2016 (10) TMI 512 - AT - Central Excise

Tribunal affirms valuation under Section 4A for footwear industry supplies, upholding MRP requirement.

Commissioner of Central Excise, Aurangabad Versus M/s Arvind Footwear Pvt. Ltd.

The Tribunal upheld the Commissioner (Appeals) decision, valuing footwear supplied to industries under Section 4A of the Central Excise Act, 1944. The ... Valuation - whether in the case where the footwear supplied to industries would be valued under Section 4 or Section 4A of Central Excise Act, 1944 when the package of footwear bearing of MRP? - Held that:- We find that there is no dispute in case that footwear supply in packages to the industries is not eligible for exemption provided under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rule, 1977. If this is so, then the supplier is required to affix the MRP statutory on each package of product. When the requirement to affix the MRP on packaged goods is made under Section 4A of Central Excise Act, 1944 the valuation of the said goods shall be covered by Section 4. It is also fact that the footwear supplier affixing the MRP on each package of each footwear, the respondent supplied to their industrial buyer. We are of the opinion that the footwear, even though the supply in bulk but in absence of exemption provided under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rule, 1977. The valuation of footwear shall be correctly made under Section 4A and not under Section 4 of the Central Excise Act, 1944. Issues Involved:Valuation of footwear supplied to industries under Section 4 or Section 4A of Central Excise Act, 1944.Detailed Analysis:Issue 1: Valuation under Section 4 or Section 4AThe primary issue in this case was the determination of whether the footwear supplied to industries should be valued under Section 4 or Section 4A of the Central Excise Act, 1944. The adjudicating authority initially held that the footwear supplied to industries in bulk should be valued under Section 4, as there was no requirement to declare the retail sale price in bulk sales to industrial buyers. The appellant challenged this decision, leading to an appeal before the Commissioner (Appeals) who ruled in favor of the appellant, allowing the appeal on both merits and limitation grounds. The Revenue subsequently filed an appeal against this decision.Analysis of Arguments:- The Revenue argued that since the footwear was supplied in bulk to industries without retail sales, the valuation should be under Section 4 of the Central Excise Act, 1944, citing a Tribunal judgment in a similar case.- On the other hand, the respondent contended that Section 4A would apply only when it is mandatory to affix the Maximum Retail Price (MRP) on product packages. They referred to legal provisions requiring the affixation of prices on packages and highlighted a Supreme Court judgment supporting their position.Judgment and Legal Precedents:The Tribunal carefully considered the arguments presented by both parties and analyzed the legal provisions and precedents. It was noted that the exemption under Rule 34 of The Standards of Weights & Measures (Packaged Commodities) Rule, 1977 did not apply to footwear supplied to industries, necessitating the affixation of MRP on each package. Based on this, the Tribunal concluded that the valuation of the footwear should be under Section 4A and not Section 4 of the Central Excise Act, 1944. The Tribunal explicitly referenced the Supreme Court judgment in the case of Liberty Shoes Ltd., emphasizing the applicability of Section 4A in cases where MRP is affixed on products supplied.Final Decision:In alignment with the legal principles established by the Supreme Court and the analysis of the specific case, the Tribunal upheld the order passed by the Commissioner (Appeals) as just and legal. The impugned order was upheld, and the appeal filed by the Revenue was dismissed, confirming the valuation of footwear supplied to industries under Section 4A of the Central Excise Act, 1944.