By TIOL News Service

NEW DELHI, SEPT 23, 2015: THE appellant deals in Audio-Visual Equipments such as LCD projector, Plasma TV, Home Theatre System, DVD CAMM etc.. During the disputed period from 2001 - 2002 to 2004 - 2005, the appellants imported goods by declaring the RSP and paying duty on such assessment.

A search was conducted on 12/01/2005 in the business premises of the appellants on a specific intelligence. Audio-visual equipments imported worth Rs.57,55,770/- were found in the business premises of the appellant which did not have MRP displayed on the packing though these goods were imported by paying duty on RSP declared. The goods were seized and later provisionally released on furnishing bond of 100% value of seized goods and bank guarantee of 25%. Differential duty of Rs.6,93,820/- was deposited.

On further enquiry, it was found that the appellants sold such imported goods to NCCF/KB at a price higher than the RSP declared at the time of import. The appellants had sold goods to retailers and other customers besides sale to NCCF/KB.

A show cause notice was issued alleging mis-declaration of RSP, and proposing inter alia, demand of differential duty taking into consideration the price at which goods were sold to NCCF/KB.

The notice was finalized by the order, inter alia, whichconfirmed -

(a) confiscation of goods worth Rs.57,55,770/- and as the goods were provisionally released, a fine of Rs.5,00,000/- was imposed in lieu of confiscation u/s 125 of CA, 1962;

(b) demand of Rs.3,19,593/- being differential duty on seized goods along with interest;

(c) demand of Rs.1,50,88,287/- being differential duty on past clearances along with interest;

(d) imposed equal amount of penalty besides penalty of Rs.25 lakhs on Director of appellant u/s 112 (a) of CA, 1962, and

(e) ordered appropriation of amount of Rs.6,93,820/- already deposited.

Aggrieved by this order passed by Commissioner of Customs, (Preventive) New Delhi, the appellant is before the CESTAT.

The appellant, inter alia, submitted that NCCF/KB being institutional buyers, the provisions of SWM Act 1976 and PC Rules 1977 are not attracted to the supply of goods to these customers.

After considering the elaborate submissions made by both sides, the Bench extracted the relevant definitions & provisions &observed as under -

+ NCCF/KB are not institutional consumers. NCCF/KB purchase goods in bulk for effecting sale to ultimate consumers and do not fall into the category of institutional consumers. The argument on behalf of the appellants that the appellants relied upon the Board Circular dated 28.2.2002 and was under the belief that MRP need not be affixed in effecting supply to NCCF/KB is without merits. The sale of goods at price higher than the RSP declared can only lead to the conclusion that appellants mis-declared the RSP of such goods at the time of import. The appellants are, therefore, liable to pay differential duty.

+ Even though the appellant sold goods to other customers at prices lower than the declared RSP, as the appellant had mis-declared RSP, the highest price at which the goods were sold to NCCF/KB was rightly taken by the authorities below as the basis for calculation of differential duty.

+ RSP is only the upper limit of the sale price which the importer can charge from the consumer. The appellant is free to sell goods at any price lower than the RSP declared. The appellants have pleaded and put forward a consistent case, which is corroborated by the detailed list and invoices, that sales effected to customers other than NCCF/KB were made at RSP or prices lower than the RSP declared at the time of import. In such circumstances we have to agree with the appellant's contention that the demand of differential duty on goods sold below RSP or goods sold at RSP is unjustified. Merely because the importer effected sale of some goods at price higher than the RSP declared, the Revenue cannot demand differential duty on entire import done as per various B/E during the period 2001- 2002 to 2004-2005.

+ That there is no stipulation in the said Act that all packings should bear the same MRP. It is a prerogative of the manufacturer to affix the MRP on the goods and if different MRPs are affixed keeping in view of the market conditions, different MRP so fixed would be the retail sale price in respect of each packet.

+ The goods were imported under different B/E declaring RSP and cleared after assessment. Law does not forbid sale of goods at prices lower than the declared RSP or equal to RSP. On such score, there cannot be any mis-declaration of RSP if goods are sold at RSP or below RSP. Undeniably the allegation of collection of higher price is confined to the sales effected to NCCF/KB. The demand of differential duty, in our view, has also to be confined to sales effected to NCCF/KB only. In such circumstances the demand of differential duty of Rs.1,50,88,287.05 on entire sales is unsustainable.

+ As per the relevant provision of SWM Act 1976 and PC Rules 1977 the packages ought to have the MRP declared on them. Therefore, we hold that the confiscation and demand of differential duty on the seized goods, in our view, does not call for any interference.

+ The imposition of penalty of Rs.25 lakhs (on the Director of the appellant), in our view is slightly on the higher side. We consider that the penalty imposed is liable to be reduced to Rs.50,000/- which would be justifiable in the facts and circumstances of the case.

+ Perse the appellants have committed mis-declaration of RSP, and therefore this contention of the appellants (that the extended period of limitation is not invokable) deserves only to be brushed aside.

Held:

++ The order, to the extent of demand of differential duty of Rs.1,50,88,287/- and imposing equal amount of penalty is set aside and differential duty and mandatory (equal) penalty only in respect of goods sold to NCCF/KB is upheld. The adjudicating authority is directed to (re)compute the demand of differential duty and penalty accordingly and inform the appellants.

++ The confiscation of goods worth Rs.57,55,770/- and demand of differential duty of Rs.3,90,593.62 is sustained along with the levy of redemption fine of Rs. 5 lakhs. (Five Lakhs).

++ The penalty of Rs.25,00,000/- imposed on Shri Sanjeev Ratra, Director is reduced to Rs. 50,000/-.

The appeal was partly allowed.

(See 2015-TIOL-2008-CESTAT-DEL)