Dept. Can't Re-Determine MRP Of Laptops Imported By Acer India Supplied With Laptop Bag: CESTAT
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the department cannot re-determine the MRP of laptops imported by Acer India.The bench of Sulekha Beevi C.S. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that though the adjudicating authority has stated that Rule 6 of 2008 is applied to redetermine RSP, it can be seen...
The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the department cannot re-determine the MRP of laptops imported by Acer India.
The bench of Sulekha Beevi C.S. (Judicial Member) and Vasa Seshagiri Rao (Technical Member) has observed that though the adjudicating authority has stated that Rule 6 of 2008 is applied to redetermine RSP, it can be seen that the method of arriving at the redetermined MRP is not within the principles or provisions of Section 4A of the Central Excise Act and Rules. The methodology adopted by the adjudicating authority is to deduct the negotiated price of the backpack from the purchase order price. The purchase order price, or bid price, is inclusive of items that are not imported. Further, the department has no case that such a backpack can be obtained for Rs. 225 from the market.
The appellant/assessee has been importing and clearing notebook and laptop computers and supplying the same to M/s. Electronics Corporation of Tamil Nadu Ltd. (ELCOT) and other state government agencies for free distribution to students. On specific intelligence that the appellant has been suppressing the actual sale price by mis-declaring the MRP to evade customs duty (CVD), officers of SIIB conducted an inspection of the goods stored at the warehouse of the importer.
On inquiry, it revealed that the laptop bags were purchased locally and packed in a box along with the laptop computer, and a combined MRP of Rs. 16,899 had been affixed to both the laptop computer and the laptop bag. Copies of several tax invoices billed to various schools in Nilgiris District, Tamil Nadu, were also found and seized.
The laptops of the Acer brand were meant for supply to M/s. Rajcomp Info Services Ltd. for free distribution to the students of Rajasthan. An offence for evasion of duty in respect of these laptops was also registered by the Department, for which a Show Cause Notice was issued separately. The dispute is with regard to the notebook and laptop computers meant for supply to M/s.ELCOT for free distribution to schools in Tamil Nadu only.
The Department noted that there was a big difference between the MRP affixed to the laptops at the time of import and the MRP that was affixed to the laptop along with the carry bag that was to be supplied to ELCOT. At the time of import, in some bills of entry, the MRP declared for a laptop alone was Rs. 14,399, whereas the MRP declared for supply to ELCOT with a carry bag was inclusive of VAT. The importer claimed that the difference in the price was because supply to ELCOT was to be made along with a laptop bag, whereas the order placed with the foreign supplier was only for a laptop. The laptop bags were procured locally by the appellant at a rate of Rs. 225, though the market price of the laptop bag is Rs. 2500. The appellant had affixed the new MRP for supply to ELCOT after packing the laptop along with the carry bags, and therefore the difference in MRP at the time of import and at the time of supply to M/s. ELCOT.
The Department contended that the appellant had undervalued the MRP at the time of the import of the laptop to evade payment of countervailing duty (CVD). A Show Cause Notice dated August 8, 2017 was issued, proposing to reject the MRP declared by the appellant in the Bills of Entry and to re-determine the same under Section 4A of the Central Excise Act, 1944, read with the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008. Show Cause Notice proposed to demand differential CVD along with interest and also proposed to impose penalties, besides proposing to hold the goods liable for confiscation.
After due process of law, the Original Authority rejected the MRP declared by the appellant at the time of import and re-determined the same.
The adjudicating authority ordered the confiscation of the goods, confirmed the demand for differential duty (CVD) along with interest, and gave an option to redeem the goods on payment of a redemption fine. Penalties were also imposed.
Though Section 4A was introduced w.e.f. May 14, 1977, there was no provision for ascertaining (or redetermining) the price (RSP) in the event of a violation of the provisions. Subsection (4) to Section 4A for ascertaining or redetermining the RSP came to be introduced only w.e.f. 14.5.2003. Subsection (4) then merely says that the RSP of the goods shall be ascertained in the prescribed manner. The Rules 2008 putting forth the prescribed manner or method of ascertaining were introduced by Notification 13/2008 (NT) dt. 1.3.2008 only. The adjudicating authority has resorted to Rule 6 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008.
As per Rule 3, as above, the rules would apply in the case of redetermination of the sale price (RSP) of excisable goods under subsection (4) of Section 4A of the Central Excise Act. There is no mention that it would be applicable to Section 3 of the Customs Tariff Act. Pertinently, Section 3 of the Customs Tariff Act, though it refers to Section 4A, does not adopt it to determine the assessable value.
The tribunal held that for payment of CVD on imported goods notified under subsection (1) of Section 4A, the value of the imported article shall be deemed to be the RSP declared on the imported article less such amount of abatement. The proviso to Section (3) itself stipulates how the value has to be determined for imported goods to which the Legal Metrology Act, 2009, and Rules thereunder apply. There is no provision envisaged herein for redetermination of the MRP. The proviso to subsection (2) of Section 3 merely refers to subsection (1) of Section 4A to indicate the class or description of goods notified. Subsection (2) of Section 4A is referred to as allowing abatement on the declared MRP to determine the value for payment of CVD. The proviso to subsection (2) of Section 3 does not use the words that 'the entire provision of Section 4A would be applicable'.
Counsel For Appellant: V. Lakshmi Kumaran
Counsel For Respondent: P. Narasimha Rao
Case Title: M/s. Acer India (Pvt.) Ltd. Versus Commissioner of Customs (Audit)
Case No.: Customs Appeal No. 41786 of 2019