MRP valuation – CBEC bows to Apex Court and revises Circulars
In the celebrated Jayanti Food Processing case, the Supreme Court decided several issues relating to MRP valuation and demolished the views of the Board. This judgement was delivered on 22.08.2007 and we brought this to you on 24.08.2007. Now the Board has accepted the decision of the Supreme Court and has withdrawn some of the circulars issued earlier.
In circular no. 843/01/2007 dated 17.01.07, Board had clarified that bulk sale of ice cream in packages to hotel/catering industry etc. is required to comply with the provisions of Standards of Weight & Measures (Packaged Commodities) Rules, 1977, and accordingly, the assessee is required to declare the retail sale price on such packages.
But the Supreme Court in the judgement held that Package which was sold by assessee could not be termed as “retail package” nor the sale thereof be termed as a “retail sale” and as such there was no requirement of mentioning the “retail sale price"
Board has realised that the said circular has become redundant and advises the field so.
In Circular No. 625/16/2002 dated 28.02.02, paras 3 and 4, Board clarified that,
In respect of telephones falling under heading 85.17 and notified u/s 4A it was noticed that the manufacturers also make bulk supplies of telephone instruments to the Deptt. of Telecommunication (DOT) and the MTNL, who in turn provide these instruments, on rental basis, to the telephone subscribers. In these cases valuation will have to be done under sec.4 of the C.E. Act, 1944.
But the Supreme Court held that, assessment is to be done under Section 4A.
So these paras 3 and 4 of Circular No. 625/2002 have become redundant.
It is commendable that the Board has decided to amend its circulars. Board should undertake a review of all its circulars and remove all the redundant ones.
There are instances where there are Supreme Court decisions which are contradictory to Board Circulars and as the Board Circulars are not withdrawn, the field continues to issue Show Cause Notices based on these circulars.
DDT was witness to an Additional Commissioner directing a Superintendent to arrange to file an appeal before the CESTAT, even though the issue had been finally decided by the Supreme Court in favour of the assessee, just because there was a redundant circular of the Board which was not withdrawn.
CBEC Circular No. 873/11/2008-CX., Dated: June 24, 2008