Case Law Details
Commissioner of Customs Vs Acer India Pvt. Ltd. (CESTAT Chennai)
CESTAT Chennai held notebook computers imported for sale to Rajiv Ghandhi University of Knowledge Technologies, Hyderabad (RGUKT) i.e. institutional consumer and not ultimate consumer is assessable under section 4 based on transaction value and not based on Retail Sale Place.
Facts- The respondent, M/s. Acer India Ltd. filed bill of entry dated 06.02.2012 for import of notebook computers consequent to an order placed by Rajiv Ghandhi University of Knowledge Technologies, Hyderabad (RGUKT). The respondent had assessed the bill of entry on the basis of Retail Sale Price (RSP) for payment of duties. Later they realized that as the goods are for supply to educational institution and not intended for retail sale, the assessment ought to have been done under normal transaction value, instead of RSP based assessment. This resulted in excess payment of duty of Rs.12,41,118/-. The respondent then requested for re-assessment of bill of entry on the basis of transaction value and furnished copies of documents in the nature of order placed by the educational institution, invoices, advance amount received from the educational institution etc. They also paid back the Special Additional Duty (SAD) benefit availed by way of RSP based assessment at the time of import.
The original authority rejected the request for reassessment and held that the assessment and CV duty paid in terms of section 4A of Excise Act 1944 is legal and proper.
Commissioner (Appeals) set aside the order passed by the original authority and held that the goods are to be assessed under transaction value and that appellant would thereafter be eligible for refund. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the department has not doubted that the import is for sale to the RGKUT. This being so, the sale is not to an ultimate consumer and is only to institutional consumer. The view taken by the Commissioner (Appeals) that the assessment has to be made under normal transaction value under Section 4 is indeed legal and proper.
FULL TEXT OF THE CESTAT CHENNAI ORDER
This is an appeal filed by the department against the order passed by the Commissioner (Appeals) who set aside the order passed by original authority for assessment on the basis of RSP, and ordered for re-assessment under transaction value, and also held that the importer can thereafter claim refund as provided by law.
1. Brief facts are that, the respondent, M/s. Acer India Ltd. filed bill of entry dated 06.02.2012 for import of notebook computers consequent to an order placed by Rajiv Ghandhi University of Knowledge Technologies, Hyderabad (RGUKT). The respondent had assessed the bill of entry on the basis of Retail Sale Price (RSP) for payment of duties. Later they realized that as the goods are for supply to educational institution and not intended for retail sale, the assessment ought to have been done under normal transaction value, instead of RSP based assessment. This resulted in excess payment of duty of Rs.12,41,118/-. The respondent then requested for re-assessment of bill of entry on the basis of transaction value and furnished copies of documents in the nature of order placed by the educational institution, invoices, advance amount received from the educational institution etc. They also paid back the Special Additional Duty (SAD) benefit availed by way of RSP based assessment at the time of import. The original authority rejected the request for reassessment and held that the assessment and CV duty paid in terms of section 4A of Excise Act 1944 is legal and proper. Against this, the appellant filed appeal before the Commissioner (Appeals) who vide order impugned in this appeal, set aside the order passed by the original authority and held that the goods are to be assessed under transaction value and that appellant would thereafter be eligible for refund. Aggrieved by such order the department is now before the Tribunal.
2. The Ld. AR, Shri Rudra Pratap Singh appeared and argued for the department. It is submitted that in the present case, the MRP/RSP was affixed on each package. Thus the goods are sold in a pre-packaged form. The goods which are notified under Section 4 A and imported in pre-packaged condition bearing MRP, should be assessed only as per Section 4 A on the basis of MRP. The imported goods are sold by respondent to the University which in turn is supplied to the students. Therefore, the subject goods have to be assessed under Section 4 A only.
2.1 The relevant part of the Standard Weight and Measures Act, and the relevant Packaged Commodities Rules were adverted to by the Ld. AR. The decision of the Hon’ble Apex Court in the case of Jayanthi Food Processing (P) 2007 (215) ELT 327 was referred to canvass the argument that in the said case, the Hon’ble Apex Court had laid down the factors for assessment under Section 4 A of the Central Excise Act 1944. These are:-
(i) The goods should be excisable
(ii) They should be such as are sold in the package
(iii) There should be requirement in the Standards of Weights Act or the Rules made thereunder or any other law to declare price of such good relating to their retail price on the package.
(iv) The Central Government must have specified such goods by notification in the official Gazette
(v) The valuation of such goods would be as per the declared retail sale price on the packages less than the amount of abatement.
2.2 The Ld. AR argued that all the above factors are satisfied in the present case and therefore the assessment has to be under 4 A only. The Ld. AR also argued that Educational Institution cannot be considered as a ‘service industry’. Education is neither a service nor is the institution an ‘industry’. That therefore the exclusion of chapter 2 of the Packaged Commodities Rules 1977 will not apply in the present case. The Ld. AR prayed that the appeal may be allowed.
3. The Ld. counsel Shri Rohan Muralidharan appeared and argued for the appellant. It is submitted by the Ld. counsel that on the basis of the documentary evidence, it is established that the goods are imported for supply to educational institution and not for retail sale. The respondent had inadvertently assessed the B/E on MRP value and availed SAD exemption. On realizing the error, they voluntarily paid back the SAD and also requested for reassessment on the basis of transactions value. It is submitted that in the present case, the goods are in pre-packaged form with a declaration of MRP on the retail packages. However, the goods are sold to RGUKT which is an educational institution. The supply being to an institutional consumer and not intended for retail sale, the assessment has to be under section 4 based on transaction value, as correctly held by the Commissioner (Appeals).
3.1 In the case of Jayanthi Food Processing Ltd. (Supra), it was held that as long as the goods are notified under Section 4A and imported in pre-packaged condition, bearing MRP and the sale is directly to ultimate consumer, the assessment is to be under Section 4 A. In the present case, as the sale is not made to ultimate consumer, the third factor as put forth by the Apex Court, is not satisfied. Further, while laying down the law in Jayanthi Food Processing Ltd. the Apex Court was dealing with the pre amended Act and Rules. With effect from 13.01.2007, Rule 2 A has been amended which specifically provides that the provisions relating to the packages intended for retail sale will not be applicable when the packaged commodity is meant for ‘institutional consumer’. This position is affirmed by Hon’ble Supreme Court in CCE Vs AR Polymer Pvt. Ltd. 2023 (3) TMI 951 – SC. In the said case the Apex Court was analysing the issue in regard to purchases made by military and paramilitary institutions for distribution to their employees. It was held that the purchases are made by ‘institutional consumers’ and not by an end consumer, and that the assessment has to be on the basis of transaction value under Section 4 and not under 4 A.
3.2 The Ld. counsel submitted that the SWM Act was replaced with the Legal Metrology Act, 2009 (LMA) and SWMPC Rules were replaced by Legal Metrology (Packaged Commodities) Rules 2011 (LMPC Rules). As per Rule 3 of LMPC Rules, the provisions of Chapter II pertaining to declaration of MRP would not apply in the case of sale made to institutional consumer. The definition of ‘institutional consumer’ covers all the service institutions including transportation, airways, railways, hotels, hospitals etc. who buy packaged commodity directly from the manufacturer for use by the institution. It is not alleged by department, that RGKUT has acted as a dealer, and that the University further sold the goods to the students. There is no dispute with regard to fact of sale made by appellant to RGKUT. The decision in the case of M/s UT Starcom Inc Vs CC Chennai 2018 (6) TMI 530 (CESTAT, Chennai) was relied by Ld. counsel to argue that in the said case supply of cement to educational institution was held to be supply to institutional consumer. The said decision of Tribunal was affirmed by the Hon’ble Apex Court as reported in 2020 (3) TMI 776 – S.C. Similar view was taken in the case of Charms Cosmetier Pvt. Ltd. Vs CCE 2017 (352) ELT 197 (Tribunal – Mumbai).
4. Head both sides.
5. The issue to be decided is whether the imported goods are to be assessed under Section 4 or Section 4 A of C.E. Act 1944 for payment of Counter Vailing Duty (CVD).
5.1 The department is of the view that the goods imported being in prepackaged form with MRP affixed, the value has to be assessed under Section 4 A on the basis of MRP. The Ld. Counsel for respondent has argued that though in prepackaged form, bearing MRP since the goods were imported without intention for retail sale and for sale to educational institution, the assessment is to be under Section 4 of the Act.
5.2 In the grounds of appeal, the department has relied upon the old SWM Act / Rules 1977 as well as the decision of Hon’ble Apex Court in the case of Jayanthi Food Processing Ltd. The imports having been made in 2012, the new Legal Metrology Act and Packaged Commodities Rules 2011 would apply. The relevant provision of LMPC Rules read as under:
CHAPTER II
Provisions applicable to packages intended for retail sale
Applicability of the Chapter
The provisions of this Chapter shall not apply to:-
a) Packages of commodities containing quantity of more than 25kg or 25 litres excluding cement and fertilizer sold in bags up to 50 kg ; and
b) Packaged commodities meant for industrial consumers or institutional consumers.
Explanation: For the purpose of this rule:-
(i) “institutional consumer” means the institutional consumer like Transportation, Airways, Railways, Hotels, Hospitals or any other service institutions who buy packaged commodities directly from the manufacturer for use by that institution.
(ii) “industrial consumer” means the industrial consumer who buy packaged commodities directly from the manufacturer for use by that industry.
5.3 From the above it is clear that only when the package is intended for retail sale the provisions of the Chapter for affixing MRP and other details would apply. Further, the definition of institutional consumer has also undergone change. Instead of the words ‘service industry’ the words used in the new definition of institutional consumer is ‘service institution’.
5.4 The department has not doubted that the import is for sale to the RGKUT. This being so, the sale is not to an ultimate consumer and is only to institutional consumer. The view taken by the Commissioner (Appeals) that the assessment has to be made under normal transaction value under Section 4 is indeed legal and proper. Our view is supported by the decision of the Tribunal in the case of M/s UT Starcom Inc (Supra) as affirmed by the Hon’ble Apex Court and the decision of the Apex Court in the case of A.R. Polymer and Pvt. Ltd. (Supra).
6. From the foregoing, we find no grounds to interfere with the impugned order. The impugned order is sustained. The appeal is dismissed.
(Pronounced in court on 03.08.2023)
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