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2015 (8) TMI 192 - CESTAT MUMBAI (LB)

2015 (8) TMI 192 - CESTAT MUMBAI (LB) - 2015 (325) E.L.T. A202 - Valuation of goods - Computation of CVD on MRP basis - Re-labelling of boxes of Vitrified and Glazed tiles with higher MRP - Scope of Section 4A of Central Excise Act, 1944 for computing CVD on import of goods - Extended period of limitation - Confiscation of goods - Imposition of redemption fine and penalty - Difference of opinion - Majority order - Held that:- There is no dispute that goods are covered by scheme of Section 4A of .....

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sale price declared by them to the Customs.

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 - Tax payer cannot be permitted to himself misdeclare the RSP, thereby evade payment of correct amount of duty.

Reference to Section 4A of the Central Excise Act to affix RSP is not to affix any RSP but true and correct RSP - .....

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has to be determined based upon the best judgment method which should be in accordance with Section 4A. - provisions of Section 3(2) of the Customs Tariff Act will not become ineffective in the absence of Section 4A(4) of the Central Excise Act, 1944 for the imports made prior to 14.5.2003.

In taxation of law, it is not unusual to use the best judgment method keeping in view the purpose and object of the law/particular provision.

There are number of bills of entry where de .....

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d 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.

Appellant has declared a MRP at the time of import 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 (2004 (10) TMI 209 - CESTAT, NEW DELHI). Decision in the case of Media Industries (2006 (4) TMI 275 - CESTAT, N .....

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T] is equally applicable in the present case.

Appellants had declared certain RSPs and sold the goods both below the declared RSP in some cases above the declared RSP. However, as discussed, with reference to para 4, it has not been possible to clearly pinpoint the consignments or part of the consignment where goods have been sold at a price more than the declared RSP and hence RSP is misdeclared. Even the computation of the duty short paid is based upon number of assumptions. - confi .....

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er (Technical) (Third Member on Reference) For the Appellant : Shri V Sridharan, Sr. Adv. & Shri Ratan Jain, CA For the Respondent : Shri K M Mondal, Spl. Counsel ORDER Per: Ashok Jindal: The appellant has filed this miscellaneous application to urge additional grounds on the jurisdiction to issue show-cause notice under Section 28 of the Customs Act by Additional Director (General), DRI, Mumbai. We find that the ground taken by the appellant is legal one therefore, the miscellaneous applica .....

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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 Notif .....

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Intelligence was gathered that Nitco was indulging in evasion of CVD by declaring lower Maximum Retail Price (MRP) or Retail Sale Price (RSP) in selling the titles at prices higher than the declared MRP. Based on this information, the DRI conducted investigation into the imports made by the Nitco. Statements of various officers were recorded and thereafter a show-cause notice came to be issued on the allegation that Nitco mis-declared MRP of the imported tiles in the bills of entry and thereby c .....

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mp; Measures (Packaged Commodities) Rules, 1977. The show-cause notice proposed to explain as to why (i) correct MRP/RSP of the imported tiles should not be taken as given in column 12 of Annexure B and column 6 of Annexure C of the show-cause notice instead of what was declared in the bills of entry, (ii) why not the differential customs duty be demanded (iii) why the goods should not be confiscated and (iv) penalty should not be imposed. Adjudication took place and the proposals made in the sh .....

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re, they wants to urge the said ground is required to be considered being legal in nature. 6. On merit, he submitted that as Nitco is engaged in the trading of imported tiles which were sold directly to builders, hospitals and hotels without any intermediary involved in such sales. In some cases, the tiles were sold to dealers who in turn sell the same to builders, hospitals and hotels. The imported tiles are of different shade, size, colour, design and grade. Therefore, the sale price of the ti .....

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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 s .....

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sold or to be sold. In the instant case, it is an accepted position that the appellants have indeed affixed/declared the RSP at the time of import of tiles and the same duly declared on the packages at the time of tiles imported into India and CVD was assessed and paid qua price of the clearance from the port. He relied on the Supreme Court decision in the case of ITC Ltd. vs. CCE - 2004 (171) ELT 433 (SC). It is further submitted that in the impugned order the adjudicating authority has relied .....

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so to Section 3(2) of Customs Tariff Act shows that Section 4A(4) of Central Excise Act, 1944 and Explanation 1 and 2 of Section 4A of Central Excise Act, 1944 are not relevant for purpose of Section 3 of Customs Tariff Act, 1975. He relied on the decision of the Tribunal in the case of ABB Ltd. v. CC - 2011 (272) ELT 706 (Tri. Bang.) to support that Section 4A(4) of the Central Excise Act, 1944 is not relevant for the purpose of Section 3(2) of CTA, 1975. He submitted that the decision in the c .....

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can be applied in respect of goods cleared 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. ( .....

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f 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) ELT 703 (Tri). He further submitted that an amendment to Section 4A of the Central Excise Act, 1944 made by Finance Act, 2003 cannot apply to period prior to that date. He further submitted that proviso to Section 3(2) introduced by Finance Act, 2001 will be .....

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2011 (266) ELT 399 (T) and ABB Ltd. (supra). He further submitted that according to the show-cause notice, the price on which the imported tiles were sold to their customers is the RSP. Not even an allegation or suggestion that sale price is not genuine or any other consideration flowed to the appellants from the customers. According to show-cause notice, maximum of the RSPs at which the tiles were sold by the appellants should be construed as the MRP, the sole reason for the same is the explana .....

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t case since on the packages of imported tiles only one MRP was declared and also for each category tiles sold under one invoice, only one price has been charged by the appellants from the customers. He also submitted that in any case the highest of the RSPs among the different RSPs affixed on different packages or the highest price at which the tiles of a particular colour is sold cannot be the basis for determination of the value of various varieties of the tiles of such colour even by applyin .....

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(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 v .....

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d on the basis that the price at which the imported tiles were sold should be the basis then respective sale price alone should have been considered and not the highest of the sale price of the tiles for all types of tiles. He further submitted that in the show-cause notice, as well as, in the impugned order a blunder has been done. In fact, both considered the size of tiles is based on number of other factors i.e. colour, shade, design, nature of the pigments used, grade of tiles etc. On this i .....

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for the impugned period of after six months is barred by limitation. He further submitted that the imposition of penalty and confiscation of goods are without any basis and the same are not sustainable. He further submitted that in the light of decision in the case of Shiv Kripa Ispat Pvt. Ltd. v. CCE - 2009 (235) ELT 623 (Tri. LB) redemption fine is not imposable as the said goods are not available for confiscation. Lastly he submitted that under Section 114A of the Customs Act, 1962, no penalt .....

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e department is that after clearance of the impugned goods, Nitco has changed the MRP stickers affixed on the package of the impugned goods which was per sq. mtr. to MRP per box and a new sticker/stamp was affixed thereon showing MRP per box. This 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 account .....

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ces 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 was found to be ₹ 667.37/- per sq.mtr.in respect .....

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ection, he relied on the decision in the case of M/s. ABB Ltd. (supra). In that case ABB Ltd. had imported electrical apparatus without declaring the RSP in the bills of entry. The said goods were cleared on payment of duty in terms of Section 4 of the Central Excise Act, 1944. After clearance, the appellant had sold the said goods allegedly by mis-classifying the same under Chapter Heading 85.8 instead of 85.36. According to the department, the said goods being pre-packed commodity merited MRP .....

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d without declaring RSP on the goods. Similarly, in the absence of similar machinery provisions to determine RSP in CTA, no demand of differential CVD could have been validly raised. Therefore, the Tribunal's decision in ABB Ltd's case is totally different. In fact, in the case in hand there is no dispute that Nitco had declared the MRP in the bills of entry and paid CVD in terms of Section 4A of the Central Excise Act, 1944. However, after clearance, Nitco sold the imported goods at dif .....

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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 rele .....

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oms authorities to permit further mutilation of the goods before clearance. He also relied on the decision in the case of Shipping Corporation of India Ltd. v. CC Madras - 1998 (98) ELT 78 (Mad) in the context of Section 115(2) of the Customs Act, 1962 providing for confiscation of conveyances wherein the Hon'ble High Court held that non-framing of the rules contemplated in Section 115 (2) of the Customs Act, 1962 could not be pleaded as a valid defence against the vessel and the absence of .....

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workable. He further submitted that the present case is squarely covered by the decision in the case of Planet Sports Pvt. Ltd. v. CC - 2005 (180) ELT 206 (T). He further submitted that on behalf of Nitco it is contended that "the value as defined in Section 2(41) of the Customs Act, is different from the MRP therefore, the alleged mis-declaration with respect to the MRP on the said goods will not attract the provisions of Section 111(m) of the said Act. Consequently, impugned goods are not .....

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of MRP declared in the bill of entry. As mis-declaration in respect of MRP of the impugned goods have been established on record, the impugned goods are clearly liable to confiscation under Section 111(m) of the Customs Act, 1962. Consequently, the appellant is liable for penalty. He further submitted that the Customs Act, 1962 and the Customs Tariff Act, 1975 are complementary to each other. Together they form a composite legislation or an integrated code. That is very clear from the reading o .....

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ered 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 cle .....

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per sq. meter, the sticker of ₹ 500/- per box has been affixed. It does not amount that the appellant has changed the MRP. The appellant has only changed the stickers for ease of convenience to show that the price per box is as per the MRP declared at the time of Customs clearance. Therefore, the inference drawn by the Learned Spl. Counsel for the Revenue that the stickers have been changed is not sustainable. 9.1 It is an admitted fact that in some cases the appellant had sold the goods o .....

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Levy of additional duty equal to excise duty. 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 (60 of 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 pro .....

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llow in respect of such like article under sub-section (2) of section 4A of that 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 .....

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at 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 of the price is to be taken as assessable value which has been derived in the impugned order. We find the Section 4A of the Central Excise Act, 1944 provides for determination of duty payable on excisable goods on the basis o .....

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he Central Excise Act, 1944 certain goods have been notified for payment of excise duty based on MRP less admissible abatement, such an article when imported into India same shall be subjected to CVD on MRP less the same percentage of abatement provided by the said Notification. Therefore, the provisions of Section 4A(4) and Explanation 1 & 2 thereto are irrelevant and inapplicable for purpose of proviso to Section 3(2) of CTA 1975. The Explanation to below proviso to Section 3(2) of Customs .....

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is for very limited purpose. 9.4 We also agree with the arguments advanced by the learned Counsel for the appellant that prior to 14.05.2003, Section 4A(4) of Central Excise Act, 1944 merely provided for confiscation of offending imported excisable goods. We further agree with the argument of the learned counsel for the appellant that proviso to Section 3(2) introduced by Finance Act, 2001 will be governed by Section 4A as on 11.05.2011 and subsequent amendment to Section 4A is not relevant for .....

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riff 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 decla .....

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16 (60 of 1976) or the rates 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 goods, to which the provisions of sub-section (2) shall apply. (2)Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such .....

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g the retail sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained i .....

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ice is the sole consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in subsection (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 t .....

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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 shall, in .....

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lip;………….. Explanation. - In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where .....

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f 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 (60 of 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 wh .....

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ion 4A of that 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 thi .....

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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 les .....

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where the importer does not declare the RSP on the imported package. 14. A notification was issued in terms of sub-section (4) of Section 4(A) of the CEA on 1 March 2008. The pertinent portions of the Notification No. 13/2008 CE (NT) under which Central Excise (Determination of Retail Sales Price of Excisable Goods) Rules 2008 were issued are reproduced below: "In exercise of the powers conferred by section 37 read with sub-section (4) of section 4A of the Central Excise Act, 1944 (1 of 19 .....

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s the excisable goods specified under sub-section (1) of section 4A of the Act, - (a) without declaring the retail sale price on the packages of such goods; or (b) by declaring the retail sale price, which is not the retail sale price as required to be declared under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or rules made thereunder or any other law for the time being in force; or (c) by declaring the retail sale price but obliterates the same after their rem .....

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ce 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 i .....

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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 these rules, the retail sale price shall be ascertained in accordance with the principles and the provisions of section 4A of the Act and the rules aforesaid." (Emp .....

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dated 1.3.2008, RSP of the goods indigenously manufactured and not declared on the package by a manufacturer can be determined in terms of these rules. We find that before issue of these rules, there was no machinery prescribed to determine the RSP of excisable goods for the purpose of assessment under Section 4 (A) of the CEA where the RSP is not declared by the manufacturer. 15. As far as the CVD under Section 3 of the Customs Tariff Act is concerned, the Government is yet to similarly prescr .....

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o recover the same. We find that the situation obtaining in the case on hand is similar to the situation covered by the above judgment. The Section 11D of the Act had provided that "every person who has collected any amount from the buyer of any goods in any manner as representing duty of excise shall forthwith pay the amount as collected to the credit of the Central Government". 15.1 On a reading of the above provision, there is no ambiguity as regards the legislative intention. Howev .....

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t 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 penal .....

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erit in this submission of ABB. However, this claim was not raised before the lower authority and the facts have not been verified. 16. Revenue had argued that in the Notification issued under Section 4A (4) of CEA effective from 1.03.08, it was prescribed that RSP could also be determined following the principles governing fixation of RSP as provided under Section 4A (4) of CEA. These provisions applied retrospectively as it referred to the Section 4(A)(4) which existed all along. The method co .....

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customs clearance of imported goods at a lower RSP along with imposition of fine and penalty in the case of Planet Sports Pvt. Ltd. Vs. Commissioner of Customs, New Delhi [2005 (180) E.L.T 206 (Tri.-Del.)]. 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 det .....

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ral Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 prior to 1.3.2008: "It can be noted that these rules came into force with effect from 1-3-2008. We are of the considered opinion that if these rules came to be effective on 1-3-2008, the ascertaining of value of similar goods has to be done so, with effect from 1-3-2008 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 .....

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ace 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 f .....

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il Sale Price of Excisable Goods) Rules, 2008 following the principles informing the legislative policy prescribing RSP as the value. We find that the judgment elaborately deals with interpretation of the language of a statute in such a manner to effectuate the intention of the legislature. In the case on hand, we are not faced with the task of interpreting a provision which can accommodate more than one meaning. We are also faced with the argument of the assessee that when RSP was not declared .....

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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." The decision is squarely applicable to the fact .....

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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 App .....

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peds 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 and set aside and its operation stayed by the higher court. The judgement being stayed does not wipe it out unless and until it so wiped out, it continues to be binding on the lower and subordinate courts. Thus, the learned Judge ought to have decided the application on the touch stone of the law laid down by this court as als .....

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(supra) has no relevance to the facts of this case as the same was in some other context. 9.8 We further find that the rules to determine RSP under the Central Excise Act, 1944 came into force in 2008 to ascertain the RSP in a prescribed manner. During the period in question there was no rules to determine RSP. Therefore, the Rules framed in 2008 that too under Central Excise Act are not relevant in this case as per the decisions of Millennium Appliances India Ltd. (supra), Ravi Foods Pvt. Ltd. .....

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07.07.2014. 9.9 The contention of the learned Spl. Counsel for the Revenue is that the provisions of Central Excise Acts/Rules and Customs Acts/Rules are para material to determined RSP. We have not convinced with this arguments as in the case of Central Excise Acts, the duty is payable on manufacture and at the time of clearance of the goods but in the case of Customs, duty is payable at the time of procurement of goods. Particularly, in the case to arrive the assessable on the basis of MRP for .....

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re 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 b .....

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nto consideration i.e. not the goods. In any case, the highest of MRP's among different MRPs affixed on different package or the highest price at which the tiles of a particular colour is sold cannot be the basis for determination of the value of various varieties of tiles of such colour even by applying Explanation 1 to Section 4A of the Central Excise Act, 1944. The higher MRP can be determined only when more than one MRP is fixed on the same package and not other situation. In this case, .....

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onal to march 2003 to July 2004. The provisional assessment were finalized in August 2004 when the facts were known to the department during the investigation prior to finalization in (August 2004 itself) as the show-cause notice has been issued after six months of such finalization. Therefore, extended period of limitation is not invokable. Therefore, the demand which pertains to the period beyond the limitation period are also not sustainable. We further find that confiscation under Section 11 .....

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r this Section is not warranted. 9.13 We further find 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 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 agains .....

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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 also not sustainable. 10. To conclude, as discussed above, we hold that the appellant has paid duty on MRP declared as per the Se .....

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able to agree with his views. Therefore, I am passing a separate order. 13. Heard both sides. Considered the submissions. 14. The matter in this case involves both facts and law. The details of the case may not be repeated here except where I want to highlight some facts which have a strong bearing on the case. That the imported goods namely vitrified tiles/ceramic tiles being specified under notification No. 5/2001-C.E (NT) dt. 1.3.2002 issued under Section 4A(1) of the Central Excise Act, 1944 .....

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oms Act, 1962, Shri Anup Kumar Parashar, Asstt. General Manager (Customs & P.R.) stated, inter alia, that they imported vitrified tiles from China & UAE his job involves customs clearance work of imported consignments that Mr. V.G. Borkar, Vice President-Finance is responsible for imports and pricing; that the tiles are stocked at Alibaug and Kanjur marg divisions; that at the time of Customs clearance they affixed MRP stickers as required under the Standards of Weights and Measure Act, .....

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asis 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 .....

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t to the question as to whether it is possible from their accounting and stock accounting records to determine which particular imported tile has been sold vis-a-vis which particular Bill of Entry the said sold tile is related, to, he stated that it is not possible to relate a particular sale of tiles to a particular Bill of Entry; 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. consider a Bill of Entry starting .....

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yment of CVD and SAD Customs duty; that the said statement shows the import B.E. details and the corresponding sales of the imported tiles including the RSP (Retail Sale Price) i.e. MRP declared to Customs, the total sale amount of these tile inclusive of taxes the RSP or the value per square metre for the sales and the actual MRP (with corresponding sale invoice number) which should have been declared. (iii) Shri Vivek P. Talwar, Managing Director stated that he has gone through the statements .....

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to decisions on import pricing and sale pricing that they have sold the imported tiles at prices higher than the MRP/RSP declared to Customs in a few cases and that he agrees to pay the differential duties in these cases. 16. The above statements recorded under Section 108 of the Customs Act reveal that the appellants did sell tiles of various sizes to the dealers at prices which were higher than the MRP declared on the packages before the same were cleared from Customs. It is noted that the sta .....

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P. 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) calculatin .....

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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 does not include the duty referred to in sub-sections. 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, 19 .....

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, 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 the Central Excise Act, 1944 (1 of 1944) Explanation. - Where on any imported article more than one retail sale price is declared, the maximum of such reta .....

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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 Cent .....

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. 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 does not arise, he said. He also argued that, in any case, there is no Rule prescribed to ascertain the retail sale price under the situation specified in sub Section (4) of Section 4A. In other words, even after the amendment made to Section 4A with effect from 14/5/2003, the retail sale price cannot be ascertained for the excisable goods whic .....

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force, to declare on the package thereof the retails sale price of such articles; 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 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) ....." I have underline the words 'required .....

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"declared" in the case of imported goods which are specified under Section 4(A)(1) of the Central Excise Act. The question which arises is - what is the retail sale price that is required to be declared. For this we have to revert to the provisions of Standards of Weights and Measures Act, 1976 and the Rules made thereunder. These Rules called the Standards of Weights and Measures (Package Commodities) Rules 1977 define retail price (RSP) under Rule 2(r) as 2(r) - "retail sale pri .....

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ay 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 ( .....

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on as well as the administrative problem of having a large number of prices at which the goods are sold. Therefore, the law makers found it prudent to levy duty on the basis of a single price which is the MRP. And once a true MRP exists by law, there is no escape from the levy of duty on all goods of the same kind (size in this case) on that MRP. 17.4 The argument that entire provisions of Section 4A of the Central Excise Act are not applicable and Section 4A has limited application as far as Se .....

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aring the RSP, and actually the goods were cleared by paying CVD in terms of Section 4 of the Central Excise Act, 1944 by misclassifying the goods. In the present case the facts are different. Here the MRP was wrongly declared in the Bill of Entry. After clearance from Customs, the appellants sold the goods at prices which are different from the MRP declared by them. The case of Revenue is that the MRP was wrongly declared. It is my considered view that even if there are no machinery provisions .....

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ection 24 of the Customs Act. The Hon'ble High Court held that ".............Therefore, if the import of such rags is to continue, a pragmatic approach is called for Section 24 of the Customs 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 provisio .....

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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 framing of rules under Section 115(2) of the Customs Act was an issue. It was held by the Hon .....

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of our conclusion expressed supra that the absence does not impede or pose any obstacle in the effective enforcement of the provisions under Section 115(2), at any rate, in the cases of the nature, where there are evidence on record, on the basis of which, the adjudicating Authority as a fact finds and was satisfied that the contraband goods recovered from the ship could not have been present or carried without the knowledge of the Master of the ship having regard to the volume or quantity of su .....

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asa Rao v. Govt. of Andhra Pradesh & Another - 2006 (13) SCALE 27]. It is, however, also well-settled that the machinery provisions for calculating the tax or the procedure for its calculation are to be construed by ordinary rule of construction. Whereas a liability has been imposed on a dealer by the charging section, it is well-settled that the court would construe the statute in such a manner so as to make the machinery workable.............In M/s. Ispat Industries Ltd. vs. Commissioner o .....

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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, w .....

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": It was urged that no rules were framed in respect of the valuation of land and buildings. But s. 7 only directs that the valuation of any asset other than cash has to be made subject to the rules. It does not contemplate that there shall be rules before an asset can be valued. Failure to make rules for valuation of a type of asset cannot therefore, affect the vires of s. 7. It was also said that s. 7 (1) which requires that the asset shall be valued at the price which it would fetch if s .....

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been shown that Rules may not be necessary to determine the correct MRP. There is only one MRP which is to be considered and that MRP is well defined within the parameters of Section 3(2) of CTA. The correct MRP is fixed under the Standards of Weight and Measures Act read with Section 3(2) of the Customs Tariff Act. These two Acts clearly define what MRP is and what is the MRP on which CVD is required to be paid under Section 3(2) of the Customs Tariff Act. And this is precisely what Revenue ha .....

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ubsequently. This fact has been admitted by Shri Dipak Agarwal, Financial Controller of the Appellants, in his statements. Accordingly, the appellants are liable to discharge their duty liability on the basis of actual MRP at which the impugned goods are sold and not on the basis of MRP declared by them............. In the present matter before us, it was incumbent upon the importer to declare the MRP at which the imported goods were to be sold and not any other price. The judgment in the case o .....

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nts 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 fina .....

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eived from the customer, and as also rightly pointed out by the Ld. Sp. Counsel for Revenue what the law requires is that MRP should be the MRP defined in the statute laid down in the Standards of Weights and Measures Act, along with the Rules framed thereunder. The law does not leave scope for any other interpretation. 20. It has also been argued by the appellants that the highest MRP can be adopted only when more than one MRP is affixed on the same package in terms of Explanation to Section 3( .....

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ghts and Measures Act. And this is the essence of the proviso to Section 3(1) of the Customs Tariff Act, which uses the word "in relation to which it is required under the provisions of the Standards of Weights and Measures Act (SWM), 1976 or Rules made there under." The retail sale price has to be that which is required to be declared under the SWM Act. And no other price. I have explained in para 17 above as to which retail sale price should have been declared. 21. Another argument o .....

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ing authority has stated that in the sale invoices issued to the local 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. .....

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s 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 limitation. Completion of investigation takes time and in this case the investigations were complex elaborate and time consuming. I have related the details of the case above, and the fact that all senior officers clearly admitted to s .....

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ms Tariff Act for confiscation and imposition of penalties. This contention is rejected straightaway by referring to Section 3(6) of the Customs Tariff Act, which states that "the provisions of the Customs Act 1962 and Rules and Regulations made thereunder, including those relating to drawbacks, refunds and exemption from duties shall, so far as may be they apply to the duty chargeable under this Section as they apply in relation to the duties leviable under that Act." The word 'in .....

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rspective. For better appreciation we may refer to the Sections 111(d), 111(m) and 111(o) of the Act as reproduced below: "Section 111. Confiscation of improperly imported goods, etc. The following goods brought from a place outside India shall be liable to confiscation. (m) "any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under Section 77 in respect thereof or in the .....

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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)/1997-200 .....

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ms for home consumption. All prepackaged commodities, imported into India, shall in particular carry the following declarations: (e) Maximum retail sale price at which the commodity in packaged form may be sold to the ultimate consumer. This price shall include all taxes local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertising, delivery, packing, forwarding and the like, as the case may be. The prohibition laid down in the import policy h .....

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n the Managing Director, Vice President (Finance) and Assistant General Manager under Section 112(a) & (b) are also upheld. 25. The argument put forward by the appellant, that action cannot be taken under the Customs Act, for the reason that Section 3(2) of the Customs Tariff Act is a self contained law, is a little farfetched and not accepted. Section 12 of the Customs Act is the charging Section which states that "except as otherwise provided in this Act or any other law for the time .....

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ct. A perusal of the scheme of these two enactments makes it absolutely clear that though they are two separate enactments, one cannot be given effect to without the other Section 12 of the Customs Act levies the charge and indicates the taxable event. The rates, 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 s .....

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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 appeal of the appellant .....

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ection 4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) of the Customs Tariff Act as held by Member (T). 2. Whether the provisions of Section 4A(4) of the Central Excise Act, 1944 are not applicable for the import made prior to 14.05.2003 in terms of provisions of Section 3(2) of the Customs Tariff Act as held by Member (J). Or The provisions of Section 3(2) of the Customs Tariff Act, will not become ineffective in the absence of Section 4(A)(4) of .....

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toms Tariff Act, 1975 as held by the Hon'ble Member (Techncial). 4. Whether in the facts and circumstances of this case, FIFO method adopted by the revenue is without sanction of laws to arrive at the MRP of the goods as held by the Hon'ble Member (Judicial). Or It is most reasonable method to arrive at the MRP in the absence of records to correlate Bills of Entry and invoices and in the absence of any other more judicious method as held by the Hon'ble Member (Technical). 5. Whether .....

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he 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 .....

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y 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). (Order pronounced on 21.11.2014) Order No.M/2879/15/CB Date of Hearing: 26.2.2015 Third Member on reference: Shri P K Jain, Member (Technical) Appellant Rep by: Shri S Srid .....

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duty leviable on such goods. On excise side, the said goods are covered under Section 4A, i.e. the duty is to be charged based upon RSP (Retail Sale Price) after giving notified abatement. The appellants were clearing the goods after declaring certain RSP. At the time of import, the appellants were declaring RSP on per square meter basis (and not on the basis of the quantity contained in the box). Stickers were put on the boxes at the time of import and tiles were being cleared thereafter from t .....

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. Revenue's case is therefore that the highest price at which the tiles were sold by the appellant is the correct RSP. BY not declaring the correct RSP, appellant has evaded the duty. 29. In order to appreciate the various issues in correct perspective, it would be necessary to see the relevant provisions under the Customs Tariff Act, 1975. The Customs Tariff Act, 1975 was an Act to consolidate and amend the law relating to customs duties. Section 2 of the said Act states that the rates at w .....

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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 .....

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, local taxes and other charges. - (1) Any article which is imported into India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the 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 that percentage of the value of .....

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ime being in different States on the class or description of alcoholic liquor to which such imported alcoholic liquor belongs. Explanation. - In this sub-section, the expression "the excise duty for the time being leviable on a like article if produced or manufactured in India" means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable .....

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d article determined under sub-section (1) of section 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- .....

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iption 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 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-sectio .....

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duty leviable on any raw materials, components and ingredients of the same nature as, or similar to those, used in the production or manufacture of such article, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty representing such portion of the excise duty leviable on such raw materials, components and ingredients as, in either case, may be determined by rules made by the Central Government in this behalf. (4) .....

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al duty as would counter-balance the sales tax, value added tax, local tax or any other charges for the time being leviable on a like article on its sale, purchase or transportation in India, it may, by notification in the Official Gazette, direct that such imported article shall, in addition, be liable to an additional duty at a rate not exceeding four per cent. of the value of the imported article as specified in that notification (6) The provisions of the Customs Act, 1962 (52 of 1962) and th .....

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r 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 char .....

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um sales-tax, local tax, other charges for the time being in force, which shall be leviable on a like article, if sold or purchased in India, or if a like article is not so sold or purchased which shall be leviable on the class or description of articles to which the imported article belongs. (2) For the purpose of calculating under this section the special additional duty on any imported article, the value of the imported article shall, notwithstanding anything contained in section 14 of the Cu .....

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ition to, and in the same manner as, a duty of customs, but not including the special additional duty referred to in sub-section (1); and (iii) the additional duty of customs chargeable on that article under section 3 of this Act.(3) The duty chargeable under this section shall be in addition to any other duty imposed under this Act or under any other law for the time being in force.(4) The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including .....

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ere merged and replaced by new Section 3 in 2005. For the purpose of this case, old Section 3 would be relevant as dispute pertains to the period prior to 2005. 29.4 As far as the lis in the present case is concerned, it is relating to additional 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 .....

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s 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 side compared to the transactional value within the cou .....

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a-vis the supplier abroad and the buyer/importer in India will not be on the same footing. Keeping in view this factor, transaction value between supplier abroad and buyer/importer in India is not taken as value for purpose of computing CVD. However, at the time of import, it is difficult to assess or value such factors. Sub-section(2) of Section 3 of the Customs Tariff Act,1975 therefore defines how to compute the value for purpose of charging the countervailing duty. As per Section 3(2) of the .....

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reference to the retail sale price of the goods. Thus, for goods specified under Section 4A, it is not the transaction value but value arrived at taking retail sale price declared on such goods less such amount of abatement, if any, as the Central Government may allow by notification. Further, Explanation 1 after sub-section (4) of Section 4A defines "retail sale price" means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and inclu .....

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e 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 .....

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b-section (1) of section 4A 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, 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 the Central Excise Act Explanation. - Where on any imported article more than one retail sale price is declared, .....

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as is being done for excise purpose, viz. importer will be required to declare RSP on the goods imported. Abatement as prescribed under the Excise Law will be allowed on the declared RSP and on the value so arrived, duty at the rate as prescribed under the Central Excise tariff Act will be charged. It is interesting to see that in case of goods covered by Section 4 viz., transaction value does not exist and there is no need to go for value (which is deeming in nature) under main Section 3(2) of .....

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force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may a .....

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le 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 advertis .....

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e prices shall be deemed to be the retail sale price; (b) 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." 29.6 In the present case, there is no dispute that goods are covered by scheme of Section 4A of the Central E .....

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eclared by them to the Customs. The issue is whether the declared sale price should be taken as RSP or the highest of actual retail prices should be taken as RSp for CVD purposes. 30. The first point of difference of opinion reads as under:- 1. Whether the reference to Section 4A of the Central Excise Act is for a very limited purpose i.e. to affix RSP and abatement with respect to the Explanation to Section 3(2) of the Customs Tariff Act as held by Member (J). Or The reference to Section 4A(1) .....

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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. 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 .....

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e 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 Ltd. vs. CCE, New Delhi reported in 2004 (171) ELT 433 (SC). The learned senior counsel also relied upon the judgment of the Hon'ble Supreme Court in the case of Innamuri Gopalan referred in the judgment of ITC Ltd. (su .....

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fit of various persons in the logistic chain i.e. distributor, wholesaler, sub-wholesaler and retailer and finally cigarettes were being sold by retailer at a price higher than the printed price. The Hon'ble Supreme Court in that case held that it is for the persons who are involved in the logistic chain, to decide whether to do their business with the available margins or not press for higher margin with ITC Ltd. They may not do that business and in case such wholesalers/retailers are selli .....

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) in para 36 has observed as under:- "36. There is no allegation of any 'flow back' in the appellant's case. Therefore the 'permitted' course of action or sale by the retailer is statutorily prescribed under the 'the SWM Act' and the Packaged Commodities Rules.............." The facts in the present case are entirely different. In the present case, the importer himself is charging a price higher than the RSP declared to the Customs. Thus there is realization .....

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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 impor .....

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axes local or otherwise, freight, transport charges, commission payable to dealers, and all charge towards advertisement, delivery, packing, forwarding and the like, as the case may be, and the price is the sole consideration for such sale." Tax payer cannot be permitted to himself misdeclare the RSP, thereby evade payment of correct amount of duty. 31.3 In view of the above position, in my considered view, reference to Section 4A of the Central Excise Act to affix RSP is not to affix any R .....

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:- 2. Whether the provisions of Section 4A(4) of the Central Excise Act, 1944 are not applicable for the import made prior to 14.05.2003 in terms of provisions of Section 3(2) of the Customs Tariff Act as held by Member (J). Or The provisions of Section 3(2) of the Customs Tariff Act, will not become ineffective in the absence of Section 4(A)(4) of Central Excise Act, 1944 for the import made prior to 14.05.2003 as held by Member (T). 32.1 Both Member (Judicial) and Member (Technical) have made .....

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ct, 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, "ret .....

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kage, 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 manufacture, is alte .....

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.e.f. 14.5.2003 that law provides that in case of tampering, obliterating or altering the RSP, the RSP of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price. Member (Technical), on the other hand, has taken the view that even before 14.5.2003, the provisions of Section 3(2) of the Customs Tariff Act will not become ineffective in the absence of Section 4A(4) of the Central Excise Act, 1944 for the import made prior to 14.5.2003. A .....

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us, in effect, before 14.5.2003, the law was silent on how to determine the correct RSP in situations enumerated earlier. W.e.f. 14.5.2003, the law provided that RSP will be ascertained in the prescribed manner. Of course, even the new Section 4A(4) did not prescribe the details and was to be prescribed by means of rules which were notified much later. Member (Judicial), in effect, is taking the view that before 14.5.2003, if a manufacturer and importer misdeclares the RSP on the package, then t .....

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rted 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 du .....

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re relevant for determining the value of the goods under Section 4A in respect of indigenously produced goods would automatically be applicable to imported goods. If some part of Section 4A is irrelevant in a particular situation, obviously that part will not be applicable. However, it cannot be said that only a part of Section 4A will become applicable and other is inapplicable until and unless the provisions of law say so. It is not the case of either Member (Judicial) or Member (Technical) th .....

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in the provisions of the Standards of Weight and Measure Act, 1976 (60 of 1976) or the Rules made thereunder or under any other law for the time being in force to declare on the package thereof a retail sale price of such goods, then the provisions of sub-section (2) shall apply and sub-section (2) provides that the value will be based upon the retail sale price declared on such goods. Thus, Section 4A presupposes a requirement for declaring the retail sale price. Obviously the declaration has t .....

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ealers and all charges towards advertisement, delivery, packing, forwarding and the like. Since the appellant himself has sold the goods at a price higher than the declared RSP, the declared RSP cannot be considered as true declaration of the price. In fact, after the appellant has sold the goods, the dealers would be selling the same goods on prices still higher than the appellant's prices, but since these details were not available, the Revenue has taken the price at which the goods have b .....

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deed 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 (Determinatio .....

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method which should be in accordance with Section 4A. This is exactly what has been done in the present case. In my view, the provisions of Section 3(2) of the Customs Tariff Act will not become ineffective in the absence of Section 4A(4) of the Central Excise Act, 1944 for the imports made prior to 14.5.2003, as held by Member (Technical). 33. The third point referred to me is as under:- "3. Whether the price at which the goods have been sold to the consumer should be construed to be RSP f .....

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sold to the consumer should be construed to be RSP for demanding duty (CVD) as per Section 3(2) of the Customs Tariff Act. On the other hand, Member (Technical) has taken the view that the CVD is to be paid on the basis of higher prices at which the goods of the same size were sold to the customers and which were required to be declared as MRP under Section 3(2) of the Customs Tariff Act, 1975. It would be seen that Explanation 1 of Section 4A before or after 14.5.2003 stated that for purpose o .....

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different prices many of which are less than the declared RSP and some of which are more than the declared 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 .....

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e. 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 may be noted that in the present case, only one RSP was declared on each package. However, package to package were sold at different prices, sometime at prices higher than declared. RSP whi .....

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clared RSP. To my mind if various packages of the same commodity were being sold at different prices (which are not based upon area etc.), then the highest of such price only has to be taken as the correct RSP as per the definition of RSP under Section 4A. In view of the above, I concur with Member (Technical) that the CVD is to be paid on the basis of higher prices at which the goods of the same price were sold to the customer and which were required to be declared as RSP under Section 3(2) of .....

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by the Hon'ble Member (Technical)." 34.1 In this case, Member (Judicial) has taken a view that FIFO method adopted by the Revenue is without sanction of law to arrive at the MRP of the goods, while Member (Technical) has taken the view that FIFO is the most reasonable method to arrive at the MRP in the absence of record to correlate bills of entry and invoices and in the absence of any other more judicial method. 34.2 It is noted that during the investigation, the appellant was asked f .....

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g 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 tile .....

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e the differential duty that would arise from the irregularities. Shri Bhaskar Gurudas Borkar has clearly stated in his statement that the only method to determine sale of the tile in relation to the bill of entry is using the first-in-first-out method. As far as Member (Judicial)'s observation that FIFO method adopted by the Revenue as without sanction of law, I find it difficult to agree with the same. This is simply because no law can prescribe methods for all the possible situations. In .....

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oughout at 45% of the RSP and, therefore, the FIFO need not be resorted. It was further submitted that even if it is assumed that FIFO method is necessary, the impugned order should have compared the respective actual sale price with the value already declared in the bill of entry and work out the differential duty, if any, then payable. The entire basis for demand of differential duty is by taking the highest price of one particular variety of tiles and adopting the same as RSP for all other va .....

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earlier, it is undisputed fact that the goods have been sold at a price higher than the declared price. As per the definition of RSP, it is maximum retail sale price. Thus the declared RSP did not represent the true and correct RSP. Correct RSP is to be determined. Thus, contentions of learned senior counsel 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 .....

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nd 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 ₹ 175/- while the proposed RSP is ₹ 1314.67. If we go through the corresponding invoices based on the FIFO principle, it is se .....

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d in few hundred invoices (covering 43,200 sq.m) in the price range of ₹ 250 to 410/- will be sold at ₹ 1314.67. To me it appears perhaps these are some other goods of different quality or some other reason. Thus adopting a RSP of ₹ 1314.67 for a quantity of 43,200 sq.m would result into unfair and highly exaggerated demand. This is not a stray example. Similar is the situation in respect of many other sizes and types of tiles or other bills of entry. It would, therefore be app .....

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fect from 1.3.2001, but appellants were in the business of import/sale even before that and it is not as if stock of all types/size of tiles was NIL as on 1.3.2001. Obviously they would have sold such stock/part of such stock during the period under dispute. In the proposed method of computation this has been totally ignored. Many of the transactions will be from such stock. Stray cases of sale may possibly be from such stock. 34.9 It is also seen from annexure A to the show cause notice that th .....

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hat 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 .....

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try are of varying RSPs (either declared or as assessed by the Customs in the impugned order), then it cannot be said that the appellant would be only selling the goods of the earlier bill of entry first and thereafter of next bill of entry. While generally this will be true but three would be aberrations. It is possible that the appellant might have sold the goods from a second or third bill of entry where the RSP was higher or lower or even from old stock (where RSP based assessment was not ex .....

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e stock may possibly be available, no differential duty needs to be demanded by Revenue. This is because practically it is not possible at this stage to know bill of entry and date-wise stock and the only solution is to consider all bills of entry of that size imported earlier to the last date of sale based upon FIFO method. For example, on 4 th December 2001, last lot of tiles (size 500 x 500 floor tiles) are being sold, then Revenue must take the RSPs of all the bills of entry (of the size 500 .....

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ble. As per working in respect of clearance of 4 th bill of entry, RSP determined as ₹ 807/- which is less than earlier three RSP. It is possible that goods sold at that price (Rs. 807) may be from earlier stock. Thus no differential duty needs to be demanded by Revenue. Benefit of doubt must go to the appellant/assessee. I am aware this method is not perfect. In this method, it is possible that there may be errors as the data relating to quantity and variety is not available but error wou .....

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0,53,17,591/-. 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 ₹ 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 .....

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ve paid excess duty of ₹ 76,53,625/-. In brief, what the appellants are trying to bring out from the two affidavits and various annexures enclosed therein that overall they have paid more duty. Revenue in counter-affidavit dated 29.5.2014, on the other hand, challenged the affidavits based upon RSP concept. I note that the said affidavits filed by appellants ignore the concept of RSP and assume the sale price in each transactions as the RSP for that transaction. This is not permitted under .....

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e method adopted by the Revenue results in exaggerated demand and needs to be revisited. 34.13 From the above discussion, my conclusion is that in the facts and circumstances of the case, first-in-first-out method is the most reasonable method. However, the computation part adopted by Revenue needs to be improved by taking the following two steps, - (i) In respect of each bill of entry, stray transactions are required to be ignored and a band in which the goods have been sold is required to be d .....

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39;s case squarely applies to the facts of this case as held by the Hon'ble Member (Judicial) Or it does not apply to the facts of this case, on the contrary, Tribunal'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 disting .....

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f 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 Hon'ble Member (Technical) to hold that levy can be made even in the absence of rules are not applicable to the present ca .....

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see has changed the MRP on the goods and thereafter sold the goods. The Tribunal in Planet Sports distinguished the case of ITC Ltd. on the ground that in ITC Ltd., the MRP was not changed. Similarly, Media Industries simply followed the case of Planet Sports. The learned senior counsel submitted that in the instant case, the appellants have not declared a changed or affixed different MRP on the package subsequent to import. The question is therefore as to whether the Customs have power to redet .....

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ble to the facts of the present case. On the contrary, I find that the Tribunal's decisions in the case of Planet Sports (supra) and Media Industries (supra) squarely apply to the facts of this case. I find that Member (Technical) in para 17.5 on page 43 to 52 has elaborately discussed and extracted from the said judgments and I entirely agree with the same and I am not repeating for the sake of brevity. The learned senior counsel has tried to distinguish the case of Planet Sports on the gro .....

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iven 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 .....

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n the view that 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 redetermined by the Customs authority. On the contrary, Member (Technical) has taken the view that MRP can be redetermined on the basis of underlying law and spirit of Section 3(2) of the Customs Tariff Act, 1975 having regard to the various judgments of the Hon'ble Gujarat High Court in the case of Rupani Spinning Mills Pvt. Ltd. and Hon' .....

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read with Section 3(1) of the Customs Tariff Act, the RSP could have been redetermined. There was no prohibition to redetermine. Any interpretation to the contrary will lead to absurd result. For example, if an item having a correct RSP of ₹ 1000/- is misdeclared by an importer as having a MRP of ₹ 500/- and if a view is taken that the importer will be required to pay the duty corresponding to ₹ 500/- only, this would lead to a situation wherein misdeclaration and tax evasion w .....

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old the goods. In my view, there is nothing irregular or incorrect in such a redetermination. It is not the case of the appellant that the Revenue has acted against the spirit of Section 4A of the Central Excise Act or against the spirit of Section 3(1) of the Customs Tariff Act. In view of the said position, I am in total agreement with Member (Technical) that MRP can be redetermined on the basis of the underlying law and the spirit of Section 3(2) of the Customs Tariff Act. This is further sup .....

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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 .....

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he Customs Act provides for issuance of notice for payment of duties, interest etc. The proviso to Section 28(1) of the Customs Act provides that where any duty has not been levied or has been short-levied or the interest has not been charged or has been part paid or the duty or interest has been erroneously refunded by reasons of collusion or any wilful misstatement or suppression of facts by the importer or the exporter or the agents or employees of the importer or exporter, the provisions of .....

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d wherein they have clearly admitted that RSP was declared merely based on the landed cost and their estimate of selling price. Further, it was clearly in the knowledge of the appellant's employees as also senior officers including the Managing Director that the goods were being sold at times at a price which was much higher than the declared RSP. Thus there was a clear-cut wilful misstatement or suppression of facts by the importer and his employees and the requirements of Section 28 for in .....

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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 .....

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ion 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 Section 111(d) is not warranted. Member (Judicial) has also held that Section 111(o) is applicable to any goods exempted, subject to any condition, from duty or any prohibition in respect of imports thereof under this Act or any other law for the time being in force in respect of which the condition .....

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h 4 was added in Chapter 1A and, therefore, in his view the goods have been imported against the restriction imposed under Sections 111(d) and (o) of the Customs Act, 1962. Further, Member (Technical) has taken the view that the goods are liable to confiscation under Section 111(m) as the said sub-section provides for confiscation of the goods which do not correspond any value or in any other particular with the entry made under this Act. Member (Technical) has taken the view that the MRP declar .....

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sold at a price more than the declared RSP and hence RSP is misdeclared. Even the computation of the duty short paid is based upon number of assumptions. Under the circumstances, in my view, this is not a fit case for confiscation of the goods without going into the details about the reasoning advanced by either Member (Judicial) or Member (Technical). I am, therefore, not answering the question on the legality, but under the facts and circumstances of the case, I agree with Member (Judicial) t .....

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ed, 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. T .....

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