Custom, Excise & Service Tax Tribunal
Commissioner Of Customs(Import), ... vs M/S. Sleek International on 9 July, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. C/86904/13-MUM C/CO/91004/15-MUM [Arising out of Order-in- Original No. 15670/2012 AM (I) dtd. 23/2/2012 passed by the Commissioner of Customs(Import), Nhava Sheva] For approval and signature: Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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Commissioner of Customs(Import), Nhava Sheva
:
Appellants
VS
M/s. Sleek International
:
Respondent
Appearance
Shri. Chatru Singh, Asstt. Commissioner(A.R.) for the Appellants
Shri. V.K. Singh, Consultant for the Respondent
CORAM:
Honble Mr. P.S. Pruthi, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 9/7/2015
Date of decision: /2015
ORDER NO.
Per : P.S. Pruthi
This appeal by Revenue arises out of orders in appeal NO. 72& 73 dated 31/1/2013 passed by the Commissioner (Appeals). Cross Objections are filed by the respondent.
2. On specific intelligence, the Customs Marine and Preventive wing on 5th June 2010 intercepted a container at Uran Phata, Junction, cleared from Customs at JNPT under B/E 662557 dt 28.05.2010 and on the way to Vashi. On examination, it was found that there was huge difference between MRP/RSP of the goods, namely Sanitary ware of Iron and Steel, declared in the Bill of Entry and the MRP declared on the price list obtained at their store at Vashi. The partner of the respondent in his statement on 7th June 2010 confessed that normally the supplier fixed MRP on the packaging material but as he had forgotten to do so for the impugned goods, so the stickers bearing MRP were sent by supplier through courier and they undertake to affix the MRP on the goods at their godown before clearing/selling the same to the dealers. He also admitted that they are selling goods to dealers at the net dealer price declared in the list obtained from their store. He agreed that the price of Vashi store can be considered as MRP. Accordingly he paid differential duty of Rs. 1,49,754/- and Rs. 1,53,148/- on the goods which were cleared under the Bill of entry dated 28/5/2010 and B/E 813289 dt 18/12/2009. The goods in the container were seized. Equal quantity of packaging cartons provided with product code found in the containers were also seized. In further action the goods valued at Rs. 10310919/-lying in their godown at Vasai were seized for non declaration of MRP. The goods consisted of Hobbes, Ovens and Sinks. In the godown, printer machines used to affix MRP stickers was also seized. The labels which were affixed on the seized goods in the godown give details such as product name, size, quantity, MRP, Email Address of the Respondent. Investigation also showed that the price list, MRP stickers, sale invoices showed higher price than the MRP declared to customs at the time of import. It was also revealed that during the period 1/12/2006 to 28/5/2010 the respondent had imported consignments under 21 Bills of Entry. Therefore duty was demanded in respect of such goods which were cleared from customs allegedly by declaring lower MRP. The adjudicating authority confiscated the goods cleared under Section 111(m) of the Customs Act with an option to redeem the same under Section 125 on payment of fine of Rs. 5 lakhs. Further, by rejecting the declared RSP and ordering the re-determining of RSP as Rs. 4,35,05,088 he confirmed the demand of duty of Rs. 15,33,382/- on the goods cleared in the past. He also confirmed the demand of duty of Rs. 1,49,754/- and Rs. 1,53,148/- in respect of goods seized in the in the containers and re-determination of the RSP declaring in Bills of Entry. He also imposed penalty of Rs. 2 lakhs under Section 114A on the respondent firm and Rs. 1 lakh under Section 112A on its partner. In appeal, the Commissioner(Appeals) upheld the confiscation of goods seized from the container only under Section 111(m) and reduced redemption fine from Rs. 5 lakhs to Rs. 1 lakh. Further he reduced demand on the goods cleared in the past to Rs. 9,44,404/- for the reason that the Rules for determination of RSP were introduced by notification No. 13/2008 dt 1/3/3008 and such determination can be done only after 1/3/3008. Accordingly, he confirmed penalty of Rs. 9,44,404/- under Section 114(A). He upheld the penalty of Rs. 1 lakh on the partner.
3. Heard both sides.
4. Revenues appeal is mainly on two grounds. The first is that in terms of Section 46(4) read with Section 14(1) the importer is required to declare the true RSP. The importer intentionally misdeclared the contents of the Bills of Entry by declaring lower MRP, therefore goods seized from the godown are liable to confiscation under Section 111(m). The Commissioner has thus erred in lowering the demand from Rs. 1533382/- to Rs. 944404/- because even before 1/3/2008 the goods were subjected to RSP based assessment under Section 4A and the MRP as revealed from the documents was known to the importer. Correspondingly the equivalent penalty under Section 114A of Rs. 15,33,382/- is imposable. The second ground of appeal is that the Commissioner ignored the fact that the importer did not put RSP labels on the pre-packed commodities in terms of Notification No. 44/RE-2000/1997-2002 dated 24/11/2000 issued by DGFT read with Section 46 of the Customs Act making the goods seized in the godown liable to confiscation.
5. The respondent filed cross objection under Section 129A(4) as under:
(a) The Adjudicating Authority held that there is no concrete proof as to whether MRP labels were pasted on the packages at the time of actual imports, this was not challenged and has assume finality.
(b) The Commissioner (Appeals) held that there is no evidence to show that the goods seized from the godown were the same as covered by the remaining Bills of entry and therefore the goods except those mentioned in Bills of Entry dated 28/5/2010 and 18/12/2009 are not liable for confiscation.
(c) Only those goods were seized which did not bear MRP labels at the time of import but no investigation was done to establish that these goods were imported under the 21 Bills of Entry, therefore the Commissioner(Appeals) held that these are not liable for confiscation.
(d) The goods are not liable for confiscation under Section 111(d) having already been cleared for home consumption to become imported goods.
(e) for import before 1/3/2008 there was no provision for determining and therefore duty cannot be demanded. Reliance is placed on Tribunal decision in the case of ABB Ltd. [2011(272) ELT 106].
(f) Stainless steel sinks are not imported in packaged condition and therefore RSP based levy is not attracted under the Standards of Weights and Measures (Package Commodity) Rules, 1977.
(g) The goods could not be treated as package goods as they were seized in loose condition.
(h) The C.A. Certificate dated 1/4/2012 states that Stainless Steel sink covered under two Bills of Entry were sold at the declaration of RSP and not as per price list. Therefore differential duty of Rs. 149754/- and 153148/- is not payable nor the goods are liable to confiscation.
(i) The Adjudicating authority and the Commissioner(Appeals) gave finding that there is no proof whether the RSP labels were pasted on the goods cleared in the past and there is no evidence to show that the goods seized were the same as covered by the 21 Bills of Entry. The Commissioner has enhanced the penalty under Section 114A without following the provisions of Section 128A(3) as no opportunity was given.
6. Heard both sides and considered the submissions.
7. We find there are three aspects of the case to be dealt with. The first is determination of correct RSP in respect of goods seized from the container and their liability to confiscation. The second aspect is whether the goods cleared in the past under Bills of Entry as detailed in Annexure 1 to the show cause notice need re-determination of RSP and their leviability to confiscation. Third aspect is whether the Commissioner(Appeals) could have enhanced the penalty imposed under Section 114A without giving notice the respondent.
7.1 On the first issue, Revenues stand that the goods are sold after affixing MRP on the packages is contested. We find that the goods were being taken in the container and the packages were stacked on the pallets model wise and equal number of packing cartons printed with importers product code for further sale in the Indian Market were found in the container. Sinks imported on earlier occasion were found in the godowns in packed condition in cartons received with the consignments. Moreover the respondent had themselves declared the MRP in the Bills of Entry and the partner admitted that the labels were received by courier. The labels which were affixed on the seized goods in the godown give details such as product name, size, quantity, MRP, Email Address of the Respondent. Investigation also showed that the price list, MRP stickers, sale invoices showed higher price than the MRP declared to customs at the time of import. It was also revealed by Shri. D. Mohan Reddy, Godown Incharge that the MRP is provided on the cartons with rubber stamp at the time of dispatch as per the price list received from their head office. This fact also comes down in the panchanama when samples of cartons was drawn. These facts are clearly reflected on the samples of goods drawn which had labels on them. Therefore it is clear that goods are imported in package form and leviable to duty on RSP based assessment as stickers of higher MRP were found affixed on seized goods in the godowns. For not declaring the MRP correctly, the goods are liable to confiscation under Section 111(m) and duty is required to be paid on the basis of MRP declared in the price list. The fact that a certificate is produced from the CA much later to the effect that goods were sold at lower prices makes no material difference because the MRP declared in the price list and the stickers is higher and the partner admitted at the time of import that they are selling the goods at the list price. The proviso to Section 3(2) of Customs Tariff Act unambiguously states that in the case of such goods, the retail sale price has to be declared on the package as required under the Standards of Weights and Measures Act (SWM). The retail sale price is required to be declared in the case of imported goods which are specified under Section 4(A) (1) of the Central Excise Act. And the retail price which the respondent was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). Therefore the respondents argument is not acceptable.
7.2 As regards the second issue of Hobbs, Ovens seized in the godown, we find that the details of the MRP and other details were being printed on the cartons with sticker generated on the printer machine which was also seized under the Panachanama on 9th Jun 2010. The same facts were also admitted by the partner Shri. Rajesh Ahuja, Manager marketing, for the respondent who submitted copies of the stickers in respect of various models. It is also seen from the records that some goods were lying packed condition in the godown with sticker affixed on them. Investigation also showed that the price list, MRP stickers, sale invoices showed higher price than the MRP declared to customs at the time of import. It was also revealed by Shri. D. Mohan Reddy, Godown Incharge that the MRP is provided on the cartons with rubber stamp at the time of dispatch as per the price list received from their head office. Therefore the goods are assessable to CVD on basis of RSP/MRP in terms of Section 4A of the Central Excise Act CVD as levied under Section 3(2) proviso of the Custom Tariff Act.
7.3 The goods also being notified under Notification No 49/08-CE; therefore both the conditions specified in proviso to Section3(2) of the CTA are met and goods will be leviable to RSP based assessment. Rule 6(1) of the SWM(PC)Rules, states that (i) Every package shall bear their own owned label securely affixed thereto defined plain and conspicuous declaration made in accordance with the provisons of this Chapter as to (a) name and address of the manufacturer (f) the retail sale price of the package. In the case of goods seized from the container as well as goods found in the godown, the respondent have violated the provisions of the SWM(PC) Rules read with Section 3(2) A of the CTA requiring importer to affix the label at the time of import. As those labels were not affixed as well as fact that RSP was not declared on the goods makes the goods liable to confiscation under Section 111(d) of the Customs Act and leviable to duty on MRP basis.
7.4 The plea of the respondent that the Commissioner(Appeals) found no evidence to prove that goods seized from the godown were the same as those covered by the remaining Bills of Entry mentioned in Annexure (1) to the show cause notice is not acceptable because modus operandi followed is confirmed by the statements of various people as mentioned above. It has been confessed by the partner that they bring all the goods to their godown at Vashi. No evidence has been provided to show that the goods lying in the godown are not imported goods or did not relate to the goods imported under Bills of Entry. Department made the charge based on the seizure as well as confessional statement of the partner dated 21/6/2010. Having discharged their burden by the department, the onus shifted to the importer to establish that the goods seized from the godown were not the same as those covered by the Bills of Entry. For the reason mentioned above the goods will be liable to confiscation under Section 111(d) of the Customs Act for failing to observe the requirement of the SWM Act. They will also be leviable to duty on actual MRP basis. The plea that adjudicating authority did not confiscate goods under Section 111(d) and the same was not challenged before the Commissioner(Appeals) does not mean that the department is precluded from invoking the correct provisions of law.
7.5 The third issue contended is that enhancement of penalty from Rs. 2 Lakhs was not a matter before the Commissioner(Appeals). We find that Section 114A mandates that the penalty leviable in cases where duty has been demanded for reason of suppression of facts shall be equal to the duty. Therefore this plea is not acceptable as once the duty liability is fixed by us, penalty necessarily has to be imposed as per the law laid down under Section 114A.
7.6. A plea raised by the respondent is that Cental Excise Rules for redetermination of RSP became applicable only from 01-03-2008.. Ld advocate relied on the decision in the case of ABB Ltd. (Supra). We have noted this argument. We find that the proviso to Section 3(2) states that Provided that in case of an article imported into India, - a) in relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such articles; and (b) where the like article produced or manufactured in India, or in case where such like article is not so produced or manufactured, then, the class or description of articles to which the imported article belongs, is the goods specified by notification in the Official Gazette under sub-section (1) of section 4A of the Central Excise Act, 1944 (1 of 1944) We have underlined the words required and declare as they are relevant to the discussion hereunder. To us it is clear that once the goods are specified under Section 4A(1) of the Central Excise Act, necessarily the CVD is to be charged on MRP basis. The proviso to Section 3(2) of Customs Tariff Act unambiguously states that in the case of such goods, the retail sale price has to be declared on the package as required under the Standards of Weights and Measures Act. (SWM) The critical words are required and declared. There is not an iota of doubt that the retail sale price is required to be declared in the case of imported goods which are specified under Section 4(A) (1) of the Central Excise Act. The question which arises is ? what is the retail sale price that is required to be declared. It may be safely concluded that the retail price which the appellant was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). The facts in the case of ABB(supra) are different. There the facts were that the goods, namely electrical items, were cleared without declaring the RSP, and actually the goods were cleared by paying CVD in terms of Section 4 of the Central Excise Act, 1944 by misclassifying the goods. In the present case the facts are different. Here the MRP was wrongly declared in the Bill of Entry. After clearance from Customs, the appellants sold the goods at prices which are different from the MRP declared by them. The case of Revenue is that the MRP was wrongly declared. It is our considered view that even if there are no machinery provisions laid down in Section 3(2) of the CTA and Section 4A(4) of the Central Excise Act, it cannot be concluded that Section 3(2) of the Customs Tariff Act will become ineffective and the law rendered otiose. Reliance is placed on the case of Rupani Spinning Mills Pvt. Ltd. Vs. Union of India 1992 (60) ELT 77 (Guj.), where the issue was the absence of any machinery provisions or rules regarding mutilation of imported rags under Section 24 of the Customs Act. The Honble High Court held that ..Therefore, if the import of such rags is to continue, a pragmatic approach is called for. Section 24 of the Customs Act provides the clue thereto. Under that provision the Central Government is empowered to make rules for permitting at the request of the owner mutilation of imported goods so as to render them unfit for use for a purpose other than the one for which they are imported. This is an enabling provision which indicates that Parliament had conceived of a situation where further mutilation on import may be necessary to render the material unfit for use for a purpose other than the one for which the same was imported. In the absence of rules and till such rules are framed, the spirit underlying this provision can be invoked by directing the customs authorities to permit further mutilation on import before clearance. As pointed out above, the customs officials at Bombay permit further mutilation at the importers cost and the official being satisfied that the garment is rendered totally unserviceable for any other purpose save and except the one for which it is imported, clearance is permitted on payment of personal penalty.
Therefore we cannot accept Ld Counsels contention.
8. In view of the above analysis, we allow the appeal of Revenue.
9. Cross objections stand disposed accordingly.
(Order pronounced in court on_____________) Ramesh Nair Member (Judicial) P.S. Pruthi Member (Technical) sk 18 C/86904/13-MUM C/CO/91004/15-MUM