2009 (7) TMI 399 - AT - Central Excise

Valuation - appellants are importers of set top boxes which are supplied free of cost to their customers of Direct to Home TV connections. The set top boxes are provided free of cost by the appellants and the ownership of the same is not transferred to the customers - In view of the fact that the impugned goods in this case are not sold as there is no transfer of the ownership of the same and there is also no such finding to the contrary in the impugned order, by applying the above cited decision of the Supreme Court in the case of Jayanti Food Processing reported in 2007 - TMI - 1560 - Supreme Court , it is evident that the provisions of Standards of Weights and Measures Act, 1976, cannot apply for the valuation of the impugned goods. Accordingly, for the purpose of calculation of additional customs duty on the subject goods, recourse has to be taken to Section 4 of the Central Excise Act, 1944 and not Section 4A thereof. Consequently, the impugned orders are set aside and both the appeals are allowed.

Summary

Issues: Valuation of set top boxes for customs duty calculation under Central Excise Act, 1944.

Analysis:

1. Issue of Sale and Transfer of Ownership: The appellants argued that since they provide set top boxes free of cost to customers without transferring ownership, the definition of sale requiring property transfer under the Standards of Weights and Measures Act, 1976, is not met. Citing the Supreme Court decision in Jayanti Food Processing Pvt. Ltd. v. CCE, Rajasthan, it was contended that without a sale, the valuation for customs duty calculation should not involve Section 4A of the Central Excise Act, 1944.

2. Supporting Arguments: The JCDR for the respondent confirmed that the impugned order lacked a finding on the transfer of ownership of the set top boxes to customers. However, after hearing both sides and examining the case records along with the cited case law, the Tribunal noted the significance of the definition of "retail sale price" under Rule 6(1)(f) and Section 2(v) of the SWM Act in determining the applicability of valuation rules.

3. Application of Precedent: Referring to the Supreme Court's decision in Jayanti Food Processing case, the Tribunal emphasized that for goods not involving a sale due to the absence of ownership transfer, the provisions of the SWM Act cannot govern valuation. Consequently, the Tribunal held that for calculating additional customs duty on the set top boxes, Section 4 of the Central Excise Act, 1944 should be applied instead of Section 4A, leading to the setting aside of the impugned orders and allowing both appeals.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, CHENNAI highlights the key arguments, supporting details, and the application of legal principles in resolving the issue of valuation for customs duty calculation concerning the distribution of set top boxes without a sale transaction.