2015 (9) TMI 1272 - SC - Central Excise

Supreme Court affirms MRP as sole consideration for excise goods valuation

The Supreme Court upheld the decision of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in a case concerning the valuation of excisable ... Valuation of excisable goods with reference to retail sale price (Section 4A) - MRP as sole consideration for valuation - Inclusion of value of free gifts in assessable value - Compliance with the Standards of Weights and Measures ActValuation of excisable goods with reference to retail sale price (Section 4A) - MRP as sole consideration for valuation - Inclusion of value of free gifts in assessable value - Precedent on free complementary items not forming part of assessable value - Whether the value of the face wash gel supplied 'free' with the dandruff shampoo is includable in the assessable value under Section 4A of the Central Excise Act. - HELD THAT: - The Court accepted the CESTAT's conclusion that both products fall within the goods covered by Section 4A and the Standards of Weights and Measures Act. Section 4A(2) together with the Explanation establishes that where retail sale price is declared on the package the declared MRP (less any statutory abatement) is to be treated as the deemed value and is the sole consideration for valuation. Applying that principle and the consistent precedents cited by the Tribunal, the additional free gel supplied with the shampoo does not alter the declared retail sale price of the packaged product and its separate value is not includable in the assessable value of the shampoo. The CESTAT's reliance on earlier decisions holding that free complementary items packaged with a sold product are not to be included in the assessable value was held to be squarely applicable, and no error was shown in treating the MRP as determinative.The value of the free face wash gel is not includable in the assessable value; the MRP declared on the package is the sole consideration under Section 4A, and the CESTAT order allowing the appeal is upheld.Final Conclusion: Appeal dismissed; the CESTAT's decision is affirmed that, under Section 4A read with the Standards of Weights and Measures Act, the declared MRP (subject to permissible abatement) is the sole consideration for valuation and the value of the free gel is not includable in the assessable value. Issues: Valuation of excisable goods under Section 4A of the Central Excise Act.In this case, the Supreme Court addressed the dispute regarding the valuation of two products, namely Face Wash Gel and Dandruff Shampoo, which were bound together and sold as one product. The Revenue argued that the value of the face wash gel should be included since it was sold free along with the shampoo. However, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that the Maximum Retail Price (MRP) mentioned on the product would be the sole consideration for valuation, as per Section 4A of the Central Excise Act. Section 4A specifies the valuation of excisable goods with reference to the retail sale price declared on the package, less any abatement notified by the Central Government. The Tribunal concluded that based on the provisions of Section 4A and relevant case laws, the value of the free gel should not be included in the assessable value of the product, leading to no duty liability on the gel supplied free. The Tribunal's decision was upheld by the Supreme Court, which dismissed the appeal, affirming that the products were assessable under Section 4A and there was no merit in challenging the valuation method based on the MRP declared on the package. The judgment emphasized that the MRP declared on the product is the sole consideration for valuation under Section 4A, providing clarity on the excise duty payable on such bundled products.