Section 4A of CEA empowers Central Government to specify goods on which duty will be payable based on ‘retail sale price’.
The provisions for valuation on MRP basis are as follows :
(a) The goods should be covered under provisions of Standards of Weights and Measures Act or Rules [section 4A(1)].
(b) Central Government has to issue a notification in Official Gazette specifying the commodities to which the provision is applicable and the abatements permissible. Central Government can permit reasonable abatement (deductions) from the ‘retail sale price’[section 4A(2)].
(c) While allowing such abatement, Central Government shall take into account excise duty,sales tax and other taxes payable on the goods [section 4A(3)].
(d) The ‘retail sale price’ should be the maximum price at which excisable goods in packaged forms are sold to ultimate consumer. It includes all taxes, freight, transport charges, commission payable to dealers and all charges towards advertisement, delivery, packing, forwarding charges etc. If under certain law, MRP is required to be without taxes and duties, that price can be the ‘retail sale price’ [Explanation 1 section 4A].
(e) If more than one ‘retail sale price’ is printed on the same packing, the maximum of such retail price will be considered [Explanation 2(a) to section 4A]. If different MRP are printed on different packages for different areas, each such price will be ‘retail sale price’ for purpose of valuation [ Explanation 2(c) to section 4A].
(f) Removing excisable goods without MRP or wrong MRP or tampering, altering or removing MRP declared on a package is an offence and goods are liable to confiscation [section 4A(4)] If price is altered, such increased price will be the ‘retail sale price’ for purpose of valuation [ Explanation 2(b) to section 4A].
MRP provisions are overriding provisions – Section 4A(2) of Central Excise Act uses the words ‘notwithstanding section 4’. Hence, when section 4A is applicable, provisions of section 4 for determination of assessable value are not applicable.