Custom, Excise & Service Tax Tribunal
2. Shri Sanjeev Ratra, Director vs Cc, New Delhi on 7 August, 2015
(CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
Date of Hearing: 08/7/2015
Date of Pronouncement: 07/08/2015
Appeal No. C/564-565/2009
(Arising out of OIO No. 09/Commr./JMS/2009 dated 29.04.2009 passed by Commissioner of Customs (Preventive) New Delhi)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3.
Whether their Lordships wish to see the fair copy of the order?
4.
Whether order is to be circulated to the Department Authorities?
1. M/s Savi Vision Pvt. Ltd.
2. Shri Sanjeev Ratra, Director Appellants
Vs.
CC, New Delhi Respondent
Appearance:
Present for the Appellant: Shri Naveen Mullick, Advocate Present for the Respondent: Shri Amrish Jain, SDR Coram: Honble Mr. R.K. Singh, Member (Technical) Honble Smt.Sulekha Beevi C.S., Member (Judicial) Final Order No.52477-52478/2015 Per: Sulekha Beevi C.S. The appellants are aggrieved by the demand of differential duty, confiscation of goods and imposition of penalty on the allegation that appellants evaded duty by mis-declaring the RSP and selling the goods imported at a higher price than the RSP declared at the time of import.
2. The brief facts are that the appellants, M/S Savi Vision (P) Ltd, deals in AudioVisual Equipments such as LCD projector, Plasma TV, Home Theatre System, DVD CAMM etc. and are also dealing in import of such goods. During the disputed period from 2001 2002 to 2004 2005 the appellants imported goods by declaring the RSP and paying duty on such assessment. A search was conducted on 12/01/2005 in the business premises of the appellants on a specific intelligence. Audio-visual equipments imported worth Rs.57,55,770/- were found in the business premises of the appellant which did not have MRP displayed on the packing though these goods were imported by paying duty on RSP declared. The goods were seized on the same day. Later goods were provisionally released on furnishing bond of 100% value of seized goods and bank guarantee of 25%. Differential duty of Rs.6,93,820/- was deposited. It is also alleged that on enquiry it was found that the appellants sold such imported goods to NCCF/KB at a price higher than the RSP declared at the time of import. The appellants had sold goods to retailers and other customers besides sale to NCCF/KB. A show cause notice was issued alleging mis declaration of RSP, and proposing inter alia, demand of differential duty taking into consideration the price at which goods were sold to NCCF/KB. The notice was finalized by the order which (a) confirmed the confiscation of goods worth Rs.57,55,770/- (market value of the goods which did not display MRP on packing) and as the goods were provisionally released a fine of Rs.5,00,000/- was imposed in lieu of confiscation under section 125 of Customs Act 1962 (b) raised demand of Rs.3,19,593.62/- (CVD+EC on CVD+EC on BCD) being differential duty on seized goods along with interest (c) demand of Rs.1,50,88,287.05/- (CVD + EC on CVD + EC on BCD) being differential duty on past clearances along with interest (d) imposed equal amount of penalty besides penalty of Rs.25 lakhs on Sh. Sanjeev Ratra, director of M/S SVPL under section 112 (a) of Customs Act 1962 and (e) ordered appropriation of the amount of Rs.6,93,820/- already deposited by appellant. Aggrieved the appellants have preferred these appeals.
3. The contentions raised on behalf of the appellants can be summarized as under:
i) The goods were imported by filing respective B/E declaring the RSP and paying duty on such assessment. The Proper Officer allowed clearance after being satisfied of the manner of packing and there was no objection. The goods were cleared after paying all duties, charges and complying all formalities.
ii) The packings /packages found at the time of search did not have the MRP declared /displayed on them because when the quantity imported was more than one piece, the supplier of goods, packed respective consumer packings in a Master Pack. RSP was declared on these master cartons. When individual packings were removed from master packing they did not bear the MRP.
iii) The goods were sold by issuing proper invoices. 80% of the sale was made to consumers other than NCCF/KB and the price collected in these sales was lower than the RSP declared at the time of import. The details of price list of these sales were furnished. That only 20% sale was made to KB and NCCF. The detail of these sales was also furnished by the appellant.
iv) That during the disputed period the Circular No. 625/16/2002-CX dated 28/02/2002 issued by the Board was in force which clarified that when supply is effected to DGS and Government Departments, restaurants/Hotels, Canteen stores Depot (CSD) of the Defence services, the printing of MRP on the packing is not required. The appellants got themselves registered in Kendriya Bhandar for effecting supplies to NCCF/KB and was under bona fide belief that the provisions of SWM Act, 1976 & PC Rules 1977 regarding display of MRP would not apply in case of sale to such institutional consumers, such sale not being to the ultimate consumer. In these circumstances, the transactions entered with Kendriya Bhandar/NCCF was for a price higher than that declared at the time of import. Further, that it is not possible for the appellants to foresee prior to import as to whom the goods will be sold after the import.
v) That demand of differential duty of Rs.1,50,88,287.05/- raised on the entire goods imported during the period 2002-2003 to 2004-2005 is totally illegal as only small percentage of sale was effected to NCCF/KB. Major portion of the goods were sold to ordinary customers at RSP or lower than RSP. The adjudicating authority has erred in taking the rate shown in the pricelist of the supply made to Kendriya Bhandar/NCCF for the entire sales affected by the appellants during the disputed period. The supply to NCCF/KB was only 20% and the major supply was made by the appellant to ultimate consumers/retailers at a price lower than the RSP declared. This aspect that the appellant had made major supply below the RSP was not taken into consideration at all. The assessment of differential duty on the basis of the price list of goods sold to NCCF/ KB is wholly unjustified as the appellant has made only 20% sale of goods imported to NCCF / KB. The rest was sold at price lower than the RSP declared at the time of import. Further application of the same price as the basis for calculation of differential duty for goods imported under different B/E is highly erroneous and unjustified.
4. Controverting the above submissions, the arguments advanced by the Ld. DR can be summarized as under:
i) The imported goods were assessed on the basis of RSP declared under section 4A of the Central Excise Act, 1944. Hence CVD was calculated and paid on the RSP declared at the time of import. Investigations showed that during the above period M/S SVPL had not declared RSP on the individual packages and also had mis-declared RSP at the time of import.
ii) M/S SVPL had sold the goods at higher price than the declared RSP to NCCF/Kendriya Bhandar as is evidenced by their approved pricelist. The contention of the appellants that NCCF/Kendriya Bhandar are institutional consumers and that there is no requirement to display the MRP is untenable. That SVPL has not established that NCCF/KB are not ultimate consumer. The sale to NCCF/KB is also sale to ultimate consumer/retail sale. The sale of goods at higher price than the RSP declared is violation of the provision of law. Further, the packages found in the business premises did not have the display of MRP upon them which also would go to show that the appellants have mis-declared the RSP at the time of import.
iii) That RSP is the maximum price at which goods may be sold to the ultimate consumer. The approved pricelist to NCCF/Kendriya Bhandar are basically the MRP (RSP) at which the appellant decided to sell that particular model to ultimate consumer. These prices are to be treated as the MRP at which the particular model may be sold to ultimate consumer. It is irrelevant whether the sale is to NCCF/KB or other ultimate consumer. It is also irrelevant whether the appellant has sold items to other consumers below the RSP declared at the time of import. Therefore the adjudicating authority has rightly taken the pricelist of sale made to NCCF/KB as the basis for assessing the differential duty.
5. Heard both sides and perused the records carefully.
6. The main allegation is that the appellants sold the imported goods to NCCF/KB at price higher than that RSP declared at the time of import. The first leg of argument raised by the appellants in this regard is that NCCF/KB being institutional buyers, the provisions of SWM Act 1976 and PC Rules 1977 are not attracted to the supply of goods to these customers. That the Boards Circular No.625/16/2002-CX dated 28.02.2002 was in force at the relevant time and that the appellants were under bonafide belief that the provisions of SWM Act 1976 & PC Rules 1977 was not attracted when goods are sold to NCCF/KB. Refuting the above contention of the appellant, the learned DR submitted that NCCF/KB are not institutional consumers. The sales effected to them are not outside the purview of SWM Act 1976 & PC Rules 1977. Such sale is a sale to the ultimate consumer.
For a better appreciation the relevant definitions & provisions are noticed as under:
retail dealer Rule 2(o) in relation to any commodity in packaged form means a dealer who directly sells such packages to the consumer and includes, in relation to such packages as are sold directly to the consumer, a wholesale dealer who makes such direct sale.
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.
Retail sale, in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer.
Retail sale price 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 the package, there shall be printed on the package the words. [Maximum or Max. retail price] inclusive of all taxes [or in the form MRP RsInclusiveof taxes].
Explanation For the purpose of the clause Maximum price in relation to any commodity in packaged from shall include all taxes local or otherwise, freight, transport, charges, commission payable to dealers, and all charges towards advertisement, delivery, packing forwarding, and all like, as the case may be.
Rule 3 of Chapter II of PC Rule 1977 reads as under:
3. Chapter to apply to packages intended for retail sale. The provisions of this Chapter shall apply to packages intended for retail sale and the expression package wherever it occurs in this Chapter shall be construed accordingly.
The Explanations to section 4A of the Central Excise Act, 1944 are as under:
Explanation 1 : For the purpose of this section, retail sale price means the maximum price at which the excisable goods in packaged form may be sold to the ultimate consumer and includes all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like and the price is the sole 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 packages, the retails sale price excluding any taxes, local or otherwise, the retail sale price shall be construed accordingly.
Explanation 2 :
(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;
6. It is not disputed that the goods are notified under section 4A of the Central Excise Act, 1944. It is then incumbent upon the importer to declare the RSP upon the package. The appellant, as per the provisions of law, can sell the goods at RSP or below RSP only. The appellants do not dispute that the sale effected to NCCF/KB was for a price higher than the RSP declared at the time of import. Their argument is that the provisions of SWM Act 1976 & PC Rules 1977 do not apply to the sales effected to NCCF/KB. We are not able to agree with this contention of the appellant. NCCF/KB are not institutional consumers. NCCF/KB purchase goods in bulk for effecting sale to ultimate consumers and do not fall into the category of institutional consumers. Further the appellants have no case that they displayed upon the packages that the packings were for sale to institutional consumers and not for retail sale. The argument on behalf of the appellants that the appellants relied upon the Board Circular dated 28.2.2002 and was under the belief that MRP need not be affixed in effecting supply to NCCF/KB is without merits. As already stated NCCF/KB would not come within the description of institutional consumer. Thus we do not find any infirmity with the conclusion arrived by authorities below that sale effected to NCCF/KB is a sale to ultimate consumer. The sale of goods at price higher than the RSP declared can only lead to the conclusion that appellants mis-declared the RSP of such goods at the time of import. The appellants are therefore liable to pay differential duty.
7. The second grievance put forward is regarding the calculation of differential duty demanded. On behalf of Revenue it was urged that as a appellant sold goods to NCCF/KB at higher price, this price being the highest as established from the approved price list of NCCF/KB these prices were taken for calculation of differential duty of the goods imported during the entire disputed period. That even though the appellant sold goods to other customers at prices lower than the declared RSP, as the appellant had mis-declared RSP, the highest price at which the goods were sold to NCCF/KB was rightly taken by the authorities below as the basis for calculation of differential duty.
8. Against this, the ld. Counsel for the appellant submitted that the appellants had submitted details of the sales effected to NCCF/KB and other customers as per the list furnished. But the authorities below totally failed to consider the details of sales as brought out by records. It is the case of appellants that 80% of the sale was effected to ordinary customers and the prices collected where lower than the RSP declared. That in some cases the charges collected included cost of installation articles provided extra, and also installation charges. That the authorities below ought not to have demanded differential duty on the goods sold to customers other than NCCF/KB as there is no iota of evidence that such goods were sold at a price higher than declared RSP. The ld. Counsel relied upon the decision rendered in Commissioner of C. Ex., Vododara Vs. Bell Granito Ceramics Ltd. 2009 (235) ELT 171 (Tri. Ahd.Bad.)
9. It is not in dispute that the appellants have sold goods to customers other than NCCF/KB at prices below the RSP declared. RSP is only the upper limit of the sale price which the importer can charge from the consumer. The appellant is free to sell goods at any price lower than the RSP declared. The appellants have pleaded and put forward a consistent case, which is corroborated by the detailed list and invoices, that sales effected to customers other than NCCF/KB were made at RSP or prices lower than the RSP declared at the time of import. In such circumstances we have to agree with the appellants contention that the demand of differential duty on goods sold below RSP or goods sold at RSP is unjustified. Merely because the importer effected sale of some goods at price higher than the RSP declared, the Revenue cannot demand differential duty on entire import done as per various B/E during the period 2001- 2002 to 2004-2005.
10. In CCE Vododara Vs. Bell Granito Ceramics Ltd. (supra), the Tribunal observed that Section 4A requires payment of duty on the MRP affixed as per provision of SWM Act. That there is no stipulation in the said Act that all packings should bear the same MRP. It is a prerogative of the manufacturer to affix the MRP on the goods and if different MRPs are affixed keeping in view of the market conditions, different MRP so fixed would be the retail sale price in respect of each packet.
11. Explanation 2 to Section 4A is to the effect that where more than one retail price is declared on the packet, the maximum of such retail price shall be deemed to be the retail price for the purpose of the Section. In the instant case, Revenue has no case that different MRP was affixed on same packages. So also it is not denied that the appellants sold goods to customers other than NCCF/KB at rates lower than the RSP declared at the time of import. Even then the adjudicating authority has raised demand of differential duty for the entire import of goods during the disputed period. Further, the adjudicating authority has adopted the price quoted to NCCF/KB as the basis of calculation of differential duty and applied the same to the entire sale of imported goods for the disputed period. The demand so raised in our view is not acceptable. The goods were imported under different B/E declaring RSP and cleard after assessment. Law does not forbid sale of goods at prices lower than the declared RSP or equal to RSP. On such score, there cannot be any mis-declaration of RSP if goods are sold at RSP or below RSP. Undeniably the allegation of collection of higher price is confined to the sales effected to NCCF/KB. The demand of differential duty, in our view, has also to be confined to sales effected to NCCF/KB only. In such circumstances the demand of differential duty of Rs.1,50,88,287.05 on entire sales is unsustainable. According to the appellant the sales effected to NCCF/KB is only for Rs.31,240,55/-.
12. The next issue to be addressed is regarding the goods seized at the business premises of the appellant for the reason that the packages did not bear the display of MRP. The goods were confiscated and released on payment of redemption fine of Rs.5,00,000/-. A demand of Rs.3,19,593.62/- as differential duty is raised on such goods seized. The explanation offered by the appellant for the packages which did not bear the MRP is that, at the time of import when more than one piece of the same item is imported, the supplier packed them in a master carton. MRP was declared on the master carton. When the individual packings were removed from the master carton they did not have the MRP declaration. We do not find this as a plausible explanation. As per the relevant provision of SWM Act 1976 and PC Rules 1977 the packages ought to have the MRP declared on them. Therefore, we hold that the confiscation and demand of differential duty on the seized goods in other view does not call for any interference.
13. An appeal has also been filed by Shri Sanjeev Ratra, Director of SVPL Ltd. A penalty of Rs. 25,00,000/- is imposed upon him under Section 112 (a) of Customs Act 1962. The ld. DR submitted that Shri Sanjeev Ratra being the Director of the Company is in-charge of all day to day affairs and is responsible for mis-declaration of RSP and thereby evasion of duty. Refuting this, the ld. Counsel for appellant argued that Shri Sanjeev Ratra was only an employee of the company and was under the bonafied belief that as per the Board Circular dated 28.8.2002 the provisions of SWM Act, 1976 and PC Rules 1977 were not applicable for the sales made to NCCF/KB. That at the time of import the appellant could not for see to whom the goods would be sold. These submissions are not without merits. The appellant sold the imported goods not only to NCCF/KB but to other customers also. The goods sold to other customers were sold at RSP or prices lower than the RSP declared. The appellant did not import goods for sale solely to NCCF/KB. Further the Board Circular was also in force at that time. In such circumstances the imposition of penalty of Rs.25 lakhs in our view is slightly on the higher side. We consider that the penalty imposed is liable to be reduced to Rs.50,000/- which would be justifiable in the facts and circumstances of the case. The appellants have also pleaded and contended that the extended period is not invokable. Perse the appellants have committed mis-declaration of RSP, and therefore this contention of the appellants serves only to be brushed aside.
14. From the foregoing the following order is issued:-
i) The impugned order, to the extent of demand of differential duty of Rs.1,50,88,287.05/- and imposing equal amount of penalty is set aside and differential duty and mandatory (equal) penalty only in respect of goods sold to NCCF/KB is upheld. The primary adjudicating authority is directed to (re)compute the demand of differential duty and penalty accordingly and inform the appellants.
ii) The confiscation of goods worth Rs.57,55,770/- and demand of differential duty of Rs.3,90,593.62/- is sustained along with the levy of redemption fine of Rs. 5 lakhs. (Five Lakhs).
iii) The penalty of Rs.25,00,000/- imposed on Shri Sanjeev Ratra is reduced to Rs. 50,000/- .
15. The appeal is partly allowed in the above terms.
(Pronounced on 07/08/2015)
(Sulekha Beevi C.S.) (R.K. Singh)
Member (Judicial) Member (Technical)
K. Gupta
??
??
??
??
16