MRP Labelling Not Mandatory for Industrial Use or Packages Above 25 Kg/Litre: CESTAT in BEML Case [Read Order]

The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that mandatory MRP labelling does not apply to packages meant for industrial use or those weighing more than 25 kilograms, and such imports cannot be assessed on the basis of maximum retail price under customs law.

BEML Ltd (Bharat Earth Movers Limited), the appellant, imported spares and components between April 2010 and November 2011. The customs department assessed additional customs duty on these goods by applying MRP-based valuation under Section 3 of the Customs Tariff Act, citing Notification No. 49/2008-Cus and the absence of declared MRP on the packages.

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The department held that the imported packages were intended for retail sale and were liable for duty on the basis of the retail sale price. An order dated 27 February 2015 confirmed the demand and invoked the extended period of limitation under the proviso to Section 28 of the Customs Act, alleging suppression of facts.

The appellant’s counsel argued that the imported goods were not meant for retail sale but for industrial use, so not subject to MRP-based assessment. The counsel pointed out that the packages were clearly marked “for industrial use only” and that the goods were later repacked and relabelled before being sold.

The appellant submitted that the MRP declaration is mandatory only for retail packages intended for sale to individual consumers and not for institutional or industrial buyers under the Legal Metrology (Packaged Commodities) Rules. The counsel further argued that the packages exceeded 25 kilograms which is another exemption under Rule 26 of the same rules.

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The bench comprising Justice P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) explained that the Legal Metrology and Packaged Commodities Rules apply only to retail packages, and that Rule 34 specifically excludes packages intended solely for industrial use.

The tribunal pointed out that the imported packages were marked “for industrial use only,” and that there was no dispute that the packages weighed more than 25 kilograms, qualifying for exemption under Rule 26 of the Legal Metrology and Packaged Commodities Rules.

The tribunal also stated that the department had not established any intent to evade duty and that the extended limitation period under Section 28 of the Customs Act was not justified. The appeal was allowed and the impugned order was set aside.

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