Same product partly sold in retail and partly in wholesale – CBE&C has further clarified in circular No. 737/ 53/2003-CX dated 19-8-2003 that when goods covered u/s 4A are supplied in bulk to large buyer (and not in retail), valuation is required to be done u/s 4. Provisions of section 4A apply only where manufacturer is legally obliged to print MRP on the packages of goods. Thus, there can be instances where the same commodity would be partly assessed on basis of section 4A and partly on basis of transaction value u/s 4 – view noted and approved in Jayanti Food Processing v. CCE (2007) 10 STT 375 = 215 ELT 327 (SC).

Valuation on MRP basis even if package is not really intended for retail sale – In Jayanti Food Processing v.CCE (2007) 10 STT 375 = 215 ELT 327 (SC), it was observed that nature if sale is not the relevant factor for application of section 4A but application would depend on five factors i.e.

(i) goods should be excisable goods

(ii) They should be such as are sold in the package

(iii) There should be requirement of SWM Act or rules or anyother law to declare price of such goods relating to their retail price on package

(iv) The Central Government must have specified such goods by notification of Official gazette and (v) Valuation of such goods would be as per the declared retail price on the package less the amount of abatement.

In ITEL Industries P Ltd. v. CCE 2004 (163) ELT 219 (CESTAT 2 v. 1 decision), telephone instruments were supplied to DOT/MTNL in bulk with MRP duly marked. DOT/MTNL lent these to subscribers retaining their ownership. It was held that since goods were packed, the valuation is required to be done u/s 4A on basis of MRP, even if goods were not sold to customers – followed in BPL Telecom v. CCE (2004) 168 ELT 251 = 60 RLT 664 (CESTAT), where it was held that there is no requirement under Packaged Commodities Rules that goods covered by those provisions must be actually sold in retail – view confirmed in Jayanti Food Processing v. CCE (2007) 10 STT
375 = 215 ELT 327 (SC).

This was followed in CCE v. Liberty Shoes (2007) 216 ELT 692 (CESTAT), where it was held that MRP provisions apply even when sale is in bulk to institutional buyers.

Provision does not apply to ice cream sold in bulk – In Monsanto Manufacturers v. CCE 2006 (193) ELT 495 (CESTAT), it was held that if ice cream is sold in bulk to hotels and not intended for retail sale, valuation will be as per section 4 and not on MRP basis – view confirmed in Jayanti Food Processing v. CCE (2007) 10 STT 375 = 215ELT 327 (SC).

Two items in combi-pack with one item free – In Icon Household Products v. CCE (2007) 216 ELT 579 (CESTAT), assessee was selling Mosquito Repellant Liquid (MRL) and Liquid Vapourising Device (LVD) as combi-pack. MRP was contained only on plastic container of MRL and not on LVD. It was held that this MRP will be taken for valuation of multipack. LVD supplied free in the multipack is not liable to assessment separately – relying on Himalaya Drug Company v. CCE (2006) 195 ELT 109 (CESTAT) – same view in CCE v. J L Morison (2008) 223 ELT 655(CESTAT SMB).

No MRP on free gifts/samples, hence valuation as per section 4 – In Jayanti Food Processing v. CCE (2007) 10 STT 375 = 215 ELT 327 (SC), assessee as selling Kitkat chocolates to Pepsi. These were distributed as free gift along with Pepsi bottle as a marketing strategy. It was held that even if product (chocolate) is covered under MRP provisions, since the product was not to be sold in retail, MRP is not required. Hence, valuation should be on basis of section 4.

Provision when more than one retail price declared MRP printed on package is required to be inclusive of taxes. Rate of taxes vary from State to State. Hence, in some cases, a manufacturer may print different prices for different States. In some cases, manufacturer earmarks different packages for different areas and marks different prices for different areas.

If a package bears more than one retail sale price, maximum out of these will be deemed to be retail price for purpose of section 4A [Explanation 2(a) to section 4A(4)]. If retail price declared on the package at the time of removal is subsequently altered to increase the price, such increased retail price will be retail price for purpose of section 4A [Explanation 2(b) to section 4A(4)]. Where different retail sale prices are declared on different packages, each such retail price shall be the ‘retail sale price’ for purposes of valuation of excisable goods intended to be sold in area to which the retail price relates. [Explanation 2(c) to section 4A(4)]. Thus, if different prices are printed on different packages, each such price will be ‘retail price’.

There is no stipulation in the Act that all packages should bear same MRP. Different MRPs for different buyers can be fixed. Even if MRP is different for each packet, such MRP is required to be adopted for assessable value– CCE v. Bell Granito Ceramics (209) 235 ELT 171 (CESTAT).