Custom, Excise & Service Tax Tribunal
Esson Furnishing Pvt Ltd vs Principal Commissioner, Customs-New ... on 6 August, 2025
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. 1
Customs Appeal No. 50006 of 2020
[Arising out of the Order-in-Original No. 26/2019/MKS/PR. COMMR./ IMP/ICD/TKD
dated 24/09/2019 passed by The Principal Commissioner of Customs, ICD,
Tughlakabad, New Delhi.])
M/s Esson Furnishing Pvt Ltd. ...Appellant
D-193, Lajpat Nagar - I,
New Delhi - 110 024.
VERSUS
Principal Commissioner, Customs ...Respondent
ICD, Tughlakabad New Delhi AND Customs Appeal No. 50005 of 2020 [Arising out of the Order-in-Original No. 26/2019/MKS/PR. COMMR./ IMP/ICD/TKD dated 24/09/2019 passed by The Principal Commissioner of Customs, ICD, Tughlakabad, New Delhi.]) Suveet Kalra ...Appellant Director of M/s Esson Furnishing Pvt Ltd. D-193, Lajpat Nagar - I, New Delhi - 110 024.
VERSUS Principal Commissioner, Customs ...Respondent ICD, Tughlakabad New Delhi APPEARANCE:
Shri Rupesh Kumar, Ms. Pankhuri Shrivastava, Shri Alekshendra Sharma and Shri Tarun Chawla, Advocate for the Appellant Shri Shashi Kant Sharma, Authorised Representative of the Department CORAM :
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Date of Hearing: 17.03.2025 Date of Decision: 06.08.2025 FINAL ORDER NO's. 51147-51148/2025
2 C/56005-50006/2020 JUSTICE DILIP GUPTA Customs Appeal No. 50006 of 2020 has been filed by M/s Esson Furnishing Pvt. Ltd.1 for quashing that part of the order dated 24.09.2019 passed by the Principal Commissioner of Customs 2 that rejects the declared retail sale price and determines the retail price in terms of rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 20083 read with section 4A of the Central Excise Act, 19444. The order also rejects the duty exemption claimed by the appellant under Notification No. 98/2009-Cus dated 11.09.20095 and confirms the demand of differential duty. The order also confiscates the goods and imposes penalty under section 114A of the Customs Act, 19626.
2. Customs Appeal No. 50005 of 2020 has been filed by Suveet Kalra, Director of the appellant for quashing that part of the order dated 24.09.2019 passed by the Principal Commissioner that imposes penalty upon him under section 112 (a) and (b) of the Customs Act as also under section 114AA of the Customs Act.
3. The appellant is engaged in the business of trading in wood and leather treatment chemicals, paints, lacquers, varnishes and glues. These products can be classified in two categories, namely "Lacquers" and "Hardners". The appellant is either importing the said goods or purchasing the same locally. These products are classifiable under Customs Tariff Heading7 3208 and assessment is governed by section
1. appellant
2. the Principal Commissioner
3. the 2008 Rules
4. the Central Excise Act
5. the Exemption Notification
6. the Customs Act
7. CTH 3 C/56005-50006/2020 4A of the Central Excise Act in terms of Notification No. 49/2008-C.E. (NT) dated 24.12.20088.
4. The proceedings relate to "Lacquers" and "Hardners" which were imported by the appellant either upon payment of duties of customs or by utilizing the "Duty Free Import Authorisation"9 purchased by the appellant from the open market after they were issued and made transferrable by the DGFT in favour of the original exporters who had exported leather or leather products.
5. A show cause notice dated 21.08.2015 was issued to the appellant invoking the extended period of limitation under section 28 (4) of the Customs Act. The allegations basically relate to (i) determination of retail sale price and (ii) mis-utilisation of DFIA scrips. The relevant portions of the show cause notice are reproduced below:
"Now, therefore, M/s Esson Furnishings Pvt. Ltd (EFPL) are hereby called upon to show cause, in writing, within 30 days of the receipt of this notice, to the Adjudicating Authorities mentioned in Column (F) of Table-13 below for respective imports as mentioned against each, xxxxx as to why:-
(i) Declared Retail Sale Price of the goods, imported vide bills of entry as listed in Annexures:
A-1, A-2, A-3 and A-4 to this show cause notice, should not be rejected and should not be determined in terms of the Rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 read with the provisions of the Section 4A of the Central Excise Act, 1944;
(ii) the duty exemption claimed under Notification No. 98/2009-Customs dated 11.09.2009, for goods imported vide bills of entry, as detailed in Annexure: A-2 & A-4, against DFIA scrips, as listed in Annexure-B to this notice, should not be denied;
8. the Notification
9. DFIA 4 C/56005-50006/2020
(iii) differential duty as mentioned in Column (F) of Table 13 above totally amounting to Rs 3,62,62,555/- (Rupees Three Crores Sixty Two Lacs Sixty Two Thousand Five Hundred and Fifty-Five Only), as detailed in Annexures: A-1, A-2, A-3 and A-4 to this show cause notice, which had not been paid due to collusion, willful mis-statement and suppression of facts should not be demanded and recovered in terms of extended period under the provisions of Section 28 of the Customs Act, 1962, along with interest under the provisions of Section 28AB (28AA from 08.04.2011) of the Customs Act, 1962;
(iv) goods valued at Rs. 25,20,981/- CIF, as detailed at Annexure: C-1 seized at various premises and ordered for provisionally release, should not be confiscated under Section 111(d) and (m) of the Customs Act, 1962;
(v) goods valued at Rs. 92,69,059/- CIF, as detailed at Annexure: C-2 seized at various premises and ordered for provisionally release, should not be confiscated under Section 111(d), (o) and (m) of the Customs Act, 1962;
(vi) the remaining goods of Annexures: A-1 and A-3 (excluding the goods as appearing in Annexure:
C-1) to this show cause notice valued at Rs. 3,61,24,465/- CIF, should not be held liable to confiscation under Section 111 (d) and (m) of the Customs Act, 1962;
(vii) the remaining goods of Annexures: A-2 and A-4 (excluding the goods as appearing in Annexure: C-2) to this show cause notice valued at Rs. 5,67,00,893/- CIF, should not be held liable to confiscation under Section 111 (d) (0) and
(m) of the Customs Act, 1962
(viii) penalty under Section 112 (a) & (b) or Section 114A of the Customs Act, 1962 should not be imposed on them, in relation to the above goods;
(ix) amount of Rs. 35,00,000/- deposited voluntarily during investigation should not be appropriated against demand as above."
(emphasis supplied)
6. The show cause notice also called upon Suveet Kalra, Director of the appellant to show cause as to why "24. Now, therefore, Suveet Kalra Director of M/s EFPL is hereby called upon to show cause, in writing, within 30 days of the receipt of this notice, to the Adjudicating Authorities mentioned in 5 C/56005-50006/2020 Column (F) of Table-13 above for respective imports mentioned against each, as to why penalty under Section 112 (a) & (b) and Section 114AA of the Customs Act, 1962, should not be imposed on them."
(emphasis supplied)
7. The appellant and Suveet Kalra filed replied to the show cause notice and denied the allegations.
8. The Principal Commissioner, by the order dated 24.09.2019, rejected the declared retail sale price and determined the sale price and also denied exemption claimed by the appellant under the Exemption Notification against the DFIA scrips. Accordingly, the differential duty was confirmed. The Principal Commissioner also ordered for confiscation of the goods and imposed penalty upon the appellant under section 114A of the Customs Act. The Principal Commissioner also imposed penalty upon Suveet Kalra under section 112 (a) and (b) and section 114AA of the Customs Act.
9. The Principal Commissioner had framed the following issues for consideration :
"(i) Whether the declared Retail Sale Prices of the goods imported in this case are liable to be rejected and to be determined in terms of the Rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 read with the provisions of the Section 4A of the Central Excise Act, 1944?;
(ii) Whether, the duty exemption claimed by the importer under Notification No. 98/2009-
Customs dated 11.09.2009, for goods imported against DFIA scrips, is admissible or otherwise?;
(iii) Whether the demand of differential duty totally amounting to Rs 3,62,62,555/-(Rupees Three Crores Sixty Two Lacs Sixty Two Thousand Five Hundred and Fifty-Five Only) under the provisions of Section 28 of the Customs Act, 1962 along with applicable interest is sustainable?;
6 C/56005-50006/2020
(iv) Whether the goods including the seized goods are liable to confiscation under Section 111(d), 111(o) and 111(m) of the Customs Act, 1962?; and
(v) Whether the penalties under Section 112
(a) & (b) or Section 114A of the Customs Act, 1962 imposable on Noticee No. 1 and under Section 112 (a) & (b) and 114AA on Noticee No.2?"
10. The main issue relates to mis-utilisation of the DFIA by the appellant. The finding recorded by the Principal Commissioner on this issue is as follows:
"35. Now coming to the issue whether the duty exemption claimed by the importer under Notification No. 98/2009-Customs dated 11.09.2009, for goods imported vide Bills of Entry, as detailed in Annexure: A-2 & A-4 to the present SCN, against DFIA scrips, as listed in Annexure-B to the present SCN, is admissible or otherwise. The allegation as per the SCN is that the importer has misutilized the DFIA scrips issued to the finished leather/ leather gloves exporters, for effecting duty free clearance of Imported Goods as the scrutiny of certain DFIA scrips revealed that 'Special lacquer for brush off/two tone' which was actually used in manufacture of the export product, was allowed to be imported under the said DFIA scrips. However, the noticees were importing and trading in 'MILESI' brand lacquers, sealer and hardeners etc. from overseas supplier M/s IVM which has been used in coating, stains primers for wood. Thus, they had utilised DFIA scrips which were meant for leather inputs for import of MILESI' brand goods which are for application on wood by mis-representing as Leather inputs. Consequently, the Noticees have evaded duty by wrong utilization of the DFIA scrips."
11. What weighed with the Principal Commissioner was the fact that DFIAs were issued to the exporters who had exported finished leather/leather gloves and so against the said DFIAs, only Lacquers, which were actually used in the manufacture of export leather products were allowed to be imported duty free, but the appellant 7 C/56005-50006/2020 imported "MILESI" brand Lacquers which were meant for use on wood and not leather products.
12. The submission of the learned counsel for the appellant on this issue is that the imported Lacquer was capable of being used in the leather industry as well as in the wood industry. Learned counsel also submitted that the Test Report dated 22.07.2015 of the Institute of Chemical Technology that has been used against the appellant supports the case of the appellant as it clearly states that the imported goods are capable of being used both on leather as well as wood.
13. Learned authorised representative appearing for the department has, however, relied upon the order passed by the Principal Commissioner on this issue.
14. To appreciate the contention that has been advanced, it would be appropriate to reproduce the relevant portion of the said Test Report dated 22.07.2015 of the Institute and it is as follows:
"Recommendations
1) Gloss: All the compositions show that the material can be used for leather if it is compared with wood coatings. Wood has a better gloss over Leather and it was observed that leather has also developed few cracks.
2) Scratch Hardness Test: This test is exclusively done for Metals to check the hardness of the material. Materials have adequate hardness.
3) Fingernail Resistance: All the compositions have either excellent/good resistance (except for metal for two occasions LGA-22 and KDA-1) passed the tests for all the materials (Leather, wood and steel).
4) Adhesion Test: All the compositions have passed the adhesion test for all the materials (Leather, wood and steel).
8 C/56005-50006/2020
5) Acetone Peel Test: All the compositions have passed the acetone peel test for leather. Literature (Colloids and Surfaces A:
Physicochem. Eng. Aspects 472 (2015) 21-25, Progress in Organic Coatings 56 (2006) 178-
184. International Journal of Adhesion & Adhesives 25 (2005) 320-328, etc) suggest that the usage of polyurethane and epoxy (directly or modified) have been successfully tested on leather. Hence, the materials, submitted by DRI for their evaluations, are mainly meant for application on wooden products (as specified and found out from above results) and can be used on leather products with different components and combination (as found out from above results).
15. A perusal of the aforesaid Test Report clearly shows that though the materials submitted for evaluation were mainly meant for application on wooden products, but they could also be used on leather products with different components and combination. The inference drawn by the Principal Commissioner from the Test Report is, therefore, not correct. The Lacquer imported by the appellant is, therefore, capable of being used in the leather industry as well as in the wood industry.
16. This apart, even the DGFT in its Policy Circular No. 72 dated 24.03.2009 issued a clarification regarding the "Importability of alternative inputs allowed as per SION under DFIA Scheme" by stating that "since the objective of SION is to allow duty free import of the inputs which are actually used or are capable of being used in the export products, the exporter has the flexibility to import the alternative input/product mentioned in the SION".
17. Reliance can also been placed on the Circular No. 46/2007-Cus dated 20.12.2007 issued by CBEC taking into consideration the difficulties faced by the importers in regard to clearance of material under DFIA scheme because of insistence by the Customs to establish
9 C/56005-50006/2020 co-relation between the imported goods and the exported product in all cases of imports under the DFIA Scheme. It was clarified that except for the items specified in para 4.55.2 of HoBVol.I, FTP 2004-09 [identical to para 4.32.2 of HoBVol.I/FTP 2009-14], in all other cases a correlation between the inputs under import with those used in the exported product was not required to be established.
18. Even the DGFT also clarified with regard to identical products that Lacquer/Top Coat, Varnish and Paints and Lacquer based paints are all used as Special Lacquer for Brush off/Two Tone and, therefore, covered in import item at S. No. 41 under SION G-7.
19. Even though both the above Circulars as well as DFTFs clarifications were brought to the notice of the Principal Commissioner, but the Principal Commissioner misconstrued paragraph 4.2.2 of the FTP to come to a conclusion that the items allowed to be imported as per these DFIAs were a kind of lacquer which is used only for leather industry.
20. This finding of the Principal Commissioner is in the teeth of the decision of this Tribunal in the case of Unibourne Food Ingredients LLP vs Commissioner of Customs, Hyderabad10, wherein it was held that :
"15. Now coming to the merits of the case, the issue involved is on a narrow compass. In the instant case, the goods imported are "Apple Juice Concentrate". The exemption is sought under Exemption Notification No. 98/2009-Cus dated 11.09.2009 by presenting a transferable DFIA No. 0310776851 dated 02.04.2014 which permits duty free import of "Relevant Fruit Juice/Pulp/Puree". There is no reason given as to why "Apple Juice Concentrate" is not covered under the description "Relevant Fruit Juice/Pulp/Puree" permitted in the DFIA. Ld. DR could not justify as to how "Apple Juice Concentrate" would not be covered under the
10. 2018 (364) ELT 254 (T) 10 C/56005-50006/2020 description "Relevant Fruit Juice/Pulp/Puree", when the fact that Apple Juice Concentrate can inter alia be used in the manufacturing of export product in DFIA "Assorted Confectionary and Biscuits", is not in dispute, and the Ld. Advocate has produced evidence to show that the imported product can be used in manufacturing of various products which includes candies and confectionary applications and pies and bakery goods."
21. It, therefore, follows that though the original exporters had exported leather or leather products and the appellant purchased the DFIAs, the lacquer imported by the appellant is capable of being used in the leather industry as well as in wood industry and, therefore, the appellant would be entitled for exemption under the Exemption Notification.
22. An important issue that also arises for consideration in this appeal is whether the statements of persons made under section 108 of the Customs Act can be considered relevant in terms of section 138B of the Customs Act. This aspect has been considered by the Principal Commissioner in the following manner:
"In respect of the DFIA license holders and buyers, all the statements recorded and relied upon in this case are voluntary in nature and were recorded by due legal process as provided under Section 108 of the Act ibid, which is deemed to be a Judicial Proceedings' within the meaning of Section 193 and Section 228 of the Indian Penal Code, 1860. Further, the allegations in the present SCN are based on the documentary evidences and the statements recorded in this case, which have not been retracted or proved to be untrue. I therefore find that the request for cross-examination made earlier by them was a routine request without giving any cogent reasons. Therefore I do not find that cross examination of said persons is required to be considered in this case.
37.4 Keeping in mind the totality of facts and circumstances of the case, including the statements tendered by the concerned persons recorded under Section 108 of the 11 C/56005-50006/2020 Customs Act, 1962, I am of the considered view that the subject import consignments as detailed under at Annexure: C-1, C-2, remaining goods of Annexures: A-l and A-3 excluding the goods as appearing in Annexure: C-l); and the remaining goods of Annexures: A-2 and A-4 (excluding the goods as appearing in Annexure: C-2) valued at Rs. 25,20,981/- CIF, Rs. 92,69,059/- CIF, 3,61,24,465/-CIF and 5,67,00,893/- CIF respectively are liable for confiscation under Sections 111(d), 111(m) and/or 111(0) (as applicable) of the Customs Act, 1962, as proposed in the present SCN. And, I hold accordingly."
(emphasis supplied)
23. The finding of the Principal Commissioner is contrary to the provisions of section 138B of the Customs Act.
24. This issue was examined by a Division Bench of this Tribunal in M/s. Surya Wires Pvt. Ltd. vs. Principal Commissioner, CGST, Raipur11. The Tribunal examined the provisions of sections 108 and 138B of the Customs Act as also the provisions of sections 14 and 9D of the Central Excise Act and observed as follows:
"21. It would be seen section 14 of the Central Excise Act and section 108 of the Customs Act enable the concerned Officers to summon any person whose attendance they consider necessary to give evidence in any inquiry which such Officers are making. The statements of the persons so summoned are then recorded under these provisions. It is these statements which are referred to either in section 9D of the Central Excise Act or in section 138B of the Customs Act. A bare perusal of sub-section (1) of these two sections makes it evident that the statement recorded before the concerned Officer during the course of any inquiry or proceeding shall be relevant for the purpose of proving the truth of the facts which it contains only when the person who made the statement is examined as a witness before the Court and such Court is of the opinion that having regard to the circumstances of the case, the statement should be admitted in evidence, in the interests of justice, except where the
11. Excise Appeal No. 51148 of 2020 decided on 01.04.2025 12 C/56005-50006/2020 person who tendered the statement is dead or cannot be found. In view of the provisions of sub-section (2) of section 9D of the Central Excise Act or sub-section (2) of section 138B of the Customs Act, the provisions of sub-section (1) of these two Acts shall apply to any proceedings under the Central Excise Act or the Customs Act as they apply in relation to proceedings before a Court. What, therefore, follows is that a person who makes a statement during the course of an inquiry has to be first examined as a witness before the adjudicating authority and thereafter the adjudicating authority has to form an opinion whether having regard to the circumstances of the case the statement should be admitted in evidence, in the interests of justice. Once this determination regarding admissibility of the statement of a witness is made by the adjudicating authority, the statement will be admitted as an evidence and an opportunity of cross-examination of the witness is then required to be given to the person against whom such statement has been made. It is only when this procedure is followed that the statements of the persons making them would be of relevance for the purpose of proving the facts which they contain."
25. After examining various judgments of the High Courts and the Tribunal, the Tribunal observed as follows:
"28. It, therefore, transpires from the aforesaid decisions that both section 9D(1)(b) of the Central Excise Act and section 138B(1)(b) of the Customs Act contemplate that when the provisions of clause (a) of these two sections are not applicable, then the statements made under section 14 of the Central Excise Act or under section 108 of the Customs Act during the course of an inquiry under the Acts shall be relevant for the purpose of proving the truth of the facts contained in them only when such persons are examined as witnesses before the adjudicating authority and the adjudicating authority forms an opinion that the statements should be admitted in evidence. It is thereafter that an opportunity has to be provided for cross-examination of such persons. The provisions of section 9D of the Central Excise Act and section 138B(1)(b) of the Customs Act have been held to be mandatory and failure to comply with the procedure would mean 13 C/56005-50006/2020 that no reliance can be placed on the statements recorded either under section 14D of the Central Excise Act or under section 108 of the Customs Act.
The Courts have also explained the rationale behind the precautions contained in the two sections. It has been observed that the statements recorded during inquiry/ investigation by officers has every chance of being recorded under coercion or compulsion and it is in order to neutralize this possibility that statements of the witnesses have to be recorded before the adjudicating authority, after which such statements can be admitted in evidence."
26. Thus, the statements made under section 108 of the Customs Act would not be relevant as the procedure contemplated under section 138B of the Custom Act was not followed in the present case.
27. As would be seen from paragraph 37.4 of the order dated 24.09.2019 passed by the Principal Commissioner, statements made under section 108 of the Customs Act have been relied upon for holding that the goods are liable to confiscation under sections 111(d), 111(m) and/or 111(0) of the Customs Act. Such statements, in view of the aforesaid discussion, could not have been relied upon. Thus, goods were not liable to confiscation. In this view of the matter, penalty under section 112(a) and (b) of the Customs Act could not have been imposed upon Suveet Kalra.
28. The order passed by the Principal Commissioner also imposes penalty upon the appellant under section 114A of the Customs Act. As it has been found that duty was not short paid, penalty under section 114A of the Customs Act could not have been imposed upon the appellant.
29. Another issue that arises for consideration is the determination of the retail sale price.
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30. Section 12 of the Customs Act is the charging section which provides that duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act12 or any other law for the time being in force, on goods imported into India. However, valuation of such imported goods in governed by section 14 of the Customs Act which is the "transaction value" i.e. price actually paid or payable for the goods when sold for export to India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale, subject to Customs Valuation (Determination of Value of Imported Goods) Rules 200713.
31. Imported goods are leviable to basic customs duty14 and additional duty to excise duty and other charges15. CVD is leviable under section 3(1) of the Customs Tariff Act equivalent to the excise duty for the time being leviable on like article if produced or manufactured in India. However, for the purpose of imported goods which require retail sale price based assessment, the proviso to section 3(2) of the Customs Tariff Act provides that the value of such imported goods, for the purpose of payment of CVD, shall be deemed to be the retail sale price declared on the imported article less such amount of abatement as provided in the Notification issued under section 4A of the Act.
32. There is no dispute that goods imported by the appellant were classifiable under CTH 3208 which is covered under the Notification dated 24.12.2008 issued under section 4A(1) of the Central Excise Act with abatement of 33% of retail sale price. Such goods are, therefore,
12. the Tariff Act 13 the 2007 Rules 14 BCD 15 CVD 15 C/56005-50006/2020 assessable to CVD on the basis of retail sale price in terms of the first proviso to section 3(2) of the Tariff Act.
33. In the present case, the Commissioner has accepted the proposal in the show cause notice to reject the retail sale price declared on the imported goods and to re-determine it by applying rule 6 of the 2008 Rules.
34. The Tribunal in ABB Ltd vs CC, Bangalore16 held that though the Central Excise (Determination of RSP of Excisable Goods) Rues 2008 prescribes the manner of ascertaining the retail sale price of excisable goods but, so far as CVD under Serial No. 3 of the Tariff Act is concerned, the Government has yet to prescribe the manner to ascertain retail sale price when the importer does not declare the retail sale price on the packages imported. Thus, in the absence of a machinery to determine the relevant retail sale price, no demand of differential CVD could have been validly raised. The relevant portion of the decision is reproduced below:
17. We find that in view of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 issued on 1-3-2008, it is abundantly clear that in the absence of such rules issued in terms of sub-
section (4) of Section 4A of the CEA, there was no statutory machinery to determine the retail sale price in respect of goods manufactured and cleared by a manufacturer without declaring the RSP on such goods. In the absence of a similar machinery to determine the relevant RSP in CTA, no demand of differential CVD could have been validly raised. In this connection, we rely on the following observations of this Tribunal in the case of Millennium Appliances India Ltd. v. Commissioner of C. Excise, Hyderabad [2009 (248) E.L.T. 713 (Tri.-Bang.)] on the applicability of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 prior to 1-3- 2008:
"It can be noted that these rules came into force with effect from 1-3-2008. We are of the considered opinion that if these rules came to be effective on 1-3-2008, the ascertaining of value of similar goods has to be done so,
16. 2011 (272) ELT 706 (Tri- Bang.) 16 C/56005-50006/2020 with effect from 1-3-2008 and cannot be used to determine the value for the clearances made prior to 1-3-2008. We find strong force in the contention raised by the learned Counsel that the decision of the Tribunal in the case of Aditya Cement-2007 (218) ELT. 166 (T) (supra) would squarely cover the issue in favour of the appellants. The relevant ratio in Para 9 of the said decision is reproduced:-
"9. It can be seen from the above reproduced rule that it was in context of the definition of "person liable for paying the Service Tax." This provision in itself may not suffice revenue to direct the appellant to discharge the service tax liability as service receiver, on the face of the fact that notification under Section 68(2) of the Finance Act, 1994, was issued by the Central Government only on 31-12- 2004. If the contention of the learned SDR is to be accepted, then there was no necessity for the Government to issue Notification No. 36/2004-S.T. notifying the service receiver from non-resident having no office, to pay Service tax, as receiver. By issuing the said Notification, Central Government intended to tax the service receiver from non- resident, with effect from 1-1-2005, which, in corollary would be that no service tax is payable by this category prior to 1-1-2005. If that by (sic) so, then the amount paid by the appellant is not a tax, which the revenue cannot kept (sic) with it."
35. Same view has been expressed by the Tribunal in Stephen M. Fernandes versus Commissioner of Cus. & C.Ex., Goa17, Commissioner of Cus., S.T. & Ex., Cochin versus Abdul Syed Peer Mohd18, Commissioner of Customs, New Delhi versus V.J. Traders19 and Acer India Pvt Ltd versus Commissioner of Customs (Audit)20.
36. This apart there is nothing on the record to show that the retail sale price declared on the imported goods was found to be incorrect. The two MRP Lists w.e.f. 05.09.2013 and 01.01.2015 found by the department during the course of investigation have been made the
17. 2018 (362) E.L.T. 370 (Tri- Mumbai) 18 . 2014 (307) ELT 540 (Tri- Bang.) 19 . 2019 (366) ELT 909) (Tri-Del.) 20 . Customs Appeal No. 41786 of 2019 decided on 08.05.2024 17 C/56005-50006/2020 basis of re-determining the retail sale price for the entire period covered by the show cause notice. However, the only basis in the show cause notice provided for re-determination of the value is that the said two MRP Lists reflect MRP of combined pack of lacquer, sealer, hardener and thinner sold by the appellant with the mixing ratio of the products in the combined pack for application whereas, the goods i.e. lacquer and hardners which were imported were individual items and so the retail sale price of such import items were required to be re-determined. It was also observed that some products imported by the appellant were not mentioned in the MRP Lists. This cannot be the basis for having a doubt about the truth or accuracy of the value declared in relation to imported goods for rejecting the declared value in terms of rule 12 of the 2007 Rules.
37. In this view of the matter, retail sale price could not have been re-determined.
38. Penalty under section 114AA of the Customs Act has also been imposed upon Suveet Kalra. The Principal Commissioner has found that he was responsible for import, purchases, sales and marketing of all the products imported by the appellant but he did not intentionally declare the actual retail sale price and got the goods cleared by mis- declaring the retail sale price. The Principal Commissioner has also noted that Suveet Kalra had mis-utilised the DFIA scrips. It has been found as a fact that neither had Suveet Kalra mis-declared the actual retail sale price nor he had mis-utilised the DFIA scripts. In such a situation, penalty under section 114AA of the Customs Act could not have been imposed upon him.
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39. It would be seen that the show cause notice had proposed to demand duties of customs under the following four Annexures pertaining to different situations:
Annexure A-1 Rs. 49,45,714/- For goods imported by mis-declaring the retail sale pricewhere DFIA scrips were not used for clearance prior to 05.09.2013 Annexure A-2 Rs. 91,31,170/- For goods imported where DFIA scrips were used for clearance prior to 05.09.2013 Annexure A-3 Rs. 13,97,164/- For goods imported by mis-declaring the retail sale price, where DFIA scrips were not used for clearance w.e.f. 05.09.2013 Annexure A-4 Rs. 2,07,88,507/- For goods imported when DFIA scrips were used for clearance w.e.f.
05.09.2013
40. Insofar a duty demands pertaining to Annexure A-2 and A-4 are concerned, the same cannot be sustained as the appellant is entitled to avail the benefit of duty free imports of Lacquers under the DFIAs.
41. Insofar as the duty demands pertaining to Annexure A-1 and A- 3 are concerned, the same cannot also, for the reasons stated above, be sustained.
42. The order dated 24.09.2019 passed by the Principal Commissioner cannot, therefore, be sustained and is set aside. The appeal is accordingly, allowed.
(Pronounced in the open court on 06.08.2025) (JUSTICE DILIP GUPTA) PRESIDENT (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Diksha