The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the MRP based on value under Section 4A of the Central Excise Act 1944 cannot be used for calculating the additional duty of Customs (CVD).
The bench of R. Muralidhar (Judicial Member) and K. Anpazhakan (Technical Member) has observed that the documentary evidence proves that the Disinfectant is meant only to Govt of Jharkhand hospitals and are not to be sold in retail to any other person. Such bulk supplies would fall under the category of Industrial/Institutional sales as per the Legal Metrology provisions.
The appellant, Microgen Hygiene imported Disinfectant viz “D-125- Lavender” through Kolkata Air Cargo Complex, during the period from September 2008 to October 2008, for onward supply to the Government of Jharkhand for their requirement in the State run hospitals.
A Show Cause Notice dated 29.11.2012 was issued to the Appellant, by invoking the extended period provision, raising two allegations.
Firstly, the price charged by the foreign supplier was FOB price. The contention was raised based on certain clauses of the Supply and Distribution agreement with the Supplier which stipulated that all orders shall be shipped FOB Ex-Works the Netherlands. By treating the Invoice price as FOB, the Show Cause Notice proposed addition of notional freight and insurance under Rule 10 (2) (i) and (ii) of the Customs Valuation Rules 2007.
Secondly, the goods were covered by Sr. No.40 of Notification No.14/2008-CE (NT) dated 1- 372008 issued under Section 4A of the Central Excise Act 1944 and required affixing of RSP and were liable to be assessed to additional duty of Customs (CVD) on the RSP. As no RSP was declared, the RSP is taken as three times the import value.
The appellant contended that the freight and insurance has been borne by the foreign exporter and the goods have been consigned for delivery to the appellant at Kolkata. Hence, the appellant claims that the price shown in the overseas exporter’s invoice is CIF, which has been already adopted by the appellant for payment of Customs Duty.
The department submitted that the contract to supply to Govt of Jharkhand was not awarded to the appellant, but only to a third party. The imported goods would require CVD to be paid based on the Section 4A of the Central Excise Act, 1944.
The tribunal held that the appellant has provided proper documentary evidence to the effect that the freight and insurance has been borne by the foreign party. There is nothing to indicate in these documents that the appellant is required to pay these amounts. Therefore, it gets established that the overseas exporter has exported the goods on CIF basis to the appellant.
The CESTAT held that the enhancement of Assessable Value by adding the freight and insurance by the Revenue, is legally not sustainable.
Case Details
Case Title: M/s. Microgen Hygiene Private Limited Versus Commissioner of Customs
Case No.: Customs Appeal No. 77844 of 2018
Date: 18.12.2024
Counsel For Appellant: Dr. Sujay Kantawala, J.C. Patel, Shamita Patel, Jeffry Caleb
Counsel For Respondent: Faiz Ahmed
