Supreme Court: Promotion Remains Valid Even if an Employee's Grade Pay Stays Unchanged  ||  SC Orders Bihar Government to Remove Ganga Riverbank Encroachments in Patna Within Six Weeks  ||  Bombay HC: Child of Single Mother Can’t be Denied RTE Quota over Deceased Father's Caste Certificate  ||  J&K&L HC: Complaint Dismissed Before Cognisance is Not an Acquittal & is Challengeable U/S 528 BNSS  ||  Delhi HC Acquits Man in 2006 Rape Case, Says Names Like Ram or Mohammad do Not Define Virtue  ||  Gujarat HC: Whatsapp Forward of Fake Newspaper Clipping Not Forgery Absent Proof of Fabrication  ||  Supreme Court tells Parsvnath Developers to Comply with Haryana RERA Orders or Face Jail  ||  Supreme Court: Article 142 Cannot Override a Concluded and Acted-Upon Settlement Between Parties  ||  SC Grants One-Time Relief, Allows Law Students to Take Exams Despite Attendance Shortage  ||  SC Grants One-Time Relief, Allows Law Students to Take Exams Despite Attendance Shortage    

Commissioner of Central Excise and Service Tax, Kanpur vs. A.R. Polymers Pvt. Ltd. and Ors. - (Supreme Court) (21 Mar 2023)

Mere affixation of MRP does not make goods eligible for central excise duty exemption

MANU/SC/0281/2023

Excise

The Respondent No.1, AR Polymers Pvt. Ltd. is a manufacturer engaged in the manufacture of footwear and the sale of the same to defense/paramilitary forces in bulk for their use. An intelligence was received by the DGCEI that the respondent was availing benefits under Notification No. 12/2012-CE dated 17/03/12 and Section 4(A) of the Central Excise Act, 1944, which is limited to footwear sold in retail. The said notification wholly exempts the payment of Central Excise Duty for retail sale of footwear under Rs. 500 and limits Central Excise Duty to 6% where the rate of the footwear is between Rs. 501 to Rs. 1000.

A demand-show cause notice was issued to the Respondent. Subsequently, the Learned Adjudicating authority vide order passed an order against the respondent holding that the benefit of the aforesaid notification does not extend to the footwear sold by the Respondent, and hence the respondent was directed to pay the difference amount between the tax already paid and the tax which was liable to be paid. The CESTAT overturned the judgment of the adjudicating authority and held that the benefit of the abovementioned notification extends to the Respondent herein. The primary question posed is, whether the goods sold by the respondent are eligible to claim tax benefits within the purview of the abovementioned notification under Section 4(A) of the Central Excise Act?

A mere affixation of the MRP on a good does not qualify it to claim benefits under Section 4(A) of the Act, and that there must be a “requirement” for the affixation of such MRP. Therefore, even if there is affixation of MRP in the goods, what must be looked at it is whether such affixation was mandated by law. Apart from the exemption granted by way of Section 3(b) that automatically removes the mandate of law to affix an MRP on the sold goods, the said sale still cannot be considered a retail sale because the sale of the goods must be done to a consumer.

In such a circumstance, where the purchaser institution is deemed to not be a consumer, the sale also cannot be held to be a retail sale as per the Act. Further, since the impugned sale is not a retail sale as per the Act, there exists no mandate of law on the Respondent herein to affix an MRP on the goods sold, and hence the said impugned transaction cannot claim benefit under Section 4(A) of the Act.

The mere affixation of MRP does not make goods eligible to find refuge under Section 4(A) of the Act, and what is required along with such affixation is a mandate of law that directs the seller to affix such MRP. By not considering other relevant considerations, the tribunal has committed a grave error in law, and hence the impugned judgment is liable to be set aside. CESTAT committed an error in law by passing the impugned order and the Respondent being under an obligation is directed to pay the differential amount to the relevant tax authority. Appeals allowed.

Tags : GOODS   DUTY EXEMPTION   ELIGIBILITY  

Share :        

Disclaimer | Copyright 2026 - All Rights Reserved