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2. The facts, briefly stated, are as under:

The appellants were manufacturing and clearing biscuits to Municipal Corporation of Delhi on contract basis as well as to other independent buyers. The clearances/supplies of biscuits made to MCD under the National Programme of Nutritional Support of Primary Education were assessed by them under Section 4A of the Central Excise Act, 1944 and duty was paid thereon after claiming abatement of 40% up to 20.2.2003 (and 35% thereafter), on the so called MRP printed thereon. The adjudicating authority held that the supplies of biscuits to MCD did not qualify to be called retail sale, MRP was not required to be printed thereon, the price printed on packages was not (true) MRP and the impugned goods were required to be assessed not under Section 4A but under Section 4 ibid. The adjudicating authority also held the appellants guilty of suppression of facts and as it was done with the knowledge and connivance of Shri A.D. Bajaj and Shri Arvind Maheshwari, penalty was also imposed on them.

3. The appellants have contended that the clearances made by them to MCD fell under the scope of Section 4A for assessment as MRP was printed on those packages. They stated that the two judgements in the case of Australian Foods Ltd. Vs. CCE, Chennai  2010 (254) ELT 392 (Mad.) and in the case of CCE, Mysore Vs. Nestle India Ltd.  2009 (248) ELT 37 (Tri.-Bang.) are not applicable in their case because in both these cases the supplies of goods were made to institutional customers and no MRP was marked thereon. They referred to the judgement of the Supreme Court in Jayanti Foods Processing Pvt. Ltd.  2007 (215) ELT 327 (SC) to press the point that in a situation when MRP is printed the assessment is to be done under Section 4A. They stated that MCD is a local body and that their case is also covered by Tribunals judgement in the case of P.G. Electro Plast Ltd. Vs. CCE, Noida  2014 (307) ELT 787 wherein it was held that the television sets sold to M/s ELCOT for free distribution were liable to assessment under Section 4A. Regarding the fact that the MRP on the packages cleared for MCD was uniformly declared to be Rs. 2/- though the packages were of 63 gms., 71 gms., and 100 gms, they said that the price was fixed at Rs. 2 per unit pack and the only variation was with regard to the quality of the biscuits and that the price pertained to different periods. They also contended that there was no suppression on their part and they have been filing their periodical returns and the issue is also interpretational inasmuch as it requires interpretation of whether the MRP is required to be printed on the impugned goods. They also referred to the clarification dated 4.9.2003 issued by Legal Metrology department to the effect that such packages sold to MCD require declaration of MRP.

The products are being supplied by the assessee to their institutional customers in bulk based on specific contracts entered into with them, printing on them that they are specifically packed for such institutional customers and not meant for retail sale, and thus are exempted under Rule 34(a) of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, the assessee cannot say that he is obliged under the provisions of the Standards of Weights and Measures Act to declare the retail sale price on the package-A pre-condition to claim benefits under Section 4A of the Act. The appellants have contended that these two judgements do not cover their case because the MRP was not printed on the goods covered under these two judgements while in their case the MRP was printed. It needs to be pointed out that the circumstances obtaining in respect of supplies covered under the said two judgments are similar to the ones obtaining in the present case. In terms of explanation 2 to Rule 2A (b) of the SWM (PC) Rules institutional consumer means those consumers who buy packaged commodities directly from manufacturers/packers for service industry like transportation including airways, railways or any other similar service industry. It is clear from MCD Act that the MCD provides various services to public and even in this case it was performing its function by distributing the said biscuits free under a given scheme for primary education and thus the sales to MCD clearly qualified to be sales to institutional buyer and therefore no MRP was required to be printed on such goods as the provisions of Chapter 2 of the SWM (PC) Rules do not apply to packaged commodity sold to institutional buyers. Madras High Court in the case of Australian Foods Ltd. categorically observed that such supplies were exempted under Rule 34(a) of Standards of Weights and Measures (Packaged Commodities Rules 1977). Thus, their claim that so called MRP was printed on their packages is of no consequence when it was not required to be printed. However as this point is harped upon by the appellants, we deem it fit to discuss and analyse it further. The Retail Sale Price is defined under the SWM (PC) Rules 1977 as under:
As has been brought out earlier, the MRP printed on all the packages supplied by the appellants was uniformly Rs.2/- regardless of whether the weight of each package was 61 gms., 71 gms., or 100 gms. The appellants have conceded that this was as per the contract price agreed upon with MCD. Further as mentioned earlier, packages of 61gms. and 71gms. are not in accordance with the requirements of the SWM (PC) Rules and the contract price itself was fixed keeping in view that MCD supplied wheat (for making biscuits) free of cost. This obviously means that the so called MRP was legally not MRP in terms of SWM (PC) Rules; it was just a figure mentioned on the packages in the name of MRP. Further supplies to MCD were not even a sale at arms length because as per the contract under which the goods were supplied the MCD provided them free wheat. It is thus evident from the definition of retail sale price quoted earlier that the price at which MCD bought the impugned goods cannot be called MRP because that price was negotiated taking into account the fact that the appellants were given free supply of wheat. So, it is beyond doubt that what was mentioned on those packages was not MRP. Thus ground on which the appellants attempted to distinguish their case from the cases of Australian Foods Ltd. (supra) and Nestle India Ltd. is not sustainable.