Viacom Electronics Pvt. Ltd. Vs. Commissioner of Cus. - Court Judgment

Excerpt:
1. the question for consideration in this appeal is the applicability of the exemption contained in clause (i) of entry 225 of the table to notification 5/99. clause (i) of the entry exempts from excise duty in excess of 16% colour television receivers classifiable in heading 85.25 of the central excise tariff, "where the retail sale price is declared on the package, at the time of clearance from the factory of production, and the retail sale price declared forms the sole consideration for sale to the ultimate consumer;" the other clauses of the entry prescribe varying rates of duty applicable to other clauses, depending upon screen size of the television receivers. the appellant imported these goods, and for purposes of determination of the additional duty of customs payable on them, it.....

Judgment:
1. The question for consideration in this appeal is the applicability of the exemption contained in Clause (i) of entry 225 of the table to Notification 5/99. Clause (i) of the entry exempts from excise duty in excess of 16% colour television receivers classifiable in heading 85.25 of the Central Excise Tariff, "where the retail sale price is declared on the package, at the time of clearance from the factory of production, and the retail sale price declared forms the sole consideration for sale to the ultimate consumer;" the other clauses of the entry prescribe varying rates of duty applicable to other clauses, depending upon screen size of the television receivers. The appellant imported these goods, and for purposes of determination of the additional duty of customs payable on them, it claimed benefit of the exemption contained in this clause of the entry. The Deputy Commissioner of Customs denied the exemption on the grounds contained in the following paragraph of his order :- "I also find that notification states that "Retail price declared on the Package at the time of clearance from the factory of production". In the trade parlance the word 'retail prices' is understood as the local sales prices, rather than the local sales prices in the country of Export. Accordingly I find that the wording "Retail sale price declared on the package at the time of clearance from the factory of production" has to be understood to mean a factory of production in India where the retail prices has been determined rather than any other country of exportation. Also, the supplier of goods is not supposed to be aware of local taxes & levies to determine the MRP for India & if he does so, then it must be at the express instructions of the importer. Clearly, the importer, in order to somehow avail of the benefit of CVD under Sr.

225 (i) of Notification 5/99, has resorted to this colourable device (McDowell's case) of instructing his suppliers to affix MRP for India on subject goods. Further, Sr. No. 225(i) has necessarily to be read with Section 4A of Central Excise Act, 1944 and any notification issued under the said section specifying the percentage of abatement for arriving at the assessable value. It is quite clear that Section 4A was introduced to check the under valuation of domestically produced goods and references therein to MRP can only be satisfied by goods which are actually produced within India.

Therefore, although for determining CVD, we resort to a legal fiction whereunder the imported goods are assumed to be manufactured in India and then the highest of C. Excise duties leviable is imposed on it but in this case, the provisions of Sr. No. 225(i) as it contemplates a rate of duty if & only if the goods bear a MRP (which necessarily can be satisfied by a locally produced goods only for the reasons stated hereinabove), straightway rules itself out of contention. Therefore, the only provision left for consideration, is Sr. No. 225(ii) of Notification 5/99-C.E." 2. In addition, he noted that the provisions of the Standards of Weight and Measures (Packaged Commodities) Rules, 1977 had been contravened.

The Commissioner (Appeals) having confirmed this order, the appellant is before us.Thermax Pvt. Ltd. v. CC - 1992 (61) E.L.T. 352, the Supreme Court had for consideration the applicability to imported goods of the exemption from excise duty contained in Notification 63/85, which granted exemption in entry 8 to parts of refrigeration for specific purposes subject to the procedure prescribed in Chapter X has been followed, the denial by the department of the claim on the ground that as the provisions of the Central Excise Rules were not applicable outside the country, they could not have been followed in respect of imported goods, was accepted by the Tribunal. The court however did not accept this contention. It said, "In other words, we have to forget that the goods are imported, imagine that the importer had manufactured the goods in India and determine the amount of excise duty that he would have been called upon to pay in that event. Thus, if the person using the goods is entitled to the remission, the importer will be entitled to say that the CVD should only be the amount of concessional duty and, if he has paid more, will be entitled to ask for a refund. In our opinion, the Tribunal was in error in holding that the assessees could not get a refund because the procedure of Chapter X of the rules is inapplicable to importers as such." By applying this ratio, it appears to us that the appellant should be entitled to the benefit of the exemption. If we imagine that the television sets are manufactured in India, there would be no objection to the grant of exemption.

4. We do not find that the judgment of the Supreme Court in Motiram Tolaram v. UOI - 1999 (112) E.L.T. 749 takes a different view, or applies so as to make inapplicable the ratio of Thermax Pvt. Ltd, The Supreme Court in this judgment held that the condition subject to which the exemption from excise duty was available to polyvinyl alcohol that it was manufactured from vinyl acetate monomer on which appropriate duty of excise and additional duty of customs has been paid - would not be available to imported polyvinyl alcohol. It said, "it is not possible to assume or presume or imagine that the raw material used is the one on which appropriate amount of duty of excise has been paid in India." The condition subject to which the goods under consideration by us are available for exemption is that the retail price is marked upon the package containing television when they are cleared from the factory of production, in the country of production. It cannot be denied that the goods are cleared from the factory of production. We are not here concerned with the condition, such as the one considered in Motiram Tolaram requiring statutory compliance with any Indian law.

If such a condition existed, it would be difficult to grant the exemption. But in the case before us, all that must be shown for the exemption to be applied is that the packages containing the television sets bore on them the retail price when they were removed from the factory. That is not disputed by the Deputy Commissioner or the Commissioner (Appeals). It is necessary to mention here that the word clearance contained in the entry is not of legal significance. The word "clearance" is not defined in the Central Excise Act or the Rules or in the Tariff.

5. The circular dated 5-1-2000 of the Board reproduced in 2000 (115) E.L.T. (T41) = 2000 (88) ECR 49C no doubt says in paragraph 6 that "factory of production" contained in the entry has to be understood to mean factory of production in the country of import and not the factory of production situated in the supplier's country abroad. The circular of the Board however does not bind us. We do not find any particular reasoning all for this conclusion in the circular.

6. We do not see the relevance of Rule 33 of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977. Sub-rule (2) provides that the responsibility for making the declaration is cast on the importer. This does not mean, as the departmental representative says, that the declaration should be made by the importer alone and no one else. All that Sub-rule (2) provides is up to the importer to ensure that these declarations are made in the appropriate manner when the goods are imported and it is he who has to answer that the provisions of Sub-rule (1) are shown to have been complied with on importation.

This sub-rule does no way prohibits the importer in acting in such a manner as to ensure that the declarations are put on the packages before they arrive in India. We do not find anything in these rules that provides that the retail price must be put on the imported goods only by their importer after their arrival in India. The benefit of the exemption could not therefore be denied.