any notication against supply to govt agencies on rate contract basis thru tender not appliacable MRP Procedure, Central Excise

[nandankumar roy]

Dear Sir,

we are procuring order through tender for supply of medicines to various govt supply body& ESIC where  contract  rate applicable only not on MRP Basis & we are doing the same since last 15 years. But recently excise audit team questioning why you are selling on rate contact instead of MRP and asking for any notification or guide from govt. Now what we should give reply regarding this query. Pl help.

Posts / Replies

[Pradeep Khatri]

Dear Mr. Roy,

MRP-based valuation is governed by Section 4A of the Central Excise Act, 1944. The primary requirement attracting MRP-based valuation of goods under excise is that the goods should be notified under Section 4A of the Act and should be covered within the purview of the Standards of Weights & Measures (Packaged Commodities) Rules, 1977. These rules do not apply to packaged commodities that are meant for sale to industrial/institutional consumers, who purchase the commodities for using the products in their industry. Sale of bulk quantities of your product, not intended for sale in retail, to industrial buyers would be outside the purview of the Legal Meterology Act, 2011 (Earlier Standards of Weights & Measures (Packaged Commodities) Rules, 1977) and, therefore,may not attract MRP-based valuation for the purpose of payment of excise duty.

Facts are needed to be checked in your case before providing you a firm opinion.  If possible, please share with the us the letter issued by the Audit team.

Please send it on [email protected]

We will revert after checking the material facts and it gona be a free opinion without any cost to you.

Best Regards,

Pradeep Khatri

[vijay kumar]

The provisions of MRP based assessment under Section 4A are subject to applicability of Legal Metrology Act,2009 (previously Standards of Weights and Measurements Act, 1976). Hence you have to check whether there is any exemption available to you from printing MRP on the packages on account of Institutional sales or any other reason. In case of doubt, you may ascertain the same from the local Legal Metrology authorities. Thus, if you are not obliged to print MRP on the packages in terms of the said Act, there is no need to go for MRP  assessment under Section 4A. Otherwise you would be violating both LMA and CEA. There is no notification in this regard since Section 4A itself is clear and u may accordingly deal with the matter.

[sunil ahuja]

MRP is applicable in case of retail sales only... when there is bulk supplies / rate contract sales then such sales are exempted from MRP valuation in terms of Rule 34 of Packed commodities rules.