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TMI Blog2025 (3) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... ter alia, additional duty of customs without declaration of RSP mentioning in the Bill of Entry as 'not for retail sale' and consequently claimed exemption from application of Section 4A of the Central Excise Act, 1944 in computing CVD component. Alleging that the imported goods are required to be declared and assessed for CVD on the basis of RSP and also alleging that the RSP declared by the appellant in certain cases not correct, as later it was sold at higher price, show-cause notice was issued to the appellant for recovery of duty short paid Rs.1,86,92,939/- along with interest and penalty, with proposal for confiscation of the goods under various provisions of the Customs Act, 1962. On adjudication, the demand was reduced to Rs.1,22,88,757/- with interest and equivalent penalty under Section 114A of the Customs Act; penalty of Rs.40.00 lakhs under Section 114AA of the Customs Act imposed on the company; penalty of Rs.5.00 lakhs imposed on Shri Vijay Kumar Sujhani and penalty of Rs.2,50,000/- each on Shri Nitish Hegde and Smt. Meherunissa under Section 112 and Section 114AA of the Customs Act, 1962 respectively. Hence, the present appeals. 3.1. At the outset, the learned advoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed reliance on the judgment of this Tribunal in the case of Hi-Tech Computers Vs. CC, Bangalore [Final Order No.20729-20731/2024 dated 29.04.2024]; Starlite Components Ltd. Vs. CCE [2012(286) ELT 43 (Tri. Mumbai)]. 3.3. Further the learned advocate has submitted that the definition of institutional consumer or industrial consumer as laid down under Rule 2(bb) of the Legal Metrology (Packaged Commodities) Rules, 2011 means those persons who procure goods directly from the manufacturers/packer and in the case of imported goods, the definition of 'industrial consumers' to be held that those persons who procure goods directly from the importer since the obligations of the importer under Legal Metrology Act in respect of imported goods is similar to that of a local manufacturer/packer in respect of manufactured goods. Further, they have referred judgment in the cases of Henkel CAP Pvt. Ltd. Vs. CC(Import), JNCH, Mumbai-II [2012(282) ELT 566 (Tri.)] and UT Starcom Inc. Vs. CC (Port-Import), Chennai [2019(370) ELT 937 (Tri. Chennai)](affirmed in 2020(371) ELT A47 (SC)) wherein it is held that importer was not required to comply with the compliances relating o retail sale as the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f applicable CVD and also on declaring the goods 'not for retail sale'; hence, invocation of extended period of limitation and imposition of penalty is unsustainable. 4.1. Per contra, learned AR for the Revenue has submitted that the reliance placed on the judgment of EWAC Alloys Ltd. by the appellant is misplaced as the adjudicating authority has clearly distinguished the applicability of the said judgment. It is observed in the said case that the assessee was either sold directly or through their stockists and meant for industrial used only whereas in the case at hand, it is not so. The thrust of the argument of the appellant in the said case was that industrial goods are not subjected to RSP assessments. Even in the case of CCE Vs. Madras Cements [2019(11) TMI 1784, the Revenue's appeal was dismissed; however, it was made clear that where the sale was not found to be in favour of the industrial or institutional consumers, the concession in question shall not be available. He has submitted that packages of more than 25 kgs have been excluded from the purview of the present demand notice and the amount has been calculated on the basis of the data provided by the appellant. He has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue involved in the present case relates to determination of applicability of MRP/RSP based assessment of imported goods cleared to/meant for industrial consumers as declared by the appellant in their Bills of Entry as "NOT FOR RETAIL SALE". 7. Undisputed facts of the case are that during the relevant period June 2008 to November 2012, the appellant had imported lubricants and lubrication preparations of various brands. They have declared in their Bills of Entry filed against the said imports 'not for retail sale' and claimed assessment of additional customs duty (CVD) on assessable value + BCD instead of MRP/RSP based assessment. It is alleged that in terms of Notification No.14/2008-CE(NT) dated 01.03.2008 as amended, lubricant oils and lubrication preparations falling under Chapter heading 2710 and 3403 are assessable to duty under Section 4A of CEA, 1944 for payment of additional duty of customs(CVD) under sub- section (1) of Section 3 of Customs Tariff Act, 1975. The appellant by declaring the goods in the Bills of Entry 'not for retail sale' claimed exemption from application of Section 4A of CEA, 1944 claiming that these goods were cleared to industrial consumers directly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon'ble Karnataka High Court in the case of EWAC Alloys Ltd. (supra) observing that in the said case, the manufacturer of welding electrodes sold the goods through their stockists to industrial consumers which is not the present case as the appellant being an importer sold the imported goods through their dealers; hence the ratio laid down in the said judgment is not applicable to the facts of the present case. 10. We find that the learned Commissioner has misinterpreted the said judgment of the Hon'ble Karnataka High Court which was later upheld by the Apex Court in Writ appeal No.1770/2012 on 24.01.2020. In the said judgment, Hon'ble Karnataka High Court was confronted with the interpretation of the definition, scope and meaning of industrial consumer and institutional consumer as prescribed in Rule 2A of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Their lordships held as follows:- "24. Therefore, Rule 34 expressly exclude the application of Rule 6 to any package containing a commodity if the marking on the package unambiguously indicates that it has been specially packed for the exclusive use of any industry as raw material or for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nition of retail package. It was made clear that it is only those 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, Rule 6 is attracted. The proviso makes it clear that the expression, 'ultimate consumer' used in the definition 'retail package' did not include industrial or institutional consumer. Therefore, the legislature has again expressly excluded from the operation of these Rules, the industrial or institutional consumer. 26. Now the dispute is, are the words, industrial or institutional consumer used in proviso to Section 2-A(b) to be given the same meaning as given in the explanation to Rule 2-A. In case of Rule 2-A, as is clear from the explanation, the consumers who buy packaged commodities directly from the manufacturers are excluded from the purview of Chapter II. In other words, the requirement of Chapter II are not attracted to the packages purchased directly from manufacturers. However, in the case of retail package, it is not necessary that the industrial or institutional consumer should purchase the packaged commodities from the manufacturer. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacturer. In the case of retail package, the manufacturer of goods meant for industrial use may not be able to supply the goods directly. Therefore, they may take the assistance of a stockist. If the customers are speared 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 cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclared at the time of import will also have no significance.; hence, the demand on this count cannot be sustained. 12. This Tribunal in the case of Hi-Tech Computers (supra) following the judgment of this Tribunal in the case of Starlite Components Ltd. (supra) in similar circumstances held that the goods imported and cleared to industrial consumers cannot be assessed to CVD under Section 4A of the Central Excise Act, 1944. 13. On the issue of demand confirmed on SAD, though not separately mentioned in the Order, we find that the claim of the appellant is that in most of the cases, they have cleared the imported goods on payment of SAD; however, in few/stray cases even though, they have not paid SAD at the time of its import but later cleared on payment of applicable Sales Tax on sale of such goods, hence the demand on this count also not sustainable. The Notification allowing exemption from SAD as was in force during the relevant time reads as follows:- Special CVD - Exemption to all goods when imported for subsequent sale In exercise of the powers conferred by sub- section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, on being satisfied t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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