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2015 (8) TMI 192 - AT - CustomsValuation of goods - Computation of CVD on MRP basis - Re-labelling of boxes of Vitrified and Glazed tiles with higher MRP - Scope of Section 4A of Central Excise Act, 1944 for computing CVD on import of goods - Extended period of limitation - Confiscation of goods - Imposition of redemption fine and penalty - Difference of opinion - Majority order - Held that - There is no dispute that goods are covered by scheme of Section 4A of the Central Excise Act and CVD is to be paid based upon RSP minus abatement. The appellants were also following Section 4A of the Central Excise Act as also Section3(2) of the Customs Tariff Act inasmuch as they were declaring certain retail sale price on the goods. Abatement was given on the so declared retail sale price and duty was being paid with reference to the value so arrived. However, later on, it was found that appellants themselves were selling some goods at a price higher than retail sale price declared by them to the Customs. The declaration relating to RSP has to be true and correct declaration and not a false declaration. If importer himself is selling the tiles at a price higher than the declared RSP, declared RSP is not true - Tax payer cannot be permitted to himself misdeclare the RSP, thereby evade payment of correct amount of duty. Reference to Section 4A of the Central Excise Act to affix RSP is not to affix any RSP but true and correct RSP - Section 4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) of the Customs Tariff Act, and disagree with Member (Judicial) that reference to Section 4A of the Central Excise Act is for very limited purpose i.e. to affix RSP and abatement with respect to the Explanation to Section 3(2) of the Customs Tariff Act. In effect, even the Rules introduced in 2008 provide certain steps and if the price cannot be determined under those steps, then it has to be determined based upon the best judgment method which should be in accordance with Section 4A. - provisions of Section 3(2) of the Customs Tariff Act will not become ineffective in the absence of Section 4A(4) of the Central Excise Act, 1944 for the imports made prior to 14.5.2003. In taxation of law, it is not unusual to use the best judgment method keeping in view the purpose and object of the law/particular provision. There are number of bills of entry where declared RSP has been accepted as based upon FIFO method, there was no transaction exceeding the declared RSP. While what has been done is correct, it is possible that some of the good covered by such RSPs might have been sold during the subsequent period or earlier period. For example, in respect of bill of entry No. 304782, the goods were cleared on 24.10.2002 and as per FIFO principle, these have been sold between 30.11.2002 to 7.1.2003. It is possible that part of the goods might have been sold between 24.10.2002 to 29.11.2002 or any time after 7.1.2003. Appellants will be entitled to the benefit of doubt in such cases. Appellant has declared a MRP at the time of import and subsequent to the clearance, sold the goods himself at a price higher than the declared MRP. In my view, the present case is equally strong footing if not better than the case of Planet Sports (2004 (10) TMI 209 - CESTAT, NEW DELHI). Decision in the case of Media Industries (2006 (4) TMI 275 - CESTAT, NEW DELHI) followed. There was a clear-cut wilful misstatement or suppression of facts by the importer and his employees and the requirements of Section 28 for invoking extended period are satisfied. The fact that provisional assessments were finalized during the investigation period is of no relevant or consequence for invoking proviso to Section 28. The reasoning followed by the Hon ble Gujarat High Court in the case of Neminath Fabrics Pvt. Ltd. 2010 (4) TMI 631 - GUJARAT HIGH COURT is equally applicable in the present case. Appellants had declared certain RSPs and sold the goods both below the declared RSP in some cases above the declared RSP. However, as discussed, with reference to para 4, it has not been possible to clearly pinpoint the consignments or part of the consignment where goods have been sold at a price more than the declared RSP and hence RSP is misdeclared. Even the computation of the duty short paid is based upon number of assumptions. - confiscation of the goods and consequently imposition of redemption fine and penalties under Section 112 (a) & (b) of the Customs Act, 1962 on the appellants are not sustainable. As far as penalty under Section 114A is concerned, the same is sustainable only to the extent of duty computed - Decided partly in favour of assessee.
Issues Involved:
1. Jurisdiction to issue show-cause notice under Section 28 of the Customs Act by Additional Director (General), DRI, Mumbai. 2. Demand of differential duty, interest, and imposition of penalty. 3. Confiscation of imported goods and redemption fine. 4. Mis-declaration of Maximum Retail Price (MRP) or Retail Sale Price (RSP). 5. Applicability of Section 4A of the Central Excise Act, 1944 for determining value for levy of CVD. 6. Invocation of extended period of limitation under Section 28 of the Customs Act. 7. Confiscation of goods under Sections 111(d), 111(m), and 111(o) of the Customs Act. 8. Imposition of penalties under Section 112(a) and 112(b) of the Customs Act. Detailed Analysis: 1. Jurisdiction to Issue Show-Cause Notice: The appellant argued that the Additional Director (General), DRI, Mumbai, lacked jurisdiction to issue a show-cause notice under Section 28 of the Customs Act, 1962. The Tribunal allowed the miscellaneous application to urge this legal ground. 2. Demand of Differential Duty, Interest, and Penalty: The appellant, engaged in importing vitrified and ceramic glazed tiles, was accused of evading CVD by declaring lower MRPs. The Tribunal examined whether the declared RSP at the time of import should be considered for CVD or the higher actual sale price. The Tribunal concluded that the correct RSP should be the highest price at which the goods were sold, aligning with the definition of RSP under Section 4A of the Central Excise Act. 3. Confiscation of Imported Goods and Redemption Fine: The Tribunal found that the appellant sold goods at prices higher than the declared MRP, leading to mis-declaration. However, the confiscation of goods was not sustainable due to the inability to precisely identify the offending goods. Consequently, the redemption fine and penalties under Section 112(a) and 112(b) were not upheld. 4. Mis-Declaration of MRP/RSP: The appellant declared MRPs on imported tiles but sold them at higher prices. The Tribunal determined that the declared RSP was not the true MRP, and the highest sale price should be considered the correct RSP for CVD purposes. 5. Applicability of Section 4A of the Central Excise Act: The Tribunal held that the reference to Section 4A of the Central Excise Act is fully applicable to the explanation to Section 3(2) of the Customs Tariff Act. The Tribunal rejected the appellant's argument that only a limited reference to Section 4A was intended. 6. Invocation of Extended Period of Limitation: The Tribunal upheld the invocation of the extended period of limitation under Section 28 of the Customs Act, citing wilful misstatement and suppression of facts by the appellant. The extended period was justified due to the appellant's mis-declaration of MRP and intent to evade duty. 7. Confiscation under Sections 111(d), 111(m), and 111(o): The Tribunal found that confiscation under Section 111(d) was not sustainable as there was no prohibition imposed under the Customs Act or any other law. Confiscation under Section 111(m) was also not warranted as there was no allegation of non-correspondence in value. Similarly, Section 111(o) was inapplicable as the goods were not exempted from duty. 8. Imposition of Penalties: The Tribunal concluded that penalties under Section 112(a) and 112(b) were not sustainable due to the inability to precisely identify the offending goods. However, the penalty under Section 114A was upheld to the extent of the reworked duty demand. Majority Decision: 1. Reference to Section 4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) of the Customs Tariff Act. 2. Provisions of Section 3(2) of the Customs Tariff Act will not become ineffective in the absence of Section 4A(4) of the Central Excise Act for imports made prior to 14.05.2003. 3. CVD is to be paid on the basis of higher prices at which the goods were sold to customers and which were required to be declared as MRP. 4. FIFO method is reasonable to determine MRP in the absence of records to correlate Bills of Entry and invoices. However, differential duty needs reworking. 5. The decision in ABB Ltd.'s case does not apply; Tribunal's decisions in Planet Sports Pvt. Ltd. and Media Industries Ltd. apply. 6. MRP can be redetermined based on the underlying law and spirit of Section 3(2) of the Customs Tariff Act. 7. Extended period of limitation can be invoked to confirm the duty demand. 8. Confiscation, redemption fine, and penalties under Section 112 are not sustainable. Penalty under Section 114A is upheld only to the extent of duty reworked. Conclusion: The Tribunal allowed the appeal with consequential relief, if any, directing the Commissioner to rework the differential duty as per the Tribunal's observations.
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