CA Bimal Jain
MRP based valuation applicable to institutional buyers for goods which are specified under Section 4A of the Excise Act, covered by SWM Act, 1976 & Rules thereof and further, MRP was affixed on the goods supplied which are not exempted under Rule 34 of the Rules thereof
Liberty Shoes Ltd. (“the Respondent”) was engaged in manufacturing of footwear under the brand name of ‘Liberty’ and selling their products to various buyers in retail as well as to various institutional buyers in bulk on contractual price, but was paying Excise duty on the basis of MRP as per Section 4A of the Excise Act. The Department alleged that clearing footwear to the institutional buyers by assessing their value under Section 4A of the Excise Act is not correct as in the case of sale of goods on the basis of contract price, Section 4A of the Excise Act will not be applicable and valuation of the same shall be governed by Section 4 of the Excise Act.
The Hon’ble Supreme Court, relying upon the judgment in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of Central Excise, Rajasthan [2007 (8) TMI 3 – Supreme Court], held that footwear is an item which is specified under Section 4A of the Excise Act, covered by Standard of Weights and Measures Act, 1976 and Rules made thereof, and MRP was also required to be affixed on the products supplied, which were not exempted under Rule 34 of the Rules thereof. Thus, the provision of Section 4A of the Excise Act shall stand attracted. Accordingly, the Respondent has correctly discharged Excise duty liability as per Section 4A of Excise Act.
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