MRP-based valuation under section 4A depends on the condition of goods at factory removal, not later repacking.

MRP-based valuation under section 4A of the Central Excise Act applies only where the goods, as cleared from the factory, are subject to the relevant weights and measures requirement for retail sale price declaration. Where lubricating oils were removed in bulk to a depot and later repacked into smaller packs for sale, the assessable value could not be determined by reference to the later retail-packed goods. Valuation turned on the form and condition of the goods at the time of removal, not on subsequent repacking or depot sales. On that basis, the duty demand and penalty founded on section 4A were unsustainable.

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Issues: Whether lubricating oils cleared in bulk to a depot and later repacked and sold in smaller packs were liable to valuation under section 4A of the Central Excise Act, 1944, and whether the demand and penalty based on that valuation were sustainable.

Analysis: The dispute related to bulk removals in lorry tankers during a period after section 4A had come into force. The decisive question was whether the goods, as cleared from the factory, attracted the MRP-based regime under section 4A. The majority held that section 4A applies only where the goods are covered by the relevant weights and measures requirements for declaration of retail sale price and, on the facts, the bulk clearances were not goods to which that regime attached. The goods were removed in bulk and were not assessable on the basis of the retail-packed goods sold later from the depot. The majority also relied on the settled valuation principle that assessment turns on the form and condition of the goods at the time of removal, not on subsequent repacking or sale from the depot.

Conclusion: Section 4A was not applicable and the demand of duty and penalty based on that provision was unsustainable. The issue was decided in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: MRP-based valuation under section 4A applies only to goods that are themselves subject to the relevant weights and measures requirements, and subsequent repacking or sale from a depot cannot determine assessable value when the goods were cleared from the factory in bulk form not covered by that regime.

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