2016 (10) TMI 453 - AT - Central Excise

Alteration of MRP of imported goods - Deemed manufacture - seizure of China imported DVD/VCD players on which stickers were pasted after 01.03.2003 - Central Excise Authorities held that pasting of stickers on the goods amounted to manufacture and respondents were not registered as manufacturer with effect from 01.03.2003 - Held that - the respondent had imported goods they had paid CVD on the basis of MRP declared before importation there was no alteration in the MRP on importation. Therefore there was no loss to revenue. Therefore we do not find any reason to interfere with impugned order. - Decided against the Revenue

Summary

Issues:
- Confiscation of seized goods
- Imposition of penalty under Rule 25 of Central Excise Rules, 2002
- Extension of period for issuing show cause notice
- Acceptance of deposit under Section 11A (2B) of Central Excise Act, 1944

Confiscation of Seized Goods:
The case involved the respondent importing DVD/VCD players and Home theatre systems from China, storing them in a godown, and pasting stickers on the goods for identification purposes. Central Excise Officers detained the goods and seized them, valuing them at ?1,19,54,604. The respondent was not registered as a manufacturer at the time of pasting stickers, which was considered as manufacturing activity. The seized goods were provisionally released after the respondent registered with Central Excise. The original order confiscated the goods and imposed a redemption fine of ?20 Lakhs along with a penalty of ?5 Lakhs under Rule 25 of Central Excise Rules, 2002.

Imposition of Penalty under Rule 25:
The Commissioner (Appeals) set aside the original order of confiscation and penalty imposition. The decision was based on the acceptance of the respondent's application under Section 11A (2B) of the Central Excise Act, 1944. The Commissioner considered the voluntary payment of duty by the respondent and the fact that the show cause notice for confiscation was issued after the expiry of the stipulated period. The Commissioner held that the seized goods were not eligible for confiscation, and the penalty under Rule 25 was deemed inapplicable in this case.

Extension of Period for Issuing Show Cause Notice:
The Revenue appealed the decision, arguing that the Commissioner (Appeals) erred in considering the acceptance of the deposit under Section 11A (2B) as unrelated to the show cause notice. The Revenue contended that the Commissioner challenged the inherent powers vested under the Customs Act, 1962, regarding the extension of the period for issuing show cause notices. The Revenue emphasized that the provisions did not require preconditions for extending the notice period.

Acceptance of Deposit under Section 11A (2B):
The respondent's counsel argued that there was no change in their activity of pasting stickers on imported goods before and after the amendment of Section 2(f) of the Central Excise Act. They highlighted that the duty was voluntarily paid, and the representation was accepted by the Commissioner for goods manufactured within a specific period. The counsel asserted that there was no liability for penalty, and the goods did not contravene regulations. They emphasized that the Central Excise Duty paid was equivalent to the CVD paid on importation, ensuring no loss to revenue.

In conclusion, the Tribunal dismissed the Revenue's appeal, considering that the respondent had imported goods, paid CVD based on the declared MRP, and there was no revenue loss due to the pasting of stickers. The Tribunal found no reason to interfere with the Commissioner (Appeals)'s decision and upheld the dismissal of the Revenue's appeal.