TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 192
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....he appellant has also filed an application for urging additional grounds in defence of their appeals. Shri Vivek Talwar, Managing Director, Shri Bhaskar Gurudas Norkar, Vice President-Finance and Shri Anup Kumar Parashra, Asst. General Manager all from Nitco have also filed appeals against the imposition of penalty under the Customs Act, 1962. 3. Brief facts of the case are that Nitco is engaged in the business of import of vitrified and ceramic glazed tiles from various ports in India. As the imported goods are classifiable under Customs Tariff in Chapter 69 therefore these tiles are specified goods vide Notification 5/2001-CE (N.T) dated 01.03.2001 and Notification 13/2002-CE (N.T) dated 01.03.2002 issued under sub-Section (1) and Sub-section (2) of Central Excise Act, 1944. Therefore, the said tiles were assessed in terms of Section 3 of the Customs Tariff Act, 1975 read with Section 4A of the Central Excise Act, 1944 for purposes of payment of additional Customs duty were required to be assessed on the basis of MRP declared to the Customs in the Bills of Entry. Nitco has affixed MRP on the package of the said goods before clearance from Customs. Intelligence was gathered that ....
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....r, design and grade. Therefore, the sale price of the tiles sold in India depends on all the above factors namely size, shade, colour, design and grade. He further submitted in terms of proviso to Section 3(2) of the Customs Tariff Act read with the notification under Section 4A of the Central Excise Act, 1944, the value for the purpose of payment of CVD on the imported articles shall be deemed to be retail sale price declared on the imported article less such specified abatement. During the period in question i.e. March 2001 to April 2004 as per the statutory requirement, the appellants had declared RSP on the packages of tiles imported and paid CVD on the basis of RSP less abatement provided under Section 4A(2) of the Central Excise Act, 1944. He submitted that the case of the department is that the appellant has sold some of the packages of tiles at a price higher than the RSP declared at the time of import. Therefore, the department has re-determined the RSP by adopting a peculiar method so as to arrive at the purported maximum retail sale price. Difference between declared value and recomputed value was calculated. Consequently the impugned order has been confirmed the demand ....
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....prior to 2008 or not. In the case of Schneider Electrical India (P) Ltd. (supra) the 2 nd issue was taken up by this Tribunal therefore, the decision of ABB Ltd. (supra) is applicable to the facts of this case. He further submitted that the learned Spl. Counsel's submission that the decision of ABB Ltd. (supra) has been challenged before the Hon'ble Apex Court by the Revenue and the appeal has been admitted therefore, the decision of ABB Ltd. (supra) is in jeopardy as per the decision in the case of UOI v. West Coast Paper Mills Ltd. - 2004 (164) ELT 375 (SC). The contention of the learned Spl. Counsel is not correct as mere admission of the matter before the Hon'ble Apex Court does not mean that the judgment delivered will not hold goods as a precedent to other cases. As the Hon'ble Bombay High Court in Criminal Application 4230/06 in the case of Pramod Shah held that unless until the higher court has set aside the decision of the lower Court, the decision of the lower Court is having the field. The same view has been taken by this Tribunal in the cases of Vivilon Textiles Industries Ltd. v. CCE - 2012 (286) ELT 225 (Tri) and Shiv Om Shipping Agency - 2012 (284) EL....
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....ffixed on the same package and in no other situation. However, in the present case only one RSP has been affixed on every package. Hence, adopting the highest RSP is without any basis. To support this contention he placed reliance on the decision in the cases of H & R Johnson (India) Ltd. - 2002 (144) ELT 506 (Kar.), and Goa Bottling Co. Ltd. - 2001 (128) ELT 81 (Tri. LB) and CCE v. Smithkline Beecham Consumer Health Care Ltd. - 2001 (133) ELT 717 (Tri.). He also submitted that the appellants has already paid CVD on the MRP declared on the package. The sale price realized by the appellants, on sale of the imported tiles, less than the MRP declared. Hence, there cannot be demand of differential CVD. He further submitted that without admitting, if the respective sale prices of the tiles are taken into account for determination of assessable value to demand CVD and short and excess are allowed to be adjusted then the appellants are not liable to pay duty. This has been demonstrated by the appellants in the affidavits dated 06.08.2013 and 16.08.2013. He further submitted that excess payment made towards short duty should be allowed. He further submitted since the rate of duty was throu....
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.... fact was admitted by two representatives of Nitco during investigation. He further submitted that in some cases sales to dealers were at prices higher than the MRP declared to the customs and no proper records were maintained and from its stock accounting system, one to one co-relation between the imports of a particular variety/size of tiles for which a particular MRP was declared to customs by it and the retail sales of the said tiles made by it in India was not possible. Therefore, the only method that could be adopted was the FIFO method to determine the sale price of the imported tiles in chronological manner. He further submitted that it is an admitted fact that the tiles were sold higher than the declared MRP, therefore, if sold at prices higher than the declared MRP, this higher sale price would automatically be the MRP. He further submitted that as per Explanation 1 to Section 4A of Central Excise Act, 1944 it is quite clear that the deciding factor in order to determine the MRP is the maximum price at which the excisable goods in the packaged form may be sold to the ultimate consumer. For example, the maximum price at which the tiles were sold to the ultimate consumer wa....
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....ted goods were sold to the ultimate consumer. He further submitted that the decision of ABB Ltd. (supra) has not attained finality as the department has filed an appeal against this decision in the Hon'ble Apex Court and the same has been admitted. He further submitted that in the case of West Coast Paper Mills Ltd. (supra) the Hon'ble Apex Court held "Once an appeal is filed before this Court and the same is entertained, the judgement of the High Court or the Tribunal is in jeopardy. The subject matter under determined, cannot be said to have attained finality. Grant of stay of operation of the judgement may not be of much relevance once this Court grants special leave and decides to hear the matter on merit." Same view was taken up by the Hon'ble High Court in the case of Manjushree Minerals Ltd. v. CC - 1993 (68) ELT 273 (Cal). He further relied on the decision in the case of Rupani pinning Mills Pvt. Ltd. v. UOI - 192 (60) ELT 77 (Guj) wherein the Hon'ble High Court held that in the absence of rules and till such rules are framed, the spirit underling this provision can be invoked by directing the customs authorities to permit further mutilation of the goods bef....
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.... from the reading of Section 12 of the Customs Act, 1962. To support his contentions, he placed reliance on the decision in the case of Subhash Photographics v. Union of India - 1992 (62) ELT 270 (Bom). 7.1. Therefore, the contention of the learned Counsel for the appellant is incorrect to say that the Section 3 of the Customs Tariff Act is self contained and does not call for any action under Customs Act, 1962. In these terms, he prayed that the appeal filed by the appellant is required to be dismissed. 8. Considered the submissions made by both the sides and the case law relied on by them. 9. In this case, the appellant is importing vitrified and ceramic glazed tiles which are required to be assessed in terms of Section 3 of the Customs Tariff Act, 1975 read with Section 4A of the Central Excise Act, 1944 for purposes of payment of additional duty of Customs which were required to be assessed on the basis of MRP declared to the Customs in the Bills of Entry. It is not in dispute that at the time of clearance of the goods the appellant has declared MRP on the goods and paid duty on declared MRP. The learned Spl. Counsel for the Revenue has alleged that after clearance of the go....
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....t Act; or Explanation. - Where on any imported article more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section. The said provision indicates that the value for the purpose of CVD is the MRP declared on the imported goods. There is no provision under the Customs Tariff Act to ignore such MRP declared on the imported goods and taking into account purported actual sale price at which the imported goods are sold or to be sold. In this case it is an admitted fact that the appellant has affixed/declared the MRP at the time of import of tiles. 9.3 The learned Spl. Counsel for the Revenue has argued that the valuation has to be arrived as per the Section 4A of the Central Excise Act, 1944. He submitted that to determine the assessable value as per Explanation 1 to 4A of the Central Excise Act, 1944, it is clear that the deciding factor in order to determine the MRP is the maximum price at which the excisable goods in the packaged form may be sold to the ultimate customer. In this case, as the goods have been sold over and above the price affixed on the packages therefore, the higher o....
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....RP was brought into force with effect 14.5.2003. Therefore, for the period prior to that date even under the Central Excise Act, 1944 the MRP declared on the package cannot be re-determined. Therefore, the question of ignoring the declared MRP for the purpose of determining the value under Section 3(2) of the Customs Tariff Act does not arise. 9.5 A similar issue came before this Tribunal in the case of ABB Ltd. (supra). In that case, this Tribunal held with regard to the CVD that - "13. The Revenue's case is that the impugned clearances were of goods classifiable under heading 85.36 subject to CVD on the basis of retail sale price. Notifications No. 13/2002 dated 1.3.2002 and No. 2/2006 dated 1.3.2006 had specified the goods of Chapter Heading 8536 for RSP based assessment. The assessee had not declared the retail sale price in the respective Bills of Entry and cleared the goods on payment of CVD in terms of provisions of Section 4 of the CEA. The relevant Section 4A of the Central Excise Act is reproduced below: "SECTION 4A. Valuation of excisable goods with reference to retail sale price. The Central Government may, by notification in the Official (1) Gazette, specify an....
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....cordingly. Explanation 2. - For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufacture, is altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price; (c) where different retail sale prices are declared on different packages for the sale of any excisable goods in packaged form in different areas, each such retail sale price shall be the retail sale price for the purposes of valuation of the excisable goods intended to be sold in the area to which the retail sale price relates." The Additional Duty of Customs on the impugned clearances is levied in terms of the provisions of Sub-sections 1 & 2 of Section 3 of the Customs Tariff Act, 1975. The pertinent portions are reproduced below: "SECTION 3. Levy of additional duty equal to excise duty, sales tax, local taxes and other charges. - (1) Any article which is imported into India shal....
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.... or................................................... ....................................................... Explanation. - Where on any imported article more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section.] ................................................................................. ................................................................................. Explanation. - Where on any imported article more than one retail sale price is declared, the maximum of such retail sale price shall be deemed to be the retail sale price for the purposes of this section." (emphasis supplied) As per proviso to sub-section (2), where it is required, in relation to the article imported, the provisions of SW&M Act, 1976 or the rules made thereunder to declare on the package thereof the retail sale price of such article the value shall be deemed to be the retail sale price declared on the imported article less such amount of abatement, if any, from such retail sale price as the Central Government may, by notification in the Official Gazette, allow in respect of such like....
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....t the same time of the removal of such goods from the place of manufacture: Provided that if more than one retail sale price is ascertained under clause (i) or clause (ii), then, the highest of the retail sale price, so ascertained, shall be taken as the retail sale price of all such goods. Explanation. - For the purposes of this rule, when retail sale price is required to be ascertained based on market inquiries, the said inquiries shall be carried out on sample basis. 5. Where a manufacturer alters or tampers the retail sale price declared on the package of goods after their removal from the place of manufacture, resulting into increase in the retail sale price, then such increased retail sale price shall be taken as the retail sale price of all goods removed during a period of one month before and after the date of removal of such goods: Provided that where the manufacturer alters or tampers the declared retail sale price resulting into 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 th....
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....le holding Section 11D to be a valid piece of legislation their Lordships of the Hon'ble High Court allowed the writ petitions and quashed the demand - cum - show cause notices. In the light of this judgment we find that the argument of the revenue that the impugned demand had to be sustained considering the legislative intention and accordingly construing the provisions of CTA does not appeal to us as the correct course we should follow. In the absence of a machinery to determine the relevant RSP, no demand of differential CVD could have been validly raised. We find that the impugned demand of differential duty is therefore, not sustainable. As the demand of duty is not sustainable, the demand of interest as well as imposition of equal penalty also does not survive. 15.2 It was argued for ABB that if it was guilty of not declaring MRP on packages, the competent authority could penalyse 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 authori....
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....-2008 and cannot be used to determine the value for the clearances made prior to 1-3-2008. We find strong force in the contention raised by the learned Counsel that the decision of the Tribunal in the case of Aditya Cement (supra) would squarely cover the issue in favour of the appellants. The relevant ratio in Para 9 of the said decision is reproduced:- "9. It can be seen from the above reproduced rule that it was in context of the definition of "person liable for paying the Service Tax". This provision in itself may not suffice revenue to direct the appellant to discharge the service tax liability as service receiver, on the face of the fact that notification under Section 68(2) of the Finance Act, 1994, was issued 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 nonresident, with effect from 1-1-2005, which, in corollary would be that no service tax ....
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....in jeopardy and the decision of the ABB Ltd. (supra) cannot be relied upon. 9.6 We find that mere admission of appeal filed by the department against the order of Tribunal before the Hon'ble Apex Court does not bar this Tribunal to rely on the said decision unless until the same has been set aside by the Hon'ble Apex Court. If it is so, there is no requirement to file stay application and to obtain a stay order from the higher Court. A similar issue came up before the Hon'ble High Court of Bombay in Criminal Application No. 4230 of 2006 wherein the Hon'ble High Court has observed as under:- "9. To say the least, the learned Additional Sessions Judge has committed a gave error is not following the binding precedent. The precedent does not cease to be binding merely because in the opinion of the learned Judge, the same is challenged in the Supreme Court and its operation stayed by the Supreme Court. In the decision reported in AIR 1992 Supreme Court page 1439 in the case of M/s Shree Chamundi Mopeds Ltd. vs Church of South India Trust Association, Madras, the Hon'ble Supreme Court has very succinctly pointed out the difference between a judgment being quashed an....
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....known in the case of customs. As the buyer is known in the case of excise and the duty is payable at the time of clearance therefore, the Rules to determine RSP have been framed under the Central Excise but have not been framed under Customs till now as the buyer is not known and the duty is to be paid at the time of procurement of the goods. Therefore, the rules framed to determine the MRP under the Central Excise law are not applicable to Customs law. 9.10. In the show-cause notice, it is proposed that the price at which the tiles sold by the appellant is the RSP but as per Section 3(2) of the Customs Tariff Act, 1975 the duty is payable on the RSP declared at the time of clearance of the goods from Customs. It is not in dispute that the appellant has not declared/affixed RSP at the time of clearance of the goods from the Customs. Therefore, the price at which the goods have been sold to the consumer cannot be construed RSP for demanding duty as per Section 3(2) of the Customs Tariff Act. 9.11 We further find that the Explanation to proviso to Section 3(2) of the Customs Act is inapplicable to the present case as the package of the imported tiles were having only one of MRP dec....
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....n any other particular with the entry made under the Customs Act or in the case of baggage with the declaration made under Section 77 in respect thereof, or in the case of goods under transshipment, with the declaration for transshipment referred to in the proviso to sub-section (1) of Section 54. There is no allegation against the appellant therefore, confiscation under Section 111(m) is not warranted. 9.14 We further find that Section 111(o) is applicable to any goods exempted subject to any condition, from duty or any prohibition in respect of the import thereof under this Act or any other law for the time being in force, in respect of which the condition is not observed unless the non observance of the condition was sanctioned by the proper officer. In this case the goods in question are not exempted from duty in respect of import thereof under the Customs Act, 1962 or any other law for the time being in force. Therefore, the provisions of Section 111(o) are also not applicable. 9.15 In view of this, we hold that confiscation of the goods in question is not warranted. Consequently, the redemption fine and penalties imposed under Section 112(a) and 112(b) of the Customs Act is....
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....o MRP per box; that they have made sales to dealers at prices higher than the MRP declared to Customs calculated on sq. mtr. basis; that regarding the new MRP (per box) stickers affixed by them, the MRP is worked out on pro rata basis considering the MRP per sq. mtr. declared to Customs and the square meters contained in the box. (ii) Shri Bhaskar Gurudas Borkar, Vice President, Finance in his statement dated 4.6.2004 stated that they have imported vitrified and ceramic tiles on which import duty for CVD purposes was assessed on MRP basis; that they have sold the tiles imported by them at prices higher than the declared MRP in some cases; that from their stock accounting system, one to one co-relation between the imports of a particular variety (size) of tiles for which a particular MRP is declared by them to Customs and the retail sales of the said tiles is not possible and the only method that they could possibly adopt is the FIFO method (First In First Out), to determine the sale price of the tiles imported by them, in chronological manner. In his further statement on 25.8.2004 he stated that he arrives at the MRP after discussions with sales personnel which is then communicate....
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....at prices which were higher than the MRP declared on the packages before the same were cleared from Customs. It is noted that the statements have not been retracted by any one of them. Annexure B to the Show Cause Notice gives the details of the imports of the various sizes at the various ports and the corresponding sales of the imported tiles, including the B.E. number and date, the RSP declared to Customs, the corresponding sales invoices with quantity sold and Invoice amount, the RSP i.e. value per Sq. mt., the actual MRP which should have been declared to Customs and the corresponding sale invoice indicating the actual MRP. The statements read with Annexure B to the show cause notice show that in some cases the appellants sold the goods of the same sizes to dealers at the prices higher than those declared to the Customs at the time of clearance. 17. The implications of the above facts may be analyzed with reference to Section 3(2) proviso of the Customs Tariff Act, 1985 as it existed at the materials time during the period in dispute: Section 3(2) in the Customs Tariff Act, 1975 For the purpose of (2) calculating under sub-sections (1) and (3), the additional duty on any imp....
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....nt is that the reference to Section 4A of the Central Excise Act in the proviso to Section 3(2) of the CTA is only to identify the goods which are governed by the regime of the valuation for levy of CVD based on retail selling price (RSP). Beyond this limited purpose, the provisions of Section 4A of the Central Excise Act cannot be relied upon to determine the value in terms of proviso to Section 3(2) of the Customs Tariff Act. He further emphasized that the method of determination of retail sale price in terms of Section 4A(4) of the Central Excise Act, is not applicable to the determination of value in terms of the proviso to Section 3(2) of the Customs Tariff Act. In any event, Sub-Section (4) of Section 4A of Central Excise Act enabling the Central Excise department to re-determine the retail sale price was brought into force with effect from 14.5.2003 and therefore for the period prior to that date even under the Central Excise Act, the retail sale price declared on the package cannot be re-determined, stated the Ld. Counsel. Therefore question of ignoring the declared retail sale price for the purpose of determining the value under the Section 3(2) of the Customs Tariff Act ....
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....ultimate consumer and where such price is mentioned on the package, there shall be printed on the packages, the words "Maximum or Max, retail price inclusive of all taxes or in the form MRP Rs..........inclusive of all taxes. 17.3 It may be safely concluded from this definition that the retail price which the appellant was required to declare on the goods packages in the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). IN the present case, we have a situation where the appellants sold the goods at prices which are more than the MRP declared on the packages at the time of clearance from Customs. Once, there exists a defacto situation whereby the appellants sold goods at prices higher than the MRP declared at the time of customs clearance, then these higher prices will, under law, become the true maximum retail selling price (RSP) at which CVD is to be paid. The appellant is left with no option but to pay CVD on the basis of such higher prices which are the MRP required to be declared under Section 3(2). The law does not recognize the fact in some cases the goods may have been sold below the maximum price at which go....
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....s Act provides the clue thereto. Under that provision the Central Government is empowered to make rules for permitting at the request of the owner mutilation of imported goods so as to render them unfit for use for a purpose other than the one for which they are imported. This is an enabling provision which indicates that Parliament had conceived of a situation where further mutilation on import may be necessary to render the material unfit for use for a purpose other than the one for which the same was imported. IN the absence of rules and till such rules are framed, the spirit underlying this provision can be invoked by directing the customs authorities to permit further mutilation on import before clearance. As pointed out above, the customs officials at Bombay permit further mutilation at the importer's cost and the official being satisfied that the garment is rendered totally unserviceable for any other purpose save and except the one for which it is imported, clearance is permitted on payment of personal penalty ...." Support for my view is also found in the case of Shipping Corporation of India vs. Collr. Of Cus. Madras reported in 1998 (98) ELT 78 (Mad.) wherein eh non ....
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....ultra vires the Act...." Computation provisions may bear a relationship with the nature of charge and charging section and computation provisions together constitute an integrated code as was held in C.I.T. Bangalore etc. v. B.C. Srinivasa Setty etc. [(1981) 2 SCC 460 at 465]; but it is equally well-settled that only because rules had not been framed under the Central Act, the same per se would not mean that no tax is leviable..........." In this very judgment the Supreme Court referred to the case of Sudhir Chandra Nawn vs. Wealth Tax Officer 1969 (1) SCR 108 wherein the Supreme Court had rejected the contention that Section 7(1) of the Wealth Tax Act, was unconstitutional as no Rules had been framed to value the asset. Sudhir Chandra (supra) held that "The plea that s. 7 (1) of the Welath Tax Act is ultra vires the Parliament is also wholly without substance. That clause provides: "Subject to any rules made in this behalf, the value of an asset, other than cash, for the purposes of this Act shall be estimated to be the price which in the opinion of the Wealth Tax Officer it would fetch if sold in the open market on the valuation date": It was urged that no rules were framed in....
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....any other price. The judgment in the case of ITC Ltd. is also not applicable as the facts are different. In ITC case the Appellants had cleared cigarettes manufactured by them after paying excise duty on the basis of the Maximum Retail Price printed by them on each cigarette packet. In the present matter the Appellants have changed the MRP. We, therefore, hold that there was a misdeclaration of MRP at the time of import and as such we uphold the demand of duty, liability of the impugned goods for confiscation and liability of the Appellants for penalty action". Also, in the case of Media Industries Ltd. Vs. Commissioner of Customs, Mumbai 2006 (199) E.L.T. 345 (Tri. Del.) wherein the facts were that the MRP stickers were changed after clearance from Customs, the Hon'ble Tribunal held that In any case, the MRP denotes maximum retail price at which the goods are sold to be ultimate buyer in retail sale. Tampering with the same even by the subsequent wholesale buyer will amount to contravention, inasmuch as it is the final sale price, which is required to be declared in respect of the goods at the time of clearance from the Customs and duty is required to be paid on the same. 19.....
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....l buyers, no factor of shade, design colour, has been mentioned on the invoices. This belies the claim of the appellant. It is apparent that FIFO was the only reasonable method which could be adopted in the absence of records showing Bills of Entry and invoice co-relation on the basis of any other characteristics. It also does not seem unreasonable to state that size is the most critical factor in the determination of the MRP. 22. In view of the above analysis, I confirm the duty demanded in the impugned order on the basis of MRP determined as per law as held in foregoing paragraphs alongwith interest under Section 28AB of the Customs Act, 1962. 23. I do not agree with the view of Ld. Brother that the demand of duty is time barred. The facts are that the assessments were finalized for the period March 2001 to April 2002. Thereafter the assessments were provisional from May 2002 to July 2004. The provisional assessments were finalized in August 2004. The contention of the appellant is that the facts were known to the department prior to the finalization in August 2004, and therefore, the show cause notice issued six months after such finalization, i.e. on 18.3.2005 is barred by li....
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....wide. Any goods which do not correspond in respect of value or in any other particular with the entry made under this Act ---------, will be liable to confiscation. The word 'entry' is defined under Section 2(16) of the Customs Act to mean entry made in a Bill of Entry---------------------------. In the present case the misdeclaration of MRP in the Bill of Entry clearly makes the goods liable to confiscation under Section 111(m). 24.2 Further, Section 111(d) clearly refers to goods which are imported contrary to any prohibition imposed under law for the time being. Similarly Section 111(o) refers to any prohibition under any other law. In the present case the import of the goods is subject to the Foreign Trade Development and (Regulation) Act, 1992 read with the Export and Import Policy. By Notification No. 44(RE-2000)/1997-2002, the following para was added in paragraph 4 of Chapter 1A; General Notes regarding import Policy: "4. All such packaged products, which are subject to provisions of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 when produced/packed/sold in domestic market, shall be subject to compliance of all the provisions of the said....
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....however, are not specified therein or elsewhere in the Act. It has been left to be specified by the Customs Tariff Act, 1975. It, therefore, says in Section 12 that- ".... duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 of any other law for the time being in force...." The Customs Tariff Act, 1975 specifies the rates of duty. This enactment is only for the purpose of specifying the rates at which the duty of customs would be levied under the Customs Act. Section 12 of the Customs Act is thus complete only when it is read with the Customs Tariff Act, 1975. Both the enactments are made by the Parliament. The rates of duty could have been specified by the Parliament in the Customs Act itself. That was not done. On the other hand, the Parliament in its wisdom decided to do so by means of two enactments. These two enactments, therefore, form a composite legislation or an integrated code. It is only for convenience and simplicity that instead of providing tariff in the Customs Act itself, a separate enactment has been made for that purpose." 26. In view of the findings in the paragraphs above, the impugned order is upheld and the ....
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....ble Member (Technical). 6. Whether in the absence of any rules having been framed under Section 3(2) of the Customs Tariff Act, 1975. MRP of the imported goods cannot be re-determined by the Customs authorities as held by the Hon'ble Member (Judicial). Or MRP can be re-determined on the basis of underlying law and spirit of Section 3(2) of the Customs Tariff Act,1975, having regard to the judgments of the Hon'ble Gujarat High Court in the case of Rupani Spinning Mills Pvt. Ltd. and Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. and Hon'ble Apex Court in the case of Mahim Patram Pvt. Ltd. as held by the Hon'ble Member (Technical). 7. Whether extended period of limitation under proviso to Section 28(1) of the Customs Act, 1962 cannot be invoked to confirm the duty demand as held by the Hon'ble Member (Judicial). Or The extended period of limitation can be invoked to confirm the duty demand as held by the Hon'ble Member (Technical). 8. Whether confiscation on the impugned goods is not sustainable under Section 111(d), (m) & (o) of the Customs Act, 1962 and consequently imposition of redemption fine and penalties on the ap....
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....Section 2 of the said Act states that the rates at which duties of customs shall be levied under the Customs Act, 1962 are specified in the First and Second Schedules. Here it would be necessary to appreciate that when the goods are imported, there are various components of the duties of customs which are levied and these components have different purposes. The first component is what is generally understood as the basic customs duty. Charging section for this is Section 12 of the Customs Act, 1962. The rate of basis customs duty is specified in the First and Second Schedules of the Customs Tariff Act. The First Schedule is for the import and the Second Schedule for the export. 29.1 The second component of customs duty is what is generally known as countervailing duty (CVD) or additional duty. This is equal to excise duty. Goods when manufactured or produced in India are required to pay excise duty under the Central Excise Act, 1944/Central Excise tariff Act, 1975. Goods imported, being not manufactured or produced in India will not be chargeable to excise duty. Thus goods manufactured in India will be at a disadvantageous position. In order to have the same level playing field in....
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....n 14 of the Customs Act, 1962 (52 of 1962) or the tariff value of such article fixed under sub-section (2) of that section, as the case may be; and (ii) any duty of customs chargeable on that article under section 12 of the Customs Act, 1962 (52 of 1962), and any sum chargeable on that article under any law for the time being in force as an addition to, and in the same manner as, a duty of customs, but not including the duty referred to in sub-sections (1) Provided that in case of an article imported into India, - (a) in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such article; and (b) where the like article produced or manufactured in India, or in case where such like article is not so produced or manufactured, then, the class or description of articles to which the imported article belongs, is - (i) the goods specified by notification in the Official Gazette under sub-section (1) of section 4A of the Central Excise Act, 1944, the value of the imported article shall be deemed ....
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....ply to the duty chargeable under this section as they apply in relation to the duties leviable under that Act. 29.2 It will be observed that above section attempts to put imported goods at the same level of taxes as that indigenously produced goods as far as excise duty is concerned, Goods produced in India, in addition are subject to sales tax, local tax or other charges. To bring level playing field in respect of such taxes, Section 3A was introduced in 1998 which reads as under:- 3A. Special additional duty. - (1) Any article which is imported into India shall in addition be liable to a duty (hereinafter referred to in this section as the special additional duty), which shall be levied at a rate to be specified by the Central Government, by notification in the Official Gazette, having regard to the maximum sales tax, local tax or any other charges for the time being leviable on a like article on its sale or purchase in India : Provided that until such rate is specified by the Central Government, the special additional duty shall be levied and collected at the rate of eight per cent. of the value of the article imported into India. Explanation. - In this sub-section, the expr....
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.... duty equal to excise duty (CVD) and, therefore, the subsequent discussion would be limited to additional duty equal to excise duty or CVD. It will be seen from sub-section (1) of Section 3 reproduced in para 29.1 above that any article which is imported into India shall, in addition, be liable to duty equal to excise duty for the time being, leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable, shall be calculated at the percentage of the value of the imported article. In the present case, tiles are chargeable to excise duty and are chargeable as percentage of their value. There is no dispute on this aspect. However, in order to compute the quantum of the said duty, the value has to be determined. In case of indigenously produced goods, the value as per Section 4 of the Central Excise Act is the transaction value between manufacturer and buyer. In the case of the imported goods, there would be difficulties inasmuch as the transactions are transnational. In transnational transactions, values are normally on the lower s....
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....cise Law are imported into India, how do we compute the countervailing duty? A plain reading of Section 3(1) of the Customs Tariff Act as also the purposes and objects of Section 3, as explained earlier, would answer that RSP minus abatement should be taken as the value for purpose of CVD. However, Section 3(2) as it existed before May 2001 will not permit this obvious answer. Thus vide the Finance Act, 2001, a proviso was added under Section 3(2) of the Customs Tariff Act, 1975, which is reproduced again below:- "Provided that in case of an article imported into India, - (a) in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such article; and (b) where the like article produced or manufactured in India, or in case where such like article is not so produced or manufactured, then, the class or description of articles to which the imported article belongs, is (i) the goods specified by notification in the Official Gazette under sub-section (1) of section 4A of the Central Excise Act, 19....
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....s 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) If any manufacturer removes from the place of manufacture any excisable goods specified under sub-section (1) without declaring the retail sale I price of such goods on the packages, or declares a retail sale price which does not constitute the sole consideration for such sale, or tampers with, obliterates or I alters any such declaration made on the packages after removal, such goods shall j be liabel to confiscation - Explanation 1. - For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as....
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....true and correct, even in such a situation the duty already paid is as per law and nothing more is required to be recovered. On the other hand, Member (Technical) has taken the view that reference to Section4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) thereby meaning that if RSP is found to be incorrectly affixed/declared, then on determination of the correct RSP, the excise duty is required to be paid as per correct RSP and similarly in the case of imports, the countervailing duty is required to be paid on the correct RSP. 30.2 The learned senior counsel for the appellant's main contention is that for levy of CVD in terms of proviso to Section 3(2) of the goods imported into India, RSP declared at the time of import is deemed to be the value and there is no provision under the Customs Act to ignore such RSP declared on the package of the imported article and take into account actual sale price on which the imported goods are sold or to be sold for purpose of computation of countervailing duty. The learned senior counsel has mainly supported this contention based upon the Hon'ble Supreme Court decision in the case of ITC ....
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.... the present case. On the contrary, it goes against the appellant. It is the appellant who has not correctly declared the RSP and this misdeclaration has benefitted the appellant alone. 31.2 As mentioned earlier, the purpose and object of Section 3 of the Customs Tariff Act is to levy additional duty equal to excise duty so that the Indian manufacturers of similar goods are not put to any disadvantages vis-a-vis the importers of such goods. In the case of tiles, the value of the goods has to be determined under Section 4A of the Central Excise Act and also the Customs Tariff Act and Section 3(2) itself speaks that in respect of the goods which are notified under Section 4A(1) of the Central Excise Act, 1944, the value of the imported article shall be deemed to be the retail sale price declared on the imported article less such amount of abatement. It goes without saying, the declaration relating to RSP has to be true and correct declaration and not a false declaration. If importer himself is selling the tiles at a price higher than the declared RSP, declared RSP is not true and correct RSP as per the definition of RSP, which is as under:- "'Retail sale price" means the maximu....
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....e of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1. - For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole consideration for such sale : Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly. Explanation 2. - For the purposes of this section, - (a) where on the package of any excisable goods more than one retail sale price is declared, the maximum of such retail sale prices shall be deemed to be the retail sale price; (b) where the retail sale price, declared on the package of any excisable goods at the time of its clearance from the place of manufactur....
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....contrary, Member (Technical) has taken the view that even in the absence of Section 4A(4) (as it started existing w.e.f. 14.5.2003), the provisions of Section 3(2) of the Customs Tariff will not become ineffective for the import made prior to 14.5.2003. Thus, what Member (Technical) is saying that even before 14.5.2003 if the Revenue has come to know, based upon evidence, the correct RSP of the goods, Revenue can demand and collect the duty as per the correct RSP instead of collecting duty on the misdeclared RSP even in the absence of Section 4A(4). 32.2 The valuation for purposes of excise duty is done under Section 4 of the Central Excise Act and only in respect of the notified goods, valuation is done as per Section 4A of the Central Excise Act. As mentioned earlier, the object and purpose of Section 3 of the Customs Tariff Act is to charge countervailing duty on the imported items equal to the excise duty leviable on similar goods produced in India. There is no dispute that the goods i.e. tiles are covered by Section 4A of the Central Excise Act. Therefore, the provisions which are relevant for determining the value of the goods under Section 4A in respect of indigenously prod....
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....been sold by the appellant as the retail sale price and considered the same as retail sale price. The method adopted by the Revenue is in consonance and line with the concept of retail sale price as envisaged in Explanation 1 to Section 4A as it was existing even prior to 14.5.2003 and, therefore, no fault can be found with the Revenue's approach in this matter. In fact, this would be the most reasonable solution. Accepting the misdeclared value will only amount to closing the eyes on the misdeed or duty evasion by the importer. It may be added that the rules for ascertainment of the value only provides step-by-step method for ascertaining the value in situations elaborated in clause (a) and clause (b) of the newly introduced sub-section (4). Even the steps prescribed under these rules are in consonance with the definition of RSP as given in Explanation 1 in Section 4A before or after the amendment dated 14.5.2003. It is to be further added that even the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008, Rule 6 provides that if the retail sale price of any excisable goods cannot be ascertained under these Rules, the retail sale price shall be as....
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....red RSP. Member (Technical) has taken the view that since RSP is the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer, the highest of the price at which the goods were sold should be taken as the RSP and CVD is to be charged accordingly. On the contrary, Member (Judicial) has taken the view that the price at which the goods have been sold to the consumer should be construed to be RSP. 33.1 Explanation 1 reads as under:- Explanation 1. - For the purposes of this section, "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement delivery, packing, forwarding and the like and the price is the sole consideration for such sale. A plain reading of the said Explanation would indicate that RSP is the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and, therefore, in my view, the maximum of the prices at which the goods have been sold by the appellant should be construed as the MRP. It ....
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....das Borkar, Vice President of the company, in his statement recorded on 25.8.2004 has stated that it is not possible to correlate a particular sale of tile to a particular bill of entry and that the only method to determine the sale of the tile in relation to the bill of entry is using the first-in first-out method i.e. considering bill of entry starting from RSP assessment March 2001, for a particular size of tile and existing of the sales of this size tile chronologically till no balance of the said bill of entry is left in the stock and then considering the next bill of entry for the same size tiles and so on. The said statement was further confirmed by Shri Vivek P. Talwar, Managing Director of the appellant-company. He also admitted that they have sold the imported tiles at price higher than the MRP/RSP declared to the Customs in a few cases and that he agrees to pay the differential duties on this process. 34.3 From the above statement, it is clear that the appellant had admitted that they have sold the tiles at prices higher than the declared RSP. It is also clear that it was not possible to correlate the sale invoices with the bills of entry or bills of entry with the sale....
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....elaborated in earlier paragraph are rejected. It was also submitted and found during investigation that it is not possible to correlate the goods covered by a particular bill of entry with the sales invoices as the invoices/bills of entry are not providing details of different varieties such as pattern, design, colour etc. and the only method to determine the retails sale price of the tile in relation to bill of entry is using the first-in first-out method. 34.7 I have also gone through the detailed charts on the basis of which RSPs bill of entry-wise were computed based upon FIFO method. It is seen that though FIFO method would be the most reasonable method in the present facts and circumstances of the case, but the same has been applied mechanically without keeping in mind certain realities. The first facts which is observed is that in many of the cases, RSP has been taken based upon a stray case. For example, in respect of import of wall tiles from China to Mumbai Port of the size 200mm x 300 mm, it is seen that the declared RSP is Rs. 175/- while the proposed RSP is Rs. 1314.67. If we go through the corresponding invoices based on the FIFO principle, it is seen that the RSP of....
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....e been sold between 30.11.2002 to 7.1.2003. It is possible that part of the goods might have been sold between 24.10.2002 to 29.11.2002 or any time after 7.1.2003. Appellants will be entitled to the benefit of doubt in such cases. 34.10 I also find that in respect of certain imports, no RSP was declared as the goods imported were considered as non-RSP that is meant for sale to the institutional/industrial consumer. It is possible that a part of these goods might be the one listed against some other bill of entry under the first-in first-out principle. In such cases also, benefit of doubt will have to be extended to the appellants. 34.11 On detailed examination, another issue observed is that FIFO method assumes that the tiles of a particular size imported earlier only will be sold first. If we go through the chart, in majority of the cases, it is seen that at any point of time the appellant had the stock of goods covered by number of bills of entry (say 3 or 4 bills of entry), even for one size of tile and the tiles covered by these bills of entry are of varying RSPs (either declared or as assessed by the Customs in the impugned order), then it cannot be said that the appellant w....
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....nt cannot have grievance. On the other hand, method adopted by Revenue would lead to exaggerated demand which cannot be permitted. 34.12 It is noted that the appellants have filed two affidavits and in the first affidavit it is submitted by them that the total value declared in the bills of entry in question is Rs. 98,73,42,345/- and they have paid the duty accordingly, while the total value realized by the sale of such goods is Rs. 90,53,17,591/-. According to them, thus the total sale value realized is much less than declared RSP by them. They have further tried to submit that if transactions are segregated where sales value is less than declared RSP and where sales value is more than declared RSP and duty paid is computed, duty short paid is only Rs. 1,87,600/-. In fact they have also given certain details in annexure I and annexure II of the said affidavit and in annexure II they have submitted that they have paid an excess duty of Rs. 76,53,625/-. In another affidavit submitted on 22.8.2013 they have done the calculation by ignoring the FIFO method. They have further submitted in annexure II if the total sale value realized during the period in question in respect of all the ....
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....'s decisions in the cases of Planet Sports Pvt. Ltd. and Media Industries Ltd. squarely apply to the facts of this case as held by the Hon'ble Member (Technical)." 35.1 The learned senior counsel for the appellant has argued that the case of ABB Ltd. vs. CC reported in 2011 (272) ELT 706 (Tri.-Bang.) is not distinguishable at all for the reasons addressed by Member (Technical). It was submitted that the case law ABB Ltd. has been perhaps correctly distinguished in the case of Schneider Electrical India (P) Ltd. vs. CCE, Nashik reported in - E/949/2009-Mum on some other basis. According to the senior counsel, ABB Ltd. had decided two issues. The first issue was that as to whether Section 4A(4) is applicable or relevant as to whether the principles thereof can be applied for determining the value for levy of countervailing duty in respect of goods imported into India and secondly, whether the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 can be applied in respect of goods removed prior to 1.3.2008 or not and the Tribunal has taken a different view in respect of the second issue. It was also contended that the decision relied upon by the H....
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....port and subsequent to the clearance, sold the goods himself at a price higher than the declared MRP. In my view, the present case is equally strong footing if not better than the case of Planet Sports (supra). The reasoning given by the learned senior counsel does not hold any water, in my view, and the Tribunal's decision in the case of Planet Sports as also Media Industries are squarely applicable to the facts of this case and I agree with Member (Technical). 36. The 6th point referred to me is as under:- "6. Whether in the absence of any rules having been framed under Section 3(2) of the Customs Tariff Act, 1975, MRP of the imported goods cannot be re-determined by the Customs authorities as held by the Hon'ble Member (Judicial), Or MRP can be re-determined on the basis of underlying law and spirit of Section 3(2) of the Customs Tariff Act, 1975, having regard to the judgements of the Hon'ble Gujarat High Court in the case of Rupani Spinning Mills Pvt. Ltd. and Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. and Hon'ble Apex Court in the case of Mahim Patram Pvt. Ltd. as held by the Hon'ble Member (Technical)." 36.1 Membe....
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.... the basis of the underlying law and the spirit of Section 3(2) of the Customs Tariff Act. This is further supported by the judgments of the Hon'ble Gujarat High Court in the case of Rupani Spinning Mills Pvt. Ltd. and Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. and the Hon'ble Supreme Court in the case of Mahim Patram Pvt. Ltd. I therefore agree with views of Member (Technical). 37. The 7 th point referred to me is as under:- "7. Whether extended period of limitation under proviso to Section 28(1) of the Customs Act, 1962 cannot be invoked to confirm the duty demand as held by the Hon'ble Member (Judicial), Or the extended period of limitation can be invoked to confirm the duty demand as held by the Hon'ble Member (Technical)." 37.1 In the present case, Member (Judicial) has taken a view that the assessments were provisional for the period March 2003 to July 2004 and these were finalized in August 2004 and when the facts were known to the department during the investigation prior to finalization in August 2004 itself, the extended period of limitation is not invokable. Member (Technical), on the other hand, has taken the vie....
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.... is as under:- "8. Whether confiscation of the impugned goods is not sustainable under Section 111(d), (m) & (o) of the Customs Act, 1962 and consequently imposition of redemption fine and penalties on the appellants cannot be sustained as held by the Hon'ble Member (Judicial), Or Confiscation of the impugned goods and impositions of redemption fine in lieu thereof and imposition of penalties on the appellants are sustainable as held by the Hon'ble Member (Technical)." 38.1 Member (Judicial) has taken a view that confiscation under Section 111(d) is not sustainable as that is applicable only if the goods are imported contrary to any prohibition imposed in the Customs Act or under any other law for the time being in force. Member (Judicial) has further observed that there is no prohibition imposed under the Customs Act or under any other Act for the time being in force in respect of the tiles imported by the appellant. Member (Judicial) has further held that the confiscation under Section 111(m) is applicable to any goods which do not correspond in respect of value or in any other particular with the entry made under the Customs Act and, therefore, confiscation under Sec....
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....on 112 (a) & (b) of the Customs Act, 1962 on the appellants are not sustainable. As far as penalty under Section 114A is concerned, the same is sustainable only to the extent of duty computed as per point No. 4 (para 34.13) and not equal to demand confirmed in the impugned order. 39. To sum up, I agree with Member (Technical) on points 1, 2, 3, 5, 6 and 7. 40. As far as point No.4 is concerned, I agree with Member (Technical). However, the differential duty needs to be reworked by the Commissioner as per para 38.13 above. 41. As far as point 8 is concerned, in the present facts and circumstances of the case, the confiscation, redemption fine and penalties under Section 112 imposed are not sustainable in view of the fact that it is not possible to precisely identify the offending goods. Penalty under Section 114A is upheld only to the extent of duty reworked as per para 38.13. 42. The matter be placed before the referral Bench for passing majority order. (Pronounced in Court on 19.5.2015) Majority decision: In view of the majority decision the following is held:- 1. Reference to Section 4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Secti....