MRP based product Excise- 2 category of clients, Central Excise

[Amit Maru]

Bottled water Product

There are 2 type of customer

1. Distributors- who eventually sale product to retailers shop and then retailer sale to public for end use. Say example 1 Ltr bottle sold at ₹ 20 by retail shop to customer.

2. Hotels, Caterers, Shipping Company- they use water for their on consumption to serve clients and not sale at MRP- for example hotels put bottles complimentary in rooms and don’t sale to client. Like caterers use for wedding function and serve with food. These parties are not concerned with MRP.

Scenario of packaging;

	1 Ltr	500 ml	200 ml	20 Ltr
A. Distributors
MRP per Bottle	20	10	5	70
Basic Price	7	4.5	3.5	40
Assessable value (A.V) 55% of MRP (as 45% is abatement)	11	5.5	2.75	38.5
Excise duty @12.5% on AV
AV compare to Sale basic price	More	More	Less	More
B. Hotels/Caterers
MRP per Bottle	10	6	4	50
Basic Price	7	4.5	3.5	40
Assessable value (A.V) 55% of MRP (as 45% is abatement)	5.5	3.3	2.2	27.5
Excise duty @12.5% on AV
AV compare to Sale basic price	Less	Less	Less	Less

Questions:

1. On MRP based product – excise duty is calculated on Assessable Value (AV)- in case of LESS item, can we pay excise only on AV ? where AV is less than Basic sale price.

2. Same product can we have difference MRP for distributor and Hotes/caterers as 2 category of clients.

3. In case of hotel/caterer can manufacturer have lower MRP as special group of customer and then whether abetment can be applied?

4. Can manufacturer do not print MRP for product sale to hotel/caterer and write “Not for Sale”- in that case how excise duty will be calculated ?

Posts / Replies

[YAGAY AND SUN]

In our view if the goods are mentioned in the Third Schedule of the Tariff, then, you need to pay the Duty on MRP printed on such goods and if it is specifically mentioned in the chapter note of that particular Chapter Tariff Heading. Selling goods to institutions like Hotels etc. there is no need to print the MRP and for details please check Legal Metrology Rules.

[Ganeshan Kalyani]

MRP can be different for different class of customers.

[YAGAY AND SUN]

Then Excise Duty will be applicable on the highest MRP in case of different MRPs are set for different customers.

[Ganeshan Kalyani]

Thanks.