The Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has quashed the demand for Countervailing Duty ( CVD ) on industrial imports, emphasising that such imports should be valued at Transaction Value under Section 4 of the Central Excise Act, rather than at the Maximum Retail Price (MRP).
The case centered around M/s. Amar Radio Corporation, an importer, that challenged the CVD demand imposed by the Commissioner of Customs, Bangalore.
The customs authorities had calculated the CVD on the basis that the imported goods should be valued at their MRP under Section 4A of the Central Excise Act. However, the importer was of the opinion that the goods in question were meant for industrial use and not for retail sale to end consumers, and therefore, MRP-based valuation was inapplicable. The importer contended that the correct approach was to value the goods at their transaction value as per Section 4 of the Central Excise Act.
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The appellant, represented by Mr. Rajesh Chander Rohra and Ms. Yovini Rajesh Rohra contended that the imported goods, intended for industrial use and not for retail sale, should be valued at their transaction value under Section 4 of the Central Excise Act. They argued that MRP-based valuation under Section 4A was inapplicable as there was no statutory requirement to declare an MRP.
The respondent revenue, represented by Mr. K.A. Jathin contended that the imported goods should be valued based on the MRP under Section 4A of the Central Excise Act, arguing that the goods fell under the category requiring MRP declaration. They maintained that this method was appropriate for calculating the CVD.
The CESTAT stressed the distinction between goods that are subject to MRP-based valuation under Section 4A and those that are not. The bench noted that Section 4A specifically applies to goods where there is a statutory requirement to declare the MRP under the Legal Metrology (Packaged Commodities) Rules, 2011. Since the imported goods were intended for industrial use and were not subject to retail sale, there was no statutory obligation to declare an MRP.
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The bench noted that the valuation of goods for the purpose of levying CVD must align with the provisions of the Central Excise Act. For goods not intended for retail sale, where no MRP declaration is mandated, the valuation should be based on the transaction value as per Section 4, not Section 4A.
In result, the two-member bench comprising Mr. P.A. Augustian (Judicial Member) and Mr. Pullela Nageswara Rao (Technical Member) effectively quashed the CVD demand that was based on the erroneous application of Section 4A, providing relief to the importer. The bench brought clarity to the interpretation of excise law concerning the valuation of goods in situations where MRP is not applicable.
The bench set aside the CVD demand based on MRP valuation and highlighted the correct application of valuation principles under the Central Excise Act. It ensures that industrial imports, which do not fall within the purview of retail sales, are not unfairly burdened with additional duties based on an incorrect valuation method.
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