2023 (7) TMI 268 - AT - Customs

Valuation of imported STBs - to be determined for the purpose of levy of CVD in terms of Section 3(2) of the Customs Tariff Act, 1975 read with Section 14 of the Customs Act, 1962 as claimed by the appellants; or, on the basis of Retail Sale Price as per the first proviso to Section 3(2) of the Act of 1975 (supra) read with Section 4A of the Central Excise Act, 1944, as claimed by the Revenue? HELD THAT - On a conjoint reading of Rule 6(1)(e) ibid and Rule 2(m) ibid, it transpires that affixation of RSP under the former rule would arise only in cases/situations, where the packages are to be sold to the ultimate consumers. In other words, till the time there is no element of sale involved in transferring the title of the goods form the seller to the buyer, the requirement to affix RSP would not arise - on perusal of the audited Balance Sheet for the relevant period, we also find that the appellants have claimed depreciation on the STBs, meaning thereby that those STBs are their fixed assets. Since such declarations made in the Balance Sheet is a requirement under the company law statute and being approved by the statutory auditors, the same cannot be questioned by the Customs department in saying that such disputed goods were sold by the appellants to their subscribers in order to be categorized under the LM Act and PC Rules for assessment of the disputed goods under the RSP basis. There is no element of sale involved in as much as the ownership of the STBs were never passed on by the appellants to the subscribers. Thus, in absence of any element of sale i.e., transfer of property in goods from one person to another, the question of affixation of RSP in the packages would not arise and if the importer choose to do so, the same cannot be questioned, in the absence of any specific statutory provisions in vogue, restricting such practice - An identical issue came up for consideration in the case of Jayanti Food Processing (P) Ltd. (supra) 2007 (8) TMI 3 - SUPREME COURT and upon analysis of the statutory provisions, the Hon ble Supreme Court have held unless there is an element of sale, as contemplated in Section 2(v). Rule 6(1)(f) will not be attracted and thus such package would not be governed under the provisions of SWM (PC) Rules which would clearly take such package out of the restricted arena of Section 4A(1) of the Act and would put it in the broader arena of Section 4 of the Act. The Co-ordinate Bench of the Tribunal at Chennai in the case of the appellants themselves in M/S. TATA SKY LIMITED VERSUS THE COMMISSIONER OF CUSTOMS 2019 (10) TMI 1562 - CESTAT CHENNAI , has set aside the CVD demand. In view of the fact that CVD has to be assessed in general on the transaction value provided under Section 4 ibid, which admittedly has been done by the appellants, the submissions made by the learned AR not agreed that the valuation has to be done on RSP basis in the present case. Thus, we are of the considered view that the judgement in the case of Jayanti Food Processing (P) Ltd. would not be of any help to the Revenue for deciding the appeal differently. Rather, the ratio of the said judgement supports the case of the appellants inasmuch as element of sale is only the condition precedent for determination of the issue, whether the valuation of imported goods for CVD purpose has to be done on transaction value basis or on RSP basis. There are no merits in the impugned order passed by the learned Commissioner (Appeals), in so far as he had endorsed the views of the original authority that the subject assessments should be done on RSP basis - the impugned order is set-aside - appeal allowed.

Summary

Issues Involved:
1. Change of cause title in the appeal.
2. Determination of the value of imported Set-top Boxes (STBs) for the purpose of levy of Additional Duty of Customs (CVD).

Summary:

1. Change of Cause Title:
The applicant/appellant requested a change in the cause title due to the company's name change from "Tata Sky Limited" to "Tata Play Limited" effective from 19.01.2022, as approved by the NCLT. The Tribunal directed the Registry to update the name accordingly.

2. Determination of Value for Levy of CVD:
The appellants, engaged in providing Direct-to-Home (DTH) broadcasting services, imported STBs and initially sold them, paying CVD on Retail Sale Price (RSP) basis. Post 01.04.2011, they provided STBs on an 'entrustment basis' without transferring ownership to subscribers. The customs authorities assessed CVD on RSP basis, which the appellants contested, arguing for assessment on transaction value due to the absence of sale.

Key Arguments:
- Appellant's Stand: The STBs were provided on an entrustment basis, not sold, thus CVD should be based on transaction value, not RSP. They cited previous Tribunal decisions supporting their view.
- Revenue's Stand: The RSP must be affixed on imported goods as per statutory requirements, hence CVD should be computed on RSP basis, supported by the Supreme Court judgment in M/s Jayanti Food Processing (P) Ltd.

Tribunal's Analysis:
- Statutory Provisions: CVD is generally assessed on transaction value unless the goods are required to declare RSP and are notified under Section 4A of the Central Excise Act, 1944.
- Legal Metrology Act & Rules: RSP declaration is required only for goods intended for retail sale. Since the STBs were not sold but provided on an entrustment basis, the requirement to affix RSP did not arise.
- Evidence: The appellants' agreements, Chartered Accountants' certification, and audited Balance Sheets indicated no sale of STBs, supporting the appellants' claim.
- Precedents: The Tribunal referred to similar cases (M/s Bharti Telemedia Ltd. and the appellants themselves) where CVD was assessed on transaction value. The CBEC had accepted these decisions and issued a circular for assessment procedures accordingly.

Conclusion:
The Tribunal concluded that the STBs were not sold, thus CVD should be assessed on transaction value, not RSP. The impugned order by the Commissioner (Appeals) was set aside, and the appeal was allowed in favor of the appellants.