MRP-based excise valuation inapplicable to institutional medical supplies not meant for retail sale; demand and penalty set aside.

Medicaments supplied to Government hospitals and institutional buyers, and not intended for retail sale, were held outside MRP-based valuation under Section 4A of the Central Excise Act. Because the packages stated they were not for retail sale and the goods were not shown to have entered retail trade, the requirement to affix retail sale price was treated as inapplicable. The Tribunal followed earlier decisions on identical facts and held that such institutional supplies must be valued under Section 4. The Section 4A demand was therefore unsustainable, and the duty, interest, and penalty orders were set aside.

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Issues: Whether medicaments supplied to Government hospitals and institutional buyers, and not intended for retail sale, were liable to valuation under Section 4A of the Central Excise Act, 1944, and whether the duty demand and penalty were sustainable.

Analysis: The supplies were made to Government hospitals and institutional buyers, the packages carried the indication that they were not for retail sale, and the goods were not shown to have been offered in retail trade. On that factual basis, the requirement of affixing retail sale price was held inapplicable. The statutory scheme governing MRP-based assessment applies only where goods are meant for retail sale, and the reasoning adopted in earlier decisions on identical facts was followed. The Tribunal concluded that such institutional supplies fall outside Section 4A and are to be valued under Section 4.

Conclusion: The demand based on Section 4A was not sustainable, and the duty, interest, and penalty orders were set aside.

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