2019 (10) TMI 1562 - AT - Customs

Assessment and demand of CVD - requirement of affixing retail sale of the Set Top Boxes, the RSP/MRP - case of appellant is that Department has demanded duty without any legal basis since there is no sale of the Set Top Boxes - HELD THAT - On perusal of the facts of the case, it is seen that in the agreement entered by the appellant with the subscribers, it is clearly stated that the hardware (Set Top Box) will always remain the property of M/s. Tata Sky Ltd. and the ownership cannot be transferred. It is also stated that such hardware cannot be moved from the address without prior written consent of the appellant. This would go to show that there is indeed no sale of the Set Top Boxes to the subscribers. Further, it has been submitted by the Ld. Counsel for the appellant that the value of the Set Top Boxes is shown as capital assets in their Financial Statements. The decision in M/S. BHARTI TELEMEDIA LTD. AND M/S. DISH TV INDIA LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) NHAVA SHEVA 2015 (9) TMI 1196 - CESTAT MUMBAI categorically holds that the levy of CVD cannot sustain when there is no sale of Set Top Boxes. The Board Circular No. 1020/8/2016-CX dated 11.03.2016 has accepted the said decision and clarified that in identical circumstances, CVD cannot be demanded. The impugned order is set aside - Appeal allowed.

Summary

Issues:
1. Assessment of Customs Valuation Duty (CVD) on imported Set Top Boxes under MRP method.
2. Interpretation of ownership and sale of Set Top Boxes based on subscription agreement and financial statements.
3. Applicability of precedent case law and Board Circular on CVD levy in similar circumstances.

Analysis:
1. The case involved a dispute regarding the assessment of CVD on imported Set Top Boxes by the Department under the MRP method, which was contested by the appellants. The Commissioner (Appeals) upheld the re-assessment, leading to the appeal before the Tribunal.

2. The appellant argued that as per the subscription agreement, the Set Top Boxes remained the property of the appellant company and were not sold to subscribers. The appellant contended that since there was no intention for retail sale of the Set Top Boxes, the RSP/MRP was not required to be affixed on them. The appellant also highlighted that the financial statements of the company treated the Set Top Boxes as capital assets, further supporting their claim of ownership.

3. The appellant relied on the decision in the case of M/s. Bharti Telemedia Ltd. to argue that when Set Top Boxes are not sold, the demand of CVD on RSP/MRP basis cannot be sustained. They also referenced a Board Circular accepting the decision in M/s. Bharti Telemedia Ltd. and clarifying that in similar circumstances, CVD cannot be levied. Additionally, it was noted that the Department's appeal against the Tribunal's decision in a similar case was dismissed by the High Court.

4. After hearing both sides, the Tribunal examined the agreement between the appellant and subscribers, which clearly stated that the Set Top Boxes would always remain the property of the appellant, with ownership non-transferable. The Tribunal also considered the appellant's practice of only collecting service charges and not the price of the Set Top Boxes from subscribers.

5. Ultimately, based on the agreement terms, financial statements, precedent case law, and Board Circular, the Tribunal set aside the impugned order, allowing the appeal and providing consequential reliefs to the appellant.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the Tribunal's decision in favor of the appellant regarding the assessment of CVD on imported Set Top Boxes.