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TMI Blog2024 (12) TMI 1154X X X X Extracts X X X X X X X X Extracts X X X X ..... ? - HELD THAT:- The goods are meant for supply to Govt of Jharkand. The label also clearly states that the goods are not meant for retail sale to any individual but are meant for bulk sale to Govt. of Jharkand Hospitals only. On going through the Sl. No.40 of Notification No.14/2008-CE (NT) dated 01.03.2008 issued under Section 4A of the Central Excise Act, 1944 on which Department has placed reliance to hold that the goods are liable for MRP based assessment, we find that Sl. No.40 covers goods of Heading 34.02, which are in the form of bars, cakes, moulding pieces or shapes - In the present case, the appellants have imported the goods under CTH 3402 90 99 and are in liquid form and not in the form of bars, cakes, moulding pieces or shapes. Hence, the view of the Revenue that the goods are required to be assessed in terms of Section 4A of the Central Excise Act, 1944, for arriving at the CVD to be paid cannot be subscribed. Thus, the MRP based Section 4A value cannot be used for calculating the CVD. The Revenue is in error in applying the Section 4A valuation method to arrive at the CVD on the imported goods. Therefore, holding that the enhancement of Duty on this count is legally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods were covered by Sr. No.40 of Notification No.14/2008-CE (NT) dated 1-372008 issued under Section 4A of the Central Excise Act 1944 and required affixing of RSP and were liable to be assessed to additional duty of Customs (CVD) on the RSP. As no RSP was declared, the RSP is taken as three times the import value. 3. After due process, the adjudicating authority confirmed the demand. On appeal, the Commissioner (Appeals), dismissed their appeal. Hence, the appellant is before the Tribunal. 4. The Ld. Counsel appearing for the appellant makes the following submissions: 4.1. It is submitted that the goods were imported for Government of Jharkhand, Health Department, for use in their Hospitals; the Appellant supplied the said goods to the Government of Jharkhand, Health department through Messrs. Nand Kishor Fogla to whom the Tender was awarded by the said Government. It is pointed out that as per the terms and conditions of the Government Order/ tender, the goods were required to bear a Label mentioning Govt. Of Jharkhand Supply, not for Sale and accordingly, the goods carried such Label mentioning Govt. of Jharkhand Supply, not for Sale . Copy of the said Government Order/ Tend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supply and Distribution Agreement with foreign supplier [on Paragraphs 3 and 5 of the said Agreement] for contending that the price in the present case was FOB and not CIF, which is ex-facie erroneous and totally misconceived; a bare perusal of the said Agreement would show that the said paragraphs 3 and 5 apply to the product, which as per the very first recital of the agreement and definition clause 1.2 is the active ingredient known as Microgen Quat-80 and which, as per the said paragraph 5, was to shipped FOB Ex-Works Mijdrecht, the Netherlands. In this regard, it is submitted that the goods imported in the present case are not the said active ingredient known as Microgen Quat- 80 , but is the final product D-125-Lavender and the same is not shipped from Netherlands, but is shipped from USA. Accordingly, they contend that the FOB terms mentioned in the said agreement are not in respect of the imported goods; that as far as the imported goods are concerned, it is clear from the foreign supplier's invoices and the Straight bills of lading and insurance policies that the goods were shipped from USA on CIF basis. 4.6. In view of the above, it is submitted that the addition of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods, is not satisfied. 4.10. The appellant have also submitted that the goods in the present case were imported for Government of Jharkhand, Health Department, for use in their Hospitals; as per the terms and conditions of the Government Order/ tender, the goods were required to bear a Label mentioning 'Govt. of Jharkhand Supply, not for Sale . Accordingly, the goods carried such Label mentioning Govt. of Jharkhand Supply, not for Sale . The foreign supplier's invoices also mentioned Govt. Of Jharkhand Supply . This is in dispute. 4.11. Since the goods were imported for supply to the Government of Jharkhand, Health department, for use in their Hospitals, and also carried a Label to that effect, the appellant submits that it is clear that the goods were for Institutional Consumer and therefore cannot be called as a Retail Package intended for Retail Sale to the ultimate consumer; Rule 2 (p) of the Standards of Weights and Measures (Packaged Commodity) Rules 1977 defines Retail Package to mean packages which are intended for retail sale to the ultimate Consumer for the purpose of consumption Of the commodity contained therein; the proviso thereto excludes industrial and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs of customs. Merely because the same documents filed by the Appellant, the audit subsequently takes a different view, that cannot justify the invocation of the larger period of limitation. (v) Further as held in the following decisions, merely because the audit department subsequently took a different view on the legal interpretation of the issues, that cannot justify confiscation of the goods under Section 111 (m) of the Customs Act 1962 and imposition of penalty: a) Lexmark International (I) P. Ltd. v. Commr. of Cus. (Imports), Nhava Sheva [2011 (274) E.L.T.556 (Tri. Mum.)] b) Commr. of C.Ex. S.T., Jaipur-II v. Arora Products [2018 (359) E.L.T. 604 (Tri. Del.)] 6.1. Accordingly, the appellant submits that the confirmed demand may be set aside even on account of time bar. 7. The Ld. Authorized Representative appearing on behalf of the Revenue submitted as under : - i. The foreign Supplier's Invoices did not mention terms of payment and that therefore the price must be considered as FOB. ii. Clause 3 of the Agreement dated 17th June, 2006 shows that the price of product does not include shipping cost. iii. It is stated that as per the Airway Bill the Shipper is Troy Chemicals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voice is CIF, which has been already adopted by the appellant for payment of Customs Duty. 12.2. The appellant has submitted copies of the Bills of Entry, Invoices, BL and Insurance, etc., in their Synopsis (page Numbers 10 to 53). Some of the important documents are extracted below : Marine Policy: Freight Bill: Bill-of-Lading: Pick Ticket: Product Label: Commercial Invoice: 12.3 A careful perual of the above documents clarifies as under : - (i) The Marine Policy has been issued by ACE USA, with the assured being Microgen USA. The premium stands paid by the exporter. (ii) The Airway Bill states the amount of freight to be paid as Agreed . This shows that the freight is paid by the overseas party. (iii) The Bill of Lading, referring to the freight payment, states that the freight is to be billed to Microgen Inc., USA (iv) The Invoice raised by Microgen Inc. states tha the goods are meant for supply to Government of Jharkand supply 12.4. On a factual matrix, after going through all the above documents, we find that the appellant has provided proper documentary evidence to the effect that the freight and insurance has been borne by the foreign party. There is nothing to indicate in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eared over the country and if the manufacturing unit is in one part of the country and they want to concentrate on manufacturing activity, they may not have resource or ability to arrange for the sale of their product through out the country. In those circumstances, it is quite but natural that they need middle men or stockist as distributors, through whom they would distribute their product or sell their products to an industrial or institutional user. In such an event, that packaged commodity cannot be construed as a retail package. Therefore, after deleting Rule 34(a), in the very definition of retail package , the legislature while defining the meaning of ultimate consumer to whom a retail package is meant, excluded institutional or industrial consumer. 30. Therefore, a harmonious reading of these provisions, keeping in mind the object with which the Act is passed, it is reasonable to arrive at the conclusion that the meaning assigned to industrial consumer and institutional consumer in the explanation 2-A cannot be attributed to the meaning of those consumers in proviso to Rule 2(p) . Rule 2(p) and Rule 2-A operate in distinct and separate fields. Therefore, the object is very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) The impugned notices are hereby quashed. (iii) Parties to bear their own costs. (Emphasis supplied) 12.9. We also refer to the decision rendered by the Tribunal at Mumbai in the case of M/s. Charms Cosmetics Pvt. Ltd. v. Commissioner of Central Excise, Pune-I [2017 (352) E.L.T. 197 (Tri. Mumbai)], wherein it has been held as under: - 12. An institutional consumer, by implication of the definition of the said expression, is undoubtedly a point of sale to customer; the customer, however, is clearly distinguishable as a recipient of the service provided by such institutional consumer. So it is with the Canteen Stores Department. Goods procured in bulk are supplied to the members of the armed forces of the Union. The goods are procured through a competitive bidding process with prices fixed for a specified period. [The] procurement price has naught to do with the maximum retail price even if affixed on the goods for reasons other than statutory compliance . 13. That a maximum retail price is affixed on the impugned package does not, of itself, render the goods liable to comply with the provisions of the law relating to maximum retail price - whether that of legal metrology or of lev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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