2012 (8) TMI 508 - AT - Customs

Demand of additional customs duty (CVD) - transaction value u/s 4 versus MRP based value u/s 4A - Held that - As the goods were imported by the appellant in bulk and cleared for further process to party who undertook the process of packing, repacking, labeling and putting stickers of MRP which is process of manufacturing as per Section 2 (f) of the Central Excise Act, 1944 and finally cleared these goods on payment of Central excise duty as per Section 4A, thus the appellants have rightly discharged their duty liability as per Section 4 of the Central Excise Act, 1944 - in favour of assessee.

Summary

Issues:
1. Assessment based on Section 4 vs. Section 4A of the Central Excise Act, 1944
2. Time limitation for demands
3. Liability for payment of Central Value Duty (CVD) on imported goods

Analysis:

1. Assessment based on Section 4 vs. Section 4A of the Central Excise Act, 1944:
The case involves the import of film rolls by the appellant, which were initially assessed and cleared based on Section 4 of the Central Excise Act, 1944. Subsequently, a Show Cause Notice was issued requiring payment under Section 4A as the films were intended for retail sale. The appellant argued that the goods were further processed by another entity, M/s Phil Corporation Ltd, which repacked and labeled the goods before clearing them by paying Central Excise duty under Section 4A. The Tribunal found that the process undertaken by M/s Phil Corporation Ltd constituted manufacturing under Section 2(f) of the Act. Consequently, it was held that the appellant was not liable to pay CVD at the time of importation under Section 4A, and the demands made under the Show Cause Notice were deemed unsustainable.

2. Time limitation for demands:
The appellant contended that the demands made through the Show Cause Notice were not sustainable due to being issued more than six months after the assessments and clearance of the goods. The Tribunal acknowledged this argument, indicating that demands made after such a significant lapse of time may not be enforceable under the law. This aspect further weakened the case for demanding additional customs duty from the appellant.

3. Liability for payment of Central Value Duty (CVD) on imported goods:
The core issue revolved around the correct application of duty liability under Section 4 or Section 4A of the Central Excise Act, 1944, concerning the imported film rolls meant for retail sale. The Tribunal's analysis focused on the processing and clearance of the goods by M/s Phil Corporation Ltd, emphasizing that the duty was discharged by them under Section 4A after manufacturing activities. This led to the conclusion that the appellants were not obligated to pay CVD at the time of importation, resulting in the setting aside of the impugned order and allowing the appeals filed by the appellants with consequential reliefs, if any.

In conclusion, the judgment by the Appellate Tribunal CESTAT, Mumbai favored the appellants by ruling in their favor on the grounds of correct duty liability application, time limitations for demands, and the manufacturing process undertaken by another entity, leading to the setting aside of the impugned order.