2015 (9) TMI 1315 - AT - Customs

Appellants Found Liable for Mis-declaring Prices & Evading Duty: Tribunal Ruling

The tribunal found the appellants liable for mis-declaration of Retail Sale Price (RSP) and selling goods at higher prices than declared, resulting in ... Levy of CVD on the basis of MRP - Evasion of duty by mis-declaring RSP - On enquiry it was found that appellants sold imported goods to NCCF/KB at price higher than RSP declared at time of import – Demand of differential duty – Imposition of penalty – Held that:- sale of goods at price higher than RSP declared can only lead to conclusion that appellants mis-declared RSP of such goods at time of import – Appellants are therefore liable to pay differential duty. RSP is only upper limit of sale price which importer can charge from consumer – Appellant is free to sell goods at any price lower than RSP declared – Merely because importer effected sale of some goods at price higher than RSP declared, Revenue cannot demand differential duty on entire import done as per various B/E – Adjudicating authority adopted price quoted to NCCF/KB as basis of calculation of differential duty and applied same to entire sale of imported goods for disputed period – Demand so raised is not acceptable – Allegation of collection of higher price is confined to sales effected to NCCF/KB therefore, demand of differential duty, has also to be confined to sales effected to NCCF/KB only. Admittedly appellant sold imported goods not only to NCCF/KB but to other customers also – Goods sold to other customers were sold at RSP or prices lower than RSP declared – In such circumstances imposition of penalty of ₹ 25 lakhs is slightly on higher side – Therefore penalty reduced – Appeal partly allowed – Decided partly in favour of Assesse. Issues Involved:1. Demand of differential duty.2. Confiscation of goods.3. Imposition of penalty.4. Mis-declaration of Retail Sale Price (RSP).5. Applicability of Standards of Weights and Measures (SWM) Act, 1976 and Packaged Commodities (PC) Rules, 1977.6. Calculation of differential duty.7. Penalty on the director of the appellant company.Detailed Analysis:1. Demand of Differential Duty:The appellants were accused of evading duty by mis-declaring the RSP and selling imported goods at higher prices than declared. The main contention was that the goods sold to NCCF/KB were at prices higher than the RSP declared at the time of import. The appellants argued that the goods were imported with proper declarations and assessments. However, the tribunal found that the appellants had indeed sold goods at higher prices to NCCF/KB, which indicated mis-declaration of RSP at the time of import. Therefore, the appellants were liable to pay differential duty.2. Confiscation of Goods:Goods worth Rs. 57,55,770/- were confiscated as they did not bear the MRP on the packaging, which was a violation of the provisions of the SWM Act, 1976 and PC Rules, 1977. The appellants explained that the MRP was declared on master cartons and not on individual packages, but this was not accepted as a valid explanation. Consequently, the confiscation and the demand of differential duty of Rs. 3,19,593.62/- on the seized goods were upheld.3. Imposition of Penalty:An equal amount of penalty was imposed along with the differential duty. Additionally, a penalty of Rs. 25 lakhs was imposed on Shri Sanjeev Ratra, the director of the appellant company. The tribunal found that the penalty on the director was slightly on the higher side and reduced it to Rs. 50,000/-.4. Mis-declaration of Retail Sale Price (RSP):The tribunal concluded that the appellants had mis-declared the RSP at the time of import. The sale of goods at prices higher than the declared RSP to NCCF/KB substantiated the allegation of mis-declaration. The appellants' argument that NCCF/KB were institutional consumers and thus exempt from MRP display requirements was rejected.5. Applicability of SWM Act, 1976 and PC Rules, 1977:The appellants contended that the provisions of the SWM Act, 1976 and PC Rules, 1977 did not apply to sales made to institutional consumers like NCCF/KB. However, the tribunal held that NCCF/KB were not institutional consumers but rather ultimate consumers. Therefore, the provisions of the SWM Act, 1976 and PC Rules, 1977 were applicable.6. Calculation of Differential Duty:The tribunal found that the authorities had erred in calculating the differential duty based on the highest price at which goods were sold to NCCF/KB for the entire period. The demand of differential duty should be confined to the sales made to NCCF/KB only, as the appellants had sold goods to other customers at or below the declared RSP. The tribunal directed the primary adjudicating authority to recompute the differential duty and penalty accordingly.7. Penalty on the Director:The penalty of Rs. 25 lakhs imposed on Shri Sanjeev Ratra was reduced to Rs. 50,000/- considering that he was under the bona fide belief that the provisions of the SWM Act, 1976 and PC Rules, 1977 were not applicable to sales made to NCCF/KB based on the Board Circular dated 28.02.2002.Order:i) The demand of differential duty of Rs. 1,50,88,287.05/- and the equal amount of penalty was set aside, and the differential duty and penalty were confined to the goods sold to NCCF/KB only.ii) The confiscation of goods worth Rs. 57,55,770/- and the demand of differential duty of Rs. 3,19,593.62/- were sustained along with a redemption fine of Rs. 5 lakhs.iii) The penalty on Shri Sanjeev Ratra was reduced to Rs. 50,000/-.The appeal was partly allowed in these terms.