MRP-based excise valuation fails for promotional non-retail packs; normal valuation applies and related penalties fall away.

Promotional packs marked as not intended for retail sale were not assessable under MRP-based valuation because Section 4A applies only where retail sale price declaration is statutorily required on packages intended for retail sale. Where MRP is absent from a mandatory requirement, or is affixed only voluntarily, valuation must proceed under Section 4. Once the Section 4A demand failed, the penalty foundation also collapsed, and the consequential penalties could not survive. The assessment therefore remained governed by normal valuation principles, and the demand and penalties were set aside.

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Issues: (i) whether goods cleared in promotional packs not intended for retail sale were liable to be assessed under Section 4A of the Central Excise Act, 1944 on the basis of MRP, and (ii) whether the penalties could survive when the demand itself was not sustainable.

Issue (i): whether goods cleared in promotional packs not intended for retail sale were liable to be assessed under Section 4A of the Central Excise Act, 1944 on the basis of MRP

Analysis: Section 4A applies only where the law requires declaration of retail sale price on the packages. Rule 3 of the Standard of Weights and Measures (Packaged Commodities) Rules, 1977 confines the chapter to packages intended for retail sale. The packages here were marked as promotional packs not for retail sale, and the circulars relied upon clarified that where there is no statutory requirement to declare MRP, or where MRP is affixed voluntarily, assessment cannot be made under Section 4A and must be under Section 4.

Conclusion: The goods were not liable to be assessed under Section 4A and were assessable under Section 4 instead.

Issue (ii): whether the penalties could survive when the demand itself was not sustainable

Analysis: Once the demand based on Section 4A was held to be unsustainable, the foundation for the penalties also disappeared. In the absence of any short-payment or non-payment, the penalties imposed in the impugned order could not stand.

Conclusion: The penalties could not survive.

Final Conclusion: The assessment was held to be governed by the normal valuation provision rather than MRP-based valuation, and the consequential demand and penalties were set aside.

Ratio Decidendi: Section 4A applies only where declaration of retail sale price is statutorily required on packages intended for retail sale; if MRP is not mandatory or is affixed only voluntarily on a non-retail package, valuation must be made under Section 4 and not Section 4A.

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