Summary
A footwear manufacturer supplying shoes in bulk to defence and paramilitary forces under fixed-price contracts affixed maximum retail price stickers and claimed assessment under Section 4A of the Central Excise Act, 1944 with the concessional rates of a 2012 notification for retail footwear. The adjudicating authority denied the benefit but the Tribunal reversed, looking only at whether the goods were notified. The Supreme Court allowed the Revenue's appeals: under Jayanti Food Processing all five conditions must be met, including a legal requirement to declare the retail price; sales to institutional consumers are exempt from the Legal Metrology (Packaged Commodities) Rules, 2011, the forces were intermediaries and not consumers, so the sale was not retail and voluntary MRP affixation does not attract Section 4A.
Issues
- Whether footwear sold in bulk to military and paramilitary institutions under contract, bearing voluntarily affixed maximum retail price stickers, is assessable under Section 4A of the Central Excise Act, 1944 so as to attract the concessional rates for retail footwear.
Provisions considered
- Section 4A, Central Excise Act, 1944MRP-based valuation applies only where, among the conditions in Jayanti Food Processing, there is a requirement under the Legal Metrology Act or rules to declare the retail price on the package; a mere affixation of MRP without such a legal mandate does not qualify. (¶¶ 6, 7, 12, 13, 17)
- Rule 3(b), Legal Metrology (Packaged Commodities) Rules, 2011Exempts sales to institutional consumers from the Rules; the military and paramilitary purchasers buying in bulk for distribution to their personnel are institutional consumers, so there was no legal requirement to declare a retail price and the transaction falls outside Section 4A. (¶¶ 8, 9, 10, 14)
Held
- The purchasing forces are intermediaries who distribute the footwear to the end users and are not consumers as understood in Jayanti Food Processing; the sale is therefore not a retail sale, no law required an MRP to be affixed, and the goods cannot claim the benefit of Section 4A or the notification merely because stickers were attached. (¶¶ 9, 14, 15, 16, 17)
- The Tribunal committed a grave error of law by considering only whether the goods were notified under Section 4A and ignoring the other four conditions laid down in Jayanti Food Processing. (¶¶ 18, 19)
Result
Appeals allowed; order of the Customs, Excise and Service Tax Appellate Tribunal, Allahabad dated 09.01.2019 set aside; respondent directed to pay the differential duty to the tax authority; no order as to costs.