The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside a substantial portion of a Central Excise duty demand raised on allegations of Maximum Retail Price (MRP) suppression and remanded the matter for fresh adjudication for the post-March 2008 period. 

The bench of  Dr. Ajaya Krishna Vishvesha (Judicial Member) and Satendra Vikram Singh (Technical Member) has directed the adjudicating authority to reconsider the evidence and submissions placed on record; recompute any excise duty liability, if applicable, for the period commencing from 1 March 2008; examine issues relating to alleged clandestine clearances; and redetermine penalties on the company and its officials after evaluating their respective roles, if any, in duty evasion. 

The case involved a demand of differential Central Excise duty amounting to ₹1.23 crore, along with interest and an equivalent penalty. Separate penalties were also imposed on the company’s Chairman and Directors under Rule 26 of the Central Excise Rules, 2002. The department alleged that the manufacturer of vitrified tiles had suppressed the actual MRP of its products and recovered the differential amount from dealers in cash through “angadias,” thereby evading excise duty. 

The disputed period extended from April 2005 to the financial year 2009-10, with the majority of the demand relating to the period prior to 1 March 2008. 

During the proceedings, the assessee relied upon a Larger Bench decision of the Tribunal delivered in September 2024 in a batch of appeals involving similar issues concerning retrospective determination of retail sale price under Section 4A of the Central Excise Act. 

The Larger Bench had examined whether authorities could retrospectively ascertain the retail sale price of goods cleared before the introduction of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. It ultimately held that such retrospective determination was not permissible for clearances made before 1 March 2008, when the Rules came into force. 

According to the Larger Bench, authorities could not determine or reconstruct the retail sale price of goods removed from the factory where there was non-declaration, incorrect declaration, alteration, tampering, or obliteration of MRP for the period preceding the introduction of the 2008 Rules. 

The assessee also pointed out that the Revenue’s challenge to the Larger Bench decision had failed before the Supreme Court. The appeal was dismissed on 19 January 2026 on the ground of delay, strengthening the legal position adopted by the Tribunal. 

Based on this development, it was argued that the demand relating to the period before 1 March 2008 could no longer survive.

The Tribunal further directed that all necessary documents be produced before the adjudicating authority and instructed that the matter be decided within four months. 

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