2021 (9) TMI 417 - AT - Customs

Valuation for levy of CVD - Re-determination of value under Central Excise - Levy of additional duties of customs - assessment of duties of central excise on the basis of retail selling price - re-labelling of the specified goods would amount to manufacture after import - HELD THAT - The assessment of duties of central excise on the basis of retail selling price was intended to dovetail enforcement of the levy with the statutory oversight contemplated by the Standards of Weights and Measures Act, 1976 and Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (and the substituting Legal Metrology Act, 2009 and Legal Metrology (Packaged Commodities) Rules, 2011) and its adoption, for parity, in assessment of additional duties of customs was ineluctable - Though Central Excise Act, 1944 did empower re-valuation with effect from 1st March 2008 in the specifically enumerated circumstances, there has been no corresponding empowerment under either Customs Act, 1962 or Customs Tariff Act, 1975. The exercise of such power in the proceedings leading to the impugned order is, thus, without authority of law. The mandate by which an assessing authority was enabled, under Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, to revisit the value declared in the entry under section 46 of Customs Act, 1962 is limited to assessment of basic customs duty under section 12 of Customs Act, 1962. Any revision in the assessable value for determination of basic customs duty would correspondingly impact additional duties of customs too - Recourse to rules of valuation framed under the authority of section 14 of Customs Act, 1962 was, thus, precluded and the sanctity of declared retail selling price protected from being re-determined. As re-labelling of the specified goods would amount to manufacture after import, it is not that recourse was unavailable to remedy any breach of parity. The adoption of retail selling price of other re-sellers and, that too, while the impugned goods were yet to be cleared for home consumption on the presumption that the importer intended to enhance the retail selling price at the point of sale appears to be a mis-direction on the part of the original authority and the confirmation thereof, by the first appellate authority, bears the same taint as to warrant the setting aside of the impugned order. The demand for differential duty liability, confiscation and penalty set aside - Appeal allowed.

Summary

Issues Involved:
1. Levy of 'additional duties of customs' under section 3(2) of the Customs Tariff Act, 1975.
2. Authority of the assessing officer to re-determine the declared retail sale price (RSP).
3. Invocation of section 111(m) of the Customs Act, 1962.
4. Validity of the revision of declared RSP based on market price comparisons.

Detailed Analysis:

1. Levy of 'additional duties of customs' under section 3(2) of the Customs Tariff Act, 1975:
The dispute centers on the peculiarities in the levy of 'additional duties of customs' on imported goods, which are imposed to create a level playing field for domestically produced and imported goods by subjecting them to similar duties as central excise. The default assessment applies the duty rate from the Central Excise Tariff Act, 1985 to a value comprising the basic customs duty and the value under section 14 of the Customs Act, 1962.

2. Authority of the assessing officer to re-determine the declared retail sale price (RSP):
The appellant contended that the assessing authority lacked the power to re-determine the declared RSP, citing the Tribunal's decision in Acme Ceramics v. Commissioner of Central Excise, Rajkot, which held that the rules for re-determination of RSP were not prescribed until Notification No. 13/2008-C.E. (N.T.), dated 1-3-2008. This decision emphasized that prior to this notification, there was no legal procedure for revising the declared RSP, and any such revision was without authority.

3. Invocation of section 111(m) of the Customs Act, 1962:
The appellant argued that section 111(m) of the Customs Act, 1962, which deals with confiscation of goods for misdeclaration, had been invoked without proper authority. They relied on the Supreme Court's decision in RIB Tapes (India) Pvt Ltd v. Union of India and the Tribunal's decision in Ajay Industrial Corporation v. Commissioner of Customs (Export Promotion), Mumbai, which delineate the scope for invoking section 111.

4. Validity of the revision of declared RSP based on market price comparisons:
The original authority had revised the RSP based on an average of market prices obtained from three different points of sale, suspecting the declared RSP was not comparable with prevailing market prices. However, the Tribunal noted that the assessment of duties on the basis of 'retail selling price' was intended to align with the statutory oversight of the Standards of Weights and Measures Act, 1976, and its successor legislation. The Tribunal found that while the Central Excise Act, 1944 empowered re-valuation from 1st March 2008, there was no corresponding empowerment under the Customs Act, 1962 or the Customs Tariff Act, 1975. Thus, the exercise of such power was without legal authority.

The Tribunal concluded that the original authority's action of adopting RSPs from other resellers and assuming the importer intended to enhance the RSP at the point of sale was a misdirection. The confirmation of this action by the first appellate authority was similarly flawed.

Conclusion:
The appeal was allowed, and the demand for differential duty liability, confiscation, and penalty was set aside. The Tribunal pronounced the order in the open court on 07/09/2021.