- (1.) The Respondent herein is engaged in the manufacture of footwear under the brand name of 'Liberty' falling under Chapter 64 of the First Schedule to the Central Excise Tariff Act, 1985. They are selling their final product, i.e., footwear to various buyers in retail as well as to various institutional buyers in bulk on contractual price, but are paying Central Excise duty on the basis of MRP after availing abatement of 40% as provided Under Sec. 4A of the Central Excise Act, 1944 (hereinafter referred to as 'Act') on both type of transactions irrespective of the fact whether the goods are sold to retail buyers or to institutional buyers on contract price. According to the Revenue, Respondent herein, by clearing the footwear (finished goods) to their institutional buyers by assessing their value Under Sec. 4A of the Act, had tried to evade Central Excise duty inasmuch as the words and language of Sec. 4A unambiguously state that MRP is the basis of valuation Under Sec. 4A whereas, in the case of sale of goods, on the basis of contract price, Sec. 4A will not apply. In case of sale of goods by manufacturer at the contract price, affixation of MRP has no legal significance so far as valuation of goods is concerned. The valuation of goods for levy of excise duty, in a case where goods are sold to an institutional buyer under a contracted price, shall be governed by Sec. 4 of the Act and not Under Sec. 4A.
(2.) The Revenue further relied upon few provisions under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (hereinafter referred to as 'Rules') which, according to them, specifies that retail sale price has to be declared only in case the goods are intended for retail sale and not otherwise. The goods sold to institutional buyers at the contract price are not meant for retail sale. Such goods are sold to the institutional buyers and are not intended for sale directly to the consumers. The provisions of Sec. 4A, therefore, are not attracted as there is no requirement under the Rules to declare retail sale price on the packages meant for such sale. Thus, mere affixing MRP on packages supplied to institutional buyers does not constitute retail sale as MRP is required to be affixed only in the case of retail sale and not in the case of wholesale sale or bulk sale to the institutional buyers.
(3.) The Revenue also relied upon the C.B.E. & C. Circular dated 31 -7 -1998 wherein it was stated that in case a manufacturer voluntarily affixes MRP, which is not statutorily required, then the Central Excise duty on goods in such packages shall not be charged on the basis of Sec. 4A of the Act.;