Indian Kanoon - Search engine for Indian Law

7. The requirement for conformity with 'retail sale price (RSP)' valuation for levy of additional duty of customs is the mandate C/85209 - 85211/2014 of Standards of Weights & Measures (Packaged Commodity) Rules, 1976 and not mere lack of agency with the dealer/stockist to determine price. It was held by the Hon'ble Supreme Court, in Commissioner of Central Excise & Service Tax, Kanpur v. AR Polymers Pvt Ltd [2023- TIOL-21-SC-CX], that '8. In the present case at hand, the respondent entered into a sale with the paramilitary and military as per the terms of agreement signed. While the goods in the impugned sale were notified under Section 4(A) of the Act by way of an official notification in the gazette, what is most relevant to us is Rule 3(b) of the Legal Metrology (Packaged Commodities) Rules, 2011 which exempts the sale to institutional consumers from its purview.

10. Due to the purchasers, on account of them being institutional consumers, are exempt from the Legal Metrology (Packaged Commodities) Rules, 2011, and since Section 4(A) of the Act mandates the applicability of the abovesaid rules, the transaction automatically becomes ineligible to claim refuge under Section 4(A) of the Act.

11. Further, even if we were to assume that Section 3(b) of the Legal Metrology (Packaged Commodities) Rules, 2011 is C/85209 - 85211/2014 inapplicable to the present purchaser, the impugned sale still fails the test of point (iii) of the Jayanti Foods judgment.

13. Emerging from this backdrop of law, set out in section 3(1) of Customs Tariff Act, 1975 read with section 3(2) therein, is the proposition that declared value, whether of 'retail sale price (RSP)' or 'transaction value' in terms of section 14 of Customs Act, 1962, should, for levy of additional duty of customs, be accepted and intervention warranted, insofar as the former is concerned, only to assure conformity of declaration with particulars of price on the 'pre-packaged commodities' under import. Insofar as such articles being found, after clearance, to be without such details on package as is stipulated in Legal Metrology (Packaged Commodity) Rules, 2011 are concerned, detriment in accordance with section 111 of Customs Act, 1962 alone may be contemplated. Section 28 of Customs Act, 1962 does not merit invoking in the absence of empowerment to re-determine surrogate price through legislated mechanism; neither is the interests of the exchequer, in the context of nature and purposes of the levy, prejudiced sufficiently to sanction supply of any contrived lack with some price under authority of another law or without any validation. The disputed valuation in the impugned proceedings is secondary to, and contingent C/85209 - 85211/2014 upon, fitment of the impugned goods within coverage of notification issued under the authority of section 4A of Central Excise Act, 1944.

15. It is noted that applicability of chapter 2 of the Legal Metrology (Packaged Commodities) Rules, 2011 is limited to 'packages intended for retail sale' and it has not been evidenced that the impugned goods did pass through channel that conforms to 'retail sale' set out in rule 2(l) of the said Rules. Neither can it be discountenanced that the C/85209 - 85211/2014 impugned goods were not supplied to customers of original equipment supplied by them and, hence, within the ambit of exclusion extended to 'industrial consumer' exempted from stipulatory marking under rule 3 of Legal Metrology (Packaged Commodities) Rules, 2011.