TMI Blog2023 (3) TMI 1286X X X X Extracts X X X X X X X X Extracts X X X X ..... oxes have been damaged and subsequently sold to the subscriber. Undisputedly, the set top boxes were sold were much lower prices than Rs. 2,100/- in respect of such retail sales. The price at which the goods were sold to Dish TV cannot be considered as retail sale price. Dish TV cannot be considered as retail buyer because it is not using the goods for itself but is using them to provide service to its subscribers. Therefore, the price of Rs. 2,100/- at which the goods were sold to Dish TV cannot be considered as retail sale price even if the assessment is not modified and continues to be under Section 4A as was done in this case. The assessment should correctly be done under Section 4 as per Bharti Telemedia. Assessment in this case was done under Section 4A as per RSP with abatement as decided by the assessing officer of Rs. 1465/- - the assessing officer has rejected declared RSP of Rs. 1000/- per set top box and recalculated it after adding the basic customs duty to the landed cost of the STB and adding 20% as post importation cost which came to Rs. 1832/-. After allowing 20% abatement, he determined the additional duty of Customs on a value of Rs. 1465/-. How can the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of amount already deposited by M/s Essel International Ltd., New Delhi vide TR-6 Challans dated 13.10.2010 and 30.10.2010 against this penalty. 2. The appellant imported Set Top Boxes for television sets and sold them to M/s Dish TV Limited. Goods which are imported into the country are chargeable to Basic Customs Duty as per Section 12 of the Customs Act at the rates applicable as per Customs Tariff. They are also chargeable to Additional Duty of Customs as per Section 3 of the Customs Tariff, 1975 at the rates of excise duty applicable to such goods manufactured in India. Thus, the additional duty of customs, is a duty of customs but is levied at rates applicable to central excise. Duties of central excise can be levied based on quantity (specific rate of duty) or value (ad valorem rate of duty). If the duty is to be levied based on the value, such valuation should be done as per Section 4 read with Central Excise Valuation Rules. However, in respect of some goods which are notified under Section 4A in relation to which it is required to declare the retail sale price under the Standards of Weights and Measures Act, 1976, the duty shall be paid on the retail sale price after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consideration for such sale: Provided that in case the provisions of the Act, rules or other law as referred to in sub-section (1) require to declare on the package, the retail sale price excluding any taxes, local or otherwise, the retail sale 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 altered to increase the retail sale price, such altered retail sale price shall be deemed to be the retail sale price; (c) 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. 3. It is undisputed that the set top boxes imported by the appellant were cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y have sold the said items to M/s. Dish T.V. India Ltd. for Rs.2,100/- per piece. We note, the said sale price is more than double, even though the transaction is in bulk, for 10,000 pieces. Further, M/s.Dish T.V. sold the impugned goods to the distributors at Rs.741/- per piece who further sold it to sub-distributor at Rs.761/- per piece. We note, there is evidence on record that the ultimate retail consumer purchased the set top box at Rs.961/- per piece. We note that the chain of transaction starting from import up to consumption by the retail buyer is having price variations of wide range, which cannot be explained by a linear business sale transaction. Admittedly, the sale price is not the sole consideration in respect of impugned goods from the stage of the first buyer, namely M/s. Dish T.V. India Ltd. who purchased these items at Rs.2,100/- per piece. In such a scenario, which is apparently unique, we find that the RSP printed and declared on the imported items is prima-facie having problem of genuineness. It is apparent that the importer and the first buyer are part of group companies. The sale price of M/s. Dish T.V. India to the distributor is only 1/3 of purchase price. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant reckoning Rs. 2,100/- as the RSP. The other related issues to be decided are the demand of interest and imposition of penalty under Section 112. 7. Learned counsel for the appellant contested the impugned order and the demand on two grounds. Firstly, it is his submission that although the appellant had declared them retail sale price and assessed the bill of entry under Section 4A, in respect of identical products, it was decided by this Tribunal in Bharti Telemedia Ltd. Vs. Commissioner of Customs (Import), Nhava Sheva [ 2016 (331) ELT 138 (Tri.-Mumbai) ] that there is no retail sale in use of the set top box by ultimate consumers and, therefore, Section 4A will not apply and valuation had to be done as per Section 4 of the Central Excise Act. This decision of the Tribunal was accepted by Circular dated 11 March 2016 issued by the CBEC which reads as follows: After detailed analysis, Hon ble Tribunal held that in the given circumstances CVD shall not be leviable on the basis of Retail Sale Price. In view of the above, it is clarified the judgment of Hon ble Tribunal in case of M/s Bharti Telemedia Ltd. (supra), may be followed for assessment of CVD on imported ST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice means the maximum price at which the commodity in packaged form may be sold to the ultimate consumer and where such price is mentioned on package, there shall be printed on the packages the words [Maximum or Maxi. Retail price..............inclusive of all taxes or in the Form M.R.P. Rs............... inclusive of all taxes. 10. It is his submission that in terms of Rule 2A of SWM rules, the provisions of Chapter-II of the Rules including Rule 6 which mandates declaration of RSP would not apply to packaged commodities meant for industrial consumers or institutional consumers. As per the Explanation to Rule 2A, institutional consumers means consumers who buy packaged commodities directly from the manufacturers/packers for service industry like transportation (including airways, railways) hotel or any other similar industry . According to the learned counsel Dish TV is providing direct to Home [DTH] television services and for use in providing this service, it was buying set top boxes. Therefore, Dish TV cannot be considered as a retail buyer and, therefore, the requirement of indicating RSP as per Rule 6 SWM Rules does not apply to STBs sold to Dish TV. Consequently, Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsumers as those who buy packaged commodities directly from the manufacturer/packers for service industry. It is their submission that the importer is not the manufacturer or a packer of STBs and therefore, buying from an importer does not fall under this definition. Therefore, Dish TV cannot be considered as an institutional consumer. They also rely on the Rule 23(1) and (2) of such Rules which state that no retail dealer or any other person including manufacturer, packer and wholesale dealer shall make any sale of any commodity in packed form at price exceeding the retail sale price thereof. It is, therefore, their submission that once the goods have been sold at Rs. 2,100/- it cannot be said that this price is higher than the retail sale price and it must be considered as RSP. It is also evident that there was no other sale of STBs and since the STBs are sold at this price, it should be considered as retail sale price. They further assert that Notification No. 49/2008-CE(NT) dated 24 December 2008 under which set top boxes have been notified for valuation under Rule 4A at S. No. 99 has an explanation which reads as follows: For the purposes of this notification, except S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notified under SWM rules and therefore, notification applies to the set top boxes which were imported. However, assessment under Section 4A applies only if the SWM Act read with the SWM Rules applies to the goods being assessed. Even if the goods are notified under Section 4A but the SWM Act and Rules requiring RSP to be declared do not apply, Section 4A will not apply. For instance, if the goods are notified but a particular manufacturer or importer does not sell the goods directly or indirectly to consumers but sells them to only industrial consumers or institutional consumers, then the SWM Rules do not apply and RSP does not have to be declared. Consequently, such manufacturer or importer will have to pay Central Excise duty or, as the case may be, additional duty of customs as per Section 4 of the Central Excise Act and not as per Section 4A. The SWM rules, make an exception to institutional consumers and the price at which the goods are sold to institutional consumers cannot be considered as retail sale price. The institutional consumer in this case is the Dish TV. According to the learned authorised representatives for the Revenue, Dish TV does not qualify as an institution ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which was providing the service. In our considered view, Dish TV cannot be considered as retail buyer because it is not using the goods for itself but is using them to provide service to its subscribers. Therefore, the price of Rs. 2,100/- at which the goods were sold to Dish TV cannot be considered as retail sale price even if the assessment is not modified and continues to be under Section 4A as was done in this case. The assessment should correctly be done under Section 4 as per Bharti Telemedia. Assessment in this case was done under Section 4A as per RSP with abatement as decided by the assessing officer of Rs. 1465/-. We find that the assessing officer has rejected declared RSP of Rs. 1000/- per set top box and recalculated it after adding the basic customs duty to the landed cost of the STB and adding 20% as post importation cost which came to Rs. 1832/-. After allowing 20% abatement, he determined the additional duty of Customs on a value of Rs. 1465/- 20. If Section 4 is applied duty has to be determined on the landed cost of the goods plus basic customs duty which will also be Rs. 1465/- per STB. Therefore, there will be no difference between the value on which additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... since nobody (not just the retailer) can sell any goods at a price above RSP, and since the appellant sold the Dish TV at Rs. 2,100/- this amount cannot be said to be higher than the RSP. Therefore, RSP should be taken as Rs. 2,100/-. Learned authorised representatives also argued that once the appellant themselves have self assessed additional duty under Section 4A, it is not open for them to question the applicability of Section 4A. We have already discussed and found that there is no retail sales but only institutional sales in this case and we find nothing in Rule 23(2) that permits sale price to institutional buyers to be reckoned as retail sale price. It is true that assessment (both self assessment and re-assessment) were done under Section 4A and the appellant had not assailed the assessment. However, by issuing the SCN Revenue has re-opened the assessment on one ground (that RSP should be taken as Rs.2,100/-) and it is open to the appellant to plead any grounds in defence including any question of law (that Section 4 and not Section 4A should have been applied) and it is for the adjudicating authority and appellate authorities to consider the defence. We have considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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