Tribunal rules Central Excise duty on price, not MRP for CSD Canteens supplies.

The Tribunal set aside the impugned orders and allowed the appeals, following the precedent established in a previous case involving Charms Cosmetics Pvt. Ltd. vs. CCE. It was held that Central Excise duty should be calculated based on the price determined under Section 4 of the Central Excise Act, 1944, not on the MRP affixed to goods supplied to CSD Canteens under the Ministry of Defence. The judgment was pronounced on 07/02/2018.

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Issues:
1. Central Excise duty calculation on MRP basis for toilet soaps supplied to CSD Canteens under Ministry of Defence.

Analysis:
The appeal was filed against Order-in-Appeal No.91/2007 dated 29.5.2007 and Order-in-Appeal No. 72/2008-CE dated 03/04/2008. The appellants are involved in the manufacture of toilet soaps subject to Central Excise duty under the Central Excise Tariff Act, 1985. They supplied the soaps exclusively to CSD Canteens under the Ministry of Defence, affixed with MRP. The Department sought to charge Central Excise duty under Section 4A of the Central Excise Act on MRP basis, contrary to the transaction value paid by the appellant. The appellant, feeling aggrieved, filed the present appeals.

During the proceedings, the appellant's counsel and the Revenue's representative were heard. Reference was made to a previous Tribunal case involving Charms Cosmetics Pvt. Ltd. vs. CCE, where it was established that CSD is an in-house procurement agency for the armed forces, not subject to legal metrology statutes. The affixing of MRP does not automatically render the goods liable for compliance with MRP laws or Excise duty levy. The focus should be on compliance with the Standards of Weights & Measures Rules, 1977, which do not apply to institutional buyers like CSD. The price determined under Section 4 of the Central Excise Act, 1944 should be the basis for duty computation, not the MRP.

In line with the precedent set by the Charms Cosmetics case, the Tribunal set aside the impugned orders and allowed the appeals. The judgment was pronounced and dictated in Open Court on 07/02/2018.

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