By TIOL News Service

MUMBAI, SEPT 29, 2015: THIS is a Revenue appeal.

On specific intelligence, the Customs' Marine and Preventive wing on 5th June 2010 intercepted a container at Uran Phata, Junction, cleared from Customs at JNPT and on the way to Vashi. On examination, it was found that there was huge difference between MRP/RSP of the goods, namely Sanitary ware of Iron and Steel, declared in the Bill of Entry and the MRP declared in the price list obtained at their store at Vashi.

The partner of the respondent in his statement confessed that normally the supplier fixed MRP on the packaging material but as he had forgotten to do so in respect of the impugned goods, so the stickers bearing MRP were sent by supplier through courier and they undertake to affix the MRP on the goods at their godown before clearing/selling the same to the dealers. He also admitted that they are selling goods to dealers at the net dealer price declared in the list obtained from their store. He agreed that the price of Vashi store can be considered as MRP.

Accordingly, he paid differential duty of Rs. 1,49,754/- and Rs. 1,53,148/- on the goods which were cleared under the Bills of entry. The goods in the container were seized. Equal quantity of packaging cartons provided with product code found in the containers were also seized. In further action, the goods valued at Rs. 1,03,10,919/- lying in their godown at Vasai were seized for non-declaration of MRP. The goods consisted of Hobs, Ovens and Sinks. In the godown, printer machines used to affix MRP stickers was also seized. The labels which were affixed on the seized goods in the godown give details such as product name, size, quantity, MRP, Email Address of the Respondent. Investigation also showed that the price list, MRP stickers, sale invoices showed higher price than the MRP declared to customs at the time of import.

It was also revealed that during the period 1/12/2006 to 28/5/2010 the respondent had imported consignments under 21 Bills of Entry. Therefore duty was demanded in respect of such goods which were cleared from customs allegedly by declaring lower MRP.

The adjudicating authority confiscated the goods already clearedwith an option to redeem the same on payment of redemption fine of Rs. 5 lakhs. By rejecting the declared RSP and ordering the re-determination of RSP as Rs. 4,35,05,088/- he confirmed the duty demand of Rs. 15,33,382/- on the goods cleared in the past. The duty demand on the goods seized was also confirmed. Penalties were also imposed of Rs. 2 lakhs u/s 114A on the respondent firm and Rs. 1 lakh u/s 112A on its partner.

In the appeal filed by the importer, the Commissioner (Appeals) upheld the confiscation of goods seized from the container and reduced redemption fine from Rs. 5 lakhs to Rs. 1 lakh. He also reduced the demand on the goods cleared in the past to Rs. 9,44,404/- on the ground that the Rules for determination of RSP were introduced by notification No. 13/2008-CE(NT) dt 1/3/2008 and such determination can be done only after 1/3/3008.An equivalent Penalty of Rs.9,44,404/- was also imposed and the penalty of Rs.1 lakh imposed on partner was upheld.

As mentioned, Revenue is in appeal against this order.

The grounds are -

+ In terms of Section 46(4) read with Section 14(1) of Customs Act, 1962, the importer is required to declare the true RSP. The importer intentionally misdeclared the contents of the Bills of Entry by declaring lower MRP, therefore, goods seized from the godown are liable to confiscation under Section 111(m). The Commissioner has thus erred in lowering the demand from Rs. 15,33,382/- to Rs. 9,44,404/- because even before 1/3/2008 the goods were subjected to RSP based assessment under Section 4A and the MRP as revealed from the documents was known to the importer. Correspondingly the equivalent penalty under Section 114A of Rs. 15,33,382/- is imposable.

+ The Commissioner ignored the fact that the importer did not put RSP labels on the pre-packed commodities in terms of Notification No. 44/RE-2000/1997-2002 dated 24/11/2000 issued by DGFT read with Section 46 of the Customs Act making the goods seized in the godown liable to confiscation.

The respondent importer filed cross objections.

After hearing both sides, the Bench observed thus -

+ It is clear that goods are imported in package form and leviable to duty on RSP based assessment as stickers of higher MRP were found affixed on seized goods in the godowns. For not declaring the MRP correctly, the goods are liable to confiscation under Section 111(m) and duty is required to be paid on the basis of MRP declared in the price list.

+ The retail sale price is required to be declared in the case of imported goods which are specified under Section 4A(1) of the Central Excise Act. And the retail price which the respondent was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP).

+ Investigation also showed that the price list, MRP stickers, sale invoices showed higher price than the MRP declared to customs at the time of import. Therefore the goods are assessable to CVD on basis of RSP/MRP in terms of Section 4A of the Central Excise Act, CVD as levied under Section 3(2) proviso of the Custom Tariff Act.

+ In the case of goods seized from the container as well as goods found in the godown, the respondent have violated the provisions of the SWM(PC) Rules read with Section 3(2) of the CTA requiring importer to affix the label at the time of import. As those labels were not affixed as well as fact that RSP was not declared on the goods makes the goods liable to confiscation under Section 111(d) of the Customs Act and leviable to duty on MRP basis.

+ It has been confessed by the partner that they bring all the goods to their godown at Vashi. No evidence has been provided to show that the goods lying in the godown are not imported goods or did not relate to the goods imported under Bills of Entry. Having discharged their burden by the department, the onus shifted to the importer to establish that the goods seized from the godown were not the same as those covered by the Bills of Entry.

+ For the reason mentioned above, the goods will be liable to confiscation under Section 111(d) of the Customs Act for failing to observe the requirement of the SWM Act. They will also be leviable to duty on actual MRP basis. The plea that adjudicating authority did not confiscate goods under Section 111(d) and the same was not challenged before the Commissioner (Appeals) does not mean that the department is precluded from invoking the correct provisions of law.

+ The third issue is that enhancement of penalty from Rs. 2 lakhs was not a matter before the Commissioner (Appeals). We find that Section 114A mandates that the penalty leviable in cases where duty has been demanded for reason of suppression of facts shall be equal to the duty. Therefore this plea is not acceptable as once the duty liability is fixed, penalty necessarily has to be imposed as per the law laid down under Section 114A.

+ It is clear that once the goods are specified under Section 4A(1) of the Central Excise Act, necessarily the CVD is to be charged on MRP basis. The proviso to Section 3(2) of Customs Tariff Act unambiguously states that in the case of such goods, the retail sale price has to be declared on the package as required under the Standards of Weights and Measures Act, (SWM) The critical words are "required" and "declared". There is not an iota of doubt that the retail sale price is required to be declared in the case of imported goods which are specified under Section 4A(1) of the Central Excise Act. The question which arises is - what is the retail sale price that is required to be declared. It may be safely concluded that the retail price which the appellant was required to declare on the goods packages is the maximum price at which they may be sold to the ultimate consumer and which is termed as maximum retail price (MRP). [ABB case - 2011-TIOL-792-CESTAT-BANG distinguished]

+ It is our considered view that even if there are no machinery provisions laid down in Section 3(2) of the CTA and Section 4A(4) of the Central Excise Act, it cannot be concluded that Section 3(2) of the Customs Tariff Act will become ineffective and the law rendered otiose.

The Revenue appeal was allowed.

(See 2015-TIOL-2060-CESTAT-MUM)