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TMI Blog2014 (8) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... contained in packages of 10 grams of 10 ml. or less, the activity of labelling/re-labelling would amount to "manufacture" as there is no statutory requirement of undertaking the said activity before their import can be allowed. However, the appellant would be eligible to take cenvat credit of the CVD paid on such goods. Further, as the entire activity was undertaken with the knowledge and permission of the Customs authorities, the allegation of suppression of facts does not sustain and the duty demand is sustainable only for the normal period of limitation. Since the issue relates to interpretation of law, there is no warrant for imposition of any penalties. Thus the matter is remanded back to the adjudicating authority only for the limited purpose of re-computation of duty demand for the normal period and allowing cenvat credit of the CVD paid on the imported goods, subject to the appellant producing the necessary documentary evidence in this regard. - Decided partly in favour of assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... to discharge excise duty liability of these goods. 6. The learned Counsel for the appellant submits that the activity of affixing labels and declaring MRP on the imported goods are mandatory vide DGFT Notification No. 44 (RE)-2000)/1997-2002 dated 24/11/2000 and these activities ought to be undertaken by every importer before effecting clearance for home consumption. Inasmuch as the activity has been undertaken before clearance for home consumption, the goods remain imported goods and there cannot be any question of 'manufacture' so as to attract excise levy. He further submits that there are two types of goods imported by the appellant. The majority of the goods imported by the appellant are in packages of above 10 grams or 10 ml. and in respect of these goods, counter-vailing Duty (CVD) is leviable and is discharged on the basis of the MRP declared. The MRP remains the same when the goods are marketed in the Domestic Tariff Area (DTA) and the basis for levy of excise duty is also MRP. Therefore, in respect of the goods contained in packages of above 10 grams or 10 ml. the entire exercise is revenue neutral and there is no additional duty liability accruing and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me both before as well as after imports. However, in respect of goods in packages of 10 ml. or 10 grams or below there is no statutory requirement of labeling/affixing MRPs either under the Packaged Commodity Rules or under the Drugs and Cosmetics Rules. Since customs duty liability has been discharged on such goods on the transaction value and there is an increase in the transaction value when the goods are cleared into DTA, additional excise duty liability would accrue. It is his contention that the position will not change even after 26/02/2010, when the activities were undertaken under Customs bond and therefore, it his plea that duty demand in respect of the goods contained in packages less than 10 ml. or 10 grams would be clearly sustainable. Consequently, interest liability would accrue and penal consequences would ensure. 8. We have carefully considered the submissions made by both the sides. 8.1 We have perused the Notification No. No. 44(RE)-2000/1997-2002 dated 24/11/2000 wherein restrictions have been laid on 131 items for retail sales subject to provisions of the Standards of Weights and Measures regulations. As per these regulations the following procedure has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the shortage of space in the various CFSs. 2. DGFT Notification RE 44/2000 provides for labelling of all goods imported into India which are covered by the provisions of Standards of Weights and Measures (Packaged Commodities) Rules, 1977. The compliance of this condition has to be ensured before the import consignment of such commodities is cleared by Customs for home consumption. Thus, the goods have to be suitably labeled before they are released for home consumption. 3. In view of the difficulties faced by the Importers in labeling the goods in CFSs in compliance of DGFT Notification RE44/2000, it has been decided that henceforth the importers will have the option of labelling such goods under bond. 4. The trade should ascertain that such marking/labelling facility, space, is available in the warehouse prior to exercising this option. In such cases the importer may file Warehousing Bills of Entry. The Assessing Group will give suitable directions to Docks staff to allow bonding of the goods without labelling and with endorsement on the warehousing Bill of Entry that verification RE 44/2000 markings to be done prior to de-bonding by Bond Superintendent. The goods will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unless there exists a statutory interdict, common law principle would apply which would mean that import would be complete when the goods enter the territories of the country Taxable event in terms of the notification issued under Section 9A of the Customs a Tariff Act, 1975 is on importation of the good and not when the same passes the customs barrier." 8.5 A plain reading of the above decisions make it clear that so long as the goods remain under the Customs control, they cannot be said to have been imported into India. In the present case both after and prior to 26/02/2010, when the appellant was undertaking the activity of labelling in the Customs bonded warehouse or in a private warehouse on execution of bond and bank guarantee with the Customs, control of the goods remained with the Customs and importation of goods could not said to have been completed. Therefore, the question of 'manufacture' attracting excise duty liability would not arise at all before the goods are cleared for home consumption. In this view of the matter, the impugned duty demands are clearly unsustainable in law in respect of goods where there was a statutory requirement of affixing the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nded period of time for demand of duty is clearly not sustainable in law and the duty demand would sustain only for the normal period of limitation. Since in the impugned orders, these factors have not been considered, the matter has to go back to the adjudicating authority for re-computation of the demand. Since the matter relates to interpretation of law relating to 'manufacture' and valuation, imposition of penalty is not at all called for. 9. To sum up, our findings and conclusions are as follows:- (1) The excise duty demand on imported goods contained in packages of above 10 grams or 10 ml. is not sustainable in law as the activity of labeling/affixing MRP is a statutory requirement before goods are allowed to be cleared for home consumption and therefore, the import is complete only after these activities are undertaken. Further no additional excise duty liability accrues as the additional customs duty (CVD) liability has been discharged on the MRP affixed and the entire exercise is revenue neutral. (2) As regards the goods contained in packages of 10 grams of 10 ml. or less, the activity of labelling/re-labelling would amount to "manufacture" as there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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