2018 (7) TMI 18 - HC - Central Excise

Court affirms Tribunal on duty liability & limitation issue, allowing cenvat credit.

COMMISSIONER OF CENTRAL EXCISE, RAIGAD Versus L’OREAL INDIA PVT. LTD.

The High Court upheld the Customs, Excise & Service Tax Appellate Tribunal's decision regarding duty liability on imported goods in small packages, ... Valuation - imported goods contained in packages of about 10 grams or 10 milliliters - Held that:- The import is complete only after these activities are undertaken. Further no additional Excise duty liability occurs as the additional Customs duty has been paid on the MRP affixed and the entire exercise is revenue neutral. Then the Tribunal holds that insofar as packages of 10 grams or 10 milliliters or less, the above activity would amount to manufacture as there is no statutory requirement of undertaking the above activity before their import can be allowed. However the assessee would be eligible to take cenvat credit of the Countervailing Duty (CVD) paid on such goods. Time Limitation - Held that:- The Tribunal holds that the activity was undertaken with the knowledge and permission of the Customs Authorities and hence the finding of suppression of facts cannot be sustained - demand sustained only for normal period. Penalty - Held that:- As there was a pure question of interpretation of law, the Tribunal deleted the penalty as well. No substantial question of law - appeal dismissed. Issues:1. Challenge to the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) by the Revenue.2. Legality and validity of the orders-in-original confirming duty demand.3. Excise duty payment on imported goods in packages of 10 grams or 10 milliliters.4. Eligibility for cenvat credit of Countervailing Duty (CVD) on goods in small packages.5. Limitation period for duty demand.6. Deletion of penalty by the Tribunal.7. Recomputation of duty demand by segregating it within and beyond the normal period of limitation.8. Determination of whether the appeal raises any substantial question of law.Analysis:1. The Revenue challenged the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) regarding the legality and validity of the orders-in-original confirming duty demand. The Tribunal considered the duty liability issue and ruled that the Excise duty payment on imported goods in packages of 10 grams or 10 milliliters is not sustainable as labeling/affixing minimum retail price is a statutory requirement before clearance for home consumption. However, for packages of 10 grams or less, such activity amounts to manufacture, allowing the assessee to take cenvat credit of Countervailing Duty (CVD) paid on those goods.2. The Tribunal also addressed the limitation issue, holding that the activity was done with the knowledge and permission of Customs Authorities, negating the finding of suppression of facts. The duty demand was deemed sustainable only within the normal period of limitation. Due to a pure question of interpretation of law, the Tribunal deleted the penalty, and the matter was sent back for recomputation of duty demand segregating it within and beyond the normal limitation period.3. Upon review, the High Court found that the Tribunal's decision did not raise any substantial question of law. The Court examined the facts and contentions of the parties, concluding that the Tribunal's findings were not vitiated by any apparent error. The Court upheld the view that there was no suppression of facts by the assessee, as disclosures were made to Customs Authorities throughout. Consequently, the appeal was dismissed, and no costs were awarded.This comprehensive analysis covers the key legal issues and the High Court's decision regarding the challenge to the CESTAT order, duty liability, limitation period, penalty deletion, and the absence of substantial questions of law in the case.