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Claim of Assessment Benefits under Central Excise Act only for Retail Sale

Last Updated on March 27, 2023 by Administrator

The respondent in the case m/s AR Polymers Pvt. Ltd. is a manufacturer who has been engaged in the manufacturing of footwear and its sale in bulk to the defense and the paramilitary. The case has been recently held by the supreme court that just the affixation of the MRP is not entitled to make the goods eligible for the exemption from the central excise duty. Along with the affixation, there must be a mandate from the law, directing the seller for such affixation.

The division bench comprising Justices Krishna Murari and Sudhanshu Dhulia has observed that in instances where the institution which is the purchaser is not deemed to be a consumer, even the sale cannot be said to be retail as per the act. In this case, the sale was not considered as a retail act and therefore there was no need for the mandate on the respondent to fix the MRP of the goods sold.  Hence in the transaction the benefit under section 4 (A) of the Central Excise Act, 1944 cannot be claimed.

The DGCEI had received an intelligence report that the respondent had been availing of the benefits under a previous notification, dated March 17. 2012 AND SECTION 4(A) of the central Excise Act. As per the notification, a complete exemption has been granted on the central excise duty for the retail sales of footwear Rs. 500 and has been limiting the central excise duty to 6 percent, in cases where the rates of the footwear lie in the rate bracket of Rs. 501 and Rs. 1000.

But after the inspection that was carried out by the DGCEI, it was found that the respondent was manufacturing the products as per a contract and was fixing the rate as per the contract but was attaching the MRP stickers on the insole of the shoes to claim the exception. This was reported by the DGCEI.

The respondent, who was aggrieved by the order had filed an appeal with the CESTAT. The CESTAT overturned the Judgement of the adjudicating authority and held that the benefits of the said notification would extend to the respondent. It was held by the court that as per the purchaser status as the international consumers, they are exempt from the legal metrology rules, and since section 4 A of the act mandates the applicability of the rules refuge under section 4(A) of the Act.

Case Title: – Commissioner of Central Excise and Services Vs. M/S A.R Polymers Pvt. Ltd. Etc.

Relevant Provisions: – Section 4(A) of Central Excise Act. 

Written by – Shianjany

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