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2016 (1) TMI 590 - CESTAT CHENNAI

2016 (1) TMI 590 - CESTAT CHENNAI - 2016 (336) E.L.T. 345 (Tri. - Chennai) - Levy of CVD on MRP based or transaction value - import of LCD/LED Monitors and Television sets - demand of differential duty on the ground that the said goods were sold to industrial consumers and therefore, assessment under MRP is not applicable - Held that:- It is pertinent to state that, on imported goods, and at the time of clearance, the appellants are required to affix MRP as the goods are covered under the packag .....

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he said goods in retail sale or for personal consumption. - Once the goods are covered under LMA, as a packaged commodity, they are required to be cleared on retail sale price on the packages as per the provisions of Section 4A, the assessment shall be on MRP basis. - Decision of Apex Court in Jeyanthi Food Processing Pvt. Ltd. [2007 (8) TMI 3 - Supreme Court] followed. - In the present case, the appellants have been clearing the goods when the MRP assessment came into existence from 200 .....

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41772 - 41774 / 2015 - Dated:- 10-12-2015 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Petitioner : Shri S. Jaikumar, Adv. For the Respondent : Shri Veerabhadra Reddy, JC (AR) ORDER Per: R. Periasami The appellant filed miscellaneous application for change of cause title in respect of appeal No. C/41789/2014 in the name of M/s. Top Victory Investments Pvt. Limited. The Ld. Advocate submits that the said appellant unit has been renamed as M/s. TPV Technol .....

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12.08.2015 and appeal No.C/41789/2014 is arising out of OIA dated 06.05.2014. The brief facts of the case are that the appellants are importers of LCD/LED Monitors and Television sets of various sizes falling under CTH 85285100 of CTA, 1975 and filed Bills of Entry for clearance of these goods. They claimed full exemption from BCD under Notification No. 24/2004-Cus dated 01.03.2005 and indicated MRP/RSP on the packages. The B/Es were assessed for CVD @ 12% on MRP based assessment claiming 35% ab .....

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er Section 28 AA of the Customs Act and imposed penalty under Section 112 (a) of CA. and ordered for re-assessment of LCD/LED Monitors under Section 3 of Customs Act read with Section 4 and denied abatement and confirmed the demand. In respect of appeals C/41927/2015 & C/41928/2015, OIO dated 28.02.2014, the adjudicating authority also held that the goods are liable for confiscation under 111(m) of the Customs act since the goods were not physically available for confiscation, no redemption .....

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regular importer of LCD/LED Monitors and Television sets of various sizes and there is no dispute on the classification of LCD/LED monitors. He submits that the monitors were sold to the customers under three modes viz. a) sale to the brand owner where the monitors are affixed with the brand name of HCL, Wipro etc., b) sell under their own brand name (AOC) and c) sell as non-branded goods. They regularly import monitors and initially CVD was paid as per the transaction value and in 2008 the mon .....

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on monitors was increased from 20% to 35%. The department issued notice alleging the goods sold to the Brand owners are not covered under Section 4A and proposed assessment on the transaction value, and accepted MRP assessment in respect of their own brand and also on sale of unbranded monitors. He further submits that the department alleged that they should have claimed exemption under Standards of Weights and Measures Act, 1976. (now LMA) for the clearance made to the brand owners as it is fo .....

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the definition of industrial consumer means, industrial consumer who buy packaged commodity directly from the manufacturer for use by that industry. The same definition continued under Rule 2 (bb) from 6.6.2013. Only from 14.5.2015, the said Rule was amended to include manufacturers or importers or wholesale dealers. He submits that this amendment came into effect only from 14.05.2015 and in their case Rule 3 and Rule 2 (bb) is not applicable as they are not manufacturers. 4. He also submitted .....

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on value. He relied on the following citations: 1. Mexim Adhesive Tapes Pvt. Ltd. Vs. CCE, Daman-2013 (291) ELT 195 2. ITEL Industries Pvt. Ltd. Vs. CCE, Calicut-2004 (163) ELT 219 3. Jayanthi Food Processing Pvt. Ltd. Vs. CCE, Rajasthan-2007 (215) ELT 327 (S.C) 4. CC, Chennai Vs. Micro Labs. Ltd.-2010 (251) ELT 317 He drew attention to the Hon ble Supreme Court Judgment in the case of Jayanthi Food Processing Pvt. Ltd. (supra) and submitted that the Hon ble Supreme Court has held that once the .....

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nitors are supplied to HCL and Wipro as actual users who used the monitors for manufacture of PC s. The appellant as per the pre-determined arrangement imported these monitors for sale to the actual users only, and the said goods are not intended for retail sale. He refers the definition of retail sale , where the goods are ultimately sold in retail sale. Whereas, in this case, HCL and Wipro are used monitors for their manufacture of computers. He submits that the ultimate user is not disputed b .....

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rovision and mandatory and the department is bound to enforce the Act and also submits that the appellants should have claimed exemption under Rule 3 Rule and 2 (bb) o LM Act. Regarding the citations relied on by the appellant, he submits that all the citations were discussed in the impugned order and countered by the appellate authority. Therefore, the monitors imported and sold to HCL and Wipro fully satisfies sale to industrial consumers and it is in conformity with the Rules. He further subm .....

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monitors are rightly covered under LM Act as packaged commodity and also submits that they have not opted for exemption from the industrial consumers and not from LMA. Further, he submits that they have affixed the MRP supplied by the HCL and Wipro confirms that they have affixed RSP and at this stage of import and clearance to them they will not be in a position to what would be the nature of further transaction at the hands of the brand owners and also he submits that their buyer clear the mo .....

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e 2 (bb) under LM Act was specifically amended to include importer and the wholesale dealer . This confirms that for earlier period only manufacturers were covered under Rule 3 and under Rule 2 (bb) and the customs cannot interpret the LM Act by differently changing the definition. 8. We have carefully considered the submissions of both the sides and perused the records. The short issue before us is whether the assessment of imported monitors LCD/LED is under Section 3(2) (b) read with Section 4 .....

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rs were brought under MRP based assessment under Section 4A of the CEA and Notification No. 49/2008 dated 24.12.2008, was issued listing MRP items and % of abatement. On perusal of the table annexed to the said notification Sl.No. 98 covers Monitors of a kind solely or principally used in an automatically data processing machine falling under sub-heading 8528 and allowed abatement of 20% on the retail sale price. From 24.12.2008 to 10.05.2012, the department continued assessment and the same was .....

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ection 4A of CEA read with Section 3 (2) (b) of CER prior to 10.05.2012. We also find that once it is accepted, that the goods are covered under LMA as packaged commodity, for certain period the same goods cannot be held that these are not packaged commodities w.e.f. 10.05.2012 because of the higher abatement allowed on LCD/LED monitors. It is not disputed that the appellants as importer/dealers regularly imported monitors and sell in wholesale trade to various customers ie., Brand owners and al .....

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ustrial consumers and not intended for retail sale. In this scenario, it is relevant to see W&M Act/LM Act under Rule (3) as existed w.e.f. 13.04.2011, which is reproduced as under:- Rule 3 The provisions of this Chapter shall not apply to (a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags upto 50 kgs; and (b) packaged commodities meant for industrial consumers or institutional consumers. Explanation- For the purpose of .....

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s or service in connection with transport, hotels, hospitals or such other service institutions which buy packaged commodities directly from the manufacturer for use by that institution. Rule 2 bb- w.e.f. 14.5.2015 Industrial consumer means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration not for retail sale . From the above definition of Rule 3, industrial consu .....

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ssessment should be made for the purpose f CVD as per the notification issued under Section 4A. It is confirmed that the appellants imported and cleared the impugned goods to various customers and they have also cleared to the brand owners, cleared under their own brand and as unbranded. From the reading of Rule 3 and Rule 2 (bb) as existing from 13.4.2011 to 14.5.2015, it is very clear that the definition of industrial consumers under LM Act and the Rule relates to sale of packaged commodities .....

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e appellants are required to affix MRP as the goods are covered under the packaged commodity and therefore in the case of branded goods, the RSP was correctly affixed by the appellant as provided by the brand owners Wipro/HCL etc. The appellant being a dealer not a manufacturer of monitors, the RSP supplied by the brand owners was affixed and there is no dispute on the fact that the monitors are packaged commodity squarely covered under the LM Act. As far as the importers concerned, the transact .....

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declare on the package of the goods the retail sale price of such goods for being covered by the Section, it would be better to see the various provisions of the said Act and the Rules made thereunder. Section 83 of the SWM Act empowers the Central Government to make Rules on the subjects provided in Section 83(2). Accordingly, the Central Government framed the Rules called The Standards of Weights and Measures (Packaged Commodities) Rules, 1977 . As would be suggestive from the title itself, R .....

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includes, in relation to such packages as are sold directly to the consumer, a wholesale dealer who makes such direct sale. Definition of retail package under Rule 2(p) is as under : retail package means a package containing any commodity which is produced, distributed, displayed, delivered or stored for sale through retail sales, agencies or other instrumentalities for consumption by an individual or a group of individuals . Definition of retail sale under Rule 2(q) is as under : retail sale , .....

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maximum or max. retail price inclusive of all taxes or in the form MRP Rs- incl., of all taxes. Explanation : For the purposes of the clause maximum price in relation to any commodity in packaged form shall include all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be. Definition of wholesale dealer under Rule 2(w) is as under : wholesale dealer in relation .....

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by these rules to comply. Definition of wholesale package under Rule 2(x) is as under : wholesale package means a package containing - (i) a number of retail packages, where such first mentioned package is intended for sale, distribution or delivery to an intermediary and is not intended for sale direct to a single consumer; or (ii) a commodity sold to an intermediary in bulk to enable such intermediary to sell, distribute or deliver such commodity to the consumer in smaller quantities; or (iii) .....

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ules 15 and 16 pertain to the declarations required to be made on combination packages and group packages. A glance at these rules suggests that the sale price is required to be mentioned on both. Rule 17 deal with multi-pieces packages also requiring to declare the sale price on the same. Rule 23(1) and (2) provide as under : 23. Provisions relating to wholesale dealer and retail dealer (1) No wholesale dealer or retail dealer shall sell, distribute, deliver, display or store for sale any comm .....

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meaning of this sub-rule. Chapter III deals with the provisions applicable to wholesale packages. Rule 29 pertains to the declaration required to be made on every wholesale package. Chapter V deals with the exemptions. Rule 34 thereof is extremely important. It runs as under : 34. Exemptions in respect of certain packages Nothing contained in these rules shall apply to any package containing a commodity if, - (a) the marking on the package unambiguously indicates that it has been specially packe .....

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s 15, 16 and 17, would be governed under Section 4A as such packages are required to declare the retail sale price on the packages. The packages covered by Rule 29 would be outside the purview of the retail sales as under that Rule retail prices are not required to be mentioned on the package. However, again those packages which enjoy the exemption under Rule 34 shall also be outside the scope of Section 4A of the Act as the Rules do not apply to the said packages. The above ratio squarely appli .....

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