By TIOL News Service

NEW DELHI, JAN 16, 2014: THE facts of the case are that M/s. R.V . Solutions Pvt. Ltd. got cleared a consignment of mobile phones on payment of duty. Present appeal relates to 27 past consignments and one live consignment. Demand of Rs.70 ,51,612 /- has been confirmed against the importer on account of under valuation and mis -declaration of goods alleged by the Revenue. Penalty of Rs.1 crore has been confirmed on the importer and Penalty of Rs.75 lakhs each has been imposed on Shri Rajiv Seth, Director of imporing company and Shri GR Bagri, exporter.

There is no basic customs duty and countervailing duty on the goods in question. Goods are liable to NCCD at the rate of 1% of Retail Sale Prices and Education Cess at the rate of 2% of quantum of NCCD . The goods are also liable to Special Additional Duty (SAD) at the rate of 4% of the assessable value as determined under Section 14 of the Customs Act, 1962.

Out of 28 consignments, in 27 consignments goods were cleared after payment of duty at the declared value. Under a customs notification, importer is eligible for refund of SAD subject to fulfilment of the conditions of the notification. In the present case also, importer was granted refund of SAD paid by them on clearances of the goods. Had value of goods been loaded to USD 55 per piece at the time of clearances of the goods, importer would have got the refund of duty payable at the enhanced value. Out of total demand of Rs.70 ,51,612 /-, SAD portion is approximately Rs.54.18 lakhs and the balance amount of Rs.16.32 lakh pertains to NCCD and Education Cess.

The Member (J) felt that differential SAD now being confirmed against the assessee, by way of impugned order, is also eligible to be refunded to them, thus making the entire situation revenue neutral. As regards the balance amount of duty, falling under the category of education cess and higher education cess, totally amounting to Rs.16.32 lakhs, she found that the appellant's bank guarantee of Rs.13.98 lakhs is sufficient to cover the said amount. She accordingly directed the appellant to keep the said bank guarantee alive during the pendency of the appeal subject to which balance amount of duty and penalties imposed upon all the applicants shall stand waived and its recovery stayed during pendency of the appeal.

Member (T) did not agree with her and he ordered pre-deposit of 75% of the duty demanded.

Matter went to the Third Member who agreed with Member (J) and noted that the appellant importer has a strong prima facie case in his favour in respect of quantum of SAD for waiving of pre-deposit and importer is required to make pre deposit only in respect of NCCD and Education Cess. Since the importer has executed a bank guarantee of Rs.13.98 lakhs, Revenue interests are safeguarded if bank guarantee is kept alive during the pendency of appeal.

In view of the majority decision, Stay was granted.

(See 2014-TIOL-79-CESTAT-DEL)