Importer Not Liable for Differential Duty on Post-Import RSP Revision by Authorised Dealers

The Hon'ble CESTAT, Principal Bench, New Delhi, in M/s. Richemont India Pvt. Ltd. Versus The Commissioner of Customs (Appeals), New Delhi-2026 (4) TMI 618 - CESTAT NEW DELHI  held that an importer cannot be held liable for differential Countervailing Duty ("CVD") due to an upward revision of the Retail Sale Price ("RSP") made by authorized dealers after the goods have been cleared and sold on a principal-to-principal basis.

Facts:

• M/s. Richemont India Pvt. Ltd. ("the appellant") imports and sells luxury watches in India through authorised dealers. At the time of import, the appellant declared the RSP and discharged the applicable customs duty. The appellant claims that at the time of import, the RSP was affixed to the imported watches.
• The Directorate of Revenue Intelligence ("DRI") conducted searches at the premises of two authorised dealers and found that Maximum Retail Price ("MRP") tags on certain watches were either missing or had been upwardly revised based on price lists circulated by the appellant.
• Thereafter, SCN was issued against the appellant, and an Order in Original was passed on November 11, 2018. But the appellant approached this court after the appeal filed before the appellate authority was also rejected.

Issues:

• Whether an importer is liable to pay differential CVD if the RSP is revised upward by authorised dealers after the goods have been cleared for home consumption?
• Whether Rule 5 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, which pertains to manufacturers, can be invoked against an importer?

Held:

The Hon'ble CESTAT, Principal Bench, New Delhi, in [M/s. Richemont India Pvt. Ltd. Versus The Commissioner of Customs (Appeals), New Delhi-2026 (4) TMI 618 - CESTAT NEW DELHI] held as under:

• That the appellant had correctly declared the RSP and paid the duty at the time of importation.
• There was no evidence to prove that the appellant had altered, tampered with, or had any knowledge of the RSP revision carried out by the authorised dealers on their existing stock.
• Once the watches were sold to dealers on a principal-to-principal basis, the ownership and control transferred to the dealers, and the appellant could not be held responsible for their subsequent actions.
• Relied on M/s. Quantum Hi-Tech Merchandising Pvt. Ltd. Versus Commissioner of Customs, New Delhi - 2024 (11) TMI 844 - CESTAT NEW DELHI  in which the Tribunal held that Rule 5 of the 2008 Rules applies specifically to manufacturers who alter RSP and does not apply to importers.
• After relying on M/s Surya Wires Pvt. Ltd. and Shri Harsh Agrawal Versus Principal Commissoner, CGST, Raipur - 2025 (4) TMI 441 - CESTAT NEW DELHI, the court held that the statement of the appellant's Director admitting liability is irrelevant as the mandatory procedure under Section 138B of the Customs Act was not followed. In the above-mentioned case, the investigating agencies relied on investigation-stage statements without examining witnesses before the adjudicating authority and denied the assessee the right to cross-examine.

Hence, the demand for differential duty and the penalty under Section 114A were set aside, and the appeal was allowed.

Relevant Rules & Sections:

Rule 5 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008:

Where a manufacturer alters or tampers the retail sale price declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased retail sale price shall be taken as the retail sale price of all goods removed during a period of one month before and after the date of removal of such goods:

Provided that where the manufacturer alters or tampers the declared retail sale price resulting into more than one retail sale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods.

Section 138B of the Customs Act, 1962: Relevancy of statements under certain circumstances. -

(1) A statement made and signed by a person before any gazetted officer of customs during the course of any inquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for an offence under this Act, the truth of the facts which it contains,-

(a) when the person who made the statement is dead or cannot be found, or is incapable of giving evidence, or is kept out of the way by the adverse party, or whose presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable; or

(b) when the person who made the statement is examined as a witness in the case before the court and the court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence