Maximum Retail Price (MRP) based valuation [Section 4A] :

The provisions relating to duty based on MRP are dealt with under section 4A. Section 4A was introduced to fight the evil of manufacturers transferring cost to trading companies and reducing the excise duty payable by them.

The provisions of section 4A are discussed below:

(a) Excisable goods can be valued on the basis of MRP under section 4A, if Legal Metrology Act, 2009 or related rules or any other law requires declaration of the retail sale price on the package of such goods and the Central Government has notified said goods for the purpose of this section [sub-section (1)]. Thus, both the conditions need to be followed cumulatively i.e., declaration under Legal Metrology Act, 2009 and notification under section 4A.

(b) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, the valuation has to be done on the basis of retail sale price declared on the package less abatement as prescribed in the notification issued by the Central Government under sub-section (1) [sub-section (2)]. Abatements can be given by the Central Government after taking into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods [sub-section (3)].

(c) The ‘retail sale price‘ has been defined to mean the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for such sale.

However, if the provisions of the Act, rules or other law referred to in (a) above requires the retail sale price to exclude any taxes, local or otherwise, the retail sale price shall be construed accordingly [explanation 1].

(d) It is also stated that where there is more than one retail sale price, the maximum of such retail sale price will be deemed to be the retail sale price for the purpose of this section [Explanation 2(a)].

(e) The excisable goods shall be confiscated and the retail sale price will be ascertained in the manner prescribed by the Central Government if the manufacturer does any of the following acts:

(i) removes excisable goods from the place of manufacture, without declaring the retail sale price of such goods on the packages, or

(ii) declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law referred to in (a) above or

(iii) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture [sub-section 4].

(f) Where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates [explanation 2(c)].

(g) If the retail sale price declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price [explanation 2(b)].