CX - No co-relation between allegations made in body of SC N and computation of duty liability - demand itself is without any basis, hence unsustainable: CESTAT
By TIOL News Service
MUMBAI, FEB 15, 2018: THIS Revenue appeal has been filed in the year 2007 against the o-in-o passed by CCE, Aurangabad.
The brief facts of the case are that the Respondent had obtained permission from the Development Commissioner, SEEPZ, Mumbai to sell the goods, i.e. Television Receiver Sets, manufactured in 100% EOU in the Domestic Tariff Area. They were also filing monthly return, ER-2 for the goods manufactured and sold in Domestic Tariff Area.
The Respondents were issued SCNs contending that they have cleared goods in DTA by paying basic custom duty on the value ascertained on the basis of FOB value of like goods being exported by them instead of paying the basic customs duty on the invoice price, i.e. transaction value.
For the purpose of paying CVD, the Respondent was ascertaining the assessable value on the basis of the Maximum Retail Price (MRP) as per Section 3 of the CTA, 1975, r/w s.4A of the CEA, 1944 and Notification issued thereunder. It was contended that the invoice price of the goods meant for DTA sale is in the nature of transaction value and in conformity with the provisions of Rule 3 of the Customs Valuation Rules, 1988 and such invoice price would form the basis of determining the assessable value.
The adjudicating authority,by the impugned Order, set aside the demands and, therefore, Revenue is in appeal.
While the AR reiterated the department stand, the respondent in their submissions adverted to the Tribunal decision in Axiom Impex International Ltd. - 2016-TIOL-918-CESTAT-MUMwherein it is held that in terms of Circular 268/85-CX.8 dated 29.09.1994, the FOB value of export of identical or similar goods can form the basis for payment of duty on the goods sold in DTA by the EOU. It is also pointed out that the SCN proposed to demand differential duty on the ground that the assessable value for the purpose of computation of BCD should be transaction value and not the FOB value whereas the Annexure to the SCN had calculated duty not based on the transaction value but on the basis of MRP for the purpose of payment of BCD. Inasmuch as there is no co-relation between the allegations made in the body of show cause notice and the computation of demand. It is also submitted that the demand raised by invoking extended period is not invokable as there is no specific allegation of misrepresentation or suppression of facts and moreover the issue involves interpretation.
The Bench considered the elaborate submissions and observed thus -
++ The revenue is demanding duty on the basis of transaction value whereas the Respondent has resorted to valuation of goods for the purpose of paying basic custom duty on the basis of FOB value of the like goods being exported by them. However, we find that the duty demand has been computed on the basis of MRP of the goods without citing any provision of law.. .
++ The Transaction value as per Rule 4 of the Customs Valuation Rules, 1988 is the price of imported goods actually paid or payable for the goods when sold for exports to India adjusted in accordance with Rule 9 of Custom Valuation Rules. However, we find that no documents have been relied upon in the show cause notice that the price charged or paid was more than FOB Value. The Respondent has also pointed out that the whole of the details of clearance and prices was submitted by them to the department, however, the same has not been relied upon and instead the basis of demand is MRP which nowhere finds favour as basis for demand under Valuation Rules.
++ Further it is not forthcoming from the SCN that the dealer price on which the duty was demanded was the price that was charged by the Respondent from their customers or the customer's price was equal to dealers price. Hence we are of the view that since the basis of demand itself is without any basis, the demand is not sustainable.
Noting that in the cases of Morarjee Brembana - 2003-TIOL-309-CESTAT-MUM, 2015-TIOL-62-SC-CX, Axiom Impex International Ltd. - 2016-TIOL-918-CESTAT-MUM, the Tribunal and the Apex Court had held that the FOB value of exports would be basis for valuation of goods cleared into DTA, the demands against the respondent were held to be not sustainable.
The impugned order was upheld and the Revenue appeal was rejected.
(See 2018-TIOL-555-CESTAT-MUM)
