Tax share of service recipient
MRP-based valuation
Our company is engaged in manufacture of adhesives and we sell the products in the retail market. We pay excise duty on MRP as the product is classified under the third schedule of the Central Excise Tariff Act, 1944. However, in recent times. We have started getting purchase orders from industrial buyers who buy in bulk. We have come to know that duty computation on MRP is not applicable in the case of industrial sale. Please advise.
Section 4 of Central Excise Act, 1944 (CEA) provides the basis for determining the assessable value for calculating excise duty. However, Section 4A of the CEA provides an exception to the general rule. As per Section 4(A), specified goods which have been listed in the third schedule of the ETA merit valuation under MRP.
Valuation under MRP is covered by Section 4A of the CEA, wherein the principal requirement is that the goods should be notified under Section 4A and there must be a statutory requirement to declare the retail price of such goods on the package i.e should be covered within the purview of the Legal Metrology Act, 2009 and the Legal Metrology (Packaged Commodities) Rules,
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