Central Excise | Packaged Drinking Water Cannot Be Assessed On MRP Basis U/S 4A: CESTAT Chennai
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that packaged drinking water is not liable to be assessed on MRP basis under Section 4A of the Central Excise Act unless it is specifically covered by a statutory notification. Section 4A of the Central Excise Act, 1944, provides a special procedure for the valuation of excisable goods based on...
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that packaged drinking water is not liable to be assessed on MRP basis under Section 4A of the Central Excise Act unless it is specifically covered by a statutory notification.
Section 4A of the Central Excise Act, 1944, provides a special procedure for the valuation of excisable goods based on their Retail Sale Price (RSP) or Maximum Retail Price (MRP), rather than the standard transaction value used under Section 4.
P. Dinesha (Judicial Member and Vasa Seshagiri Rao (Technical Member) examined whether packaged drinking water is to be assessed on MRP basis under Section 4A of the Central Excise Act, 1944.
In the case at hand, the assessee/appellant was engaged in the manufacture and clearance of packaged drinking water under the brand “Holy Aqua” from multiple units at Athur, Coimbatore, Tiruvallur, Konnakuzhy.
A show-cause notice was issued to the assessee proposing a demand of duty on MRP basis under Section 4A of the Central Excise Act, 1944.
The Adjudicating Authority (Joint Commissioner) confirmed the demand and penalties made in the show cause notice. The assessee filed an appeal before the Commissioner (Appeals), which was rejected.
The counsel for the assessee argued that the MRP assessment under Section 4A applies only to goods expressly covered by the MRP Notifications. The Notifications relied upon (Nos. 02/2006, 14/2008, 49/2008) refer to “Mineral water” under specific tariff items. Packaged drinking water sold under the appellants' classification heading (CTH 22019090 / 22011010) is distinct from “Mineral water” and is not included in the MRP Notifications as originally framed.
The Tribunal noted that Notifications under Section 4A are statutory; they must be read strictly and can apply only to goods specified in Column (3) of the notification table. The impugned notifications (Nos.02/2006, 14/2008, 49/2008) list “Mineral waters” (and aerated waters) under the relevant entries, which do not, by plain text, include all forms of packaged drinking water.
The Athur unit's product is packaged potable drinking water and is not covered by the MRP notifications. The Order-in-Appeal's reliance on MRP notifications to reach valuation under Section 4A is therefore erroneous, held the bench.
The Tribunal opined that the product is not statutorily covered by the notifications relied upon, the impugned demand, which proceeds on MRP valuation under Section 4A, cannot be sustained and must be set aside. As the manufactured product is not mineral water, the demand for duty under Section 4A of the Central Excise Act, 1944, is not sustainable.
The Tribunal opined that the impugned assessment under Section 4A is not sustainable.
In view of the above, the Tribunal allowed the appeal.
Case Title: M/s. Sree Gokulam Food and Beverages (P) Ltd. v. Commissioner of GST and Central Excise
Case Number: Excise Appeal No. 41775 of 2017
Counsel for Appellant/ Assessee: P. Satheesan
Counsel for Respondent/ Department: Anandalakshmi Ganeshram