Garment valuation based on MRP alone was held unsustainable; reasonable retail deductions supported waiver of pre-deposit and stay.

Valuation of excisable garments sold through retail outlets, where no wholesale price was available, had to be determined by working out the nearest equivalent wholesale price under Section 4 of the Central Excise Act, 1944, after allowing reasonable deductions for retailer's margin and retailing expenses. On a prima facie view, valuation based only on MRP with deductions for sales tax and central excise duty was not sustainable. The demand was therefore treated as insufficient to deny interim relief, and full waiver of pre-deposit with stay of recovery was justified pending final hearing.

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Issues: Whether the demand based on valuation of garments by reference to the MRP printed on retail sales, with deductions for sales tax and central excise duty, justified refusal of waiver of pre-deposit and stay of recovery.

Analysis: The applications concerned valuation of excisable garments transferred from the factory to retail outlets and sold in retail, where no wholesale price was available. For arriving at assessable value under Section 4 of the Central Excise Act, 1944, the nearest equivalent of wholesale price had to be worked out by allowing reasonable deductions towards retailer's margin and retailing expenses. On a prima facie assessment, the duty demands computed on the basis adopted by the lower authority could not be sustained.

Conclusion: Full waiver of pre-deposit was warranted and recovery was directed to remain stayed pending regular hearing of the appeals.

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