The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) quashed re-determination of MRP of laptops imported by Acer India supplied with laptop bag by the Customs Department.
It appeared to the Department that the appellant had undervalued the MRP at the time of import of laptop to evade payment of Countervailing Duty (CVD). Show Cause Notice 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 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.
The counsel for the appellant submitted that the methodology adopted by the Department under the best judgement method is not consonance with the powers vested with the Customs Department. Therefore, the impugned order inasmuch as it suo-motu re-determines the MRP of composite supply of laptop + laptop bags and disregards the MRP of the laptop bags purchased locally by the Appellant viz. Rs. 2,500/-, is improper and deserves to be set aside.
It was further submitted that differential duty has been computed by taking the price quoted by the Appellant to ELCOT for supply of laptop and laptop bags on the ground that the quoted price is inclusive of all elements of costs of the laptop and is the actual MRP of the laptop with the backpack.
The authorized representative for the Department submitted that as the MRP of the imported goods was altered after import so as to evade appropriate payment of CVD, the Department has redetermined the RSP as per Central Excise (Determination of Retail Price of Excisable Goods) Rules, 2008. Rule 6 has been applied by the adjudicating authority to arrive at the redetermined MRP. Appellant had deducted Rs.2,500/- as price of carry bag from the purchase order price of the goods. However, it has come to light that they have obtained laptop bag for Rs.225/- and therefore appellant cannot deduct Rs.2500/- per bag to arrive at the MRP of the composite goods.
A Two-Member Bench comprising Vasa Seshagiri Rao, Technical Member and CS Sulekha Beevi, Judicial Member observed that “The methodology adopted by adjudicating authority is to deduct the negotiated price of the backpack (Rs.225/-) from the Purchase order price. The Purchase order Price or bid price is inclusive of items which are not imported. Further, the department has no case that such backpack can be obtained at Rs.225/- from market. All these factors would lead to the conclusion that the redetermined MRP cannot be sustained. Consequently, the demand of differential duty also cannot be sustained and require to be set aside. Ordered accordingly.”
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