TaxTMI 
TaxTMI 
2024 (5) TMI 478
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....iscovered by the officers that there were 16,331 Nos. of laptop computers ready for supply to M/s.ELCOT with Tamil Nadu Government Logo pasted in the form of sticker on the carton boxes and a rubber stamping with the words 'Box 1&2 shipped with combined MRP of Rs.16,899/-'. On enquiry, it revealed that the laptop bags were purchased locally and packed in a box along with laptop computer and a combined MRP of Rs.16,899/- had been affixed in respect of both laptop computer and the laptop bag. Copies of several tax invoices billed to various schools in Nilgiris District, Tamil Nadu were also found and seized. 1.3 In addition to the aforesaid laptops, 25,512 Nos. of Acer Brand laptops meant for supplying to M/s. Rajcomp Info Services Ltd., for free distribution to the students of Rajasthan was also discovered. An offence for evasion of duty in respect of these laptops (for supply to M/s.Rajcomp) were also registered by the Department for which Show Cause Notice was issued separately. In the present case, the dispute is with regard to the notebook / laptop computers meant for supply to M/s.ELCOT for free distribution to schools in Tamil Nadu only. 1.4 The appellant submitted that the ....
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....xed the new MRP for supply to ELCOT after packing the laptop along with the carry bags, and therefore the difference in MRP at the time of import (Rs.14,399/-) and at the time of supply to M/s.ELCOT (Rs.16,789/-). 1.7 It appeared to the Department that the appellant had undervalued the MRP at the time of import of laptop to evade payment of Countervailing Duty (CVD). Show Cause Notice dated 08.08.2017 was issued proposing to reject the MRP declared by the appellant in the Bills of Entry and to re-determine the same under Section 4A of the Central Excise Act, 1944 read with Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Show Cause Notice proposed to demand differential CVD along with interest and also proposed to impose penalties, besides proposing to hold the goods liable for confiscation. After due process of law, the Original Authority rejected the MRP declared by the appellant at the time of import and re-determined the same. Adjudicating Authority ordered for confiscation of the goods, confirmed the demand of differential duty (CVD) along with interest and an option was given to redeem the goods on payment of redemption fine Penalties were ....
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....op and laptop bags. There was no break-up of individual items to be supplied under the contract. 2.7 For undertaking supplies to ELCOT, the Appellant imported laptops from M/s. Acer Inc., Taiwan. However, the Appellant procured laptop bags with MRP of Rs. 2,500/- from a local vendor at a price of Rs. 225/- (inclusive of VAT). 2.8 The MRP of imported laptops were determined by appellant for supply to ELCOT as the total price agreed with ELCOT (less) the MRP of locally procured bags i.e., Rs. 2,500/-. Case of the Department: 2.9 It is submitted by the Ld. Counsel that pursuant to the investigation by SIIB in 2013, the Revenue initiated proceedings against the Appellant vide Show Cause Notice dated 08.08.2017 alleging the following: a) Firstly, the price initially quoted by the Appellant to ELCOT for supplying the laptops along with bags etc. ("Quoted price") (plus 5% VAT) is inclusive of all elements of costs of the laptop and denotes the actual MRP of the laptop with the backpack. Therefore, it is the quoted price and not the finally agreed purchase order price that must be considered as the combined MRP of Laptops and Laptop Bags. The manner in which Revenue has sought to re-....
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....the period from 2003 to 2008, no rules were prescribed for re-determining MRP of excisable goods. Resultantly, even if the MRP declared was found to be incorrect, there was no machinery which empowered the Department to redetermine the MRP for the purposes of payment of central excise duty. 3.4 In this context, for the period prior to introduction of RSP Rules, 2008, the Larger Bench of Tribunal recently, in the case of Ocean Ceramics, Interim Order No.1-23/2024 dt. 23.1.2024 in Excise Appeal No.235 of 2008 has held that the RSP rules are substantive in nature and in the absence of any machinery prior to such period for re-determination, MRP cannot be re-determined. The RSP Rules have not been made applicable to Section 3(2) of Customs Tariff Act, 1975: 3.5 Section 3 (1) of Customs Tariff Act, 1975 provides for levy of CVD equal to the excise duty leviable on a like article if produced or manufactured in India. In addition to general provision for payment of CVD on Transaction value (under Section 14 of Customs Act), the proviso to Section 3(2) (introduced vide Finance Act, 2001) provides that in case of an article imported into India, a) in relation to which it is required, u....
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....Civil Appeal No. 7147 of 2011 has been filed by Department before Supreme Court - No stay on CESTAT order b) CC v. V.J. Traders [2019 (366) E.L.T. 909 (Tri. - Del.)] - Civil Appeal No. 844/2019 has been filed by Department before Supreme Court - No stay on CESTAT order c) CC v. King Kaveri Trading Co. [2019 (370) E.L.T. 1049 (Tri. - Mumbai)] d) DS Chandok & Sons v. CC [2021 (9) TMI 417 - CESTAT MUMBAI] e) Legrand India Pvt. Ltd. v. CC [2014 (304) E.L.T. 305 (Tri. - Mumbai) - Civil Appeal Nos. 7320-7323 of 2014 have been filed by Department before Supreme Court - No stay on CESTAT order. 3.10 As above, even in the context of levy of excise duty under Section 4A of Central Excise Act, 1944, the Larger Bench in Ocean Ceramics case (supra), has held that the RSP Rules framed on 01.03.2008 is substantive and cannot be applied retrospectively for the period prior to 2008. The said decision will squarely apply to levy of CVD under Section 3(2) of the Customs Tariff Act, 1975. 3.11 Therefore, the Appellant submits that re-determination of MRP in the present case is without authority of law and the impugned order must be set aside. 4. Without prejudice, even assuming power to bor....
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....e brought to question. Thus, there is a purpose behind ensuring that the best judgment method is applied subject to the principles and provisions of the preceding Rules which act as reasonable guidelines. 4.7 Moreover, the best judgment method only allows some elbow room or reasonable flexibility in valuation while applying the methodology already prescribed. 4.8 In State of Kerala v. C. Velukutty [1965 (12) TMI 32 - SUPREME COURT], the Apex Court has held that though there is an element of guesswork in a "best judgment assessment", it shall not be a wild one, but shall have a reasonable nexus to the available material and the circumstances of each case. The same principle has also been reiterated in SG Jayaraj Nadar & Sons v. State of Madras [1967 (7) TMI 106 - MADRAS HIGH COURT] subsequently affirmed by Hon'ble Supreme Court in State of Madras v. SG Jayaraj Nadar & Sons [1971 (9) TMI 156 - SUPREME COURT] 4.9 In Uflex Ltd. v. CCE [2016 (335) E.L.T. 376 (Tri. - All.)], it has been held that value of intermediate goods that were captively consumed in manufacture of final product cannot be re-determined by resorting to deductive method or best judgment assessment under Rule 11 of ....
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....ent, under the garb of re-determining MRP of imported laptops cannot question MRP of laptop bags as well as the composite supply of laptops and laptop bags. 4.14 As noted in the impugned order, the Appellant arrived at the MRP of the imported laptops by subtracting the MRP of backpack i.e., Rs. 2,500/- from the ELCOT Purchase Order price. 4.15 It is pertinent to note that the said MRP was affixed on the laptop backpack by the local vendor itself and not at the instruction of the Appellant. This has not been controverted in the impugned order except for a plain statement that the Appellant has tried to offset loss by getting MRP of laptop bags/backpacks declared as Rs. 2,500/-. 4.16 The Appellant submits that the impugned order by ordering re-determination of MRP of laptops by taking ELCOT quoted price as MRP of laptop + bag and deducting purchase price of laptop bags from quoted price, has indirectly re-determined the MRP of laptop bags and the composite supply of laptops and bags which is impermissible as it is only the nodal authority under the Legal Metrology Act, 2011 or the Central Excise Officer under the Central Excise Act, 1944 who is empowered to question/re-determine t....
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....tity of Imports Quoted Price (inclusive of VAT) ELCOT Purchase Order Price per Unit (with VAT) (A) 1. May to August 2012 200250 17,586 13,939 2. Mar-April 2013 96095 18,097 16,790 3. May-June 2013 110000 18,097 16,790 4. May-Jun 2014 130950 Not Available 16,486 6. Without prejudice, Laptop bags sold in the normal market, are purchased by the Appellant at Rs. 460.78/- and sold with an MRP of Rs. 1,499/-. Therefore, in any case, the MRP of the laptop bags in question cannot be treated to be below Rs. 1,499/- : 6.1 In the impugned order, it has been held that the laptop bags in question bearing MRP of Rs. 2,500/- have been purchased at a price of Rs. 225/- whereas laptop bags sold in normal market bearing an MRP of Rs. 1,499/- have been purchased by the Appellant at Rs. 460.78/-. Therefore, the MRP of the backpack procured at Rs. 225/- has been artificially hiked to Rs. 2,500/- and subtracted from the purchase order price to arrive at the MRP of the laptop. 6.2 In this regard, it is submitted that admittedly, the laptop bags for sale in the normal market are purchased by the Appellant at Rs. 460.78/- and sold with an MRP of Rs.....
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....ecifically questioned by the Department as to who decided on the high MRP of Rs. 2500/- for the laptop bag purchased at a low price of Rs. 225/-. 7.5 This clearly establishes that all the facts relating to procurement of bags locally for Rs. 225/-, supply of laptops along with bags to ELCOT at Purchase Order price, were within the knowledge of the Department as early as 04.07.2013/12.07.2013. Resultantly, the Appellant submits that invocation of extended period for issuance of Show Cause Notice after a period 4 years from the date Department came to know about the impugned imports and the valuation methodology adopted cannot be sustained as no suppression can be alleged on part of the Appellant. 7.6 In CCE v. Essel Propack Ltd., [2015 (323) E.L.T. 248 (S.C.)] it was held that since all the information was already available with the department, extended period cannot be invoked. The said principle was also laid down in CCE v. Spicejet Ltd. [2023 (79) G.S.T.L. 271 (Tri. - Del.)] and Ajit India Pvt. Ltd. v. CCE [2018 (19) G.S.T.L. 659 (Tri. - Mumbai). 7.7 It is argued that the impugned order must be set aside on this ground alone. In Highland Dye Works Pvt. Ltd. v. CCE [2000 (121) ....
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....I 212 - BOMBAY HIGH COURT] has considered a similar issue on levy of interest and penalty in relation to CVD and held that in the absence of specific provisions for levying of interest or penalty due to delayed payment of tax, the same cannot be levied/charged unless the statute makes a substantive provision in this behalf. This decision of the Hon'ble Bombay High Court has been affirmed by the Hon'ble Apex Court in Union of India Vs Mahindra and Mahindra Ltd, [2023 (8) TMI 135 - SC ORDER]. Further, the Review Petition filed by the Department has also been dismissed vide order dated 09.01.2024 in Review Petition (Civil) Diary No. 41195/2023. 8.4 Further, the Tribunal in Acer India Private Ltd. v. CC, Chennai, 2023-VIL-998-CESTAT-CHE-CU, has also affirmed the above view and held that even in cases where differential CVD is payable, there shall be no recovery of interest or confiscation of goods or imposition of fine since the Customs Tariff Act has not borrowed the relevant provisions. Therefore, the imposition of interest, fine and penalty may set aside as being without authority of law. 9. The Ld. Authorised Representative Shri P. Narasimha Rao appeared and argued for the Depart....
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.... related parties. The SVB Order No.465/2013 dt. 25.04.2013 was passed accepting the transaction value with its' foreign supplier in terms of Rule 3 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. The Basic Customs duty, if any has to be discharged by appellant on the basis of the transaction value agreed by the parties. In the present case, the imported laptops were exempted from payment of Basic Customs Duty (BCD) as well as Special Additional Duty of Customs (SAD) in terms of Notification No.24/2005-Cus. dt. 17.3.2012 respectively. The laptops being goods covered under the Legal Metrology Act, 2009 read with Legal Metrology (Packaged Commodities) Rules, 2011, it is incumbent for the appellant to declare and affix the MRP on the goods at the time of import. The Countervailing Duty (CVD) becomes payable on goods imported on which MRP is required to be declared. The allegation of the Department is that appellant declared a lower MRP at the time of import and thus evaded payment of appropriate CVD. 11.2 In the SCN dt. 8.8.2017, the Annexures II and III gives the details of the imports done vide various Bills of Entry and the MRP declared for the imported....
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....r manual in Tamil and English as a single booklet and Do's and Don'ts instruction guide in Tamil and English. The appellant has purchased backpack locally. In such circumstances the appellant, no doubt, is entitled to add this value while supplying to ELCOT. It is not a case where only the imported laptop computer is supplied to ELCOT. According to appellant, they procured the backpack which has market price of Rs.2500/- at a negotiated price of Rs.225/-. The appellant has affixed the new increased MRP on the basis of purchase price agreed with ELCOT. This purchase price includes the price of laptop computer, backpack, the booklet, instruction guide etc. 16. The appellant while declaring the MRP at the time of import has arrived it by deducting the market price of the backpack (Rs.2500/-) from the purchase price [Rs.16,789.50 (-) Rs.2500 = Rs.14,289.50]. A slightly high MRP has been declared, on each piece of laptop computer imported. The statement of Shri Alok Dubey of appellant company reads as under : "10. Shri Alok Dubey, Chief Financial Officer (CFO), M/s Acer India Pvt. Ltd in his statement dated 12.05.14 under Sec 108 of Customs Act, 1962 interalia elaborated his role as ....
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....lso found and detained." 18. On the basis of this combined new MRP, department has arrived at a conclusion that the appellant has misdeclared the MRP at the time of import. According to department, if Purchase Order is taken as the basis of MRP, the said MRP is to be inclusive of all taxes and costs involved. The MRP declared at the time of import was lesser than the transaction value. The department has thus rejected the MRP declared at the time of import and proceeded to redetermine the MRP to demand differential CVD. According to department, since the final bid price with M/s.ELCOT is inclusive of all cost structures, it implies that the quoted price which is inclusive of VAT 5% is to be the actual MRP with the backpack. The department thus redetermined the MRP by deducting the price of bag (Rs.225/-) from the quoted price. (i.e. Rs.17,586 (-) Rs.225 = Rs.17,361/-). The table in para 23 (xv) of the SCN gives the details of method of redetermination of MRP. The table as noticed in para 23 (xv) of SCN is as under : PERIOD OF IMPORT QTY OF IMPORTS QUOTED PRICE W/O VAT QUOTED PRICE WITH VAT PRICE OF BAG WITH CST REDETERMINED MRP OF LAPTOP APR-JUN AUG2012 200250 16749 1758....
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....imported article less such amount of abatement, if any, from such retail sale price as the Central Government may, be notification in the Official Gazette, allow in respect of such like article under clause (2) of the said Explanation. 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." 20. The above provision states that for payment of CVD on imported goods notified under subsection (1) of Section 4A, the value of the imported article shall be deemed to be the RSP declared on the imported article less such amount of abatement. The proviso to Section (3) itself stipulates how the value has to be determined for imported goods to which Legal Metrology Act, 2009 and Rules thereunder apply. There is no provision envisaged herein for redetermination of the MRP. The proviso to subsection (2) of Section 3 merely refers to subsection (1) of Section 4A to indicate the class or description of goods notified. Subsection (2) of Section 4A is referred for allowing abatement on the declared MRP to determine the value for payment of CVD. Thi....
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....such goods, by declaring the retail sale price, then, the said declared retail sale price shall be taken as the retail sale price of such goods : (ii) if the retail sale price cannot be ascertained in terms of clause (i), the retail sale price of such goods shall be ascertained by conducting the enquiries in the retail market where such goods have normally been sold at or about 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. RULE 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....
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....lares 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 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 ....
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....heir 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. ... ... .... 17. We find that in view of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 issued on 1-3-2008, it is abundantly clear that in the absence of such rules issued in terms of sub-section (4) of Section 4A of the CEA, there was no statutory machinery to determine the retail sale price in respect of goods manufactured and cleared by a manufacturer without declaring the RSP on such goods. In the absence of a similar machinery to determine the relevant RSP in CTA, no demand of differential CVD could have been validly raised. In this connection, we rely on the following observations of this Tribunal in the case of Millennium Appliances India Ltd. v. Commissioner of C. Excise, Hyderabad [2009 (248) E.L.T. 713 (Tri.-Bang.)] on the applicability of Central Excise (Determination of ....
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....e also faced with the argument of the assessee that when RSP was not declared on the packages, the same had to be ascertained in the manner prescribed in the statute. As regards the CVD levied under CTA on goods notified for RSP based assessment, CTA does not have similar provisions as contained in the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. In Millennium Appliances India Ltd. case (supra) relied on by the assessee, this Tribunal had held that for the period prior to 1-3-2008, the provisions brought into force on 1-3-2008 could not be applied. As regards the need to determine the RSP not declared on the package by the assessee for the period prior to 1-3-2008, we are not able to distinguish the case on hand from Millennium Appliances India Ltd. case. In that case also RSP was not declared on the package and had to be determined. Following the above decision of the Tribunal, we hold that the impugned order adopted a method to determine the RSP without sanction of law. 19. We find that the principle of purposive construction cited by the learned Special Consultant for the Revenue envisages interpretation of provisions in such a manner tha....
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....rder, which has relied on the decision of the Tribunal not reversed by any higher authorities. Accordingly, the appeal is dismissed." 24.2 The Ld. A.R has relied upon the decision in the case of Nitco Tiles (supra). There was difference of opinion between the Members and it was referred to Third Member for resolving the difference of opinion. The Member (Judicial) has taken the view that once any RSP has been affixed by an importer and duty has been paid (based upon such affixed value) and later on, if it is found that the affixed RSP is not true and correct, even in such a situation, the duty already paid is as per law and nothing more is required to be recovered for the reason that there is no machinery in Section 3(2) of Customs Tariff Act, 1975 to redetermine the RSP. 24.3 On the other hand, the Member (Technical) had taken the view that reference to Section 4 (1) and Section 4A (2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) to Customs Tariff Act, 1975, thereby meaning that if RSP is found to be incorrectly affixed/declared, then the same can be redetermined for payment of Excise Duty and Countervailing Duty in case of imports. 24.4 The ....
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.... 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 does not include - (a) the duty referred to in sub-sections (1), (3) and (5); (b) the safeguard duty referred to in sections 8B and 8C; (c) the countervailing duty referred to in section 9; and (d) the anti-dumping duty referred to in section 9A:' However, the proviso requires that the value of the imported article be deemed to be the 'retail sale price' declared on the imported article less such amount of abetment, as by notification allowed. It is, therefore, apparent from Section 3 of the Customs Tariff Act, 1975 that no provision exists for ascertainment of 'retail sale price' in the same manner as provided for in Section 4A of Central Excise Act, 1944. The purpose of Section 4A of Central Excise Act, 1944 has been clearly articulated when it was incorporated in the statute. On the other hand, Section 3 of Customs Tariff Act, 1975 was intended to ensure that the valuation adopted for customs purpose, would have to conform to the price at which the good....
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.... excise which is collected not in accordance with the manner prescribed, would be without authority of law; (iii) It, therefore, follows that it would be impermissible for any adjudicating authority to ascertain the RSP by any other methodology, for such an ascertainment would be contrary to the statutory prescription contained in sub-section (4) of section 4A and would have the effect of empowering an adjudicating authority to determine the manner of ascertaining the RSP; (iv) The 2008 Rules are not procedural in nature and cannot, therefore, be given any retrospective effect; (v) Even, otherwise a rule framed by the delegatee of the legislature does not have retrospective effect, unless the statutory provision under which it is framed allows retrospectivity, either by use of specific words to that effect or by necessary implication; and (vi) It is, therefore, not possible to accept the views expressed by the Division Bench in Schneider Electrical that the 2008 Rules are procedural in nature and, therefore, can be applied retrospectively. 90. The reference made by the Division Bench to the Larger Bench of the Tribunal is, accordingly, answered in the following manner: ....