By TIOL News Service

MUMBAI, DEC 03, 2013: THE appellants have imported certain consignments of Molded Case Circuit Breakers (MCCBs) and Plugs and Sockets. The imported plugs and sockets were not individually packed and are received in a carton consisting of 10, 50 or 100 bare plugs and sockets for the purpose of easy transportation. The imported Plugs and Sockets are specifically packed for exclusive use and are not intended for retail sale. The goods were assessed to CVD under Heading 85.36. The goods of heading 85.36 were notified under Section 4A of the Central Excise Act, 1994 vide Notification 13/2002 dated 1 st March, 2002 as amended.

Investigation revealed that although the inner as well as outer carton was affixed with the label stating that the goods imported and specially packed are for the exclusive use in any industry as a raw material for the purpose of servicing any industry, mine or quarry and not intended for retail sale, the goods were allegedly sold to various non-industrial consumers at the MRP as per listed price list.

The proceedings culminated in the confiscation of goods and confirmation of duty demand of Rs.50,26,981/- by adopting the MRP along with imposition of equivalent penalty u/s 114A and a penalty of Rs.2,00,000/- was imposed on the then G.M. of the appellant Company u/s 112 of the Customs Act, 1962.

Before the CESTAT, the appellant submitted that it is a settled position that for the purpose of assessment of customs duties the form in which the goods are presented at the time of import should be taken into account. Inasmuch as since the goods undisputedly were not in the packaged form, in view of the decision of the apex court in the case of Jayanti Food Processing (P) Ltd. - (2007-TIOL-150-SC-CX) the goods do not fall for assessment u/s 4A of the CEA, 1944; that in cross-examination, each of the dealers admitted that the MCCBs were not sold by them in retail; all the packages of MCCBs clearly made unequivocal declaration - " Imported & specially packed for the exclusive Use in any industry as a raw material for the Purpose of servicing any industry, mine or Quarry and not intended for retail sale." Reliance is also placed on the decisions in Controls & Switchgears Contractors Ltd. - (2005-TIOL-173-CESTAT-DEL) for seeking exemption under rule 34 of the PC rules ; ABB Limited - (2011-TIOL-792-CESTAT-BANG) wherein it was held that there is no provisions in the Customs Tariff Act enabling the proper officer to determine RSP in a case where the importer does not declare RSP on the imported package. So also the judgment in P. Kasilingam & Ors. V/s. P.S.G. College of Technology &Ors.1995 Supp (2) SCC 348, wherein it is held that " the Act and the Rules form part of a composite scheme. Many of the provisions of the Act can be put into operation only after the relevant provision or form is prescribed in the Rules. In the absence of the Rules the Act cannot be enforced " is relied upon.

The Revenue representative reiterated the findings of the adjudicating authority and relied upon the decisions in Sushil Agarwal 2012 (283) ELT 337, Mahim Patram Pvt. Ltd. - (2007-TIOL-23-SC-CT) where it is held that when the machinery provision is explicitly provided in law there is no bar in adopting a reasonable provision to make the law operational.

The Bench observed that the department could not show that the factors as spelt out in the judgment of Jayanti Food Processing (P) Ltd. - (2007-TIOL-150-SC-CX) to include the goods in Section 4A(1) & (2) of the Act was satisfied in the present case as far as plugs and sockets and, therefore, the Commissioner's order regarding the assessment u/s 4A for the purpose of CVD in case of plugs and sockets is not sustainable and hence set aside.

In the matter of assessment of MCCBs, the Bench observed -

"So far as MCCBs are concerned undisputedly the MCCBs imported by the Appellants are not commodities in packaged form and the packing is meant only for the purpose of ease of transportation. From the capacity rating of the MCCBs also it is revealed the MCCBs are not intended for retail sale. The persons on whose statements the department relied upon in the cross-examination/re-examination they stated that the MCCBs were not sold by them in retail. From the three invoices relied upon also the department could not establish that the goods were meant for retail sale."

As regards the reliance by the department to the decision in Sushil Agarwal, the Bench noted as below -

"6.2.4 So far as the decision of the case Sushil Agarwal (supra) relied upon by the department is concerned, we find that the said order was passed on application under section 129E of the Customs Act, 1962 seeking waiver of pre-deposit. The order passed on the application of waiver of pre-deposit is based on prima facie view and dispensing with the pre-deposit cannot be inclusive. Similar view was held by the Hon'ble High Court in the case of Sir Harkishandas Narottamdas Hospital. Further the Hon'ble Supreme Court in the case of P.Kasilingam & Ors. V/s. P.S.G. College of Technology &Ors.held that the "the Act and the Rules form part of a composite scheme. Many of the provisions of the Act can be put into operation only after the relevant provision or form is prescribed in the Rules. In the absence of the Rules the Act cannot be enforced."

Holding that the orders are not sustainable in law, the same were set aside and the appeals were allowed.

In passing: Also see Schneider Electric - (2013-TIOL-1502-CESTAT-MUM).

(See 2013-TIOL-1800 -CESTAT-MUM)