“For a sale of goods to qualify for assessment benefits under Section 4(A) of the Act, it must be a retail sale, and there must be a mandate of law that directs the seller to affix a retail price on the goods for a sale to be considered a retail sale. Mere affixation of MRP does not make goods eligible for central excise duty exemption, and what is required along with the affixation is a mandate of law that directs the seller to affix such MRP.” The Apex Court held in the case of Commissioner Of Central Excise & Service Versus M/S. A.R. Polymers Pvt. Ltd. Etc.

The Respondent is a manufacturer engaged in the manufacture of footwear and the sale of it in bulk to defence and paramilitary forces for their use. A report was received by the DGCEI in which it was contended that the respondent was availing of benefits under Section 4(A) of the Central Excise Act, 1944, which is limited to footwear sold in retail. It was found during the investigation the respondent was manufacturing the footwear as per a contract entered into between the parties, and a rate for the sale and purchase of the footwear was fixed under the contract.

It was also found that the respondent was printing and attaching MRP stickers on the insole of the shoes only to avail himself of the benefits of the notification and Section 4(A). 

The Division Bench of Justice Krishna Murari and Justice Sudhanshu Dhulia further observed that “where the purchaser institution is deemed to not be a consumer, the sale also cannot be held to be a retail sale as per the Act. Since the sale was not a retail sale, there is no legal mandate on the respondent or assessee to affix an MRP to the goods sold, and hence the transaction cannot claim benefit under Section 4(A) of the Central Excise Act, 1944.”