2024 (7) TMI 328 - AT - Customs

Extended period of limitation invalid without fraud; Section 4A valuation method incorrectly applied instead of Section 4

M/s. Amar Radio Corporation Versus Commissioner of Customs, Bangalore

CESTAT Bangalore held that extended period of limitation cannot be invoked without fraud or suppression of fact for duty evasion. Since respondent had ... Method of valuation - Levy of Countervailing Duty (CVD) on the transaction value in terms of Section 4 of the Central Excise Act, 1944 (CEA) or under Section 4A of the Central Excise Act - industrial consumers or institutional consumer - Extended period of limitation. Extended period of limitation - HELD THAT:- The law is settled that for invoking the extended period of limitation, there must be a fraud or suppression of fact for evasion of duty. Since the respondent had accepted the finding of the Adjudication Authority on the very same issue for the previous period, there is no justification to invoke the extended period of limitation. Amended provision under Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011 from 14.01.2007 has got no relevance in appellant’s case. Method of valuation - HELD THAT:- It is an admitted fact that goods imported by the appellant is falling under the category of goods under Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011. However, as per Rule 6 exemption is given to importers who are importing the goods for institutional or industrial consumers - Moreover, even after selling the product to various customers over a period of time without affixing MRP, the Authority entrusted under Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011 to ensure compliance of the said provision of law has not raised any objection. Thus, the goods sold by the appellant cannot be considered as goods falling under Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011 to adopt method of valuation as per Section 4A of the CEA, 1944 as held by Adjudication/Appellant Authority. Appeal allowed. Issues Involved:1. Whether the imported brushless DC/Axial fans are excisable to Countervailing Duty (CVD) under Section 4 or Section 4A of the Central Excise Act, 1944.2. Applicability of Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011 to the imported goods.3. Validity of the extended period of limitation invoked by the respondent.Issue-wise Detailed Analysis:1. Excisability to Countervailing Duty (CVD):The primary issue in the appeal was whether the imported brushless DC/Axial fans should be assessed for CVD based on the transaction value under Section 4 or the Maximum Retail Price (MRP) under Section 4A of the Central Excise Act, 1944. The appellant contended that the goods were for industrial use and not for retail sale, hence should be assessed under Section 4. The Adjudication Authority, however, confirmed the demand of duty by assessing the value of goods under Section 4A, considering them fit for retail sale.2. Applicability of Legal Metrology (Packaged Commodity) Rules (LMPCR), 2011:The appellant argued that under Rule 3 of LMPCR, 2011, the provisions do not apply to packaged commodities meant for industrial or institutional consumers. They emphasized that the goods imported were for industrial use only, supported by statements and certifications from customers like Bharat Heavy Electricals Limited and Indian Institute of Science, which confirmed the industrial application of these fans. The Adjudication Authority, however, found that the appellant had admitted to selling goods in retail and that the packaging was fit for retail sale, thereby subjecting the goods to MRP-based assessment.3. Validity of the Extended Period of Limitation:The appellant challenged the invocation of the extended period of limitation, arguing that there was no fraud or suppression of facts since the respondent had accepted similar findings in a previous Order-In-Original dated 22.10.2005. The Tribunal noted that for invoking the extended period, there must be fraud or suppression of fact for evasion of duty. Given that the respondent had accepted the previous findings, there was no justification to invoke the extended period.Tribunal's Findings:1. Excisability to CVD: The Tribunal found that the goods imported by the appellant were meant for industrial use and not for retail sale. Therefore, the goods should be assessed under Section 4 of the Central Excise Act, 1944, and not under Section 4A.2. Applicability of LMPCR, 2011: The Tribunal held that the Legal Metrology (Packaged Commodity) Rules, 2011, do not apply to goods meant for industrial consumers. The goods imported by the appellant were exempt from the requirement to declare MRP on the packaging, as per Rule 3 of LMPCR, 2011.3. Extended Period of Limitation: The Tribunal concluded that there was no justification for invoking the extended period of limitation since the respondent had accepted the previous findings and there was no fraud or suppression of facts by the appellant.Conclusion:The Tribunal allowed the appeal, setting aside the order of the Adjudication Authority. The imported goods were to be assessed under Section 4 of the Central Excise Act, 1944, with consequential relief to the appellant. The Tribunal emphasized that the goods were meant for industrial use and not for retail sale, and the provisions of LMPCR, 2011, did not apply to the appellant's case.