MRP-based excise valuation does not apply to institutional clearances not offered for retail sale, even when routed through dealers.

Section 4A MRP-based valuation applies only where retail sale price is relevant under the pricing framework and the goods are offered for retail sale. Medicaments marked as hospital supply or not for sale, and cleared to institutional buyers, were treated as outside that retail-sale scheme. Routing the goods through dealers or distributors did not alter their institutional character or convert them into retail sales. The commentary therefore states that the retail-price requirement under the Drugs (Prices Control) Order, 1995 cannot be ignored, and MRP valuation is not attracted to non-retail institutional clearances.

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Issues: Whether medicaments supplied to institutional buyers through dealers, and not offered for retail sale, were liable to assessment under section 4A of the Central Excise Act, 1944 on MRP basis by reason of Notification No. 2/2005-CE(NT) dated 07.01.2005 and paragraphs 14(2) and 15(1) of the Drugs (Prices Control) Order, 1995.

Analysis: Section 4A applies to goods for which retail sale price is relevant, and the notification brought the medicaments within that scheme by reference to the retail sale price displayed under the Drugs (Prices Control) Order, 1995. The pricing order requires display of retail price only on formulations intended for sale and on the minimum pack thereof offered for retail sale. The disputed supplies were found to bear markings such as "hospital supply - not for sale" and were not shown to be offered for retail sale. The mere fact that the goods moved through dealers or distributors did not make the institutional supplies retail sales, and the words "offered for retail sale" could not be ignored.

Conclusion: Section 4A valuation on MRP basis was not applicable to the clearances made to institutional buyers, and the duty demand could not be sustained.

Final Conclusion: The duty demand was set aside, with the related penalties also falling with the main demand.

Ratio Decidendi: MRP-based valuation under section 4A cannot be applied to goods not offered for retail sale, even if they are routed through dealers or distributors, because the governing pricing order attaches the retail-price requirement only to retail sales.

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