2014 (2) TMI 1196 - AT - Customs

Tribunal upholds CVD demand against importer of brushless fans, rejects exemption claim

The Tribunal ruled in favor of the department, upholding the demand for differential CVD against the appellant, an importer of brushless fans. The ... Consideration of trader as manufacturer – Demand of differential CVD – Appellant claim that they are selling fans only to industrial consumers, manufacturers, and there is no retail market for these fans since only manufacturers can use it – Taking view that appellant is trader and cannot be considered as class of buyer, proceedings were initiated against appellant which has culminated in confirmation of demand for differential CVD with interest and penalty – Whether appellant being trader can be considered as manufacturer for purpose of applicability of packaged commodity – Held that:- if class of buyer is not examined and insisted upon at time of importation, it would not be possible to ensure that conditions of packaged commodities would be followed subsequently – Therefore, treatment of appellant as trader as done by impugned order seems to be correct view – Admittedly show cause notice was issued on 25-6-2013 i.e. that out of 9 months of 2012-2013, demand for first three months has to be reduced – Therefore, approximately liability that would arise on appellant is about ₹ 25 lakhs – Even though financial difficulty was mentioned during hearing, no documentary evidence was produced to show any financial difficulties – Under said circumstances, appellant directed to deposit amount – There shall be waiver of pre-deposit of balance dues and stay against recovery during pendency of appeal – Decided partially in favour of Assesse. Issues:1. Applicability of packaged commodity rules to an importer of brushless fans.2. Whether the appellant, as a trader, can be considered an industrial or institutional consumer.3. Invocation of extended period for demand and imposition of penalty.Analysis:Issue 1: Applicability of packaged commodity rulesThe appellant, an importer of brushless fans, claimed that they sold the fans only to industrial consumers and manufacturers, not to retail markets. The dispute arose regarding the payment of CVD based on Retail Sale Price (RSP). The department initiated proceedings against the appellant, culminating in a demand for differential CVD. The appellant argued that the fans were never imported in retail packages and were sold in bulk to manufacturers or dealers, with only a small percentage sold to dealers. The Tribunal considered whether the appellant, being a trader, should be subject to packaged commodity rules. The Tribunal noted conflicting views on whether the appellant should be treated as a local manufacturer or a trader, ultimately siding with the view that the appellant should be treated as a trader for the purpose of packaged commodity rules.Issue 2: Classification of the appellant as an industrial or institutional consumerThe appellant contended that they were not subject to the packaged commodity rules as they supplied products only to manufacturers or dealers, not retail customers. The department argued that the appellant's status as a trader did not exempt them from the rules. The Tribunal considered whether the appellant could be classified as an industrial or institutional consumer under the rules. It was concluded that the appellant, as a trader, could not be considered an industrial or institutional consumer, leading to the affirmation of the demand and penalty.Issue 3: Invocation of extended period for demand and penaltyThe Tribunal deliberated on the invocation of the extended period for demand and penalty imposition. It was noted that the appellant had a prima facie case in their favor due to conflicting interpretations of the law. The Tribunal found that the extended period may not be invocable in this case. After considering the financial aspects and lack of proper valuation evidence, the Tribunal directed the appellant to deposit a specified amount within a set timeframe, with a waiver of pre-deposit for the balance dues during the appeal's pendency.In conclusion, the Tribunal upheld the demand for differential CVD against the appellant but provided a directive for the deposit of a specific amount within a stipulated period, granting a waiver for the balance dues during the appeal process.