Countervailing duty valuation: set-top boxes supplied on entrustment basis are assessable on transaction value, not retail sale price.

Countervailing duty on imported set-top boxes must be assessed on transaction value where the goods are supplied to subscribers on an entrustment basis without transfer of ownership. Retail sale price-based valuation applies only when the goods are legally required to declare retail sale price under the relevant Legal Metrology framework and fall within the statutory regime for such valuation. Where the boxes were not sold to ultimate consumers, were treated as fixed assets by the importer, and no sale element existed, an RSP declaration on the package did not by itself justify assessment on retail sale price basis.

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Issues: Whether imported set-top boxes, supplied to subscribers on entrustment basis without transfer of ownership, were liable to countervailing duty on retail sale price basis or on transaction value basis.

Analysis: The statutory scheme under Section 3(2) of the Customs Tariff Act, 1975 permits countervailing duty to be assessed on transaction value, and assessment on retail sale price basis applies only where the imported goods are required to declare retail sale price under the Legal Metrology law and are goods notified under Section 4A of the Central Excise Act, 1944. The requirement to declare retail sale price under the packaged commodities rules is attracted only where the goods are meant for sale to the ultimate consumer. On the facts found, the set-top boxes were not sold to subscribers, ownership remained with the importer, the goods were shown as fixed assets, and there was no element of sale. In such a situation, retail sale price based valuation could not be applied merely because the importer had affixed an RSP declaration.

Conclusion: The imported set-top boxes were liable to be assessed on transaction value basis and not on retail sale price basis, and the contrary demand was unsustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed.

Ratio Decidendi: Retail sale price based valuation for countervailing duty is attracted only when the imported goods are required to bear such declaration in law and the transaction involves an element of sale; where the goods are supplied on entrustment basis without transfer of property, assessment must remain on transaction value.

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