TaxTMI 
TaxTMI 
2010 (12) TMI 1027
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....ase in brief are as follows. Pursuing intelligence that M/s. ABB Ltd., Bangalore (ABB) was importing electrical apparatus falling under Chapter Heading 85.36 of Customs Tariff Act, 75 (CTA) and Central Excise Tariff Act (CETA, '85) and selling the same from their warehouse to their channel partners (dealers) & others, mis-classifying them under 8538 of CTA & CETA in the Bills of Entry without declaring their Retail Sale Price (RSP) for the assessment of CVD under Section 3 of the CTA read with Section 4A of Central Excise Act, 1944 (CEA) and Notification No. 13/2002-C.E. (N.T.), dated 1-3-2002. They paid lower duty than the CVD due. 3. Several premises of ABB were searched by the officers of DRI on 16-3-2007. ABB was found to have engaged in the manufacture of various electrical equipments such as Motors, Capacitors, Relay Panels, Relays, etc. and also engaged in trading of goods imported. The assessee had a network of dealers. Evidence was gathered in the form of statements from various functionaries of the appellants. It appeared that the assessee had mis-declared the classification of the goods imported as CTH 8538 instead of CTH 8536 in order to avoid assessment of the ....
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.... framed thereunder applied only to those commodities which were meant for retail consumers. The impugned goods were meant only for industrial users and not for retail consumers. These were always meant for industrial use and therefore could not be treated as consumer products. 7. As was obvious from the preamble of the SW& M Act, 1976, that Act applied only to those goods which were sold by weight or by measure or in number. The impugned goods were basically electrical apparatus and were neither sold by weight or by measure. They were sold by the assessee in single number. The assessee relied on the judgment of the Hon'ble High Court of Kerala in M/s. Pieco Electronics & Electricals Ltd. v. Union of India & Ors. [O.P. No. 14701 of 1994 dated 26-8-2001] and the Hon'ble High Court of Madras in Philips India Ltd. v. Union of India reported in Writ L.R. No. 140 (HC of Madras) in support of the claim that the impugned goods were not covered by the SW&M Act, 1976. Section 4A assessment did not apply to the goods excluded from the operation of Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (PC Rules). The said rules did not apply to the packaged commodity whi....
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....the name and address of the appellant's warehouse was mentioned in the Bills of Entry. Applying Explanations to Rule 33, the appellant's warehouse would be treated as importer's premises and as the exporting manufacturer's address. All actions undertaken at the appellant's warehouse would be deemed to have been undertaken by the original exporting manufacturer. Thus the imported packages always contained the declaration as contemplated under Rule 34; the cartons carried the declaration as to the use of the goods exclusively in any industry or raw material, etc. This entitled the goods to exemption from Rule 34 of the PC Rules. 7.2 Section 4A of the Central Excise Act did not apply to the impugned goods. The assessee relied on the decision of the Tribunal in Controls & Switchgears Contractors Ltd. v. CCE, Noida [2005 (183) E.L.T. 95 (Tri.-Del.)]. The assessee therein had specifically mentioned on each package that it was specially packed for exclusive use for industry as a raw material and it was only for industrial use and not intended for display for sale at retail outlet. The Tribunal held that the goods involved were liable for assessment for the purpose of excise duty u....
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....ficer to ascertain the retail sale price were put in place. It is submitted that therefore, only with effect from 14-5-2003 when the above sub-section (4) was introduced under Section 4A, the RSP could be ascertained in situations described therein; one of them being non-declaration of retail sales price on the specified goods. Therefore, when the goods in question were excisable goods and were not affixed with RSP, sub-section (4) of Section 4A mandated that the ascertainment of the RSP could be undertaken in the 'prescribed manner'. In exercise of the powers under Section 4A(4) of the Act, the Central Government framed the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 to provide the manner of determination of RSP when the same was not declared on the packages or tampered or altered or obliterated. These rules came into force only with effect from 1-3-2008. The period of dispute covered by the proceedings was from 3-1-2003 to 31-3-2007. The show-cause notice had adopted the list price as RSP in computing the assessable value. This exercise was without any authority. The assessee placed reliance on decision of the Hon'ble High Court of Madras in....
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.... of the order under challenge. The learned counsel for the appellants had fairly conceded during hearing that the assessee used to classify the impugned goods under chapter heading 8536 and changed the practice by describing them as parts and classifying them under chapter heading 8538. This was obviously to escape determination of assessable value under RSP scheme. In the Bills of Entry, some of the goods were classified under chapter heading 8536. The assessee had made a mis-leading declaration in the B/E that "wherever the RSP was applicable, the same had been truthfully declared". It was admitted by Shri Dinesh, Manager Logistics of ABB during the investigation that this was a mis-declaration. It was revealed by the employees of the assessee that the baby boxes each containing a single piece used to be packed in a carton as per purchase orders and dispatched to the buyers. At the time of import, these baby boxes did not bear the declaration "packed for the exclusive use in any industry as a raw material or for the purpose of servicing any industry, mine or quarry". Thus the later declaration on the cartons did not entitle the goods to exemption under Rule 34 of PC Rules. 8.1....
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....bore marking that unambiguously indicated that they had been specially packed for the exclusive use in any industry as a raw material or for the purpose of servicing any industry, mine or quarry, our attention was invited to proviso to (iv) which reads as follows : "(iv) any package containing a commodity to be sold by number or length and displayed for sale at the retail outlet." This sub-clause was one of the provisos to Rule 34(a) specifying exclusion from the exemption under sub-rule 34(a). It is submitted that the impugned goods packed in baby boxes containing a single piece did not bear any marking which took the subject goods outside the purview of the Rule 34. Moreover, the cartons containing a number of baby boxes that bore the marking as prescribed in Rule 34 (a) had not qualified the word "package" by the word "specially" in the marking. The rubber stamp on the carton did not contain any declaration to the effect that the package did not contain a commodity to be sold by number or length and not displayed for sale at the retail outlet to be excluded from clause (iv) proviso to Rule 34(a). The products were sold in numbers; they were not raw material. Raw material w....
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....oducts; there was no need to ascertain the RSP by other methods. Declaring RSP of the goods being cleared on the relevant invoice was mandatory for assessment purpose. Marking on the package was a mandatory requirement only for indicating RSP to the consumers under the SW&M Act and PC Rules. Similarly, in the case of import, declaration of RSP on the Bills of Entry in respect of specific goods was a mandatory requirement for CVD assessment and not mere marking of RSP on the package. 8.7 In the relevant Bills of Entry, the importer omitted to indicate the RSP of the goods as per the notification issued under Section 4A. By declaring the goods to be 'parts' under heading 8538, ABB avoided the declaration required. Such a declaration was required to be made prior to the importation. 8.8 Holding that RSP based assessment was incorrect would lead to absurd results. Therefore the present case called for adopting a purposive interpretation of the statutory provision. The Hon'ble Apex Court in Acer India case (no citation mentioned) ruled that purposive construction will be adhered to when literal meaning may result in absurdity. The revenue relied on the decision of the Tr....
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.... : (a)  ADA Section 3(3) - The provisions of the Central Excise and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub-section (1). (b)  CTA Section 3(8) - The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemptions from duties shall, so far as may be, apply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. It is argued that in the ADA, the enabling provisions were circumscribed by the expression 'in relation to the levy and collection of the additional duties' while in the case of CTA, there was no such restrictive application. As far as Section 3 of CTA was concerned, the referred provisions were those in relation to duty leviable under Customs Act, 1962, etc. These were not limited by "levy and collection" and should be taken to cove....
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....ng or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders, junction boxes), for a voltage not exceeding 1000 Volts' . The Controller of Legal Metrology had furnished an opinion relating to 'surge' which is one of the many articles enumerated under the heading. Therefore the opinion covers all the articles covered by heading 85.36. The Revenue also relied on a judgment of Chennai Bench in the case of Micro Labs [2010 (251) E.L.T. 317] which upheld the confiscation of offending goods under Section 111(d), imposition of fine and penalty under Section 112(a) by the Customs authority for contravention of provisions of Section 47 of SW&M Act. It was argued that the decision showed that the Customs authority had jurisdiction to enforce provisions of SW&M Act. 10. We have carefully examined the records and studied the rival submissions. The dispute involved in the instant case is the correct liability to CVD of electrical equipments/devices imported by the appellant. We find that the impugned order demanded differential duty of Rs. 13,41,83,979/- along with appl....
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....e deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purp....
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.......... ................................................................................................. Explanation. - In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty. (2) For the purpose of calculating under sub-sections (1) and (3), the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of the imported article shall, notwithstanding anything contained in section 14 of the Customs Act, 1962 (52 of 1962), be the aggregate of - ..................................................................... [Provided that in case of an article imported into India, - (a) &n....
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....price as the Central Government may, by notification in the Official Gazette, allow in respect of such like article under sub-section (2) of Section 4A of the CEA. The common case of the parties is that such a notification was issued and retail price has to be determined in accordance with that notification. However, as rightly argued for the assessee, there is no provision in the CTA enabling the proper officer to determine RSP in a case where the importer does not declare the RSP on the imported package. 14. A notification was issued in terms of sub-section (4) of Section 4A of the CEA on 1 March 2008. The pertinent portions of the Notification No. 13/2008 C.E. (N.T.) under which Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 were issued are reproduced below : "In exercise of the powers conferred by section 37 read with sub-section (4) of section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :- 1.(1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. ..................................................
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....to more than one retail sale price available on such goods, then, the highest of such retail sale price shall be taken as the retail sale price of all such goods. 6. If the retail sale price of any excisable goods cannot be ascertained under these rules, the retail sale price shall be ascertained in accordance with the principles and the provisions of section 4A of the Act and the rules aforesaid."                         (Emphasis supplied) These rules prescribe the manner of ascertaining the retail sale price of excisable goods under sub-section (4) of Section 4A of the Act where a manufacturer removes the excisable goods specified under sub-section (1) of the Act, inter alia, not declaring the retail sale price on the packages of such goods. Before the issue of this notification, there were no provisions prescribing the manner to ascertain RSP of such goods in the CEA. With the issuance of Notification No. 13/2008 dated 1-3-2008, RSP of the goods indigenously manufactured and not declared on the package by a manufacturer can be determined in terms....
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....gued for ABB that if it was guilty of not declaring MRP on packages, the competent authority could penalise it. State Metrology Dept. had initially seized a consignment of such goods and issued Show Cause Notice. After ABB replied, no further action was taken. It meant that ABB had not violated the provisions of SW&M Act and PC Rules while engaging in the impugned transactions according to the authority competent to implement those provisions. We find merit in this submission of ABB. However, this claim was not raised before the lower authority and the facts have not been verified. 16. Revenue had argued that in the Notification issued under Section 4A(4) of CEA effective from 1-3-08, it was prescribed that RSP could also be determined following the principles governing fixation of RSP as provided under Section 4A(4) of CEA. These provisions applied retrospectively as it referred to the Section 4(A)(4) which existed all along. The method could be applied to determine CVD u/s 3(2) of the CTA. The Revenue had sought to support the demand invoking principle of purposive construction enunciated by the Apex Court in the case of Acer India Ltd. (no citation given) [2004 (172) E.L....
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....ed by the Central Government only on 31-12-2004. If the contention of the learned SDR is to be accepted, then there was no necessity for the Government to issue Notification No. 36/2004-S.T. notifying the service receiver from non-resident having no office, to pay Service tax, as receiver. By issuing the said Notification, Central Government intended to tax the service receiver from non-resident, with effect from 1-1-2005, which, in corollary would be that no service tax is payable by this category prior to 1-1- 2005. If that by (sic) so, then the amount paid by the appellant is not a tax, which the revenue cannot kept (sic) with it." 18. Excerpts from the Apex Court's judgment in the case of National Insurance Co. Ltd. (supra) were cited by the revenue in support of the claim that the retail sale price could be validly determined even in the absence of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 following the principles informing the legislative policy prescribing RSP as the value. We find that the judgment elaborately deals with interpretation of the language of a statute in such a manner to effectuate the intention of the legislature. In....