Order Date – 21 March 2023

Parties: Commissioner of Central Excise & Service Tax, Kanpur Vs M/s. A.R. Polymers Pvt. Ltd. Etc.

Facts –

• The Respondent, M/s AR Polymers Pvt. Ltd. is a manufacturer engaged in the manufacture of footwear and the sale of the same to defense/paramilitary forces in bulk for their use.
• it was found that 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 said shoes, only to avail the benefits of the Notification No. 12/2012-CE dated 17/03/12 and Section 4(A) of the Act. 
• Accordingly, a show cause notice was issued to the respondent and the CESTAT held that the benefit of the abovementioned notification extends to the Respondent. Being aggrieved the appellant had filed an appeal.

Issue –

• Whether the benefits of the Notification No. 12/2012-CE dated 17/03/12 and Section 4(A) of the Act s available to the appellant?

Order –

• The Divisional Bench of Hon’ble Supreme Court observed that the purchasers in this case are military and paramilitary institutions, both of whom purchase the goods in bulk from the respondent, and then further distribute it to their employees. They serve as an intermediary between the end consumer and the original purchaser. 
• Thus, it is deemed to not be a consumer, the sale also cannot be held to be a retail sale as per the Act. There exists no mandate of law on the Respondent herein to affix an MRP on the goods sold, and hence the said impugned transaction cannot claim benefit under Section 4(A) of the Act.
• The Tribunal in its reasoning for passing the impugned judgment only considered whether the goods in question were notified by way of a gazette, and did not consider the other four relevant conditions laid down by the Jayanti foods judgment.
• The CESTAT committed an error in law by passing the impugned order and the Respondent being under an obligation is directed to pay the differential amount to the relevant tax authority.