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TMI Blog2024 (12) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ons: a) That the price charged by the foreign supplier was FOB price. The said contention was raised based on certain clauses of the Supply and Distribution agreement with the Supplier which stipulated that all orders shall be shipped FOB Ex-Works the Netherlands. By treating the Invoice price as FOB, the Show Cause Notice proposed addition of notional freight and insurance under Rule 10 (2) (i) and (ii) of the Customs Valuation Rules 2007, b) That the goods were covered by Sr. No.40 of Notification No.14/2008-CE (NT) dated 1-372008 issued under Section 4A of the Central Excise Act 1944 and required affixing of RSP and were liable to be assessed to additional duty of Customs (CVD) on the RSP. As no RSP was declared, the RSP is taken as three times the import value. 3. After due process, the adjudicating authority confirmed the demand. On appeal, the Commissioner (Appeals), dismissed their appeal. Hence, the appellant is before the Tribunal. 4. The Ld. Counsel appearing for the appellant makes the following submissions: 4.1. It is submitted that the goods were imported for Government of Jharkhand, Health Department, for use in their Hospitals; the Appellant supplied the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not FOB. 4.4. Accordingly, the Ld. Counsel for the appellant submits that since the price charged was CIF for delivery at the place of import viz. Calcutta, the question of treating the price as FOB and consequently adding notional freight and insurance in terms of Rule 10 (2) (i) and (ii) of the Customs Valuation Rules 2007 does not arise. 4.5. The appellant also submits that the Show Cause Notice has proceed to allege that the contract was FOB on the basis of Supply and Distribution Agreement with foreign supplier [on Paragraphs 3 and 5 of the said Agreement] for contending that the price in the present case was FOB and not CIF, which is ex-facie erroneous and totally misconceived; a bare perusal of the said Agreement would show that the said paragraphs 3 and 5 apply to the product, which as per the very first recital of the agreement and definition clause 1.2 is the active ingredient known as "Microgen Quat-80" and which, as per the said paragraph 5, was to shipped FOB Ex-Works Mijdrecht, the Netherlands. In this regard, it is submitted that the goods imported in the present case are not the said active ingredient known as "Microgen Quat- 80" , but is the final product "D-12 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kes, moulding pieces or shapes and the same are therefore clearly not covered by the said Sr. No.40 and accordingly, MRP based assessment is not applicable. 4.9. It is also their contention that assuming while denying that the imported goods are covered by the said Sl. No.40 of Notification No. 14/2008-CE (NT), even so, the second Condition that there should be requirement under the Standards of Weights and Measures (Packaged Commodity) Rules 1977 to declare the retail price on the goods, is not satisfied. 4.10. The appellant have also submitted that the goods in the present case were imported for Government of Jharkhand, Health Department, for use in their Hospitals; as per the terms and conditions of the Government Order/ tender, the goods were required to bear a Label mentioning 'Govt. of Jharkhand Supply, not for Sale". Accordingly, the goods carried such Label mentioning "Govt. of Jharkhand Supply, not for Sale". The foreign supplier's invoices also mentioned "Govt. Of Jharkhand Supply". This is in dispute. 4.11. Since the goods were imported for supply to the Government of Jharkhand, Health department, for use in their Hospitals, and also carried a Label to that ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of whether the goods are liable for CIF based assessment, the same is purely one of legal interpretation. (iii) As laid down in the following judgments, the Revenue cannot justify invocation of larger period of limitation merely because the department takes a different view on the same: a) Kamavati Car Air Conditioners P. Ltd v CC [(2024) 15 Centax 360] b) Medical Engineers (I) Ltd v. Commr. of Cus., Mumbai [2015 (329) ELT 567 (Tri. - Mum.)] (iv) The Bills of Entry were duly assessed by the proper officers of customs. Merely because the same documents filed by the Appellant, the audit subsequently takes a different view, that cannot justify the invocation of the larger period of limitation. (v) Further as held in the following decisions, merely because the audit department subsequently took a different view on the legal interpretation of the issues, that cannot justify confiscation of the goods under Section 111 (m) of the Customs Act 1962 and imposition of penalty: a) Lexmark International (I) P. Ltd. v. Commr. of Cus. (Imports), Nhava Sheva [2011 (274) E.L.T.556 (Tri. - Mum.)] b) Commr. of C.Ex. & S.T., Jaipur-II v. Arora Products [2018 (359) E.L.T. 604 (Tri. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Assessable Value. (b) Whether the MRP / RSP provisions would apply, thereby calling for higher CVD payment as has been held by the Adjudicating authority. 12. In order to decide the issue at (a) above, it would be important to go through factual details and the documentary evidence placed before us: 12.1. The appellant has claimed that the freight and insurance has been borne by the foreign exporter and the goods have been consigned for delivery to the appellant at Kolkata. Hence, the appellant claims that the price shown in the overseas exporter's invoice is CIF, which has been already adopted by the appellant for payment of Customs Duty. 12.2. The appellant has submitted copies of the Bills of Entry, Invoices, BL and Insurance, etc., in their Synopsis (page Numbers 10 to 53). Some of the important documents are extracted below : * Marine Policy: * Freight Bill: * Bill-of-Lading: * Pick Ticket: * Product Label: * Commercial Invoice: 12.3 A careful perual of the above documents clarifies as under : - (i) The Marine Policy has been issued by ACE - USA, with the assured being Microgen USA. The premium stands paid by the exporter. (ii) The Airway Bill sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Excise Duty to be paid on the basis of MRP or not when the goods are cleared to industrial customers were before the Hon'ble Karnataka High Court in the case of M/s. EWAC Alloys Ltd v. Union of India [2012 (275) E.L.T. 193 (Kar.), wherein it has been held as under : "29. In Rule 2-A industrial consumer or the institutional consumer are purchasing the packaged commodities directly from the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockist. If the customers are speared over the country and if the manufacturing unit is in one part of the country and they want to concentrate on manufacturing activity, they may not have resource or ability to arrange for the sale of their product through out the country. In those circumstances, it is quite but natural that they need middle men or stockist as distributors, through whom they would distribute their product or sell their products to an industrial or institutional user. In such an event, that packaged commodity cannot be construed as a retail package. Therefore, after deleting Rule 34(a), in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gests the mix of the products, the price and the stockist from whom these can be purchased. Therefore, in the facts of this case, it cannot be said that the person to whom these petitioners are selling the products are customers in the sense it is understood under the Customer Protection Act for whose protection this particular Act and Rules were enacted. Therefore the impugned notices issued are one without authority, illegal and contrary to the express provisions contained in the enactment and cannot be sustained. Therefore it is liable to be quashed. Hence, I pass the following order : (i) Writ petition is allowed. (ii) The impugned notices are hereby quashed. (iii) Parties to bear their own costs." (Emphasis supplied) 12.9. We also refer to the decision rendered by the Tribunal at Mumbai in the case of M/s. Charms Cosmetics Pvt. Ltd. v. Commissioner of Central Excise, Pune-I [2017 (352) E.L.T. 197 (Tri. - Mumbai)], wherein it has been held as under: - "12. An institutional consumer, by implication of the definition of the said expression, is undoubtedly a point of sale to customer; the customer, however, is clearly distinguishable as a recipient of the service provide ..... X X X X Extracts X X X X X X X X Extracts X X X X
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