By TIOL News Service

MUMBAI, OCT 26, 2018: APPELLANT had imported various types of 'Telephone and other communication equipment'. These goods, in addition to basic customs duty, were liable to additional duties of customs on the 'retail selling price' as provided for in section 4A of Central Excise Act, 1944.

Consequent upon search of the premises of an associate of the importer, goods imported against various bills of entry were allegedly found with stickers indicating a 'retail selling price' higher than that declared at the time of import.

Accordingly, differential duty was demanded by revising the 'retail selling price' of imported goods. The duty confirmed is Rs.16,913/-, the goods valued at Rs.2.74 lakhs were confiscated with an option to redeem the same on payment of fine of Rs.10,000/- and a penalty equivalent to the duty demand was also imposed.

Against the o-in-a upholding the demand, the appellant is before the CESTAT.

The Bench considered the submissions and observed –

+ Additional duties of customs is levied under section 3 of Customs Tariff Act, 1975 which empowers the collection of such duty as would have been recoverable on the said goods under the Central Excise Act, 1944 if manufactured in India.

+ There are two streams for assessment of such additional duties of customs: the default levy of duty on value assessed for determination of basic customs duty with addition of such basic customs duty and, alternatively, for specified goods, on the 'retail selling price' after abatement as permitted.

+ The valuation of goods for the purpose of Customs Act, 1962 would, therefore, unhesitatingly have had to comply with the provisions of section 14 of Customs Act, 1962 and the rules framed thereunder.

+ 'Value', for determination of additional duty by the default stream, has the same meaning and, therefore, is subject to the same revision as applicable for basic customs duty.

+ Specifically for such goods as are covered by section 4A of Central Excise Act, 1944 with its own definition of value, the general provisions of value in Customs Act, 1962, i.e. section 14 and the attendant rules, would not apply.

+ Recourse cannot, therefore, be had to the said rules for determination of value of goods covered by section 4A of Central Excise Act, 1994 and there is no scope for enhancement of the assessable value by such recourse.

+ In the absence of any machinery provisions to alter the retail selling price declared by the importer and the lack of provision for recovery in the event of any subsequent alteration of retail selling price, no proceedings can be initiated against the appellant in the circumstances narrated in the show cause notice as well as the orders of the lower authorities.

Concluding that the recovery of duties under section 28 of Customs Act, 1962 fails, the impugned order was set aside and the appeal was allowed.

In passing:

++ Majority Decision in Nitco Tiles vs. Commissioner of Customs (Import), Mumbai - 2015-TIOL-1544-CESTAT-MUM.

Held inter alia :

1. Reference to Section 4A(1) and 4A(2) of the Central Excise Act is fully applicable to the Explanation to Section 3(2) of the Customs Tariff Act.

2. Provisions of Section 3(2) of the Customs Tariff Act, will not become ineffective in the absence of Section 4(A)(4) of Central Excise Act, 1944 for the import made prior to 14.05.2003.

3. CVD is to be paid on the basis of higher prices at which the goods of the same size were sold to the customers and which were required to be declared as MRP under Section 3(2) of the Customs Tariff Act, 1975.

4. MRP can be redetermined on the basis of underlying law and spirit of Section 3(2) of the Customs Tariff Act, 1975, having regard to the judgements of the Hon'ble Gujarat High Court in the case of Rupani Spinning Mills Pvt. Ltd. and Hon'ble Madras High Court in the case of Shipping Corporation of India Ltd. and Hon'ble Apex Court in the case of Mahim Patram Pvt. Ltd.

++ Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. [Notification 13/2008-CX(NT) dated 01.03.2008]

(See 2018-TIOL-3242-CESTAT-MUM)