2020 (4) TMI 804 - AT - Customs

Valuation of import goods - automobile parts - requirement of affixing of retail selling price - goods, subject to assessment under section 4A of Central Excise Act, 1944 when manufactured in India, are mandatorily to be subject to additional duties of customs under the corresponding proviso in Customs Tariff Act, 1975 even when not sold as such after import - notification no. 44(RE-2000)/97-2002 dated 24th November 2000 - Third Member, has held, by majority, that there was no provision for assessment by recourse to retail selling price except upon voluntary adoption at the time of import - HELD THAT - Admittedly, appellant is barred from disposal of the impugned goods without affixing the various particulars prescribed under Legal Metrology Act, 2011 and, therefore, in conjunction with inclusion in Third Schedule of Central Excise Act, 1944, the goods cannot be denied assessment to additional duty of customs by reference to declared, or assessed, transaction value. The expression that is variably deployed in connection with such assessment is intended for retail sale and, thereby, implies the existence of such labelled price from the time of import or clearance from factory, as the case may be, till arrival at the point of retail sale as demonstrative of intention. Such goods when routed through channels for industrial/institutional consumers are explicitly excluded from the statutory requirement under Legal Metrology Act, 2011. It would, therefore, appear that demonstrated intention of the importer/manufacturer by affixing of retail selling price is the sole decider for adopting the alternative mechanism for assessment of additional duties of customs or duties of central excise, as the case may be. From the decision of the Tribunal in STARLITE COMPONENTS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASHIK 2013 (4) TMI 624 - CESTAT, MUMBAI , it is deduced that, even if such goods are covered by notification for assessment to duties of central excise on retail selling price to the extent that these are further subject to duties of central excise in circumstances of inclusion in the Third Schedule to Central Excise Tariff Act, 1985, the prescription of affixing of retail selling price and assessment thereof does not arise. Therefore, the consequence is assessment on the basis of transaction value. The assessment insisted upon in the impugned order is not in accordance with law - Appeal allowed - decided in favor of appellant.

Issues:
1. Assessment of additional duty of customs under the proviso to section 3(2) of Customs Tariff Act, 1975.
2. Requirement of compliance with alternative provision for computation of additional duty of customs at the time of import.
3. Interpretation of legal provisions regarding labelling and assessment of goods intended for retail sale.
4. Applicability of assessment based on 'retail selling price' and transaction value.
5. Comparison of decisions in Starlite Components Limited and Mitashi Edutainment Private Limited cases.
6. Impact of Legal Metrology Act, 2011 on assessment of additional duties of customs.
7. Consideration of High Court decision in Sun Exports case regarding redemption fine for non-compliance with packaging rules.

Analysis:

1. The appeal challenged an order confirming a differential duty liability, confiscation of goods, and imposition of penalties against the appellant for not discharging additional duty of customs under the proviso to section 3(2) of Customs Tariff Act, 1975. The appellant argued that as they affix the 'retail selling price' on automobile parts in their warehouse and clear them after discharging duty liability under the Central Excise Act, there was no need to comply with alternative computation provisions for additional duty of customs at the time of import.

2. The appellant contended that the assessment should be revenue neutral as discharging duty liability under an alternative mechanism at import would affect the applicability of central excise duties on clearance from their warehouse. They highlighted the requirement of affixing 'retail selling price' before clearance to dealers and argued that goods not intended for immediate retail sale should be assessed based on transaction value only.

3. The Tribunal analyzed the legal provisions, including the General Notes in the Import Policy and notifications from the Directorate General of Foreign Trade, to determine the assessment criteria for goods intended for retail sale. The decision emphasized the importance of affixing 'retail selling price' as an indicator of intention for assessment of additional duties of customs or central excise.

4. Referring to the decision in Starlite Components Limited case, the Tribunal clarified that goods not intended for immediate retail sale and undergoing further processing or repacking are not required to declare MRP for levy of CVD. The assessment should be based on transaction value when goods are not intended for retail sale at the time of import.

5. The Tribunal distinguished the decision in Mitashi Edutainment Private Limited case and emphasized that the assessment criteria should be based on the intention of the importer/manufacturer indicated by affixing 'retail selling price.' The decision highlighted the exclusion of goods routed for industrial/institutional consumers from statutory requirements under the Legal Metrology Act, 2011.

6. Considering the arguments presented, the Tribunal concluded that the assessment insisted upon in the impugned order was not in accordance with the law. The order was set aside, and the appeal was allowed based on the interpretation of legal provisions and previous decisions regarding the assessment of additional duties of customs on goods intended for retail sale.

7. The Tribunal did not find the High Court decision in the Sun Exports case relevant to the issue at hand, as it pertained to a redemption fine for non-compliance with packaging rules and did not address the assessment of additional duties of customs based on 'retail selling price' and transaction value.

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