Mrp - central excise act

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 August 2013 If a MRP is fixed in a product and when at the time of clearance from the place of manufacture is altered to decrease the retail sale price, then what will be the price at which duty will be paid ? MRP fixed earlier or reduced MRP?

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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22 August 2013 Section 4A is Applicable in case MRP based products.

There are various types of abatement is available depending upon type of product
For better understanding please refer Notification No. 5/2001-C.E. (NT), dated 1-3-2001.

In case of alteration section 4A reads as under

SECTION 4A. Valuation of excisable goods with reference to retail sale price. -

(1) The Central Government may, by notification in the Official Gazette, specify any goods, in relation to which it is required, under the provisions of the Legal Metrology Act, 2009 (1 of 2010) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply.

(2) 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, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette.

(3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods.

(4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer -

(a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or 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 as referred to in sub-section (1); or

(b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture,
then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section.

Explanation 1. — For the purposes of this section, “retail sale price” means 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 and the price is the sole consideration for such sale:

Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly.

Explanation 2. — For the purposes of this section, -

(a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price;

(b) where 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;

(c) 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 sale 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

Querist : Anonymous

Querist : Anonymous (Querist)

22 August 2013 Yes, in none of the cases we have a scenario where the MRP is altered to reduce it.

What will be the treatment in this case is my question.?

Thanks.

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Arun Kumar Singh

Arun Kumar Singh (Expert)
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26 August 2013 Duty will be payable on MRP based even if after removal of goods price will be decrease.

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2013 My question was different.
Question involves 2 MRP prices.
For ex. The price of the product is Rs 40. At the time of clearance it is Rs 38. Which price to be considered for valuation for payment of duty?

Arun Kumar Singh

Arun Kumar Singh (Expert)
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27 August 2013 Rs. 40/- will be considered.

Querist : Anonymous

Querist : Anonymous (Querist)

27 August 2013 Thanks you very much