2011 (2) TMI 1073 - AT - Customs

Assessment of goods (polished, vitrified porcelain tiles) imported from China - whether liable to be assessed to countervailing duty on the basis of MRP (with abatement of 43% from the MRP) in terms of Section 4A as claimed by the appellant or otherwise in terms of Section 4 as claimed by the respondent - Appellant have imported the goods meant for sale to the institutional/ industrial consumers who use such tiles for construction purposes. They do not sell the same further in the market - Held that - Fact to be found is whether the goods imported by the respondent by declaring that they were meant for sale to industrial/institutional consumers and not for retail sale were actually sold to such consumers. The finding of the original authority on this question of fact is in favour of the Revenue and that of the appellate authority on the same question is against the Revenue. Apparently, this has resulted from non-application of mind on the part of the Commissioner (Appeals), Commissioner (Appeals) misunderstood certain marks found on the packaged commodity. The imported packages had come with the mark imported and marketed by M/s. NITCO Tiles Ltd. . It appears, the words imported and marketed were misunderstood by the appellate authority as imported and marked . This misunderstanding lead the appellate authority to the erroneous notion that the importer had to be treated as manufacturer in India on account of having marked the packages. This mistake bred other mistakes also, like pressing into service Rule 2(h) - as the burden of the respondent to establish before the adjudicating authority that the provisions of Chapter II of the SWM (PC) Rules are not applicable to the packaged commodity imported by them the respondent should get a reasonable opportunity of adducing evidence and of being heard so that the original authority can take a decision afresh.

Summary

Issues Involved:
1. Applicability of MRP-based assessment under Section 4A of the Central Excise Act.
2. Requirement of affixing MRP on imported goods under The Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
3. Classification of imported tiles as 'retail packages' or otherwise.
4. Burden of proof regarding the sale of imported goods to industrial/institutional consumers.
5. The procedure of provisional assessment and its withdrawal.

Issue-wise Detailed Analysis:

1. Applicability of MRP-based assessment under Section 4A of the Central Excise Act:
The core issue was whether the imported polished, vitrified porcelain tiles should be assessed to countervailing duty (CVD) based on the Maximum Retail Price (MRP) as per Section 4A of the Central Excise Act or otherwise under Section 4. The Assistant Commissioner of Customs initially ordered the assessment based on MRP, while the Commissioner (Appeals) held that the goods were exempt from MRP-based assessment as they were meant for industrial/institutional consumers.

2. Requirement of affixing MRP on imported goods under The Standards of Weights and Measures (Packaged Commodities) Rules, 1977:
The respondent argued that the imported tiles were exempt from MRP declaration under the SWM (PC) Rules as they were for industrial/institutional use. The Assistant Commissioner, however, held that the tiles, being sold in the retail market, required MRP declaration. The appellate authority disagreed, stating that the goods were not sold through retail agencies but directly to industrial consumers, thus exempting them from MRP requirements.

3. Classification of imported tiles as 'retail packages' or otherwise:
The original authority classified the tiles as 'retail packages' requiring MRP, while the appellate authority classified them as non-retail packages meant for industrial use. This classification was crucial in determining the applicability of MRP-based assessment.

4. Burden of proof regarding the sale of imported goods to industrial/institutional consumers:
The appellate tribunal emphasized that the respondent bore the burden of proof to demonstrate that the tiles were sold to industrial/institutional consumers to claim exemption from MRP declaration. The tribunal noted that the Commissioner (Appeals) failed to properly apply this burden of proof.

5. The procedure of provisional assessment and its withdrawal:
The tribunal observed that the provisional assessment procedure, which allowed for verification of the end-use of the imported tiles, was withdrawn in March 2008. The final assessment was conducted without this verification, placing the burden on the respondent to prove compliance with their declarations.

Conclusion and Remand:
The appellate tribunal found discrepancies in the findings of the original and appellate authorities. It noted that the Commissioner (Appeals) misunderstood certain marks on the packages and failed to adequately consider relevant case law and statutory provisions. The tribunal remanded the case to the original authority for a fresh decision, allowing the respondent to present evidence and legal arguments to establish that the imported tiles were sold to industrial/institutional consumers, thereby exempting them from MRP-based assessment under Section 4A of the Central Excise Act. The appeal was allowed by way of remand to ensure a thorough re-examination of the facts and applicable law.