MRP/CONSIGNMENT SALE

[S.C. WADHWA]

Dear Experts,

Item A having net MRP after abatement 65 /- But transferred to depot @₹70/-. but duty paid on ₹65/-..Secondly the said item A without MRP transferred to depot for further sale to institutional buyer @₹60/- per bottle and accordingly duty paid at ₹60/-.

Now my query is that excise authorities are asking us to produce institutional certificates. In case we could not get the same then what will be happened. please advise.

Regards,

WADHWA

[Mahir S]

Sir,

Under such circumstances, you are liable to pay the differential duty with interest and penalty, being duty difference between MRP and Non-MRP price.

[YAGAY andSUN]

Dear S.C.Wadhwa,

Under the Legal Metrology Act read with Legal Metrology (Package Commodity Rules), 2011, there is no need to mention MRP if goods are sold to Institutional/Industrial Buyers. Further, there is no provision in the Central Excise Law to submit such Certificate to substantiate Sales to Institutional/Industrial Buyers. Through the name, address and RC of the buyer duly mentioned on your Invoice, Central Excise Department can dig out the information about the buyer that whether it fits in the definition of Institutional/Industrial buyer and the end use of such goods.

CHAPTER -II

PROVISIONS APPLICABLE TO PACKAGES INTENDED FOR RETAIL SALE

3. Applicability of the Chapter-

The provisions of this Chapter shall not apply to,-

(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding

cement and fertilizer sold in bags up to 50 kg; and

(b) packaged commodities meant for industrial consumers or institutional consumers.

Explanation :- For the purpose of this rule,-

i) “institutional consumer” means the institutional consumer like transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution.

ii) “industrial Consumer” means the industrial consumer who buy packaged commodities directly from the manufacturer for use by that industry.

Regards,

SameerMalhotra- Consultant

YAGAY and SUN

(Management, Business and Indirect Tax Consultants)

[Mahir S]

Sir,

In this case, the goods are cleared on non-MRP basis to depots and from such depots the goods are further cleared to various institutional buyers. Hence, sale is not at factory gate but goods are subsequently cleared on issuance of new invoice from depots, therefore department under such circumstances, can surely ask the assessee to furnish institutional buyer’s certificate as the goods are cleared at non-MRP prices from depots.

As benefit of supply to institutional buyer is availed, therefore assessee is liable to provide such details, failing which department itself may initiate action on its own against the assessee as well as against such institutional buyers. There has been many instances wherein goods meant for industrial/institutional use has been subsequently diverted in the open market.

[MUKUND THAKKAR]

Mr. Naveed is right..

AI Summary

Excise Duty Issue: Higher Price Transfers to Depot Without MRP May Require Institutional Certificates or Face Penalties. A query was raised regarding the excise duty on Item A, which is transferred to a depot at a price higher than its MRP after abatement and sold to institutional buyers without an MRP. The excise authorities are requesting institutional certificates, and the concern is about the consequences if these certificates cannot be provided. Responses indicate that the company may need to pay differential duty with interest and penalty if the certificates are not furnished. However, under the Legal Metrology Act, MRP is not required for sales to institutional buyers, and the buyer's details on invoices should suffice for verification.