2016 (4) TMI 689 - HC - Central Excise

Declaration of Retail Sale Price / Fixation of tariff value - Where MRP is not required - Applicability of Section 3(2)- Seeking clarification/direction regarding Notification No. 16/2013 CE (N.T.) dated 31st December, 2013 - Held that - the expression Retail Sale Price declared on such goods occurring in the impugned Notification has to be read as not requiring any disclosure or declaration of the RSP on the packages in question subject to their fulfilling the parameters of Rule 26 of the LMPC Rules. It only requires the importer to make a declaration to the respondents of the RSP at which such goods, in packets of 10gm or 10ml, are to be sold. This has been further confirmed by the communication dated 2nd January, 2014 issued by the TRU which states that the tariff value shall be the RSP prescribed for such goods. Therefore, the RSP referred to in the Notification is the RSP disclosed by the importer to the Respondents. Legality of Notification No. 16/2013 - - Contrary to Central excise Act - Held that - The petitioners does not question the power of the Central Government under Section 3(2) of the CE Act to fix the tariff value. They also do not question the constitutional validity of Section 3 of the CT Act in terms of which the CVD can be levied and collected. The issue really is only about the apprehension of the petitioners that they may be compelled to disclose the RSP on the packages contrary to the exemption granted under Rule 26 of the LMPC Rules. This apprehension has been laid to rest by the respondents who have clarified that they will not insist on such disclosure of the RSP on the package as long as the petitioners otherwise satisfy the requirement of Rule 26 of the LMPC Rules. What the respondents ask is for a declaration made to them of the RSP at which such commodities are ultimately sold. Therefore, there is no illegality attaching to the impugned Notification. Consequently, the prayer that the said Notification should be held to be contrary the CE Act or the CT Act is hereby rejected. Insofar as it only fixes the tariff value as the RSP which the importer has to declare to the Customs authorities, no illegality attaches to the said Notification or the subsequent clarification issued by the TRU on 2nd January 2014. - Petition disposed of

Summary

Issues:
1. Interpretation of Notification No.16/2013 regarding the applicability to retail packages exempted under Rule 26 of the Legal Metrology (Packaged Commodities) Rules, 2011.
2. Challenge to the Notification as ultra vires, illegal, null, and void.
3. Determination of countervailing duty (CVD) under Section 3 of the Customs Tariff Act, 1975.
4. Application of Section 4A of the Central Excise Act for valuation of excisable goods with reference to the Retail Sale Price (RSP).
5. Clarification on the requirement of declaring RSP for imported goods in retail packages under the impugned Notification.

Analysis:
1. The petitioners sought a declaration that Notification No.16/2013 does not apply to retail packages exempted under Rule 26 of LMPC Rules. They argued against the Customs authorities' insistence on assessing packages based on the ultimate RSP and requiring disclosure of RSP, despite exemptions. The respondents clarified that the Notification requires a declaration of RSP to determine tariff value, not affixing RSP on packages, which was confirmed by a communication from the Tax Research Unit.

2. The challenge to the Notification as ultra vires, illegal, null, and void was based on the contention that since there is no legal requirement to declare RSP on exempted packages, there should not be a tariff value equivalent to RSP. The Court clarified that the requirement is for importers to declare RSP to authorities, not physically display it on packages, as long as they meet LMPC Rules' parameters.

3. The judgment discussed the determination of countervailing duty (CVD) under Section 3 of the Customs Tariff Act, which requires ascertaining the excise duty that could be levied on a like article if produced in India. The Court upheld the power of the Central Government to fix tariff value under Section 3(2) of the CE Act.

4. Section 4A of the CE Act was analyzed for valuation of excisable goods with reference to RSP. The Court confirmed that since the imported consignments were not covered under LM Act or Rules due to their weight, Section 4A was deemed inapplicable to the present case.

5. The issue of declaring RSP for imported goods in retail packages under the impugned Notification was clarified. The Court held that the requirement was for importers to declare RSP to authorities, not affix it on packages, as long as they fulfill LMPC Rules' parameters. The challenge to the Notification was rejected, citing the absence of illegality in its application and subsequent clarification by the Tax Research Unit.

Overall, the Court vacated interim orders and disposed of the petition based on the clarified interpretation of the impugned Notification and the legal provisions governing the valuation of excisable goods and countervailing duty.