By TIOL News Service

MUMBAI, MAY 17, 2013: THE applicants are engaged in the manufacture of motor vehicles and are importing motor vehicle parts. At the time of import of the motor vehicle parts, the applicants were declaring MRP for the purpose of payment of CVD and automobile cess. The applicants were availing CENVAT credit of the CVD paid.

The imported automobile parts were cleared to domestic market after repacking. As the automobile parts are specified goods leviable to Central Excise duty as per Section 4A of the Central Excise Act, the applicants declared MRP for the purpose of payment of Central Excise duty.

The eagle eyes of the jurisdictional officers smelled a rat here.

It was observed that the applicants were declaring higher MRP for the purpose of CVD to the Customs authorities but were paying Central Excise duty after repacking on a lower MRP.

Therefore, SCNs for demanding differential Central Excise duty were issued and the same were confirmed by the adjudicating authority along with penalties & interest.

Since the lower appellate authority upheld the demands, the applicant is before the CESTAT seeking a waiver of pre-deposit of duty of Rs.94,37,794/- and Rs. 12,36,739/-, interest and penalties.

It is informed that they had already paid an amount of Rs. 46,59,000/- during the pendency of the investigation. It is further submitted that the applicant is required to pay CVD on the imported automobile parts on an amount which is 2.5 times of the FOB less abatement. Inasmuch as the Customs authorities, in the cases where MRP declared on the packing is less than 2.5 times of the FOB value, had enhanced the same for the purpose of payment of CVD. As such, the appellant had paid the CVD as per the assessment made by the Customs authorities.

Further, when the automobile parts were cleared after repacking, the appellants were fixing the “actual MRP” and paying Excise duty accordingly and hence the demands are not sustainable.

The Revenue representative reiterated the findings of the lower authorities and also relied upon the copy of a Bill of Entry which is on record and where the applicant declared MRP in respect of the imported automobile parts which is much more than the MRP declared for the purpose of Excise duty. It is also submitted that there is no evidence on record that MRP declared by the appellants to the Customs authorities were enhanced by the Customs authorities; that the goods were assessed to CVD by the Customs authorities as per the MRP declared by the applicants and hence the demands are rightly made.

The Bench observed -

“8. We find that the applicants made import of automobile parts which are liable for CVD and for the purpose of CVD the applicants declared an MRP to the Customs authorities and the goods were assessed and appropriate duty was paid. The applicants availed credit on the CVD paid on the automobile parts. Thereafter the parts were cleared to domestic market after repacking which amounts to manufacture as per the Chapter Note to Chapter 87 of the Central Excise Tariff by declaring the MRP which is much less than the MRP declared to the Customs authorities. There is no valid explanation by the applicants regarding the lower MRP for the purpose of Excise duty. There cannot be different Retail Price for the purpose of CVD and for the purpose of Excise duty in respect of the same goods.”

Holding that the applicant had failed to make out a case for waiver of the pre-deposit of the dues, after taking into account that the applicant had already paid an amount of Rs.46,59,000/- during investigation, the Bench directed the applicant to deposit the remaining amount of duty and report compliance for obtaining stay.

Desh ki dhadkan - On our part, we will keep you informed.

(See 2013-TIOL-746-CESTAT-MUM)