CSD under Section 4 instead of Section 4A, leading to a demand for duty on differential assessable value. The Tribunal analyzed the legal obligations regarding MRP affixation and upheld that duty should be discharged under Section 4, not Section 4A.

2. The Tribunal considered whether the goods sold to CSD required MRP affixation under the Standards of Weights & Measures Act, 1976. The appellant argued that the goods were not meant for retail sale as per the SWM Act and Rules, supported by markings like "For CSD Only." The Tribunal noted that CSD, as an institutional consumer, fell under Rule 2A of the SWM Rules, exempting them from retail price obligations.

3. The interpretation of legal provisions regarding MRP requirements was crucial. The Tribunal referenced Circular No.625/16/2002-CX, emphasizing that MRP was not mandatory for goods supplied to CSD. The appellant's contention that the Circular settled the issue in their favor was accepted, highlighting the binding nature of such circulars on the Department.

4. The Tribunal examined the applicability of the Circular dated 28.02.2002, emphasizing its role in determining the necessity of affixing MRP on goods. The appellant argued that the Circular supported their position that sales to CSD did not require MRP, which the Tribunal acknowledged in favor of the appellant.

5. The determination of whether goods sold to CSD constituted retail sale under legal metrology statutes was a key issue. The Tribunal analyzed the nature of transactions with CSD, considering them as not falling under retail sale requirements due to being restricted to Defense personnel. The Tribunal upheld that goods supplied to CSD did not require MRP affixation and should be valued under Section 4 of the Central Excise Act, 1944.