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2015 (9) TMI 1196 - AT - CustomsDetermination of CVD - valuation u/s 4 or 4A - whether Set Top Boxes (STBs) which are part of the Customer Premises Equipment (CPE) and imported by the appellants should be subjected to countervailing duty under Section 3(2) of the Customs Tariff Act by assessment in terms of Section 4 or in terms of Section4A of the Central Excise Act. - Held that - The retail sale price is defined as the maximum price at which retail package may be sold. And retail package means packages which are intended for retail sale to the ultimate consumer. In other words the retail price will be required to be declared on the package only if it is intended for retail sale. The Ld. Counsels have contended that there is no sale at all. They have referred to the definition of sale under the Legal Metrology Act, and emphasized that unless there is transfer of property it cannot be said that sale has taken place. It is seen from the definition that there should be a transfer of property for any consideration or there should be a transfer on the hire-purchase system or by any system of payment by any installments. We find in the present case that there is no transfer of property or hire-purchase system involved nor there is a system of payment by installments. Thus there appears to be no sale in the use of the Set Top Box by the ultimate consumer. During the course of arguments it emerged that Dish TV had recovered damages from the subscribers in case a Set Top Box is damaged. In such cases the replacement box is sold to the subscriber at a cost. Therefore in such cases, as an element of sale is involved, CVD would be payable under Section 4A of the Act. Accordingly, it is ordered that assessment be done and duty be paid on MRP basis in such cases. Set Top Boxes imported by the appellants are not leviable to CVD on RSP/MRP basis in terms of Section 4(A) of the Central Excise Act except for the Set Top Boxes actually sold - Decided partly in favour of assessee.
Issues Involved:
1. Whether Set Top Boxes (STBs) imported by the appellants should be subjected to countervailing duty (CVD) under Section 3(2) of the Customs Tariff Act by assessment in terms of Section 4 or Section 4A of the Central Excise Act. Detailed Analysis: Common Order and Point of Decision: The judgment addresses two appeals with a common issue: whether STBs, as part of Customer Premises Equipment (CPE) and imported by the appellants, should be assessed for CVD under Section 4 or Section 4A of the Central Excise Act. Appellants' Operations and Customs Department's View: The appellants provide Direct to Home (DTH) broadcasting services and import STBs with a declaration that they are not for retail sale. The Customs department contends that the STBs should declare the retail sale price (RSP) as required by the Legal Metrology Act (LMA) and be assessed for CVD under Section 4A. Appellants' Submissions: The appellants argue that STBs are not intended for retail sale and remain their property, thus not requiring an RSP declaration under the Legal Metrology (Package Commodity) Rules, 2011. They cite various legal precedents and argue that their business model does not constitute a sale, as the ownership of STBs remains with them. Revenue's Stand: Revenue argues that STBs are packaged commodities, and the provisions of the LMA apply, warranting assessment under Section 4A. They assert that the transfer of right to possess and use the STBs amounts to a sale under the CST Act. Legal Provisions and Analysis: The judgment examines the legal provisions under Section 3(2) of the Customs Tariff Act and the Legal Metrology Act. It highlights that for CVD to be levied on the basis of RSP, two conditions must be met: the requirement to declare RSP under the LMA and the goods being specified in a notification under Section 4A(1) of the Central Excise Act. Definition of Sale: The judgment emphasizes that the definition of 'sale' under the Legal Metrology Act requires a transfer of property, which is not present in this case. The appellants' agreements and declarations indicate no transfer of property, and the STBs are shown as capital assets in their books. Case Law and Precedents: The judgment references various case laws, including the Supreme Court's decision in Geo Miller & Co. Vs. State of Madhya Pradesh, which supports the appellants' stance that the definition of 'sale' in the LMA should prevail. It also distinguishes the present case from others cited by Revenue, noting that there is no sale involved in the transaction of STBs. TRAI Regulations and Warranty Clause: The judgment notes that TRAI regulations do not expressly prohibit the appellants' business model and that warranty provisions do not imply a sale. It also rejects Revenue's argument that the cost of STBs is recovered through service charges. Conclusion: The judgment concludes that the STBs imported by the appellants are not subject to CVD on an RSP/MRP basis under Section 4A of the Central Excise Act, except in cases where STBs are actually sold as replacements for damaged units. Final Orders: - Appeal No. C/85563/2014 of M/s. Bharti Telemedia Ltd. is allowed. - Appeal No. C/85564/2014 of M/s. Dish TV India Ltd. is partly allowed, with assessment on MRP basis for STBs actually sold. (Pronounced in court on 31/07/2015)
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