Custom, Excise & Service Tax Tribunal
Carrier Air Conditioning And ... vs Bangalore-Cus on 25 October, 2024
C/21385/2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL
BANGALORE
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 21385 of 2016
(Arising out of Order-in-Appeal No. 430/2016 dated 08.06.2016
passed by the Commissioner of Customs (Appeals), Bangalore.)
M/s. Carrier Air Conditioning
and Refrigeration,
3rd Floor, Prestige Blue Chip, Appellant(s)
Block III No.9, Hosur Road,
Bangalore - 560 029.
VERSUS
Commissioner of Customs
C.R. Building,
Respondent(s)
Queens Road, Bangalore - 560 001.
APPEARANCE:
Mr. Ravi Raghavan, Advocate with Ms. Ashwini Nag, Advocate for the Appellant.
Mr. Maneesh Akhoury, Asst. Commissioner (AR) for the Respondent.
CORAM: HON'BLE DR. D.M. MISRA, MEMBER (JUDICIAL) HON'BLE MRS R BHAGYA DEVI, MEMBER (TECHNICAL) Final Order No. 21111 /2024 DATE OF HEARING: 25.10.2024 DATE OF DECISION: 25.10.2024 PER : D.M. MISRA This appeal is filed against Order-in-Appeal No.430/2016 dated 08.06.2016 passed by the Commissioner of Customs (Appeals), Bangalore.
2. Briefly stated the facts of the case are that the appellant had filed Bill of Entry No.8510902 dated 06.03.2015 for clearance of 12 units of Truck Refrigeration Unit 8002809-B Oasis 350 declaring its classification under Customs Tariff Heading 8418 6990. They have discharged Countervailing Duty Page 1 of 8 C/21385/2016 (CVD) on the transaction value as per Section 4 of the Central Excise Act (CEA), 1944. While assessing the Bill of Entry, it was objected by the department that the goods leviable to CVD attracts Retail Sale Price (RSP) based assessment under Section 4A of the CEA, 1944 instead of transaction value as claimed by the appellant since the said items are included in the Sl. No.108 of the Notification No.49/2008-CE (NT) dated 24.12.2008. These goods are described by the appellant as Truck Refrigeration Unit specifically packed for the exclusive use of transport industry as a raw material or for the purpose of servicing transport industry. On adjudication, the transaction value was rejected and the assessable value for CVD was redetermined as per Section 4A of CEA, 1944 on Maximum Retail Price (MRP) basis confirming differential duty of Rs.12,55,346/-. Aggrieved by the said order, they filed appeal before the learned Commissioner (A) who in turn rejected their appeal. Hence, the present appeal.
3. At the outset, the learned advocate for the appellant has submitted that the CVD applicable to the imported goods have been reassessed on the basis of MRP holding that the appellants are neither an industrial consumer nor an institutional consumer as defined under Rule 2(bb) and Rule 2(bc) of Legal Metrology (Packaged Commodities) Rule, 2011. He has submitted that additional duty of customs is payable on MRP basis in terms of proviso to Section 3(2) of the Customs Tariff Act, 1975. For the purpose of calculating additional duty payable on imported article, in relation to which the provisions of Legal Metrology Act, 2009 and the Rules made thereunder require declaration of retail sale price of the article on the package and once such article is specified by Notification in the official gazette under Section 4A(1) of the CEA, 1944. He has submitted that under the provisions of Legal Metrology Act, RSP is required to be declared on the prepacked commodities where (i) the packages are intended for retail sale; (ii) the packages do not contain quantity of more than 25 kgs. or 25 litres; and (iii) the packaged Page 2 of 8 C/21385/2016 commodities are not meant for industrial consumers or institutional consumers.
3.1 Further, he has submitted that Rule 3 of the Packaged Commodities Rules has carved out exceptions from applicability of the provisions under Chapter II on certain types of packages of commodities and for packaged commodities meant for industrial consumers or institutional consumers. Thus, the provisions of Chapter II are not applicable to the packaged commodities meant for industrial consumers or institutional consumers. Rule 2(bb) of the Packaged Commodities Rules, defines an 'industrial consumer'. Thus, as per the definition of 'industrial consumer' means the consumer who buys packaged commodities directly from the manufacture for use by that industry.
3.2 He has submitted that the imported 'Oasis 350 - Truck Refrigeration Unit' is a self-power unit for carrying cargo in large truck in very high climate of above 50o Celsius. It is installed in an insulated container which is mounted on a vehicle chassis. Unlike a stationery refrigerator, Truck Refrigerator Unit cannot pull down temperature but can only maintain the temperature. Products to be transported will be stored in a cold room to reach the required temperature and thereafter loaded into a truck where the temperature will be maintained. The Truck Refrigeration Units are attached to the container carrying the cargo. He has submitted that the nature of the goods are such that it is meant to be used by the industrial consumers only who uses the said goods in their industry. A specific declaration in this regard is made on the package that the imported goods are meant for industrial consumers. He submits that this issue has been considered by this Tribunal in the case of Hi-Tech Computers vs. Commissioner of Customs, Bengaluru vide Final Order No.20729 - 20731/2024 dated 29.04.2024 wherein this Tribunal following the earlier judgment of this Tribunal in Starlite Components Ltd. vs. CCE, Nashik: 2012 Page 3 of 8 C/21385/2016 (286) ELT 43 held that goods sold solely to industrial consumers are not liable to be assessed under MRP based assessment.
3.3 Further, the learned advocate submitted that the issue is covered by the judgment of the Hon'ble High Court of Karnataka in the case of Ewac Alloys Ltd. Vs. UOI [2012(275) ELT 193 (Kar.)], which has been followed by the later in the case of CCE, Bangalore-III Vs. Lotus Power Gears Ltd. [2017(346) ELT 347 (Kar.)]. Also, they placed reliance on the judgment of this Tribunal in the case of Remi Sales and Engineering Ltd. Vs. CC, Mumbai [2019(365) ELT 142 (Tri. Mum.)] and Mahle Engine Components India Pvt. Ltd. Vs. CC, New Delhi [2020(374) ELT 425 (Tri. Del.)]. Further, he has submitted that in view of the amendment later brought to the provisions of Legal Metrology (Packaged Commodities) Rules, 2011 in the year 2015 by way of insertion of Rule 2-A, explanation providing the definition of 'industrial consumers', the case is squarely covered and since the said rule is substituted, it has got retrospective application in view of the principles laid down by the Hon'ble Supreme Court in the case of GOI Vs. Indian Tobacco Association [2005(187) ELT 162 (SC)] and also the judgment of the Hon'ble Karnataka High Court in the case of CCE&ST, Bangalore Vs. Fosroc Chemicals (India) P. Limited [2015(318) ELT 240 (Kar.)].
4. The learned Authorised Representative for the Revenue reiterated the findings of the learned Commissioner (A).
5. Heard both sides and perused the records.
6. The short question involved in the present case for consideration is whether 'Oasis 350 - Truck Refrigeration Unit' imported by the appellant is assessable to additional duty of customs (CVD) by adopting transaction value under Section 4 of CEA, 1944 or MRP based assessment under Section 4A of CEA, Page 4 of 8 C/21385/2016 1944. It is not in dispute that the imported package which has been declared as Truck Refrigeration Unit specifically packed for the exclusive use of transport industry as a raw material or for the purpose of servicing transport industry. This issue has been considered by this Tribunal in the case of Hi-Tech Computers case (supra) it is held that goods cleared to industrial consumers in bulk are not liable to be assessed under MRP based assessment under Section 4A of the CEA, 1994. The Tribunal held observed as:
"6. The short issue involved in the present appeals is whether the goods viz. DVD players and Flip-down LCD monitors falling under Chapter heading 8528, 8521 and 8519 imported by the appellant and majority of which cleared to industrial consumers be assessed to duty i.e. additional duty of customs (CVD) applying MRP based assessment under Rule 4A of the Central Excise Act, 1944.
7. Undisputed facts are that the said DVD players and flip down LCD monitors falling under CTH 8528, 8521 and 8519 are notified vide Notification No.49/2008-CE(NT) dated 24.12.2008 liable to be assessed under Section 4A of Central Excise Act, 1944 on MRP based assessment. However, during the relevant period, it is also not in dispute that the appellant had cleared the goods to OEMs i.e. industrial consumers in bulk and only in stray cases, minuscule quantity was sold in retail to consumers at the direction of the OEMs. The Revenue has alleged that since the appellants are not manufacturers but traders, the imported DVD players and flip-down LCD monitors are liable to be assessed under MRP based assessment, whereas the claim of the appellant is that since the goods are imported and cleared to industrial consumers i.e. OEMs in bulk, MRP based assessment is not applicable to them. We find that this issue has been addressed by this Tribunal in the case of Starlite Components Ltd. Vs. CCE, Nashik [2012(286) ELT 43 (Tri. Mum.)] on more or less similar facts. The assessee in that case imported Energy Efficient Lighting fixtures (portable lamps working on dry battery) Torch of various models. As the said goods were notified under the provisions of Legal Metrology (Packaged Commodities) Rules, 2011, the assessee was directed to declare the RSP on the imported goods and accordingly on the insistence of the Department; the RSP was declared ranging from Rs.66 to 170 per piece. On enquiry by the Department, it was found that the actual RSP on these products were Rs.135 to to Rs.375 per piece being sold by M/s.Page 5 of 8
C/21385/2016 Bajaj Electrical Ltd. in the market. On investigation, it revealed that the assessee are importing these smart glow torches of different sizes from China in bulk and after importation, they unpack, print "Bajaj Logo" on the torches and insert and staple the card indicating details such as model, power supply, charging time etc. and affix the label indicating MRP and repack the torches as per the agreement with M/s. Bajaj Electrical Ltd. and these are sold later to the Bajaj Electrical Ltd. at RSP ranging from Rs.135 to Rs.375 per piece. In the said factual background, the Tribunal after analysing the provisions of Legal Metrology (Packaged Commodities) Rules, 2011 held as follows:-
"8. As regards the appeal of the importer, the declaration of MRP for the purpose of levy of CVD is required only when there is a statutory requirement under the Legal Metrology (Packaged Commodities) Rules, 2011 to declare on the package thereof the retail sale price of such article. Only when the goods are intended for retail sale and are packed in retail packages, the provisions of Legal Metrology (Packaged Commodities) Rules, 2011 would apply. In the case under consideration, from the records of the case, it is absolutely clear that the appellants are importing the impugned goods not for retail sale but for repacking, labelling and branding and selling the same in bulk to M/s. Bajaj Electricals Ltd. Therefore, they are not required to declare MRP in terms of Rule 3 of the said Legal Metrology (Packaged Commodities) Rules, 2011 as they are industrial consumers. This position has been further clarified by DGFT vide notification dated 22-1 2001 wherein it has been clearly stated that import of raw materials, components, bulk imports, etc. would invariably undergo further processing or removal before they are sold to consumer and in respect of these imports, the labelling requirements prescribed under Notification No. 44(RE-2000)97-2002 dated 24-11-2000 shall not apply. It is also not in dispute that the goods are specified in Third Schedule to the Central Excise Act, 1944 and the activities undertaken by the appellant importer amounts to "manufacture" under Section 2(f) of the said Act. In these circumstances, it is clear that the appellants were not required to discharge duty liability of additional Customs duty on the basis of MRP. Accordingly, we set aside the impugned order demanding the differential duty inasmuch as there was no requirement of declaring MRP. As a result, the confiscation of goods under Section 111(d) and (m) of the Customs Act, 1962 are also not justified. Consequently, the question of payment of redemption fine would not arise and also no penal consequence would follow under Section 112(a) ibid.
8. Similar view was subsequently held in the case of Remi Sales & Engg. Ltd. , wherein the Tribunal has held as under:-Page 6 of 8
C/21385/2016 "3. We have perused the facts of the case and relevant proviso. The Appellant has challenged the assessment on the ground that the goods can be assessed on RSP only when they are specified in notification issued under Sections 4A(1); and (2) declaration of retail sale price on packages under the Standards of Weight & Measures Act, 1976 or under other law for the time being in force is mandatory which is only in case of retail sale. Considering the nature and use of goods it cannot be said that the same are intended for retail sale. Therefore the goods has to be assessed on transaction value. It was submitted by them, sale is made to institution i.e. hospitals, blood banks, Research institute, etc. are not covered under the definition of "Retail sale". We find that in terms of Rule 2A of the provisions of declaration of RSP is not applicable to the following types of goods :
5.1 Rule 2A of the PC Rules, 1977 reads as follows :- "2A. Applicability of the Chapter. - The provisions of this chapter shall not apply to, packages of commodities containing quantity of more than 25 kg or 25 litre excluding cement and fertilizer sold in bags up to 50 kg; and (b) packaged commodities meant for industrial consumers or institutional consumers. Explanation :- For the purpose of this rule,-
(a) Institutional consumer. - Means those consumers who buy packaged commodities directly from the manufacturers/packers for service industry like transportation (including airways, railways), hotel or any other similar service industry.
(b) Industrial consumer. - Means those consumers who buy packaged commodities directly from the manufacturers/packers for using the product in their industry for production, etc."
From the above we find that the goods in question are sold by the Appellant to the hospital is sale to the institutional customer only. The Commissioner (Appeals) has held that an importer cannot be said to be manufacturer or packer of the goods and hence not eligible for exemption. We find that under the rules the importer is person responsible to comply with the Packaged Commodity Rules, 1977. Hence the importer has been treated at par with the manufacturer of goods. In such case for the purpose of levy of CVD the importer shall be responsible as manufacturer and eligible for exemption from complying with the provisions of RSP. We thus are of the view that the goods imported by the Appellant are liable for duty under Section 4 of CEA, 1944. We thus set aside the impugned order and allow the appeal with consequential reliefs."
9. Following the above judgment, we are of the view that the imported goods viz. DVD players and Flip-down LCD monitors which are cleared to OEMs i.e. industrial consumers in bulk are not liable to be assessed under MRP based assessment under Section 4A of the Central Excise Act, 1944;
Page 7 of 8C/21385/2016 hence the differential duty on this count demanded from the appellant and confirmed in the impugned orders is not sustainable......."
7. Following the above judgments, the impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.
(Operative portion of the order was pronounced in open court on conclusion of hearing.) (D.M. MISRA) MEMBER (JUDICIAL) (R BHAGYA DEVI) MEMBER (TECHNICAL) rv Page 8 of 8