Tribunal Rules Against Differential Duty on Laptops Distributed Free to Students

Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai bench sets aside excise duty demands on Wipro Ltd., ruling laptops for free distribution not subject to Retail Sale Price assessment.

Chennai, October 29, 2025 - In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai bench delivered a judgment favorable to M/s. Wipro Ltd. by setting aside the demand for differential duty on laptops cleared to a government undertaking for free distribution to school students. The Tribunal's decision clarified that such laptops are not subject to Retail Sale Price (RSP) assessment under Section 4A of the Central Excise Act, 1944.

The case revolved around Wipro Ltd.'s clearance of 4,661 laptops in bulk to the Electronics Corporation of Tamil Nadu Ltd. (ELCOT) during July to December 2012. These laptops were intended for free distribution to school students, a fact not disputed by the Revenue. However, the Revenue had issued a Show Cause Notice demanding differential duty, arguing that the laptops should have been assessed based on their RSP.

The Tribunal, comprising Mr. P. Dinesha, Member (Judicial), and Mr. M. Ajit Kumar, Member (Technical), examined the facts and legal precedents, including the case of PG Electroplast Ltd. v. CCE & ST, Noida, 2014, which emphasized that free distribution by a government undertaking does not constitute a service industry or commercial activity. Therefore, the laptops were not subject to RSP assessment.

The Tribunal concluded that ELCOT, being neither an "Institutional Consumer" nor an "Industrial Consumer" as defined under the Standards of Weights and Measures (Packaged Commodities) Rules, 1977, did not necessitate RSP assessment for the laptops. As such, the demand for differential duty lacked merit, leading to the setting aside of the impugned order-in-appeal.

This judgment reinforces the principle that goods cleared for free distribution by government undertakings should not be subjected to commercial assessment criteria under the Central Excise Act, thereby providing relief to businesses engaged in similar activities.

Bottom Line:

Laptops cleared to a government undertaking for free distribution to school students are not subject to Retail Sale Price (RSP) assessment under Section 4A of the Central Excise Act, 1944.

Statutory provision(s): Central Excise Act, 1944 Section 4A, Standards of Weights and Measures (Packaged Commodities) Rules, 1977 Rule 2A(b).

M/s.Wipro Ltd. v. Commissioner of GST & Central Excise, (CESTAT)(Chennai)(Regional Bench) : Law Finder Doc id # 2801271