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TMI Blog2023 (7) TMI 324X X X X Extracts X X X X X X X X Extracts X X X X ..... computing and storage of data, common in large business storage systems for data storage and processing, like banks, insurance companies, large media houses, IT institutions, etc., did not appear to be meant for retail sale, and consequently, the matter was taken up for investigation by the Directorate of Revenue Intelligence (DRI), Mumbai. 1.3 It appeared to the DRI during investigation that there was a contract titled as "Channel Partner Distribution Contract (India)" between M/s. EMC Information Systems International (hereinafter referred to as 'EMC'), which is the manufacturer and supplier, and the appellant, in the capacity of a channel partner, for remarketing products and services of M/s. EMC, belonging to product families such as Symmetrix, Application Software, Backup and Recovery Solutions, VNX, VNXe, etc., in India, Bhutan, Bangladesh, Sri Lanka and Nepal. The respondent, as a channel partner, was authorized to appoint re-sellers after obtaining prior permission of M/s. EMC, but however, such re-sellers were not authorized to remarket the products, for which even the respondent-assessee did not have authorization. 1.4 It appears that the DRI recorded statements from va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e value of Rs.513,39,63,465/- in respect of the Bills-of-Entry under dispute should not be held liable for confiscation under Section 111(m) ibid. (iv) Liability to penalties under Section 112(a) or 114A; and 114AA ibid. 3. It appears from the documents placed on record that the respondent filed a very detailed reply vide reply dated 21.12.2018 wherein they appear to have contended as under: - * As a channel partner, the respondent would sell the imported goods in the market, on retail sale basis as such, in the same pre-packaged condition, against the payment of applicable VAT / CST. * The respondent is also registered under the LMA, 2009. * Levy of 4% SAD under Section 3(5) of the Customs Tariff Act, 1975 was imposed to counterbalance various internal / State taxes like Sales Tax and Value Added Tax vide Notification No. 19/2005-Cus. dated 01.03.2005, as amended subsequently. * The respondent had paid applicable VAT on the sale, which took place after importing the goods. * At the time of import, the respondent had also submitted declarations in the prescribed forms, as prescribed under the Notification, thereby complying with the provisions of the LMA and the Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r retail sale as the imported goods were customized goods as per the requirements of the buyers. (ii) The goods were procured on the basis of the tendering process, wherein the lowest bidder was given the order. Thus, the lowest quote by the buyer had become the basis for the sale of the goods with the MRP becoming irrelevant. (iii) The imported goods were pre-booked on the basis of the Purchase Order placed by the buyers and the goods were already destined for sale to a pre-decided customer. (iv) Even though VAT is claimed to have been paid, mere payment of VAT will not decide the retail sale nor their eligibility for the exemption at the time of import. (v) With regard to respondent's submission as to revenue neutrality, it is imperative to understand that mere payment of VAT on any subsequent sale of the imported goods does not signify that revenue has been taken care of. (vi) In terms of Notification No. 102/2007-Cus. dated 14.09.2007, the respondent-importer would be eligible for refund of SAD on any subsequent sale (retail or otherwise), only when the 4% SAD was paid at the time of import of the said goods. (vii) The option of not paying the SAD at the time of imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Value Added Tax was paid on the imported goods, which were in pre-packaged condition. (f) The aspect of revenue neutrality was also explained with reference to various decisions including the decision in the case of M/s. Punjab Tractors Ltd. v. Commissioner of Central Excise, Chandigarh [2005 (181) E.L.T. 380 (S.C.)] and M/s. Tenneco RC India Pvt. Ltd. v. Commissioner of Central Excise, Chennai [2009 (235) E.L.T. 105 (Tribunal - Chennai)]. (g) The aspect of limitation was also explained and it was pleaded that the demand was time-barred. 9. We have heard the rival contentions, perused the impugned order and also the documents placed on record. 10. After hearing both sides, we find that the only issue to be decided by us is: whether the assessee's claim for refund of 4% SAD, as allowed in the impugned order, was in order? 11. The whole issue revolves around the interpretation of Notification No. 21/2012-Cus. dated 17.03.2012, the relevant portion of which reads as under: - S. No. Chapter, heading, sub-heading or tariff item of the First Schedule Description of goods Standard rate (1) (2) (3) (4) 1 .. ..... .. 2 Any Chapter All pre-packaged goods intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such pre-booked, tailormade goods were sold, on the basis of tender, to the lowest bidder. So, if the contention as to pre-booked and tailormade goods was to be accepted, then there is no need for tender and the lowest bidder buying the goods. That is to say, the Department is trying to blow hot and cold; the first contention is clearly contrary to the second contention. 14. Be that as it may, now, we shall analyse if the importer in the case on hand has satisfied the above three conditions of the Notification. 15. From the contentions of the Ld. Advocate as also the importer's reply to the Show Cause Notice, the following facts emerge: - a) Each of the packages imported contained only one unit quantity of the specified model of specific configuration and the quantity has been declared accordingly in the MRP label. b) In respect of most Bills-of-Entry, the goods were in fact examined by the proper officer of Customs, who certified that the goods were in pre-packaged condition. Accordingly, we find that the respondent has satisfied the first condition of the Notification. c) The importer sold the goods locally as such in the pre-packaged condition to their channel partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not covered by the above exclusion clauses since the imported pre-packaged goods were sold in units and the same were bought from the importer only by their channel partners / resellers and not directly sold to industrial or institutional consumers. o) There is also apparently no declaration that such packages were "not for retail sale". 16. There are clearly buyers, identified or otherwise, for the pre-packaged goods; there is no dispute that such pre-packaged goods were sold by the importer to the buyers/resellers and that MRP/RSP labelling was witnessed by the proper officer at the Customs notified area. 16.1 We do not find any disputes to the above factual position taken out either in the grounds-of-appeal before us or even in the impugned Order-in-Original, except as per paragraph 13 of this order, and therefore, we have to hold that the importer has satisfied the conditions of Notification No. 21/2012-Cus. ibid. 17.1 We have noticed in the earlier paragraphs of this order that the levy of SAD is to counterbalance the State levies in the form of VAT / ST / CST. This means that the importer is normally liable to pay SAD at the time of import; when such goods imported are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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