2020 (7) TMI 488 - AT - Customs

Valuation of imported goods - demand on the ground that the impugned goods were imported in packaged form for retail sale attracted the provisions of Section 4A of the Act, 1944 read with the provisions of Standards of Weights and Measures Act, 1976 - HELD THAT - It is an undisputed fact on record that the candies/chocolates of different variety are displayed by the retail outlets in the tubs and bins, wherefrom according to the choice, the buyer picks up the chocolates in loose form and mixed up with other kinds of chocolates and thereafter the chocolates so picked up by the buyer are sold without any packages, on the basis of weight only. The appellant used to circulate the price list for retail sale for its outlets, which were made of the quantity like 10 gm, 20 gm, 50 gm of mixed candies. The imported goods were packed in cartons only for transportation purpose and not otherwise. The statements of various persons referred to in the impugned order have also endorsed such means and methods adopted for sale of confectionary items from the retail outlets - Since, the notified goods in this case were not sold in packaged form or condition to the ultimate buyers, there was no statutory requirement on the part of the appellant to declare the retail sale price of loose chocolates for determination of the value as per Section 4A of the Act. The CBEC vide Circular dated 28.02.2002 has clarified that if there is no statutory obligation under the provisions of SWM Rules to declare the retail sale price of the packages, then the provisions of Section 4A would not be applicable. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Misdeclaration of Retail Sale Price (RSP/MRP) for calculation of Countervailing Duty (CVD).
2. Applicability of Section 4A of the Central Excise Act, 1944.
3. Compliance with Standards of Weights and Measures (Packaged Commodities) Rules, 1977.
4. Confiscation of goods and imposition of penalties.

Issue-wise Detailed Analysis:

1. Misdeclaration of Retail Sale Price (RSP/MRP) for calculation of Countervailing Duty (CVD):
The primary issue revolved around the allegation that the appellant misdeclared the retail sale price (RSP/MRP) of imported confectionary items to evade the payment of Countervailing Duty (CVD). The appellant imported confectionary items and displayed them in loose form for retail sale, where consumers could pick and mix various candies. The Department of Revenue Intelligence (DRI) conducted searches and seized various confectionary items, concluding that the appellant failed to declare the correct MRP, thus evading CVD.

2. Applicability of Section 4A of the Central Excise Act, 1944:
The appellant argued that since the goods were never sold to ultimate buyers in packaged form, the provisions of Section 4A of the Central Excise Act, 1944, which pertain to the valuation of excisable goods based on retail sale price, were not applicable. The appellant relied on Circular No. 625/16/2002-CX., dated 28.02.2002, and judgments from the Hon'ble Supreme Court and the Tribunal to support their claim that the valuation should be done under Section 4 of the Act, not Section 4A.

3. Compliance with Standards of Weights and Measures (Packaged Commodities) Rules, 1977:
The adjudicating authority confirmed the demand on the grounds that the imported goods were in packaged form for retail sale, thus attracting the provisions of Section 4A of the Act, read with the Standards of Weights and Measures Act, 1976, and the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. However, it was undisputed that the candies were displayed and sold in loose form from tubs and bins, without any packages, based on weight. The appellant circulated a price list for retail sale, and the imported goods were packed in cartons only for transportation purposes.

4. Confiscation of goods and imposition of penalties:
The Commissioner of Customs (Import), Nhava Sheva, confirmed the additional duty of customs (CVD) amounting to ?15,70,478/- along with interest, imposed an equal amount of penalty, confiscated goods valued at ?1,18,59,330/-, and imposed a redemption fine of ?20,00,000/-. Additionally, a penalty of ?3,00,000/- was imposed on an individual under Section 112 (a) of the Customs Act, 1962.

Judgment:
The Tribunal concluded that since the notified goods were not sold in packaged form or condition to the ultimate buyers, there was no statutory requirement for the appellant to declare the retail sale price for determination of value under Section 4A of the Act. The CBEC Circular dated 28.02.2002 clarified that if there is no statutory obligation under the SWM Rules to declare the retail sale price, the provisions of Section 4A would not apply. The Tribunal relied on the Hon'ble Supreme Court's judgment in Jayanti Food Processing Pvt. Ltd., which held that Section 4A would not apply to goods sold in retail in loose or unpackaged condition.

Conclusion:
The Tribunal found no merit in the impugned order confirming the adjudged demands on the appellants. Accordingly, the appeals were allowed in favor of the appellants, and the impugned order was set aside.

(Order pronounced in the open court on 17/07/2020)

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