The Customs, Excise & Service Tax Appellate Tribunal has clarified a long-standing ambiguity in excise valuation, affirming that manufacturers of notified goods may rely on MRP-based assessment under Section 4A of the Central Excise Act even when retail sale prices are not printed on packaging. This decision resolves conflicting interpretations that had led to arbitrary reassessments and imposes a clear doctrinal boundary on revenue authorities.
Background & Facts
The Dispute
The appellants, manufacturers of table top wet grinders, cleared their goods under Section 4A of the Central Excise Act, 1944, read with Notification No. 49/2008-CE, which mandates valuation based on the Maximum Retail Price (MRP) with a 35% abatement. The Revenue contended that because the packaging did not bear the MRP or the manufacturer’s brand name, the goods could not qualify for Section 4A valuation and must instead be assessed under Section 4, which permits valuation based on transaction value and disallows the abatement.
Procedural History
The Commissioner of Central Excise issued multiple Show Cause Notices (SCNs) across six distinct assessments between 2013 and 2016, all alleging improper use of Section 4A. In each case, the Commissioner issued Orders-in-Original rejecting the MRP-based valuation and reassessing duties under Section 4, thereby increasing the tax liability by eliminating the 35% abatement. The appellants appealed each order to the CESTAT Chennai Regional Bench.
Relief Sought
The appellants sought quashing of the reassessments, arguing that the statutory framework under Section 4A and Notification No. 49/2008-CE permits MRP-based valuation irrespective of whether the MRP is printed on the package, provided the goods are notified for such valuation.
The Legal Issue
The central question was whether Section 4A of the Central Excise Act, 1944 requires the physical declaration of MRP on packaging for a manufacturer to avail the 35% abatement, or whether mere notification of the product under the relevant MRP-based valuation scheme is sufficient.
Arguments Presented
For the Appellant
The appellants relied on three binding precedents from the same Tribunal: PG Electoplast Ltd. v. CCE & ST Noida, Butterfly Gandhimadhi Appliances Ltd. v. CCE Chennai, and Ponmani Industries v. CGST & Central Excise. They argued that the Tribunal had consistently held that the absence of MRP on packaging does not remove goods from the ambit of Section 4A, as long as they are notified for MRP-based valuation. They emphasized that Subsection (4) of Section 4A only imposes confiscation as a penalty for non-declaration, not disqualification from valuation.
For the Respondent
The Revenue contended that the absence of MRP and brand name on packaging rendered the goods non-compliant with the Legal Metrology (Packaged Commodities) Rules, 2011, and therefore ineligible for MRP-based valuation. They argued that Section 4A was intended for consumer goods with transparent pricing and that non-declaration indicated an attempt to evade higher duties under Section 4.
The Court's Analysis
The Tribunal examined the statutory language of Section 4A and its interaction with Notification No. 49/2008-CE. It noted that the notification explicitly lists table top wet grinders as goods subject to MRP-based valuation, without any condition requiring printed MRP. The Court then turned to Subsection (4) of Section 4A, which states that failure to declare MRP on packaging attracts confiscation and a deemed MRP, but does not exclude the goods from Section 4A’s applicability.
"...this act of omission alone will not take the goods outside the purview of valuation under Section 4A of CEA 1944, if otherwise covered."
The Tribunal reaffirmed its earlier holding in Ponmani Industries that the purpose of Section 4A is to simplify valuation for notified goods, not to impose packaging compliance as a precondition. It distinguished the Revenue’s reliance on the Legal Metrology Rules, noting that violations under those rules attract penalties under the Legal Metrology Act, not excise reassessment under Section 4. The Court emphasized that statutory interpretation must respect legislative intent: if Parliament intended MRP declaration as a condition for Section 4A, it would have said so explicitly.
The Tribunal also rejected the Revenue’s argument that pending appeals against prior judgments invalidated their precedential value, noting that until stayed by a higher court, such rulings remain binding.
The Verdict
The appellants prevailed. The Tribunal held that Section 4A applies to notified goods even if MRP is not printed on packaging, and that the 35% abatement is available as long as the product falls within the notified category. The impugned orders were set aside, and the appeals were allowed with consequential relief.
What This Means For Similar Cases
MRP Declaration Is Not a Prerequisite for Section 4A
- Practitioners may now confidently advise manufacturers of notified goods that failure to print MRP does not invalidate Section 4A valuation
- Revenue authorities cannot reassess under Section 4 solely on grounds of non-declaration
- The burden now shifts to the Department to prove non-notified status, not packaging non-compliance
Confiscation ≠ Disqualification
- Subsection (4) of Section 4A is a penal provision, not a disqualifying condition
- Practitioners should argue that non-declaration triggers separate penalties under Legal Metrology Act, not excise reassessment
- This prevents double jeopardy: one violation cannot be used to trigger two distinct tax liabilities
Precedents Bind Unless Stayed
- Tribunal decisions remain binding even if appealed, unless stayed by a higher court
- Practitioners should cite Ponmani Industries and similar rulings as controlling authority
- Revenue’s pending appeals do not suspend the efficacy of existing favorable orders
