Calculation of basic Customs Duty on MRP of Goods Contrary to Proviso of Section 3 (1) of CETA: CESTAT sets aside Calculation of Assessable Value [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) set aside the calculation of assessable value as the calculation of Basic Customs Duty on MRP of the goods was contrary to Proviso of Section 3 (1) of the Central Excise Tariff Act, 1985 ( CETA ).

After giving a hearing in the matter, the Principal Commissioner of Central Excise, confirmed demand for duty of Rs. 70,07,901/- and imposed penalty of Rs.35,03,951/- on the Appellant Contacare Ophthalmics and Diagnostics and a penalty of Rs.50,000/- on the Appellant, Shri Hasmukh I. Patel. Hence the present appeals were filed before the Tribunal.

J.C. Patel, counsel with Rahul Gajera, Advocate appearing on behalf of Appellant, submitted that the Principal Commissioner has taken the MRP, which is plainly erroneous; that to arrive at the excise duty payable by 100% EOU under the proviso to section 3(1) of the Central Excise Act, 1944, the transaction value as per Section 14 of the Customs Act 1962 was required to be adopted.

It was further contended that as regards CVD, the Principal Commissioner has wrongly calculated the same on MRP instead of MRP less abatement under Notification No. 49/2008-CE (NT) dated 24-12-2008 and further wrongly taken Education Cess and Secondary and Higher Education Cess once again on the aggregate of customs duties, although the same were already considered while calculating the aggregate of customs duties which is contrary to the law.

Ajay Kumar Samota, Superintendent ( AR ) appearing for the Revenue relied upon the findings given in the impugned order.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and Raju, Technical Member observed that “It would be evident from the calculation appearing on the Appeal that the Principal Commissioner has wrongly calculated the Basic customs duty on the MRP of the goods, which is contrary to the provisions of Proviso to Section 3 (1) of the Central Excise Tariff Act. As per Proviso to said Section 3 (1), Excise duty on goods manufactured by a 100% EOU and brought to any place in India shall be an amount equal to aggregate of customs duties leviable on like goods when imported into India and the value of such goods shall be as per the Customs Act 1962 and the Customs Tariff Act 1975.”

“The said Acts do not provide for calculating the basic customs duty on the local Maximum Retail price (MRP) but require adoption of the transaction value as per Section 14 of the Customs Act 1962. Instead of taking such value which is mentioned in the Column before the Column of MRP on page 55 of the Appeal, the Principal Commissioner has taken the MRP, which is plainly erroneous. Accordingly, the assessable value taken for calculating the Basic Duty is ex-facie erroneous” the Bench concluded.

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