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2024 (12) TMI 1154 - AT - CustomsInclusion of Freight and Insurance costs in the Assessable Value - price charged by the overseas exporter is on CIF basis or on FOB basis - applicability of MRP / RSP provisions - Extended period of limitation. Whether the Freight and Insurance costs are to be added or not to arrive at the Assessable Value? - HELD THAT - The appellant has provided proper documentary evidence to the effect that the freight and insurance has been borne by the foreign party. There is nothing to indicate in these documents that the appellant is required to pay these amounts. Therefore, it gets established that the overseas exporter has exported the goods on CIF basis to the appellant. Accordingly, we hold that the enhancement of Assessable Value by adding the freight and insurance by the Revenue, is legally not sustainable. Whether the MRP / RSP provisions would apply, thereby calling for higher CVD payment as has been held by the Adjudicating authority? - HELD THAT - The goods are meant for supply to Govt of Jharkand. The label also clearly states that the goods are not meant for retail sale to any individual but are meant for bulk sale to Govt. of Jharkand Hospitals only. On going through the Sl. No.40 of Notification No.14/2008-CE (NT) dated 01.03.2008 issued under Section 4A of the Central Excise Act, 1944 on which Department has placed reliance to hold that the goods are liable for MRP based assessment, we find that Sl. No.40 covers goods of Heading 34.02, which are in the form of bars, cakes, moulding pieces or shapes - In the present case, the appellants have imported the goods under CTH 3402 90 99 and are in liquid form and not in the form of bars, cakes, moulding pieces or shapes. Hence, the view of the Revenue that the goods are required to be assessed in terms of Section 4A of the Central Excise Act, 1944, for arriving at the CVD to be paid cannot be subscribed. Thus, the MRP based Section 4A value cannot be used for calculating the CVD. The Revenue is in error in applying the Section 4A valuation method to arrive at the CVD on the imported goods. Therefore, holding that the enhancement of Duty on this count is legally not sustainable, the impugned order to this extent set aside. Extended period of limitation - HELD THAT - In the present proceedings, the Revenue has not brought in any evidence to the effect that they have stumbled upon any new evidence to the effect that the freight and insurance paid by the exporter has been reimbursed to them by the appellant. Nor has the Department brought in any evidence to the effect that the goods in question were not sold in bulk to the Govt of Jharkhand hospitals, but were diverted and sold in retail. All the documents relied upon by the Department are the ones, which were already made available to them by the appellant at the time of imports. Thus, the Department has failed to bring in any evidence to fasten the allegation of suppression / misstatement with an intent to evade the Customs Duty. Therefore, there are no hesitation to hold that the confirmed demand is legally not sustainable even on account of time bar. Appeal allowed on account of merits as well as on account of limitation.
Issues Involved:
1. Determination of whether the price charged by the overseas exporter is on CIF (Cost, Insurance, and Freight) basis or FOB (Free on Board) basis. 2. Applicability of MRP/RSP (Maximum Retail Price/Retail Sale Price) provisions for assessing CVD (Countervailing Duty). 3. Invocation of the extended period for issuing the Show Cause Notice and the issue of time-bar. Issue-wise Detailed Analysis: 1. CIF vs. FOB Basis: The central question was whether the price charged by the overseas exporter was on a CIF basis or FOB basis, which would determine if freight and insurance costs should be added to the assessable value. The appellants argued that the goods were shipped on a CIF basis, as evidenced by the invoices, bills of lading, and insurance policies, which indicated that the freight and insurance were arranged and paid by the foreign supplier. The Tribunal examined these documents and found that the freight and insurance were indeed borne by the foreign exporter, Microgen Inc., USA. Thus, the Tribunal concluded that the goods were shipped on a CIF basis, making the addition of notional freight and insurance by the Revenue legally unsustainable. 2. Applicability of MRP/RSP Provisions: The second issue was whether the MRP/RSP provisions applied, which would necessitate a higher CVD payment. The appellant contended that the imported goods were not covered under the relevant notification for MRP-based assessment, as they were in liquid form and not in the form of bars, cakes, or moulding pieces as specified. The Tribunal agreed, noting that the goods were meant for institutional use by the Government of Jharkhand's hospitals and not for retail sale. The Tribunal referred to legal precedents, including the Karnataka High Court's decision in EWAC Alloys Ltd v. Union of India, which clarified that institutional and industrial consumers are excluded from the definition of 'retail package.' Consequently, the Tribunal held that the MRP-based assessment was not applicable, and the Revenue's approach to calculating CVD was incorrect. 3. Invocation of Extended Period and Time-Bar: The final issue was the invocation of the extended period for issuing the Show Cause Notice, which the appellant argued was time-barred. The Tribunal observed that the goods were cleared by customs officials based on the documents provided by the appellant, with no evidence of willful misstatement or suppression of facts. The Department failed to present new evidence suggesting that freight and insurance costs were reimbursed by the appellant or that the goods were sold in retail rather than to the Government of Jharkhand. Since the Department relied on documents already available at the time of import, the Tribunal found no grounds for alleging suppression or misstatement. Therefore, the Tribunal concluded that the demand was not sustainable due to time-bar. Conclusion: The Tribunal allowed the appeal on both merits and the issue of limitation. The appellant was entitled to consequential relief as per law. The order was pronounced in open court on December 18, 2024.
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