2023 (3) TMI 1286 - AT - Customs

Valuation for the purpose of CVD - Levy of differential Additional Duty of Customs - institutional buyer - should the additional duty of customs be assessed as per Section 4 or Section 4A of the Central Excise Act? - if assessment is done under Section 4A if Rs. 2,100/- can be taken as RSP? - demand of interest and imposition of penalty under Section 112 - Circular dated 11 March 2016 issued by the CBEC. HELD THAT - It is an institutional consumer because it uses the STBs to provide service to the subscribers. Therefore, the bulk of STBs purchased by Dish TV cannot be considered as having a retail sale nor can the price of Rs.2,100/- be called Retail Sale Price. There can be retail price only if the STBs are sold to the ultimate consumer. In this case since the goods are not sold to the consumer there cannot be a retail sale price. The price at which goods are sold in wholesale or to an industrial or institutional consumer cannot be retail sale price as per the SWM Rules. Retail sale price is available only in those few cases where set top boxes have been damaged and subsequently sold to the subscriber. Undisputedly, the set top boxes were sold were much lower prices than Rs. 2,100/- in respect of such retail sales. The price at which the goods were sold to Dish TV cannot be considered as retail sale price. Dish TV cannot be considered as retail buyer because it is not using the goods for itself but is using them to provide service to its subscribers. Therefore, the price of Rs. 2,100/- at which the goods were sold to Dish TV cannot be considered as retail sale price even if the assessment is not modified and continues to be under Section 4A as was done in this case. The assessment should correctly be done under Section 4 as per Bharti Telemedia. Assessment in this case was done under Section 4A as per RSP with abatement as decided by the assessing officer of Rs. 1465/- - the assessing officer has rejected declared RSP of Rs. 1000/- per set top box and recalculated it after adding the basic customs duty to the landed cost of the STB and adding 20% as post importation cost which came to Rs. 1832/-. After allowing 20% abatement, he determined the additional duty of Customs on a value of Rs. 1465/-. How can the retail sale price be lower than the institutional sale price of Rs. 2,100/-? - HELD THAT - There is no retail sales but only institutional sales in this case and, there are nothing in Rule 23(2) that permits sale price to institutional buyers to be reckoned as retail sale price. It is true that assessment (both self assessment and re-assessment) were done under Section 4A and the appellant had not assailed the assessment. However, by issuing the SCN Revenue has re-opened the assessment on one ground (that RSP should be taken as Rs.2,100/-) and it is open to the appellant to plead any grounds in defence including any question of law (that Section 4 and not Section 4A should have been applied) and it is for the adjudicating authority and appellate authorities to consider the defence. Appeal allowed.

Summary

Issues Involved:

1. Applicability of Section 4 or Section 4A of the Central Excise Act for assessing additional duty of customs.
2. Determination of Retail Sale Price (RSP) for set top boxes.
3. Demand of interest and imposition of penalty under Section 112 of the Customs Act.

Detailed Analysis:

1. Applicability of Section 4 or Section 4A of the Central Excise Act:

The appellant contested the assessment under Section 4A, arguing that the set top boxes (STBs) should be assessed under Section 4, as per the Tribunal's decision in Bharti Telemedia Ltd. and the CBEC circular dated 11 March 2016. The Tribunal in Bharti Telemedia Ltd. held that STBs used by ultimate consumers do not involve retail sale, thus Section 4A does not apply. The CBEC circular clarified that this judgment should be followed for identical circumstances. The appellant argued that Dish TV, being an institutional consumer, does not qualify as a retail buyer, and thus the SWM Rules and Section 4A do not apply.

2. Determination of Retail Sale Price (RSP):

The assessing officer initially rejected the declared RSP of Rs. 1,000/- per piece, recalculating it to Rs. 1,832/- and, after abatement, determined the duty based on Rs. 1,465/- per piece. The appellant later sold the STBs to Dish TV at Rs. 2,100/- per piece. The Revenue argued that Rs. 2,100/- should be considered the RSP. The Tribunal found that Dish TV, being an institutional consumer, does not constitute a retail sale. The Tribunal noted that the price at which STBs were sold to Dish TV cannot be considered as the RSP since Dish TV used the STBs to provide services rather than selling them to ultimate consumers.

3. Demand of Interest and Imposition of Penalty:

The Tribunal did not specifically address the demand of interest and the imposition of penalty under Section 112 in detail, as the primary focus was on the applicability of Section 4A and the determination of RSP. However, by setting aside the impugned order, the Tribunal implicitly negated the basis for interest and penalty.

Conclusion:

The Tribunal concluded that the assessment should be done under Section 4 of the Central Excise Act, not Section 4A, as Dish TV is an institutional consumer, and the sale to Dish TV does not constitute a retail sale. Consequently, the price of Rs. 2,100/- cannot be considered the RSP. The appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellant.