2015 (2) TMI 261 - AT - Customs

Waiver of pre deposit - Levy of CVD on MRP Baasis - Held that - There is no doubt that the goods have been imported in packaged form as per the statements recorded from the officers of the company and such goods also have the logo of the supplier. However, the goods are not sold as such. The appellants completely reopened the package, tested the components, repacked the same, relabelled the same and affixed their own logo. These activities amount to manufacture. When a consumer imports or purchases goods for industrial use, which in this case, since the process amounts to manufacture it can be said as industrial use, such purchase/imports are exempt from the provisions of LM (PC) Rules. In this case, appellants had imported packaged commodities as an industrial consumer. Therefore, prima facie on merits, we find that the appellants have made out a case in their favour. We also take notice of the fact that the entire demand is beyond the normal period of limitation and this is another ground which supports the case of appellant. Accordingly there shall be waiver of pre-deposit and stay against recovery of the entire dues during the pendency of appeal - Stay granted.

Issues:
1. Applicability of additional customs duty (CVD) based on MRP/RSP in compliance with Legal Metrology Act.
2. Assessment of CVD on MRP less abatement basis.
3. Nature of goods imported and activities undertaken by the appellants.
4. Whether the appellants can be considered as industrial consumers.
5. Exemption from the provisions of Legal Metrology (Packaged Commodities) Rules.
6. Activities of testing parts and discharge of central excise duty.
7. Period of limitation for duty demands.

Issue 1: Applicability of additional customs duty (CVD) based on MRP/RSP:
The appellants imported parts, components, and assemblies for their equipment meant for after sales/replacement market. The department initiated proceedings, asserting that the imported goods were pre-packaged commodities at the time of import, requiring the discharge of additional customs duty (CVD) based on MRP/RSP in compliance with the Legal Metrology Act. A customs duty of &8377; 2,72,36,253/- with interest was confirmed, along with penalties under Sections 114A and 114AA of the Customs Act 1962 for the period from April 2010 to November 2011.

Issue 2: Assessment of CVD on MRP less abatement basis:
The department argued that the assessment of CVD on MRP less abatement basis is governed by a Notification under Section 4A of the Central Excise Tariff Act, and goods must be assessed under Section 4A unless exempted. The appellants were not considered industrial consumers under the Legal Metrology (Packaged Commodities) Rules as consumers purchased goods from the importer, not the manufacturer directly. The goods were sold in numbers, not on the basis of weight, exempting them from weight limitations per LM (PC) Rules.

Issue 3: Nature of goods imported and activities undertaken by appellants:
The appellants imported components in packaged form with the supplier's logo and details. They repacked the components, affixed their logo, and supplied them for warranty, spares, or replacement. The appellants argued that affixing labels at the time of import was not feasible as they applied their logo, indicating a manufacturing process.

Issue 4: Consideration as industrial consumers:
The AR contended that the appellants were not industrial consumers as they received goods in packaged form and engaged in trading. However, the Tribunal found the appellants' arguments more convincing, emphasizing the manufacturing activities undertaken by the appellants.

Issue 5: Exemption from LM (PC) Rules:
The Tribunal noted that the goods were imported as packaged commodities by the appellants for industrial use, exempting them from LM (PC) Rules. The activities of reopening, testing, repacking, and relabelling constituted manufacturing, justifying the exemption.

Issue 6: Activities of testing parts and discharge of central excise duty:
The appellants undertook testing activities and discharged central excise duty from April 1, 2011. The Central Excise Department viewed these activities as manufacturing, aligning with the Tribunal's findings.

Issue 7: Period of limitation for duty demands:
The Tribunal observed that the entire demand exceeded the normal limitation period, supporting the appellants' case. Consequently, a waiver of pre-deposit and a stay against recovery of dues during the appeal pendency were granted.

This detailed analysis of the judgment addresses the issues comprehensively, providing insights into the legal reasoning and findings of the Appellate Tribunal CESTAT BANGALORE.

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