By TIOL News Service

CHENNAI, JAN 20, 2016: THE appellants are importers of LCD/LED Monitors and Television sets of various sizes falling under CTH 85285100 of CTA, 1975 and filed Bills of Entry for clearance of these goods. The appellants were issued SCNs for denial of assessment under Section 4A and demanding differential duty on the ground that the said goods were sold to industrial consumers and therefore, assessment under MRP is not applicable. The adjudicating authority demanded differential duty along with interest under Section 28 AA of the Customs Act and imposed penalty under Section 112 (a) and ordered for re-assessment of LCD/LED Monitors under Section 3 of Customs Act Tariff Act, read with Section 4 and denied abatement and confirmed the demand. The Commissioner (Appeals) upheld the demand. Aggrieved by the same, the importer is before the Tribunal.

It is the contention of the appellant that the LCD/LED Monitors imported by them earlier were assessed and abatement of 20% was allowed as per the Notification No. 49/2008 dated 24.12.2008 and the department had accepted the above assessment under MRP based assessment. The said notification was amended by Notification No. 26/2012-CE(NT) dated 10.05.2012, the abatement on monitors was increased from 20% to 35%. The department issued notice alleging the goods sold to the Brand owners like HCL and Wipro are not covered under Section 4A and proposed assessment on the transaction value, and accepted MRP assessment in respect of their own brand and also on sale of unbranded monitors. As per Rule 3, the definition of industrial consumer means, industrial consumer who buy packaged commodity directly from the manufacturer for use by that industry. The same definition continued under Rule 2 (bb) from 6.6.2013. Only from 14.5.2015, the said Rule was amended to include manufacturers or importers or wholesale dealers.

After hearing both sides, the Tribunal held:

++ The appellants imported and cleared the impugned goods to various customers and they have also cleared to the brand owners, cleared under their own brand and as unbranded. From the reading of Rule 3 and Rule 2 (bb) as existing from 13.4.2011 to 14.5.2015, it is very clear that the definition of industrial consumers under LM Act and the Rule relates to sale of packaged commodities directly to the industrial consumers from the manufacturers. The very fact that the amendment made in Rule 2 (bb) w.e.f. 14.5.2015, including the importers, wholesale dealers in the definition of industrial consumers, confirms that during the relevant period, the appellant being the importer/dealer imported monitors and sold to the brand owners is not covered under the category of sale to industrial consumers.

++ The ratio of Supreme Court decision in case of Jayanti Food Processing Pvt Ltd is squarely applicable to the facts of the present case, wherein the Apex Court has clearly held that once the goods are covered under LMA, as a packaged commodity, they are required to be cleared on retail sale price on the packages as per the provisions of Section 4A, the assessment shall be on MRP basis. The Apex Court also clearly held that the nature of sale is not relevant for application of Section 4A. In the present case, the appellants have been clearing the goods when the MRP assessment came into existence from 2008 onwards. Therefore, the department suddenly choose to change the assessment from MRP based to transaction value from 10.05.2012 only to the goods sales made to the brand owners is not justified and particularly when the revenue itself accepted the assessment based on MRP under Notification No. 49/2008 from 24.12.2008, on the same transaction to the actual users.

Accordingly, the Tribunal held that the monitors with brand name meant for sale to brand owners are eligible for assessment under Section 3 (2) (b) of Customs Tariff Act, read with Section 4A of CEA and set aside the demand.

(See 2016-TIOL-215-CESTAT-MAD)