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Bluemax Impex (India) Private Ltd. And Raj Kumar Harwani, M.D. Versus Commissioner of Customs (Seaport-Import) , Chennai

2016 (1) TMI 553 - CESTAT CHENNAI

Misdeclaration of Retail Sale Price (R.S.P) in order to avoid payment of actual Customs duty / CVD - valuation of import of cellular phones - Since the goods are packaged commodity, in terms of Section 3 (2) of Customs Tariff Act read with Section 4A of Central Excise Act, on importation of the said goods these are liable to be affixed with M.R.P and assessed accordingly for determining the CVD, after allowing abatement as per the notification issued under Section 4A of Central Excise Act.

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with RSP Rules 2008 and SWM Act.

The entire proceedings of redetermining the R.S.P. on the imported goods carried out by the Customs is purely based on the contemporaneous RSP noticed as per the NIDB data and stray market enquiry of other cell phones importers. - adjudicating authority in his findings at para-33 held that he is not concerned on what price the importer have ultimately sold their goods in retail but concerned only with correct R.S.P and alleged that appellants have not .....

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have sold the goods as per the declared RSP or whether they have altered the RSP or sold it at higher price than what was declared on RSP of such goods and also to verify whether any flow back received for the retail supplier and determine the R.S.P strictly in accordance with Section 4A read with Rule 4 of RSP Rules 2008 read with SWM Act. We hold that no contemporaneous RSP is applicable under Section 4A. The present remand is only for limited purpose as indicated above. If the adjudicating au .....

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oth the appeals are arising out of a common Order-in-original dt. 29.11.2013 passed by Commissioner of Customs, (Seaport-Import) and therefore both are taken up together for disposal. 2. Appellants M/s.Bluemax Impex (India) Pvt. Ltd. imported assorted models of cellular phones through Chennai Seaport under three live Bills of Entry dt. 18.11.2011, 19.11.2011 and 22.11.2011. The SIIB of Custom House, Chennai detained the goods based on the intelligence that the goods were grossly undervalued and .....

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boxes said to have been cleared from Chennai Custom House under B/E No.5176594 dt. 14.11.2011. On examination of the goods, it was found that certain goods were misdeclared and in two Bills of Entry there were excess quantity and also undeclared quantity and also shortage of quantity. On further examination, it was found that certain cell phones were not declared by the appellant in the invoices. Statement was recorded from Mr. Raj Kumar Harwani, Managing Director of appellant company, and afte .....

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A and penalty on the co-noticee Shri Raj Kumar Harwani under Section 112 (a) of the Customs Act. 3. The details of Bills of Entry are listed below :- S. No. B.E.No. AV in Rs. Decl.RSP in Rs. Decl. Duty Status of B/E 1. 5232333/-18.11.2011 2,41,67,110/- 1400 to 2300 5,11,900 Live 2. 5235745/-19.11.2011 2,27,98,138/- 685 to 1167 3,21,185 -do- 3. 5256566/-22.11.2011 2,06,16,882/- 1300 to 1650 4,72,962 -do- 4. 5331333/-29.11.2011 2,07,98,498/- 830 to 1469 2,95,559 -do- 5. 5331392/-29.11.2011 2,22,55 .....

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2,28,64,593/- 1060 to 1860 4,96,067 -do- 14. 5176594/14.11.2011 2,16,81,695/- 1395 to 2100 4,58,896 -do- 4. The adjudicating authority after following the principles of natural justice, in his order (43 pages) held as under :- (i) She rejected the R.S.P Bill of Entrywise of different models of mobile phones of various brands GLX, FORME, CARLVO,MuPHONE and KECHAO and determined the R.S.P. under Rule 4 of the RSP Rules read with Section 3 (2) of Customs Tariff Act at the highest of the contempora .....

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valued at ₹ 13,24,73,608/- in respect of past clearances covered under the respective six Bills of Entry. (iv) She demanded differential duties on mobiles phones of different models that were recovered as undeclared goods and found excess in quantity of the declared goods in respective Bills of Entry and confiscated the said goods. However he allowed redemption on payment of fine of ₹ 3 lakhs and ₹ 2 lakhs in respect of those goods. (v) She also confirmed the differential duty .....

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f Bank Guarantee of ₹ 22 lakhs (vide corrigendum dt. 21.1.14) towards duty and adjudication liabilities. (ix) She imposed penalty of ₹ 70,69,227/- in the order which was modified as ₹ 74,95,940/- vide corrigendum dt. 31.1.2014 along with interest on appellant M/s.Bluemax Impex (India) Ltd. under Section 114A of the Customs Act. (x) She imposed penalty of ₹ 7,00,000/- on Shri Raj Kumar Harwani, Managing Director of appellant company under Section 112 (a) of the Customs Act .....

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e appeal where all the Bills of Entry were assessed and R.S.P between ₹ 1050 and ₹ 1650 was accepted by Customs and during September 2011 in one Bill of Entry at page 188 to 207, the RSP was enhanced to ₹ 2500/-. He drew our attention to page 266 of the paper book enclosed worksheet showing import price, after allowing discounts, RSPs have been computed. 5.1 He submits that in the present case the goods were detained and seized on the ground of misdeclaration of R.S.P only base .....

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7; 1050 to ₹ 1500/- and the same was accepted by the Customs and also allowed clearance of another Bill of entry cleared at Hyderabad and RSP of ₹ 1799 of their own brand of same model was allowed at RSP 1799 (page 291 to 296) where the importer M/s.Celikon Impex Pvt. Ltd. who cleared their own brand which are high end models and the RSP was accepted and cleared. 5.2 He submits that the department has only shown NIDB data of RSP of ₹ 3000/- but no Bill of Entry was produced and .....

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ischarging VAT on their sales turnover and filing IT returns. They submitted 51 retail sales invoices of their own products to the department indicating the RSP but the same was not considered by the adjudicating authority. He submits that in compliance of Section 3 (2) of Customs Tariff Act they have duly declared the R.S.P and it was never sold at higher price at retail sale than the R.S.P. declared by them. These are sold at lesser R.S.P. whereas the adjudicating authority has determined the .....

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of R.S.P.Rules, 2008 if the department chose to redetermine the RSP of the goods the nearest RSP of goods should have been manufactured and removed within a period of one month, before or after removal of such goods. He countered the departments contention in para 32 and 32.3 of OIO and submits that no verification of their retail price has been done by the department to establish whether the retail price is correct or otherwise. He also submits that appellants have not altered the M.R.P or rel .....

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t R.S.P and its correctness involved. He referred to para-47 of the Supreme Court order. He also relied the following citations :- (1) CC Cochin Vs Yem Yes & Co.-2007 (210) ELT 148 (Tri.-Bang.) [Para-4] (2) Planet Sports Pvt.Ltd. Vs CC New Delhi -2005 (180) ELT 206 ( Tri.-Delhi) [Para-5] (3) NITCO Tiles Ltd. Vs CC -2015 (325) ELT A202 5.3 He also submits that department has detained two containers which are still in the custody of Customs whereas they have allowed clearance of 5 containers a .....

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. The goods are not liable for confiscation. Regarding goods which were found in excess of the declared, On imposition of penalty, he relied the following case law :- (i) VED Prakash Wadhwani Vs CC Ahmedabad 2009 (2330 ETL 356 (Tri.-Ahmd.) (ii) Madras Petrochem Ltd. Vs CC Chennai 2007 (280) ELT 712 (Tri.-Che.) He submits that their live consignments are still held up in Customs and prays that the impugned order may be set aside and also he submits that they are ready to provide all necessary doc .....

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appellant. The department has enhanced the R.S.P. based on the contemporaneous Bills of Entry as per NIDB data which is enclosed as Annexure 3 (Pages 125 to 146). She drew our attention to para-20 to submit that their own identical goods were cleared to Hyderabad at R.S.P of ₹ 2500/- which was not disputed by the appellant. She also relied market enquiry document at page 166 of M/s.G-Five. She further submits that it is not only the question of R.S.P but also appellant misdeclared the goo .....

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rt vide Bill of Entry No.5176594 dt. 14.11.2011 were already affixed with correct MRP/R.S.P stickers. He submits that RSP/MRP is exclusive to a person to sales at retail and there is no contemporaneous sales in R.S.P. He also submits that adjudicating authority in his findings held at para-33 that he is not concerned as to what should be the importers price for selling the goods and he is concerned with only correct RSP. Counsel submits that RSP for each product is specific and related to that p .....

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t merely taken a contemporaneous RSP the enhancement of RSP is liable to be set aside and matter is to be remanded to the adjudicating authority to redetermine the RSP as per statute and he submits that they are ready to deposit ₹ 8 lakhs for release of the two containers as undertaken by them vide their letter dt. 10.3.2014 at page 378 towards liabilities pending determination. 8. We have carefully considered the submissions of both sides and examined the records. The short issue relates .....

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tion 3 (2) of Customs Tariff Act read with Section 4A of Central Excise Act, on importation of the said goods these are liable to be affixed with M.R.P and assessed accordingly for determining the CVD, after allowing abatement as per the notification issued under Section 4A of Central Excise Act. We find that the goods were imported in the year 2011 under 14 Bills of Entry out of which 8 are live consignments and 6 are past consignments. The adjudicating authority had rejected the R.S.P declared .....

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equent sale. Therefore, any dispute on R.S.P or re-determination of R.S.P on the imported goods it has to be done only in terms of Section 4A read with Rule 4 of R.S.P. Rules, 2008 read with SWM Act. Once the goods are declared as packaged commodity intended for retail sale, it is mandatory to affix R.S.P. as per the S.W.M. Act. In the instant case, we find that Revenue has accepted the import price of mobile phones paid by the importer to the overseas supplier as normal price under Section 14 o .....

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as to be strictly in accordance with Section 4A of Central Excise Act read with RSP Rules 2008 and SWM Act. The Government introduced MRP based assessment on packaged commodities covered under SWM Act for assessment and levy of excise duty and Section 4A was introduced in the Central Excise Act and notification issued listing out commodities covered under this section with abatement on RSP for each commodity. The Section 4A (4) of Central Excise Act, is extracted as under :- Section 4A. Valuatio .....

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s the retail sale price declared on the package of such goods after their removal from the place of manufacture, then such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. Explanation 1. - For the purposes of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ul .....

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erates or alters the R.S.P. declared on the package of such goods. It stipulates the criteria how to determine the R.S.P. if the declared R.S.P is not acceptable by the Excise authorities. Rule 4 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008 [RSP Rules 2008] clearly explains the methodology sequential manner and if the identical goods are manufactured and are removed within a period of one month before or after removal of such goods, by declaring the R. .....

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l seller to the appellant than the declared R.S.P. has to be accepted and the onus is on the Revenue to prove that appellants have sold the said goods at a higher price than the R.S.P. declared. 9. We find that the entire proceedings of redetermining the R.S.P. on the imported goods carried out by the Customs is purely based on the contemporaneous RSP noticed as per the NIDB data and stray market enquiry of other cell phones importers. As already discussed in the preceding paragraphs, this is no .....

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ct. The adjudicating authority having chosen to re-determine the RSP as per Section 4A on imported goods has not followed any of the provisions of Section 4A or RSP Rules. 10. It is pertinent to see that the adjudicating authority in his findings at para-33 held that he is not concerned on what price the importer have ultimately sold their goods in retail but concerned only with correct R.S.P and alleged that appellants have not declared the correct R.S.P. Once the adjudicating authority dispute .....

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as under :- "47. Examples of the third kind of declaration are usually to be found where assessment under Statute A is dependent upon a basis provided by Statute B. In such case, the assessing officers under Statute A cannot question the basis. That is within the province of the authorities under Statute B. 48. In the decision of Union of India v. M/s. Rai Bahadur Shreeram Durga Prasad (P) Ltd. - 1969 (1) SCC 91, the furnishing of a declaration under Section 12(1) of the Foreign Exchange Re .....

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ed to carry. The assessee had a permit issued under the Motor Vehicles Act, 1939 which permitted him to carry a number of passengers. On the basis that the assessee had carried passengers above the permitted limits, tax was sought to be levied under the Taxation Act in respect of the assessees vehicle. This Court held that when the statute itself provided for the highest levy of tax on the basis of the number of passengers permitted to be carried in the vehicle, the Court could not ignore the ph .....

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e basis of its profit and loss account prepared in accordance with the specified provisions of the Companies Act. This Court held that the assessing officer under the Income Tax Act had no power to re-scrutinise the account by embarking upon a fresh inquiry in regard to the entries made in the Books of Account of the Company. Similarly, in terms of the notification we are called upon to construe, the Excise Authority is required to act on the basis of the printed MRP. The notification does not e .....

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ly indicate. The reliance on the Rules and forms by the Revenue appertaining to assessments does not therefore carry its case any further." The ratio of the Apex Court decision is squarely applicable to the present case. The Honble Supreme Court in the above case has clearly held that R.S.P declared is mandatory under the SWM Act it cannot be altered. The implementing authority has no power to rescrutinise or question that M.R.P which is covered under the S.W.M.Act. The Department can only .....

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g authority which is not considered on the grounds as per Rule (4) RSP of goods cleared in the past which is beyond 1 month is not comparable. If L.As view is accepted the same principle applies to NIDB data relied by the L.A. The L.A has also not brought out any evidences whether the appellant violated any of the provisions of SWM Act (LMA) as declaration of MRP/RSP on the packaged goods is within the ambit of SWM Act which is adopted for Central Excise purpose under Section 4A. By respectfully .....

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re-determination of RSP as per Section 4A read with RSP Rules and SWM Act. We find voluminous records were submitted by the appellant before the adjudicating authority in support of retail sale price of their goods. We direct the adjudicating authority to verify the details of R.S.P of the imported goods cleared by the appellants and see whether the appellants have sold the goods as per the declared RSP or whether they have altered the RSP or sold it at higher price than what was declared on RS .....

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