2018 (6) TMI 530 - AT - Customs

CVD on the basis of MRP based assessment - Supply of modems to an institutional buyer - certain models of ADSL Modems - case of appellant is that the imported items are not for sale but are to be supplied to BSNL who in turn rent out the same to the customers on rental basis - whether in such a scenario the CVD is required to be charged on the basis of MRP assessment under Section 4A of the Central Excise Act? - Held that - Rule 2 (b) of the Standards of Weights and Measurements (Packaged Commodities) Rules 1997, was amended with effect from 17.07.2006 excluding institutional consumers. The institutional consumers have been defined to mean those consumers who buy packaged commodities directly from the manufacturers/packers for service industry such as transportation, hotel or any other similar service industry. The provisions of Standards of Weights and Measurement Rules are not applicable to institutional consumer In the present case, BSNL is procuring modems in bulk from the appellant after import. Consequently, they fall within the definition of institutional consumers as above, to whom the provisions of Section 4A will not be applicable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Interpretation of MRP based assessment for imported goods for CVD purposes.
- Determination of whether goods imported for supply to BSNL qualify as supply to institutional consumers.
- Application of the decision in the Jayanthi Foods Processing Pvt. Ltd. case.
- Justification of charging CVD on MRP basis for goods supplied to BSNL.

Analysis:

The appeal in this case challenges the OIA No. 569/2010, which involved the appellant importing ADSL Modems and the department seeking MRP based assessment for CVD purposes. The appellant contended that the imported items were not for sale but for supply to BSNL, who would rent them out to customers. The authorities held that since the goods would ultimately reach individual consumers, CVD should be charged on MRP basis. The appellant argued that supplying to BSNL should be considered supply to institutional consumers exempt from MRP assessment.

The key argument revolved around whether supplying modems in bulk to BSNL qualifies as supply to institutional consumers. The appellant relied on the amended Rule 2(b) of the Standards of Weights and Measurements (Packaged Commodities) Rules 1997, excluding institutional consumers from MRP assessment. The Tribunal noted that BSNL, as a bulk procurer from the appellant, falls within the definition of institutional consumers. The decision in Jayanthi Foods Processing Pvt. Ltd. case was referenced, but found inapplicable due to amendments post-2006.

Upon examination, the Tribunal concluded that the supply of modems to BSNL constitutes supply to an institutional buyer, exempting it from CVD on MRP basis under Section 4A of the Central Excise Act. The impugned order was set aside, allowing the appeal with consequential relief as per law. The judgment clarified the distinction between individual and institutional consumers in the context of CVD assessment, emphasizing the applicability of relevant legal provisions post-amendments.

In summary, the Tribunal's decision hinged on the definition of institutional consumers and the specific circumstances of supply to BSNL. By applying the amended rules and considering the nature of the transaction, the Tribunal ruled in favor of the appellant, highlighting the inapplicability of the Jayanthi Foods Processing Pvt. Ltd. case to the present scenario. The judgment serves to clarify the criteria for MRP based assessment and the treatment of institutional consumers in CVD matters, providing a clear legal interpretation in line with the prevailing statutory framework.