TaxTMI 
TaxTMI 
TaxTMI 
2015 (9) TMI 1196
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....ibers. The appellants imported STBs in packages which bear the following declaration: 'Not meant for retail sale, specially packed for the purpose of serving DTH industries. STB shall remain property of Bharti Telemedia Limited.' Accordingly, no retail sale price (RSP) is declared on the STBs at any time, either at the time of import or thereafter. 3.1 The appellants conduct operations in the following manner: they enter into separate contracts with the Service Providers who install the equipment at the premises of the customer/subscriber and with the Distributors. The appellants sell Activation vouchers and Recharge Coupons to Distributors who in turn sell these to the ultimate subscribers, Service tax being paid by the appellants on the full value of the Vouchers and Coupons including the Distributor's margin. In terms of the agreement entered with the Service Providers, the appellants supply free of cost CPE ( consisting of STB, viewing card, remote control, dish antenna, cable) to the Service provider. According to the appellants, the ownership of the CPE continues to remain with them. 3.2 It is the view of the Customs department that in terms of definition of sal....
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....racter of the transaction should be seen and not the substance. Further they are providing warranty for the service provided and not for the goods. It was stated that the issue in the present case stands settled by CESTAT in the case of Sun Direct TV Pvt. Ltd. Vs. Commissioner of Central Excise [2009(243) ELT 705]. Ld Counsel for Bharti Telemedia also contended that under Section 3(2) of the Custom Tariff Act, CVD can be demanded only with reference to the RSP declared on the imported package but there is no mechanism to assess the CVD when the imported package does not bear any RSP. He also argued that under Rule 3 of the PC, Rules, there is no obligation to declare MRP on products intended for use of institutional consumers, which they are. Ld. Counsel for Dish TV relied upon on the Hon'ble Karnataka High Court decision ILR-2010-KAR-1968 holding that when the property is not passed, coverage under Legal Metrology Act is unwarranted. He argued very strongly that for goods to be leviable to CVD under Section 4A by virtue of the Legal Metrology Act, the definition of 'sale' under the Legal Metrology Act has to be adopted and not the definition of 'sale' under the....
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....ds whereby in a judgement of the Hon'ble Apex Court in the case of Idea Mobile Communication Ltd 2011(23) S.T.R. 433(SC) it was held that only service is provided. 5. The stand of Revenue is that the imported goods i.e STBs are a packaged commodity, hence the provisions of Legal Metrology Act will apply and assessment under Section 4A is warranted. According to Ld. A.R., even though the title of goods may be retained by the appellants, there is transfer of right to possess and enjoyment of the goods which amounts to sale as per the definition of 'sale' in the CST Act. According to him, the stand of the department earlier in the case of Dish TV Ltd. (supra) and Reliance Communications (supra) was that there is no sale on the basis of transfer of right to use. However CESTAT held that assessment under Section 4A is proper. He relied on the case of Jayanti Food Processing (P) Ltd. [2007(215)ELT 327(S.C.)] which dealt with sale of telephones in bulk. The Hon'ble Apex Court held that the nature of sale is not important and there is no need of actual sale to the subsequent person/actual user. As long as MRP is depicted as per the PC Rules, the assessment has to be done u....
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....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 (1 of 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, if any, from such retail sale 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 that Act; The proviso above states that in certain cases the CVD shall be levied on the basis of retail sale price declared on the imported packages. It is clear that 2 conditions have to be met for CVD to be levied on the basis of RSP, namely: (1) Under Legal Metrology Act it should be required to declare on the package the retail sale price (RSP); (2) The imported goods must be specified in the notification issued under Section 4A(1) of the Central Excise Act, 1944. Only if these two conditions are satisfied, the CVD will b....
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....no sale at all. They have referred to the definition of 'sale' under the Legal Metrology Act, and emphasized that unless there is transfer of property it cannot be said that sale has taken place. It is seen from the definition that there should be a transfer of property for any consideration or there should be a transfer on the hire-purchase system or by any system of payment by any installments. We find in the present case that there is no transfer of property or hire-purchase system involved nor there is a system of payment by installments. Thus there appears to be no sale in the use of the Set Top Box by the ultimate consumer. The Ld. A.R. referred to the definition of sale in the Central Sales Tax Act, 1956 which reads as: "(g) Sale, with its grammatical variations and cognate expressions, means any transfer of property in goods by one person to another for cash or for deferred payment or for any other valuable consideration, and includes........ (iv) a transfer of the right to use any goods for any purpose (whether or nor for a specified period) for cash, deferred payment or other valuable consideration;" It is seen that the definition of sale in the CST Act has a m....
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....t he has agreed to in the SAF. We are not inclined to go into the details of the Contract Act for the reason that there is enough evidence to indicate that there is no sale involved in the transaction. We find that the STBs are shown as capital assets in the books of accounts/Balance sheets and depreciation is claimed by them. The CPEs including STBs are capitalized on activation of the same. It has also been shown that VAT authorities of Maharashtra and Bihar have held that the supply of STBs does not constitute sale. We find the Ld. A.R.'s comments strange when he states that the expenses shown as capitalization of assets should have been treated as misc. expenses. There is no authority in law to compel the appellant to do so. It is, thus, clear to us that there is no transfer of property. 7.2 Only because the imported packages conformed to the Notification RE/44/2000 issued by DGFT in relation to Package Commodities does not necessarily mean that the MRP is required to be declared. Conforming to the notification may imply various other requirements such as weight of package. This is observed by us after seeing the various provisions of the Legal Metrology Act and the Packag....
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.... this case that the value of SIM cards forms part of the activation charges as no activation is possible without a valid functioning of SIM card and the value of the taxable service is calculated on the gross total amount received by the operator from the subscribers. The Sales Tax authority understood the aforesaid position that no element of sale is involved in the present transaction.' In the supply of STBs too there is no sale, only service is being provided. 8. We find a direct judgment on the issue at hand in the case of Sun Direct TV Pvt. Ltd. (supra). However, we have chosen to analyze the issue threadbare as both sides have put forth various points on facts as well as law which are required to be addressed in a comprehensive manner. We do not agree with the reliance placed by the Ld. A.R. in the cases of Dish TV India and Reliance Communication (supra). These cases related to the periods prior to 1.4.2012 when Dish TV showed transfer of STBs on rental basis as reflected in the invoices. VAT was also paid thereon. It was in that context that the Tribunal came to the conclusion that VAT was paid and there was a 'deemed sale' in the context of 'right to use&#....
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.... if MRP is not printed on the packages. As we have already decided that there is no sale in the present case, we do not find it necessary to go into this contention. 10. Both sides relied heavily on the Hon'ble Supreme Court Judgment in the case of Jayanti Food Processing (P) Ltd. Vs. Commissioner of Central Excise 2007 (215) ELT 327 (SC). We have carefully gone through this judgment. While dealing with the case of free supply by Pepsi of KITKAT Chocolates ( which are sold by KITKAT to Pepsi) along with a Pepsi bottle, the Hon'ble Court accepted the argument that contract of supply of Chocolates was for the purpose of advertisement of a particular product of the particular industry, and it would get covered within the expression 'servicing any industry' to get exemption from applicability of the PC Rules. The relevant provision Rule 34 reads as :' 34. Exemptions in respect of certain packages. Nothing contained in these rules shall apply to any package containing a commodity if,- (a) The marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material of for the purpose of servicing any in....
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....d be under Section 4 of the Act. We again mention it at the cost of repetition that the nature of sale it not important, what is important is the requirement of printing the MRP on the packages. It was not and indeed cannot be disputed that these telephones are also sold in the retail market in the same form and the same package and there is requirement of printing the MRP on each package of the Push Button Telephone.' The vital part missed by the Ld. A.R. in the present case is that it has not been established that there is any sale. Therefore he cannot rely on the above judgment in which there was bulk sale to MTNL/BSNL. Further Court also held that 'When a 'retail package' containing any commodity is produced, distributed, displayed, delivered or stored for sale for consumption by an individual or group of individual, it would be a "retail package". In this case, admittedly, DOT, MTNL and BSNL provided these instrument, after they have purchased the instruments, to the individual customers, though not by way of a 'sale' but for their use.' The present case is clearly distinguishable because the importers are not selling Set Top Boxes either to the dea....