MRP-based duty assessment on bulk-supplied modems fails where the buyer qualifies as an institutional consumer.

MRP-based assessment of countervailing duty on imported modems supplied in bulk to BSNL was held inapplicable because BSNL was treated as an institutional consumer under Rule 2(b) of the Packaged Commodities Rules, as amended from 17.07.2006. The modems were imported for bulk supply to BSNL for its service activity, not for retail sale to individual consumers, so Section 4A of the Central Excise Act did not apply. Reliance on a pre-amendment decision was rejected as not applicable to the amended legal position, and the CVD demand raised on an MRP basis was unsustainable.

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Issues: Whether countervailing duty on imported modems supplied in bulk to BSNL was liable to be assessed on MRP basis under Section 4A of the Central Excise Act.

Analysis: The modems were imported for bulk supply to BSNL, which would in turn provide them to individual customers on rental basis. Rule 2(b) of the Standards of Weights and Measurements (Packaged Commodities) Rules, 1997, as amended with effect from 17.07.2006, excludes institutional consumers. BSNL, buying the goods in bulk for use in its service activity, fell within that category. The decision relied upon by the lower authorities was rendered on the pre-amendment legal position and was not applicable to the present facts.

Conclusion: MRP-based assessment under Section 4A of the Central Excise Act was not applicable, and the demand of CVD on that basis was unsustainable.

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