Retail sale price valuation does not apply to free supplies not intended for sale under excise law.

Section 4A valuation under the Central Excise Act applies only where goods are linked to retail sale price and an element of sale to the ultimate consumer exists. Free soaps distributed with other products, marked with MRP that was scored out and labelled not for sale, were treated as non-sale items; the printed MRP was only informational. On that basis, the retail sale price mechanism was held inapplicable, and the duty demand based on section 4A could not be sustained.

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Issues: Whether soaps manufactured and supplied free of cost, with MRP printed and scored out and with wrappers stating that they are not for sale, were liable to be valued under section 4A of the Central Excise Act, 1944.

Analysis: Section 4A applies to goods whose value is linked to retail sale price and contemplates an element of sale to the ultimate consumer. The soaps in question were admittedly not sold and were intended for free distribution along with other products. The printed MRP was only for information and had been scored out, showing that it was not the price at which the goods were to be sold. The circulars relied upon and the Supreme Court ruling on free supplies clarified that where goods are distributed free and no sale is involved, valuation under section 4A is not attracted and the goods fall outside the retail sale price mechanism.

Conclusion: Section 4A did not apply to the free soaps, and the duty demand based on retail sale price could not be sustained. The appeal succeeded.

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