2013 (11) TMI 91 - AT - Customs

Exemption from levy of CVD on MRP basis - Rule 26 of the Legal Metrology (packaged Commodity) Rules, 2011 - Revenue denied exemption the basis that products imported by the appellant namely, Fevistick/Gluestick etc. are sold not on weight basis but on number basis and, therefore, the provisions of rule 26 of Rules, 2011 would not apply - Held that - As per the declarations made, net weight is declared as 5g or 8g as the case may be for the adhesives contained in the packages. The commercial invoices and the packing list in respect of the said import also bears the declaration - Fevistick - 5g/Fevistick - 8g as the case may be, which is also the description declared in the Bills of Entry. The goods are in semi-solid form and, therefore, in terms of Section 5 of the Legal Metrology Act, 2009 read with rule 12 of the Legal Metrology Rules, 2011, the description of the quantity has to be made in terms of unit of mass, which the appellant has done in the instant case. There is also no dispute of the fact that the item imported is a pre-packaged commodity as defined under Section 2(l) of the Legal Metrology Act, 2009. If that be so, under rule 26 of the Legal Metrology Rules, 2011, there is no requirement of declaring the RSP on the package of the commodity. In other words, there is no statutory requirement of declaring the RSP of the product in respect of the product under importation. If that be so, the assessment of CVD under Section 3 of the Customs Tariff Act, 1975 has to be done on the basis of the transaction value and not on the basis of RSP as claimed by the department. The glues are pre-packaged and are sold by weight which is clearly indicated on the packages. Since the net weight is less than 10g, the appellant is exempted from declaring the RSP on the packages under Rule 26 of the Legal Metrology Rules, 2011. Since the appellant is statutorily exempted from declaring the RSP on the packages, the assessment of CVD has to be done on the basis of transaction price and not on the basis of RSP - Following decision of Commissioner of Central Excise, Chennai Vs. Anabond Ltd. 2008 (7) TMI 728 - CESTAT, CHENNAI , Bharat Cosmetics Vs. Commissioner of Central Excise, Thane 2007 (2) TMI 372 - CESTAT, MUMBAI and Sarvotham Care Ltd. Vs. Commissioner of Central Excise, Hyderabad 2013 (4) TMI 505 - CESTAT BANGALORE - Decided in favour of assessee.

Summary

Issues:
1. Applicability of Rule 26 of the Legal Metrology (Packaged Commodity) Rules, 2011 for exemption from levy of CVD.
2. Interpretation of Legal Metrology Act, 2009 and Rules in the context of pre-packaged commodities.
3. Assessment of CVD on the basis of transaction value versus retail sale price.

Analysis:

1. Applicability of Rule 26 of the Legal Metrology (Packaged Commodity) Rules, 2011 for exemption from levy of CVD:
The case involved the import of adhesives in 5/8 grams packing, where the appellant claimed exemption from levy of CVD on MRP basis under Rule 26 of the Legal Metrology Rules, 2011. The lower appellate authority rejected the claim, stating that the products were sold by number and not weight, hence Rule 26 did not apply. The appellant argued that the goods were pre-packaged commodities falling under the Legal Metrology Act, 2009, and thus exempt from declaring RSP if the net weight is less than 10g. The Tribunal examined the declarations, invoices, and packaging, concluding that the goods were pre-packaged, and hence, the RSP declaration was not required. This led to the assessment of CVD based on transaction value, not RSP.

2. Interpretation of Legal Metrology Act, 2009 and Rules in the context of pre-packaged commodities:
The Tribunal referenced various cases, such as Anabond Ltd., I.C. Healthcare Pvt. Ltd., Bharat Cosmetics, and Sarvotham Care Ltd., where similar issues regarding the weight of commodities and exemption from RSP declaration were considered. These cases established that if the net weight of the product is less than 10g, exemption under relevant rules applied. The Tribunal emphasized that the goods imported were pre-packaged, sold by weight, and the net weight being less than 10g exempted them from RSP declaration. This interpretation aligned with the Legal Metrology Act and Rules, ensuring correct assessment of CVD based on transaction value.

3. Assessment of CVD on the basis of transaction value versus retail sale price:
The Tribunal's decision to allow the appeals was based on the finding that the goods were pre-packaged, sold by weight, and fell under the exemption from RSP declaration if the net weight was less than 10g. This exemption dictated that the assessment of CVD should be done on the transaction value, not the RSP claimed by the department. By following the legal provisions and precedents, the Tribunal upheld the appellant's claim for exemption and directed the assessment of CVD based on the transaction value, providing consequential relief.

In conclusion, the Tribunal's detailed analysis and interpretation of the Legal Metrology Act and Rules, along with relevant precedents, led to the allowance of the appeals and clarified the correct assessment basis for CVD in cases involving pre-packaged commodities and RSP exemptions.