Cus - Notfn. 21/2012-Cus - As pre-packaged goods to be imported would have declaration of RSP on them, applicant is eligible to avail the benefit of exemption from payment of SAD: AAR
By TIOL News Service
NEW DELHI, SEPT 06, 2016: THE applicant is a subsidiary of Middleby Europe SL, Spain which is engaged in the business of food service equipment.
They propose to import refrigeration and food services products such as chest freezers, professional refrigeration products, refrigerated displays, ice machines, upright freezers, cold room, bakery ovens, commercial microwave ovens for baking / grilling, catering products, mini-bars, coffee machines, confectionary showcases, food processors etc. and sell the same to the consumers / customers as such.
Applicant submits that the business model of the applicant is such that it will not be known at the time of importation whether the goods to be imported will be sold to industrial consumer, institutional consumer or retail consumer. Further, there is always a possibility that the same may be sold to the retail consumer, in which case there will be a requirement to affix MRP under the Legal Metrology Act read with Legal Metrology (Packaged Commodities) Rules on such packages of goods to be imported.
The applicant seeks advance ruling on the following -
Whether the applicant is eligible to avail the benefit of exemption from payment of SAD provided under Notification No. 21/2012-Cus.?
The application is filed in the year 2013.
The thrust of submissions made by Revenue is that the conditions contained in Notification No. 21/2012-Cus dated 17.03.2012 are not satisfied in respect of the goods proposed to be imported by the applicant, therefore, goods cannot be exempted from additional duty of Customs (SAD) levied under Section 3 (5) of the Customs Tariff Act.
Notification No. 21/2012-Cus dated 17.03.2012 inter-alia exempts all pre-packaged goods intended for retail sale in relation to which it is required under the provisions of the Legal Metrology Act, 2009 or the rules made there-under or under any other law for the time being in force, to declare on the package thereof the retail sale price (RSP) of such article, from whole of additional duty of Customs (SAD) levied under Section 3(5) of the Customs Tariff Act, provided importer declares;
I) The State of destination where goods are intended to be taken immediately after importation, whether for sale or distribution or stock transfer; and
II) His VAT registration No. or Sales Tax registration No. or Central Sales tax registration No., as the case may be in said State.
The applicant submitted that they already possess VAT registration number and State of destination, where goods are intended to be taken immediately after importation, would be declared at the time of subject import. Thus, the procedural conditions would be met.
In respect of the substantive conditions required to be satisfied for being eligible for the exemption viz. being (a) pre-packaged goods; ( b) intended for retail sale; (c) to declare on the package, the RSP as required under Legal Metrology Act or rules made there-under or any other law for the time being in force, the Authority, after considering the submissions, observed as below -
Pre-packaged goods:
Section 2 (l) of the Legal Metrology Act, 2009 defines "pre-packaged commodity" as a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a pre-determined quantity. Applicant has stated that they propose to import pre-packaged goods.
Intended for retail sale:
++ Prior to 14.05.2015, industrial consumer and institutional consumer meant any consumer/institution, who bought packaged commodities directly from the manufacturer for use by that industry or institution, as the case may be. Applicant has also submitted that said PC Rules will not be applicable for industrial/institutional consumer provided packaged goods are bought by them directly from the manufacturer. In the case before us, prior to 14.05.2015, applicant did not buy the goods directly from the manufacturer but from the importer. Therefore, the provisions of Chapter II i.e. relating to packages intended for retail sale are applicable to the applicant.
++ W.e.f. 14.05.2015, Chapter II of PC Rules, 2011 is not to be applicable if packaged commodities are bought directly from the manufacturer or importer or wholesale dealer for use in that industry/institution and the package will be containing the declaration "not for retail sale". In short, applicant would not fall under the definition of industrial / institutional consumer, as package will not be containing the declaration "not for retail sale" and thus, Chapter II of said Rules, 2011 regarding provisions applicable to packages intended for retail sale, would apply to subject pre-packaged goods.
Declaration of RSP on packages as required under Legal Metrology Act or rules made there under etc.
+ Applicant submits that the business model of the applicant is such that it will not be known at the time of importation whether the goods to be imported will be sold to industrial consumer, institutional consumer or retail consumer. Further, there is always a possibility that the same may be sold to the retail consumer, in which case; there will be a requirement to affix MRP under the LM Act read with PC rules on such packages of goods to be imported.
+ We are in agreement with the views of the Tribunal[ H&R Johnson Ltd vs. Commissioner of Central Excise, Raigad = 2014-TIOL-845-CESTAT-MUM as affirmed by Supreme Court. ] , which was primarily based on the clarification rendered by the authorities implementing Legal Metrology (Packaged Commodities) Rules, 2011. As the pre-packaged commodities in this case are covered by Chapter II of said Rules i.e. provisions applicable to packages intended for retail sale, the same should also satisfy all conditions regarding declarations to be made on every package, as per Rule 6 including sub-rule (e) regarding declaring the RSP of the package. As pre-packaged goods to be imported would have declaration of RSP on them, this condition is also met.
Concluding that the applicant would be satisfying all the conditions laid down in Notification No. 21/2012-Cus dated 17.03.2012, it was ruled thus - Applicant is eligible to claim the benefit of exemption from payment of SAD under Notification No. 21/2012-Cus on import of pre-packaged goods.
(See 2016-TIOL-28-ARA-CUS)
