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TMI Blog2015 (9) TMI 1196X X X X Extracts X X X X X X X X Extracts X X X X ..... e a transfer on the hire-purchase system or by any system of payment by any installments. We find in the present case that there is no transfer of property or hire-purchase system involved nor there is a system of payment by installments. Thus there appears to be no sale in the use of the Set Top Box by the ultimate consumer. During the course of arguments it emerged that Dish TV had recovered damages from the subscribers in case a Set Top Box is damaged. In such cases the replacement box is sold to the subscriber at a cost. Therefore in such cases, as an element of sale is involved, CVD would be payable under Section 4A of the Act. Accordingly, it is ordered that assessment be done and duty be paid on MRP basis in such cases. Set Top Boxes imported by the appellants are not leviable to CVD on RSP/MRP basis in terms of Section 4(A) of the Central Excise Act except for the Set Top Boxes actually sold - Decided partly in favour of assessee. - Appeal No. C/85563, 85564/2014 - Final Order Nos. A/2349-2350/2015-WZB(CB) - Dated:- 31-7-2015 - Mr. P.S.Pruthi and Mr. Ramesh Nair, JJ. For The Appellant : Shri T. Viswanathan Advocate with Ms. Srinidhi Ganeshan, Advocate, Shri K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clare on the imported goods the retail sale price (hereinafter referred as RSP). The goods are also notified under Notification No. 49/2008-CE dated 24/12/2008 for the purpose of levy of CVD on MRP basis under Section 4A. Thus the adjudicating authority ordered assessment of STBs for levy of CVD under Section 4A of the Act. This order was upheld by the Commissioner (Appeals). The appellant are in appeal before us against the order of Commissioner Appeals 4. The submissions of the Ld. Counsels for both appellants are, by and large, the same. The first submission is that the goods i.e STBs are not intended for retail sale. Therefore there is no requirement under the Legal Metrology (Package Commodity) Rules, 2011(referred hereinafter as PC Rules) to declare the RSP on the STBs. Further the terms and conditions on the subscriber application form (SAF) filled by subscribers at the time of installation of STBs clearly mention that STBs shall remain the property of the appellant and if the STB is given under a scheme on security deposit basis, the same shall be refunded only if the STB is returned in proper working condition. It was emphasized that STBs are not sold, they are merely e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance Communication Infrastructure Vs. CC [2012 (279) ELT 85 (Tri.-Del.] and Dish TV India Ltd. Vs. Commissioner 2013 (298) ELT 563 is misplaced because in those cases relating to the period prior to 1/4/2012, the appellant were showing the transfer of STBs on rental basis in the invoices and VAT was paid. Therefore, it was held that the SAD refund is admissible because the transaction amounted to deemed sale in the context of 'right to use'. He relied on the judgment in the case of NESCO Pvt. Ltd. [1985(19) ELT 15] to state that the definition of deemed sale in Article 366(29A) cannot be used in Section 4A of the Central Excise Act. It was pointed out when the definition of sale is provided in Legal Metrology Act the same has to be adopted by virtue of Section 3 of this Act which provides that provisions of this Act will override provisions of other Acts in case of conflict. In response to the AR's argument that under TRAI Regulations the STBs have to be sold or rented, the Counsels argued that TRAI Regulations do not put an embargo on providing any other option to the subscriber apart from the schemes of sale, rental or hire purchase. They also stated that if the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been treated as miscellaneous expenses and not shown as capital goods. Regarding the case of Idea Mobile (supra) relied upon by the Counsels, he stated that the said case dealt with levy of sales tax on telephonic service and not on telephones which is left open. He disagreed that the present case is a case of import by institutional consumers which does not come under the purview of PC rules by citing the case of Jayanti Food Processing (P) Ltd(supra) which also dealt with supply of telephones to institutions such as MTNL/BSNL. 5.1 The next contention of the Ld. A.R. is that the appellants were not transparent in disclosing the schemes offered to the consumers. He referred to an Order passed by the Competition Commission of India in case No. 2/2009 of Consumer Online Foundation Vs. Tata Sky, which at para 1.4(x) states that TRAI stipulation requires every Service Provider to give the consumer three options with respect to STBs, namely outright purchase/hire purchase/rental. The appellant had stated in the proceedings before the Competition Commission that they are complying with TRAI Regulations. AR stated that appellant have to follow one of the three options and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ognate expressions, means transfer of property in any weight, measure or other goods by one person to another for cash or for deferred payment or for any other valuable consideration and includes a transfer of any weight, measure or other goods on the hire-purchase system or any other system of payment by instalments, but does not include a mortgage or hypothecation of, or a charge or pledge on, such weight, measure or other goods; The Legal Metrology (Packaged Commodities) Rules, 2011 (k) retail package means the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein and includes the imported packages; Provided that for the purposes of this clause, the expression ultimate consumer shall not include industrial or institutional consumers; (l) retail sale , in relation to a commodity, means the sale, distribution or delivery of such commodity through retail sales shops agencies or other instrumentalities for consumption by an individual or a group of individuals or any other consumer; (m) retail sale price means the maximum price at which the commodity in packaged form may be sold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /0491/2004. In this case concerning the Madhya Pradesh Entry Tax Act, the Hon'ble Supreme Court was dealing with the definition of sale whose scope is enlarged by Art 366(29A) by including transfer of goods in the 'execution of Works Contract'. Nevertheless the Apex Court held that the intention of the legislature in excluding 'execution of works contract' from the definition of 'sale' in the Madhya Pradesh Act is manifest and this clearly reflects in the letter of law. Apart from this judgement, we find Section 3 of the Legal Metrology Act clearly provides that in case of inconsistency with the provisions of any other Act, the provisions of the Legal Metrology Act, will prevail. Therefore, it is beyond doubt that the definition of 'sale' which ought to be considered in the present case before us is the definition stated in the Legal Metrology Act. 7.1 This leads us to examine the facts with reference to that part of definition of sale which requires that there should be transfer of property. That is, whether on the basis of evidence it can be established that there is transfer of property in the transactions between the appellant and the ulti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orted in our view by the decision of the Hon'ble High Court of Karnataka in the case of Bharati Airtel Ltd. MANU/KA/0011/2010 in which it was held that 'the emphasis under the provisions of the Act and the Rules is in respect of commodities which are intended for sale, by themselves. Though the commodities in question are displayed in packed form they are not meant for sale by themselves. It is always coupled with or incidental to the subscriber availing the services provided by the petitioner. Further, as there is clearly an agreement by the subscriber to surrender the devices on termination of the contract, it cannot he said that there is any element of sale involved. The suggestion on behalf of the respondents that the petitioner has devised a way to include the cost of the device into the service charges that are imposed, cannot be accepted as a finding of fact without there being an adjudication in this regard.' 7.3 Revenue has adduced no evidence whatsoever to show that the cost of STBs is being passed on as service charges. In the absence of any credible evidence, we reject the contention of Revenue that the appellants have devised a way to build the cost of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to TRAI Regulations. According to Revenue, TRAI Regulations mandate that the subscribers must be given an option for outright purchase or hire-purchase or rent. It is rightly contended by the Ld. Counsel that TRAI Regulations do not expressly prohibit the provision of service under any other Scheme. However it is our considered view that notwithstanding the TRAI Regulations, the statutory provisions of the Legal Metrology Act cannot be ignored. We have discussed these provisions in some detail above to come to the conclusion that there is no sale of the STBs. Whether TRAI guidelines are followed or not is a matter to be determined by the appropriate authorities. Here we are concerned only with the application of the Customs Tariff Act, Central Excise Act and the Legal Metrology Act which is specifically referred to in Section 3(2) of the Customs Act. It is under these Acts that we have to determine whether RSP based assessment is warranted or not. Therefore on this point Revenue has no case. 9.1 Another argument put forth by Revenue is that because the transaction between the service provider and the customer has a warranty Clause, therefore it can be said that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the exemption clause in Rule 34. 10.1 We also note that the same Apex Court judgment at para 29 stated that : It was then suggested that the free gift by Pepsi to its customers would amount to distribution and would, therefore, be amounting to 'retail sale' and the package of KITKAT would be 'retail package'. However, what is material is the definition of 'retail sale price'. The requirement of Rule 6(1)(f) is specific. It requires the retail sale price of the package be printed or displayed on the package. If there is no sale involved of the package, there would be no question of Rule 6(1)(f) being attracted. There is a clear indication in the definition of 'retail sale price' as provided in Rule 2(r) which clearly explains that the MRP means the maximum price at which the commodity in packaged form 'may be sold' to the ultimate consumer. Thus, the definition of 'sale' in section 2(v) of the SWM Act becomes relevant. Therefore, unless there is an element of sale, as contemplated in Section 2(v), Rule 6(1)(f) will not be attracted and thus such package would not be governed under the provisions of SWM(PC) Rules which wou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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