In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ), Bangalore bench, has held that an importer is not required to declare the Maximum Retail Price ( MRP ) in the Bill of Entry for claiming the Special Additional Duty ( SAD ) exemption.
The company had imported goods and claimed exemption from 4% SAD under Notification No. 21/2012-Cus dated March 17, 2012. The exemption is available for pre-packaged goods intended for retail sale with the MRP affixed on the packages.
Become an Expert in Foreign Exchange Regulations! Click here
The issue arose during a post-clearance audit, wherein the customs authorities alleged that the company did not comply with the provisions of the Legal Metrology Act, 2009, by failing to declare the MRP in the import documents.
Consequently, the authorities issued a demand notice, asking the importer to pay the applicable duty, which amounted to ₹70,834. The adjudicating authority, as per the Order-in-Original No. 05/2015 dated March 16, 2015, held that the appellant was not eligible for the SAD exemption since the MRP was not declared in the Bill of Entry.
The adjudicating authority had further noted that the correct procedure would have been for the appellant to pay the SAD at the time of import and then claim a refund after selling the goods, as per the provisions of Notification No. 102/2007-Cus dated September 14, 2007. Aggrieved by this order, the appellant filed an appeal before the Commissioner (Appeals), which was also dismissed. Subsequently, the company approached the CESTAT.
The Tribunal bench, comprising P.A. Augustian (Member, Judicial) and Pullela Nageswara Rao (Member, Technical), heard the matter and ultimately sided with the appellant.
The tribunal bench observed that the allegations of non-compliance were made during the audit, long after the goods had been cleared by customs authorities, based on the appellant’s declarations in the Bill of Entry.
Become an Expert in Foreign Exchange Regulations! Click here
The Tribunal emphasised that the customs officers had accepted the declarations made by the appellant at the time of import and that any issues regarding the affixation of MRP should have been addressed during the clearance process itself.
In its ruling, the Tribunal highlighted that the requirement under Notification No. 21/2012-Cus pertains to affixing the MRP on the retail packages and does not mandate the declaration of the MRP in the Bill of Entry.
The Tribunal further clarified that the absence of an MRP declaration in the import documents cannot be a ground for denying the benefit of the exemption, especially when there was no evidence to suggest that the goods did not comply with the Legal Metrology Act, 2009. The Tribunal stated, “There is no requirement under any provision of law to make the declaration of MRP in the Bill of Entry; the requirement is only to affix the MRP on the retail packages.”
The CESTAT also took issue with the approach of the customs authorities in issuing the demand notice post-clearance based on assumptions and presumptions. It was noted that the goods were cleared after proper assessment and that there were no allegations that the goods did not meet the statutory requirements for MRP affixation.
Therefore, the Tribunal held that the demand raised by the customs authorities was unjustified and set it aside. The Tribunal concluded by allowing the appeal with consequential relief and setting aside the penalty and duty demand against the appellant.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
