MRP valuation applies where ELCOT is neither an institutional consumer nor an industrial consumer for packaged televisions.

Rule 2A(b) of the SWM Packaged Commodities Rules excludes packaged commodities meant for industrial or institutional consumers from Chapter II, so MRP declaration is not required only for those categories. On the stated facts, ELCOT's free distribution of television sets on behalf of the State Government was not treated as a service-industry purchase within the institutional consumer definition, and the televisions were not bought for industrial use as an industrial consumer. MRP declaration therefore remained necessary, valuation under section 4A of the Central Excise Act applied, and the section 4 demand was unsustainable.

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Issues: Whether the clearances of colour television sets to ELCOT attracted valuation under section 4A of the Central Excise Act, 1944 on the basis of MRP minus abatement, or whether ELCOT was an institutional consumer or industrial consumer under Rule 2A(b) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 so that MRP declaration was not required.

Analysis: The dispute turned on the scope of Rule 2A(b), under which Chapter II of the SWM Rules does not apply to packaged commodities meant for industrial consumers or institutional consumers. The expression institutional consumer was read as covering purchasers who buy packaged commodities directly from manufacturers for service industries such as transportation, including airways and railways, or other similar service industries. Free distribution of television sets by ELCOT on behalf of the State Government was held not to be a service industry activity of the kind contemplated by the rule. ELCOT also could not be treated as an industrial consumer because the televisions were not purchased for use in its factory for production or similar industrial use. Since ELCOT fell within neither category, declaration of MRP remained necessary and valuation under section 4A applied.

Conclusion: The demand based on section 4 of the Central Excise Act, 1944 was unsustainable. The appellant was entitled to valuation under section 4A, and the appeal was allowed.

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