Custom, Excise & Service Tax Tribunal
M/S. Top Victory Investments (P) Ltd vs Cc, Trichy on 10 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI C/MISC/40882/2015 & C/41789/2014 C/41927/2015 & C/41928/2015 (Arising out of Order-in-Appeal No. 1/2014 (Cuddalore) (Cus.) dated 06.05.2014 and Order-in-Appeal No. 227 & 228/2015 (CXA-II) dated 12.08.2015, passed by the Commissioner of Customs, Central Excise (Appeals), Chennai ). 1. M/s. TOP Victory Investments (P) Ltd. : Appellant 2. M/s. TPV Technology India Pvt. Ltd. Vs. CC, Trichy : Respondent
Appearance Shri S. Jaikumar, Adv., For the applicant Shri Veerabhadra Reddy, JC (AR) For the respondent CORAM Honble Shri R. PERIASAMI, Technical Member Honble Shri P.K. CHOUDHARY, Judicial Member Date of Hearing/Decision: 10.12.2015 FINAL ORDER No. 41772 - 41774 / 2015 Per: R. Periasami The appellant filed miscellaneous application for change of cause title in respect of appeal No. C/41789/2014 in the name of M/s. Top Victory Investments Pvt. Limited. The Ld. Advocate submits that the said appellant unit has been renamed as M/s. TPV Technology India Pvt. Limited and the application to this effect be allowed. Accordingly, change of cause title from M/s. Top Victory Investments Pvt. Ltd. to M/s. TPV Technology India Pvt. Ltd. is allowed. After disposing the miscellaneous application for change of cause title, all the three appeals pertaining to M/s. TPV Technology India Pvt. Ltd. are taken together for disposal, as the issues are identical in nature.
2. Appeals No. C/41927/2015 & C/41928/2015 are arising out of common OIA dated 12.08.2015 and appeal No.C/41789/2014 is arising out of OIA dated 06.05.2014. The brief facts of the case are that the appellants are importers of LCD/LED Monitors and Television sets of various sizes falling under CTH 85285100 of CTA, 1975 and filed Bills of Entry for clearance of these goods. They claimed full exemption from BCD under Notification No. 24/2004-Cus dated 01.03.2005 and indicated MRP/RSP on the packages. The B/Es were assessed for CVD @ 12% on MRP based assessment claiming 35% abatement in terms of Section 3(2) of the CTA read with Section 4A of the Central Excise Act, 1944, and the notification issued there under. The appellants were issued SCNs dated 30.04.2013, 21.10.2013 and 5.11.2013 for denial of assessment under Section 4A and demanded differential duty on the ground that the said goods were sold to industrial consumers and therefore, assessment under MRP is not applicable. The adjudicating authority in his OIOs demanded differential duty along with interest under Section 28 AA of the Customs Act and imposed penalty under Section 112 (a) of CA. and ordered for re-assessment of LCD/LED Monitors under Section 3 of Customs Act read with Section 4 and denied abatement and confirmed the demand. In respect of appeals C/41927/2015 & C/41928/2015, OIO dated 28.02.2014, the adjudicating authority also held that the goods are liable for confiscation under 111(m) of the Customs act since the goods were not physically available for confiscation, no redemption fine was imposed. However, he imposed a penalty of Rs.10,00,000/- and Rs. 4,00,000/- respectively under Section 112 (a) of the Customs Act. Aggrieved by this order, the appellant preferred appeal before the Commissioner (Appeals). The Commissioner (Appeals) in his impugned order upheld the adjudication order and rejected the appeals. Hence the present appeals.
3. The Ld. Advocate Shri S. Jayakumar, submitted a written synopsis, case laws and reiterated the same and submits that they are regular importer of LCD/LED Monitors and Television sets of various sizes and there is no dispute on the classification of LCD/LED monitors. He submits that the monitors were sold to the customers under three modes viz. a) sale to the brand owner where the monitors are affixed with the brand name of HCL, Wipro etc., b) sell under their own brand name (AOC) and c) sell as non-branded goods. They regularly import monitors and initially CVD was paid as per the transaction value and in 2008 the monitors were notified under Section 4A to be assessed under MRP based and Section 3 (2) of CTA also amended to assess CVD as per RSP in terms of Section 4A read with Legal Metrological Act, 2009 (LMA). The impugned goods were assessed and abatement of 20% was allowed as per the Notification No. 49/2008 dated 24.12.2008 and the department had accepted the above assessment under MRP based assessment. The said notification was amended by Notification No. 26/2012-CE(NT) dated 10.05.2012, the abatement on monitors was increased from 20% to 35%. The department issued notice alleging the goods sold to the Brand owners are not covered under Section 4A and proposed assessment on the transaction value, and accepted MRP assessment in respect of their own brand and also on sale of unbranded monitors. He further submits that the department alleged that they should have claimed exemption under Standards of Weights and Measures Act, 1976. (now LMA) for the clearance made to the brand owners as it is for industrial consumers. He submits that as a dealer/importer, they are required to affix MRP as per the MRP supplied by the brand owners such as HCL & Wipro. They have no say on the RSP/MRP. He further submits that the goods are packaged commodity and are rightly covered under LMA. He also submits that at the time of sale they do not know whether it is for consumption or for sale by the subsequent transaction by the buyer. Further, he submits that the LMA and Rule 3 w.e.f. 13.04.2011, Rule 3 the definition of industrial consumer means, industrial consumer who buy packaged commodity directly from the manufacturer for use by that industry. The same definition continued under Rule 2 (bb) from 6.6.2013. Only from 14.5.2015, the said Rule was amended to include manufacturers or importers or wholesale dealers. He submits that this amendment came into effect only from 14.05.2015 and in their case Rule 3 and Rule 2 (bb) is not applicable as they are not manufacturers.
4. He also submitted that the goods imported and cleared either to brand owners or under their own brand or unbranded clearance are identical in nature except for size and specification and covered under LMA as packaged commodities. He also submits that when the department disputed the MRP based assessment there is no demand for the past clearance and also for the other two modes of sales. Since the impugned goods are same and the department cannot adopt two different assessment one under MRP and one under transaction value. He relied on the following citations:
1. Mexim Adhesive Tapes Pvt. Ltd. Vs. CCE, Daman 2013 (291) ELT 195
2. ITEL Industries Pvt. Ltd. Vs. CCE, Calicut 2004 (163) ELT 219
3. Jayanthi Food Processing Pvt. Ltd. Vs. CCE, Rajasthan 2007 (215) ELT 327 (S.C)
4. CC, Chennai Vs. Micro Labs. Ltd.
2010 (251) ELT 317 He drew attention to the Honble Supreme Court Judgment in the case of Jayanthi Food Processing Pvt. Ltd. (supra) and submitted that the Honble Supreme Court has held that once the goods are covered under LMA and Rules made there under, the valuation of such goods should be on the basis of retail sale price of such goods. The nature of sale is not relevant for application of Section 4A.
5. On the other hand, the Ld. AR reiterates the findings of the impugned order and the adjudication order, he drew attention to Section 3 (2) (b) of CTA which empowers levy of CVD on the goods imported based on the MRP based assessment under Section 4A of CEA. He further submits that the monitors are supplied to HCL and Wipro as actual users who used the monitors for manufacture of PCs. The appellant as per the pre-determined arrangement imported these monitors for sale to the actual users only, and the said goods are not intended for retail sale. He refers the definition of retail sale, where the goods are ultimately sold in retail sale. Whereas, in this case, HCL and Wipro are used monitors for their manufacture of computers. He submits that the ultimate user is not disputed by the appellant and also submits that monitors supplied to HCL and Wipro confirms that it is not for retail sale. He also submits that the Customs Act defines only the importer and the nature of sale in bulk. He also submits that the definition under LM Act prior to 14.05.2015 also covers importer. The amendment made on 14.05.2015 under LMA Rules does not take away the right to levy duty under Section 4 based on the transaction value.
6. Further he submits that implementation of LMA is a legal provision and mandatory and the department is bound to enforce the Act and also submits that the appellants should have claimed exemption under Rule 3 Rule and 2 (bb) o LM Act. Regarding the citations relied on by the appellant, he submits that all the citations were discussed in the impugned order and countered by the appellate authority. Therefore, the monitors imported and sold to HCL and Wipro fully satisfies sale to industrial consumers and it is in conformity with the Rules. He further submits that the appellants contention of sale to their own brand and non-branded sales, he submits that each transaction has to be seen that how the sale was made under the terms and conditions.
7. In the rejoinder, the Ld. Advocate countered the arguments of the Ld. AR and submits that they are registered under LM Act as importer trader/dealer. He drew attention to the Registration Certificate and submits that if the departments view is taken, they will be liable for action under LMA itself. The monitors are rightly covered under LM Act as packaged commodity and also submits that they have not opted for exemption from the industrial consumers and not from LMA. Further, he submits that they have affixed the MRP supplied by the HCL and Wipro confirms that they have affixed RSP and at this stage of import and clearance to them they will not be in a position to what would be the nature of further transaction at the hands of the brand owners and also he submits that their buyer clear the monitors as retail sale as spares like any other industry and also submits that the department cannot force the appellants to claim the exemption. Regarding the amendment in LM Act, he submits that the amendment under Section 3 and Rule 2 (bb) w.e.f. 14.5.15, is a conscious amendment under LM Act, that cannot be questioned by the customs and it does not have any retrospective effect. There was a definition already existed in LM Act in respect of dealers and manufacturers prior to amendment and Rule 2 (bb) under LM Act was specifically amended to include importer and the wholesale dealer. This confirms that for earlier period only manufacturers were covered under Rule 3 and under Rule 2 (bb) and the customs cannot interpret the LM Act by differently changing the definition.
8. We have carefully considered the submissions of both the sides and perused the records. The short issue before us is whether the assessment of imported monitors LCD/LED is under Section 3(2) (b) read with Section 4A under MRP basis or under normal transaction value for the purpose of CVD. The period involved in this case relates to 10.05.2005 to 08.02.2013. As per Notification No. 24/2004-Cus dated 01.03.2005, the appellants were eligible for NIL rate of duty of BCD on LCD monitors and they availed the said exemption. We also find that the appellants have been regularly importing the said items prior to 2003 and clearing the goods on payment of CVD as per the transaction value. Subsequently the LCD monitors were brought under MRP based assessment under Section 4A of the CEA and Notification No. 49/2008 dated 24.12.2008, was issued listing MRP items and % of abatement. On perusal of the table annexed to the said notification Sl.No. 98 covers Monitors of a kind solely or principally used in an automatically data processing machine falling under sub-heading 8528 and allowed abatement of 20% on the retail sale price. From 24.12.2008 to 10.05.2012, the department continued assessment and the same was accepted under MRP and the CVD was paid and the goods were cleared without any dispute on MRP assessment.
9. On perusal of the impugned Order and SCN it is seen that the customs raised the objection on MRP assessment only from 10.05.2012, when the abatement percentage was increased from 20% to 35% on the said goods and this confirms the fact that the customs was satisfied that the goods are covered under MRP and accepted the assessment under MRP/RSP for payment of CVD as per the provisions of Section 4A of CEA read with Section 3 (2) (b) of CER prior to 10.05.2012. We also find that once it is accepted, that the goods are covered under LMA as packaged commodity, for certain period the same goods cannot be held that these are not packaged commodities w.e.f. 10.05.2012 because of the higher abatement allowed on LCD/LED monitors. It is not disputed that the appellants as importer/dealers regularly imported monitors and sell in wholesale trade to various customers ie., Brand owners and also sell their own brand and unbranded goods. The monitors with specific brand name affixed on it were imported and sold to Wipro/HCL etc. The import of monitors bearing their own brand names and unbranded goods, the department accepted assessment under MRP for CVD purposes.
10. We find the Revenues contention is only on part of the imports which are cleared to the brand owners, revenue wants to deny the assessment under MRP and deny the exemption on the plea that these goods are sold to the industrial consumers and not intended for retail sale. In this scenario, it is relevant to see W&M Act/LM Act under Rule (3) as existed w.e.f. 13.04.2011, which is reproduced as under:-
Rule 3 The provisions of this Chapter shall not apply to
(a) packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags upto 50 kgs; and
(b) packaged commodities meant for industrial consumers or institutional consumers.
Explanation- For the purpose of this rule,-
(i) institutional consumer means the institutional consumers like Transportation, Airways Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution
(ii) industrial consumer means the industrial consumer who buy packaged commodities directly for the manufacturer for use by that industry.
Rule 2 bb w.e.f. 6.6.2013 Industrial consumer means any institution which hires or avails of the facilities or service in connection with transport, hotels, hospitals or such other service institutions which buy packaged commodities directly from the manufacturer for use by that institution.
Rule 2 bb w.e.f. 14.5.2015 Industrial consumer means the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry and the package shall have declaration not for retail sale.
From the above definition of Rule 3, industrial consumer means only the consumer who buys packaged commodities directly from the manufacturer or from an importer or from wholesale dealer for use by that industry. In the present case, the appellant is an importer imported the monitors of LCD/LED for wholesale trade as a dealer under the customs provisions after the introduction of MRP/RSP based assessment w.e.f. 14.05.2015 where all the imported goods which are covered under packaged commodities and shall be affixed with MRP/RSP before clearance. Assessment should be made for the purpose f CVD as per the notification issued under Section 4A. It is confirmed that the appellants imported and cleared the impugned goods to various customers and they have also cleared to the brand owners, cleared under their own brand and as unbranded. From the reading of Rule 3 and Rule 2 (bb) as existing from 13.4.2011 to 14.5.2015, it is very clear that the definition of industrial consumers under LM Act and the Rule relates to sale of packaged commodities directly to the industrial consumers from the manufacturers. The very fact that the amendment made in Rule 2 (bb) w.e.f. 14.5.2015, including the importers, wholesale dealers in the definition of industrial consumers, confirms that during the relevant period, the appellant being the importer/dealer imported monitors and sold to the brand owners is not covered under the category of sale to industrial consumers.
11. It is pertinent to state that, on imported goods, and at the time of clearance, the appellants are required to affix MRP as the goods are covered under the packaged commodity and therefore in the case of branded goods, the RSP was correctly affixed by the appellant as provided by the brand owners Wipro/HCL etc. The appellant being a dealer not a manufacturer of monitors, the RSP supplied by the brand owners was affixed and there is no dispute on the fact that the monitors are packaged commodity squarely covered under the LM Act. As far as the importers concerned, the transaction is complete. It is not the case that how the brand owner is going to clear the said goods in retail sale or for personal consumption. In this regard, we rely on the decision of the Honble Supreme Court in the case of Jeyanthi Food Processing Pvt. Ltd. (supra), the relevant portion of the said order is reproduced as under:-
4.?Since the language of Section 4A(1) of the Act specifically mentions that there would be a requirement under SWM Act or Rules made thereunder or under any other law to declare on the package of the goods the retail sale price of such goods for being covered by the Section, it would be better to see the various provisions of the said Act and the Rules made thereunder. Section 83 of the SWM Act empowers the Central Government to make Rules on the subjects provided in Section 83(2). Accordingly, the Central Government framed the Rules called The Standards of Weights and Measures (Packaged Commodities) Rules, 1977. As would be suggestive from the title itself, Rule 1(3) provided that these Rules would apply to the commodities in packaged form which are, or are intended or likely to be sold, distributed, delivered or offered or displayed for sale, distribution or delivery, or stored for sale or for distribution or delivery in the course of inter-State trade and commerce.
Definition of retail dealer under Rule 2(o) is as under :
retail dealer 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. Definition of retail package under Rule 2(p) is as under :
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.
Definition of retail sale under Rule 2(q) is as under :
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 group of individuals or any other consumer. Definition of retail sale price under Rule 2(r) is as under :
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 package, there shall be printed on the packages the words maximum or max. retail price inclusive of all taxes or in the form MRP Rs incl., of all taxes.
Explanation : For the purposes of the clause maximum price in relation to any commodity in packaged form shall include all taxes, local or otherwise, freight, transport charges, commission payable to dealers, and all charges towards advertisement, delivery, packing, forwarding and the like, as the case may be. Definition of wholesale dealer under Rule 2(w) is as under :
wholesale dealer in relation to any commodity in packaged form means a dealer who does not directly sell such commodity to any consumer but distributes or sells such commodity through one or more intermediaries.
Explanation : Nothing in this clause shall be construed as preventing a wholesale dealer from functioning as a retail dealer in relation to any commodity, but where he functions in relation to any commodity as a retail dealer, he shall comply with all the provisions of these Rules which a retail dealer is required by these rules to comply. Definition of wholesale package under Rule 2(x) is as under :
wholesale package means a package containing -
(i) a number of retail packages, where such first mentioned package is intended for sale, distribution or delivery to an intermediary and is not intended for sale direct to a single consumer; or
(ii) a commodity sold to an intermediary in bulk to enable such intermediary to sell, distribute or deliver such commodity to the consumer in smaller quantities; or
(iii) packages containing ten or more than ten retail packages provided that the retail packages are labeled as required under the rules. Chapter II of these Rules is applicable to the packages intended for retail sale. Rule 3 provides that the expression package wherever occurring in the Chapter shall be construed as packages intended for retails sale. Rule 6(1) provides for the declaration to be made on every package and sub-rule (f) thereof is as under :
(f) the retail sale price of the package Rules 15 and 16 pertain to the declarations required to be made on combination packages and group packages. A glance at these rules suggests that the sale price is required to be mentioned on both. Rule 17 deal with multi-pieces packages also requiring to declare the sale price on the same. Rule 23(1) and (2) provide as under :
23.?Provisions relating to wholesale dealer and retail dealer (1)?No wholesale dealer or retail dealer shall sell, distribute, deliver, display or store for sale any commodity in the packaged form unless the package complies within all respects, the provisions of the Act and these Rules.
(2)?No retail dealer or other person including manufacturer, packer and wholesale dealer shall make any sale of any commodity in packed form at a price exceeding the retail sale price thereof.
Explanation :?For the removal of doubts, it is hereby declared that a sale, distribution or delivery by a wholesale dealer to a retail dealer or other person is a retail sale within the meaning of this sub-rule. Chapter III deals with the provisions applicable to wholesale packages. Rule 29 pertains to the declaration required to be made on every wholesale package. Chapter V deals with the exemptions. Rule 34 thereof is extremely important. It runs as under :
34.?Exemptions in respect of certain packages Nothing contained in these rules shall apply to any package containing a commodity if, -
(a) the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as a raw material or for the purpose of servicing any industry, mine or quarry.
5.?When we read these rules along with provisions of Section 4A of the Act, it would be clear that where there is a general exemption like Section 34 under the SWM (PC) Rules such goods and/or packages of such goods shall not be covered by Section 4A(1) and (2) of the Act. However, all such packages which are covered under Chapter II, more particularly under Rule 6(1)(f), Rules 15, 16 and 17, would be governed under Section 4A as such packages are required to declare the retail sale price on the packages. The packages covered by Rule 29 would be outside the purview of the retail sales as under that Rule retail prices are not required to be mentioned on the package. However, again those packages which enjoy the exemption under Rule 34 shall also be outside the scope of Section 4A of the Act as the Rules do not apply to the said packages.
The above ratio squarely applicable to the facts of the present case, wherein the Honble Apex Court has clearly held that once the goods are covered under LMA, as a packaged commodity, they are required to be cleared on retail sale price on the packages as per the provisions of Section 4A, the assessment shall be on MRP basis. The Apex Court also clearly held that the nature of sale is not relevant for application of Section 4A. In the present case, the appellants have been clearing the goods when the MRP assessment came into existence from 2008 onwards. Therefore, the department suddenly choose to change the assessment from MRP based to transaction value from 10.05.2012 only to the goods sales made to the brand owners is not justified and particularly when the revenue itself accepted the assessment based on MRP under Notification No. 49/2008 from 24.12.2008, on the same transaction to the actual users. By respectfully following the Tribunals decision and the Honble Apex Courts decision (supra), we hold that the monitors with brand name meant for sale to brand owners are eligible for assessment under Section 3 (2) (b) of Customs Act read with Section 4A of CEA and the notification issued there under MRP/RSP based assessment and eligible fro abatement as per the notification. Accordingly, the impugned orders demanding differential duty is liable to be set aside. Since the main demand is set aside, the question of imposing penalty does not arise. Accordingly, in respect of appeals No. C/41927/2015 & No. C/41928/2015 penalty is set aside. All the three appeals are allowed with consequential relief.
(Dictated and pronounced in open court)
(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER
BB
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