Affixing any price as MRP will not entitle assessment under section 4A.

26th November, 2014. Bajaj Food Products P Ltd., Arvind Maheshwari, AD Bajaj Vs CCE, Rohtak

FACTS : The appellants manufactured biscuits packets sold and sold them to the Municipal Corporation of Delhi (MCD) under a contract for the National Programme of Nutritional Support of Primary Education. On the buscuit packets the appellants affixed MRP and claimed abatement of 40% from the MRP under section 4A read with the relevant notification. The adjudicating authority held is was not a retail sale, section 4A was not applicable and therefore the abatement was not admissible.

DISCUSSION & FINDINGS : The Hon'ble Tribunal upheld the departments contentions. Simply affixing any price on a package as MRP will not entitle the goods to be assessed under section 4A.  No "MRP" is required to be affixed on the biscuit packets . Affixing a so-called MRP does not make the goods assessable under section 4A. The relevant facts/points noted were :

  • The assessee was selling the biscuit packets to MCD under a contract for for the National Programme of Nutritional Support of Primary Education. This is not a retail sale.
  • The assessee was receiving free wheat from MCD  to produce the buscuits. The MRP affixed therefore was not legally a MRP.
  • The fact that wheat was provided free to the assessee was not disclosed at anytime to the excise authorities.
  • The so-called MRP was affixed on all the buscuit packets were the SAME Rs 2/- regardless of the weight of the packets i.e.  Rs 2 for 61 gms, 71 gms and 100 gms.
  • This clearly shows is was not the real MRP and was only intended to hoodwink the excise authorities and claim the 40% abatement from the so called MRP.
  • The weight of the biscuit packets were non-standard and hence not compliant with the Standards of Weights & Measures Act (SWMA).
  • This situation is covered by the judgement of the Madras High Court in Australian Foods Ltd. Vs. CCE, Chennai  2010 (254) ELT 392 (Mad.) and CCE, Mysore Vs. Nestle India Ltd.  2009 (248) ELT 37 (Tri.-Bang).
  • From the above facts, it is clear that there was intent to evade excise duty. "Both Shri Bajaj and Shri Maheshwari by virtue of their position knew of and allowed this modus operandi and thus abetted the evasion of duty which made the impugned goods liable to confiscation.  In the circumstances mens rea on the part of the appellants is clearly evident making them liable to penalties adjudged by the adjudicating authority." 

DECISION : The appeals were dismissed by the Hon'ble Tribunal.