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TMI Blog2010 (12) TMI 1027X X X X Extracts X X X X X X X X Extracts X X X X ..... S/Shri M.V. Ravindran, P. Karthikeyan, JJ. Shri G. Shivadass, Advocate, for the Appellant. Shri P.R.V. Ramanan, Special Counsel, for the Respondent. [Order per : P. Karthikeyan, Member (T)]. This is an appeal filed by M/s. ABB Limited, Bangalore. The appeal is directed against the order of the Commissioner of Customs, Bangalore dated 31-12-2008. Vide the impugned order, the Commissioner demanded differential Additional Duty of Customs (counterveiling duty, CVD) of Rs. 13,41,83,979/- (plus interest) short paid on various electrical goods imported by ABB. The Commissioner confiscated the imported goods of value Rs. 7,94,74,99,324/- under Section 111(m) of the Act and offered its redemption on payment of a fine of Rs. 40 Crores. The impugned order also imposed penalty equal to the duty demanded on ABB under Section 114A of the Act. The period of dispute is January 2003 to December 2007. 2. Facts of the case in brief are as follows. Pursuing intelligence that M/s. ABB Ltd., Bangalore (ABB) was importing electrical apparatus falling under Chapter Heading 85.36 of Customs Tariff Act, 75 (CTA) and Central Excise Tariff Act (CETA, 85) and selling the same from their war ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the assessee had deliberately mis-declared the classification of the goods imported and short paid the CVD applicable to the imported goods classified under CTH 8536. Accordingly he confirmed the duty of Rs. 13,41,83,979/-, imposed equal penalty, confiscated the goods and offered redemption on payment of fine of Rs. 40 Crore. 5. In the appeal filed before the Tribunal, ABB has submitted that it imported items such as Contractor, Manual Motor Starter, Soft Starter, Load Break Switch. The appellant was registered with the department as a dealer and traded in the above goods meant for industrial users and not for retail consumers. Part of the goods imported were used in the manufacture of finished goods. In either case, the impugned goods are used for further manufacture. 6. The following grounds are taken in the appeal. Standards of Weights and Measures Act, 1976 (SW M Act) and the rules framed thereunder applied only to those commodities which were meant for retail consumers. The impugned goods were meant only for industrial users and not for retail consumers. These were always meant for industrial use and therefore could not be treated as consumer products. 7. As was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of PC Rules. Rule 33 was omitted with effect from 13-1-2007. Sub-rule (1) of Rule 33 provided as follows : (1) All pre-packed commodities imported into India shall carry the following declarations :- (i) Name and address of the importer : Provided that the importer shall also declare on the package, the name and address of the manufacturer if not already given on the package : Provided further that the provisions contained in the first proviso shall be applicable only for the packages containing food articles, Explanation 1 : An importer is an individual company or firm whose name figures in the bill of lading/import documents as the importer. Explanation II : For the purposes of these rules, the importer s premises/address shall be taken as the manufacturer s/packer s premises/address. ................................ 7.1 There was no dispute that the name and address of the appellant s warehouse was mentioned in the Bills of Entry. Applying Explanations to Rule 33, the appellant s warehouse would be treated as importer s premises and as the exporting manufacturer s address. All actions undertaken at the appellant s warehouse would be deemed to have been underta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l sale price of such goods on the packages or declares a retail sale price which is not the retail sale price as required to be declared under the provisions of the Act, rules or other law as referred to in sub-section (1); or (b) tampers with, obliterates or alters the retail sale price declared on the package of such goods after their removal from the place of manufacture, then, such goods shall be liable to confiscation and the retail sale price of such goods shall be ascertained in the prescribed manner and such price shall be deemed to be the retail sale price for the purposes of this section. (emphasis supplied) With the above, provisions to empower the proper officer to ascertain the retail sale price were put in place. It is submitted that therefore, only with effect from 14-5-2003 when the above sub-section (4) was introduced under Section 4A, the RSP could be ascertained in situations described therein; one of them being non-declaration of retail sales price on the specified goods. Therefore, when the goods in question were excisable goods and were not affixed with RSP, sub-section (4) of Section 4A mandated that the ascertainment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id. Therefore, the impugned demand was a revenue neutral exercise. Moreover the goods imported had been assessed to duty after perusing the technical literature and allowed clearance by the customs. The appellants were under the bona fide belief that the impugned goods were classifiable under chapter heading 8538 and not under 8536. Therefore, the department could not have validly invoked extended period at a later stage based on the same documents relied on for assessment at the time of import. The demand of interest as well as penalty imposed are also challenged for the reason that the demand itself is not sustainable. 8. The Revenue has made the following submissions in support of the order under challenge. The learned counsel for the appellants had fairly conceded during hearing that the assessee used to classify the impugned goods under chapter heading 8536 and changed the practice by describing them as parts and classifying them under chapter heading 8538. This was obviously to escape determination of assessable value under RSP scheme. In the Bills of Entry, some of the goods were classified under chapter heading 8536. The assessee had made a mis-leading declaration in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8.3 ABB did not fulfil the requirement set out in Rule 33(3) of PC Rules that declarations were to be printed on a label securely affixed to the package or all the declarations be made on an additional wrapper and imported package be kept inside the additional wrapper or all declaration be printed on the package itself or all declaration may be made on a card or tape affixed firmly to the package or container and bearing the required information. This was a substantial condition for availing the exemption, which had not been complied with. 8.4 As regards the claim that the goods involved were exempted in terms of Rule 34 of PC Rules, where the packages bore marking that unambiguously indicated that they had been specially packed for the exclusive use in any industry as a raw material or for the purpose of servicing any industry, mine or quarry, our attention was invited to proviso to (iv) which reads as follows : (iv) any package containing a commodity to be sold by number or length and displayed for sale at the retail outlet. This sub-clause was one of the provisos to Rule 34(a) specifying exclusion from the exemption under sub-rule 34(a). It is submitted that the impu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the reason that the assessee failed to declare the same due to inadvertence or otherwise. As a residual method, for ascertainment of RSP, principles laid down in Section 4A was provided. It was clear that if the RSP was available or known, the only appropriate course would be to adopt the RSP of the product for assessment, even though the same may not have been declared on the Bills of Entry. The same logic applied to CVD. As RSP was available/known, non-mention of any method under Section 3 of CTA could not be regarded as a vitiating factor. The duty demand was based on the RSP applied by ABB for each clearance upon sale of the imported products; there was no need to ascertain the RSP by other methods. Declaring RSP of the goods being cleared on the relevant invoice was mandatory for assessment purpose. Marking on the package was a mandatory requirement only for indicating RSP to the consumers under the SW M Act and PC Rules. Similarly, in the case of import, declaration of RSP on the Bills of Entry in respect of specific goods was a mandatory requirement for CVD assessment and not mere marking of RSP on the package. 8.7 In the relevant Bills of Entry, the importer omitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice have been used as amounting to the same. By virtue of suppression of facts and mis-declaration, ABB evaded CVD to the tune of above Rs. 13 Crores. 9.2 As regards the charge of interest and imposition of penalty in respect of short paid CVD, ABB challenged the same relying on a judgment of the Hon ble High Court of Delhi in the case of Pioneer Silk Mills Ltd. [1995 (80) E.L.T. 507 (Del.)].This judgment on Additional Duties of Excise (Goods of Special Importance) Act, 1957 (ADA for short) could not be relied on to read the provisions of CTA, as the enabling provisions were substantially different as under : (a) ADA Section 3(3) - The provisions of the Central Excise and Salt Act, 1944, and the rules made thereunder, including those relating to refunds and exemptions from duty, shall, so far as may be, apply in relation to the levy and collection of the additional duties as they apply in relation to the levy and collection of the duties of excise on the goods specified in sub-section (1). (b) CTA Section 3(8) - The provisions of the Customs Act, 1962 (52 of 1962) and the rules and regulations made thereunder, including those relating to drawbacks, refunds and exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ka Forbes and Godrej GE Appliances (no citations mentioned) which discussed the applicability of provisions of SW M Act and PC Rules to consumer electronic goods, the facts were distinguishable from the facts of the case in hand. In the instant case, the subject products were imported by ABB in unit pre-packed condition. In the judgments cited, when the goods sold only in packed form but sold in single number, whether SW M Act and PC Rules would be applicable, had been answered in the affirmative. 9.4 The entry relating to 85.36 reads - Electrical apparatus for switching or protecting electrical circuits, or for making connections to or in electrical circuits (for example, switches, relays, fuses, surge suppressors, plugs, sockets, lamp-holders, junction boxes), for a voltage not exceeding 1000 Volts . The Controller of Legal Metrology had furnished an opinion relating to surge which is one of the many articles enumerated under the heading. Therefore the opinion covers all the articles covered by heading 85.36. The Revenue also relied on a judgment of Chennai Bench in the case of Micro Labs [2010 (251) E.L.T. 317] which upheld the confiscation of offending goods under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to which it is required, under the provisions of the Standards of Weights and Measures Act, 1976 (60 of 1976) or the rules made thereunder or under any other law for the time being in force, to declare on the package thereof the retail sale price of such goods, to which the provisions of sub-section (2) shall apply. (2) Where the goods specified under sub-section (1) are excisable goods and are chargeable to duty of excise with reference to value, then, notwithstanding anything contained in section 4, such value shall be deemed to be the retail sale price declared on such goods less such amount of abatement, if any, from such retail sale price as the Central Government may allow by notification in the Official Gazette. (3) The Central Government may, for the purpose of allowing any abatement under sub-section (2), take into account the amount of duty of excise, sales tax and other taxes, if any, payable on such goods. (4) Where any goods specified under sub-section (1) are excisable goods and the manufacturer (a) removes such goods from the place of manufacture, without declaring the retail sale price of such goods on the packages or declares a retail sale price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o India shall, in addition, be liable to a duty (hereafter in this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article ... . Explanation. - In this sub-section, the expression the excise duty for the time being leviable on a like article if produced or manufactured in India means the excise duty for the time being in force which would be leviable on a like article if produced or manufactured in India or, if a like article is not so produced or manufactured, which would be leviable on the class or description of articles to which the imported article belongs, and where such duty is leviable at different rates, the highest duty. (2) For the purpose of calculating under sub-sections (1) and (3), the additional duty on any imported article, where such duty is leviable at any percentage of its value, the value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment, if any, from such retail sale price as the Central Government may, by notification in the Official Gazette, allow in respect of such like article under sub-section (2) of Section 4A of the CEA. The common case of the parties is that such a notification was issued and retail price has to be determined in accordance with that notification. However, as rightly argued for the assessee, there is no provision in the CTA enabling the proper officer to determine RSP in a case where the importer does not declare the RSP on the imported package. 14. A notification was issued in terms of sub-section (4) of Section 4A of the CEA on 1 March 2008. The pertinent portions of the Notification No. 13/2008 C.E. (N.T.) under which Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 were issued are reproduced below : In exercise of the powers conferred by section 37 read with sub-section (4) of section 4A of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules, namely :- 1.(1) These rules may be called the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale price shall be taken as the retail sale price of all such goods. 6. If the retail sale price of any excisable goods cannot be ascertained under these rules, the retail sale price shall be ascertained in accordance with the principles and the provisions of section 4A of the Act and the rules aforesaid. (Emphasis supplied) These rules prescribe the manner of ascertaining the retail sale price of excisable goods under sub-section (4) of Section 4A of the Act where a manufacturer removes the excisable goods specified under sub-section (1) of the Act, inter alia, not declaring the retail sale price on the packages of such goods. Before the issue of this notification, there were no provisions prescribing the manner to ascertain RSP of such goods in the CEA. With the issuance of Notification No. 13/2008 dated 1-3-2008, RSP of the goods indigenously manufactured and not declared on the package by a manufacturer can be determined in terms of these rules. We find that before issue of these rules, there was no machinery prescribed to determine the RSP of excisable goods for the purpose of assessment under Section 4A of the CEA where the RSP is not declared b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er action was taken. It meant that ABB had not violated the provisions of SW M Act and PC Rules while engaging in the impugned transactions according to the authority competent to implement those provisions. We find merit in this submission of ABB. However, this claim was not raised before the lower authority and the facts have not been verified. 16. Revenue had argued that in the Notification issued under Section 4A(4) of CEA effective from 1-3-08, it was prescribed that RSP could also be determined following the principles governing fixation of RSP as provided under Section 4A(4) of CEA. These provisions applied retrospectively as it referred to the Section 4(A)(4) which existed all along. The method could be applied to determine CVD u/s 3(2) of the CTA. The Revenue had sought to support the demand invoking principle of purposive construction enunciated by the Apex Court in the case of Acer India Ltd. (no citation given) [2004 (172) E.L.T. 289 (S.C.)]. The Hon ble Apex Court had apparently held that principle of purposive construction had to be adhered to when literal meaning may result in absurdity. It was also argued that the Tribunal had upheld an order wherein the first app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, to pay Service tax, as receiver. By issuing the said Notification, Central Government intended to tax the service receiver from non-resident, with effect from 1-1-2005, which, in corollary would be that no service tax is payable by this category prior to 1-1- 2005. If that by (sic) so, then the amount paid by the appellant is not a tax, which the revenue cannot kept (sic) with it. 18. Excerpts from the Apex Court s judgment in the case of National Insurance Co. Ltd. (supra) were cited by the revenue in support of the claim that the retail sale price could be validly determined even in the absence of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 following the principles informing the legislative policy prescribing RSP as the value. We find that the judgment elaborately deals with interpretation of the language of a statute in such a manner to effectuate the intention of the legislature. In the case on hand, we are not faced with the task of interpreting a provision which can accommodate more than one meaning. We are also faced with the argument of the assessee that when RSP was not declared on the packages, the same had to be ascertained i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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