When the MRP is not to be printed on goods meant for industrial customer then they cannot be subjected to MRP based valuation.

PJ/Case Laws/2012-13/1227

Case:- HENKEL CAC PVT.LTD VERSUS COMMR. OF CUS. (IMPORT), JNCH, MUMBAI

Citation: - 2012(282) E.L.T. 566 (Tri-Mumbai)

Brief fact: - The Appellant M/s. Henkel CAC Pvt. Ltd. have imported a consignment of HotMelt Adhesive DT 3984 A 20 kg, a pressure sensitive adhesive. A Bill of Entry No. 730831 dated 22-10-2009 classifying the product under Chapter Heading 35 of the Customs Tariff, was filed by the appellant for the clearance of the said goods packed in 7000 cartons. A view was taken by the department that the appellant is required to pay CVD on the imported goods based on MRP as the goods were imported in 20 kg packing as no MRP was declared on the imported package. The department determined the MRP of the imported goods as CIF price x 2.5. The appellant filed an appeal against the assessed Bill of Entry before the Commissioner of Customs (Appeals) challenging the assessment on MRP Basis and the Commissioner (Appeals) vide impugned order has upheld the assessment done by the Customs officers and rejected the appeal filed by the appellant. The present appeal is filed by the appellant against the impugned order-in-appeal.

Appellant Contention: -The Appellant submitted that the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (PC Rules in short) specifically states that the provisions of Chapter II of PC Rules are applicable only to the packages intended for retail sale. He further submitted that the packages containing the product are meant only for industrial consumers, therefore, they are eligible for exemption under Rule 2A of the PC Rules. He sub-mitted that the imported HotMelt Adhesive is sold by them to the industrial consumer and the commission agents who in turn sell this product to industrial consumers only. As the goods will not qualify retail packages as defined under PC Rules and since the ultimate consumers of the imported goods are industrial consumers, the imported product is therefore exempt from affixing MRP on the imported packages. He also contended that the manufacturer has been defined under Rule 2(h) of the PC Rules and the appellant will qualify as a manufacturer in terms of Rule 2(h) of the PC Rules as the definition of manufacturer is very wide and is not restricted to actual manufacturer alone and it includes a person who is not actual manufacturer but who put the mark on the packages. As the brand name of the appellant "Henkel CAC Pvt. Ltd." is put on the imported packages which gives the indication that the product in question may be manufactured by the appellant. He relied upon the decision of this Tribunal in the case of Commissioner of Customs (Import) v. Nitco Tiles Ltd. Order No. A/75/2011/CSTB/C-I, dated 9-2-2011 under which the case was remanded back to the original author-for verification of the fact that whether the goods imported are being sold to _-e industrial consumers or institutional buyers. He submitted that the goods in question are being sold by them to industrial consumers and this fact is verifiable from our records and accordingly they are eligible for the benefit of exemption from MRP prices for the purpose of CVD.

Respondent Contention:- The learned AR appearing for the Revenue submitted that as per the definition of "retail package" imported packages are also covered under retail package definition and, therefore, PC Rules are applicable to the imported packagesand under Rule 2A of the PC Rules, exemption is given to only those pack-ages which are meant for industrial consumers or institutional consumers and as per explanation the Rule 2A of the PC Rules, industrial consumers/institutional consumers are those consumers who buy a packaged commodity directly from the manufacturers/packers for using the product in the industrial production or in the service industry. Since the appellant do not fall under the category of manufacturer or packers they are not entitled to the exemption under Rule 2A of the PC Rules. He, therefore, submitted that the Commissioner (Appeals) had rightly rejected the appellant's appeal on merit.

Reasoning of Judgment: The Tribunal concluded that as per Rules 2A of the PC rulesgoods sold to institutional consumers or industrial consumers are exempted from application of PC Rules. It is the contention of the department that the appellant is not covered under the definition of industrial consumers/institutional consumers whereas the appellant contended that they are covered under the category of manufacturer and hence they are eligible for the benefit for the goods sold to institutional consumer/industrial consumer. The Manufacturer is defined under Rule 2(h) of the PC rules which read as under:-

(h) ‘Manufacturer” in relation to any commodity in packaged form , means a person who, or a firm or Hindu undivided family which produce make or manufactures such commodity and include person, firm or Hindu undivided family who or which put, or cause to be put , any mark on any packaged commodity, not produced, made or manufactured by him or it, and the mark claims the commodity in package to be commodity produced, made or manufactured by such person, firm or HUF, as the case may be;”

As the appellants contend that after import of the goods the brand name of "Henkel CAC Pvt. Ltd." is put on the imported package which gives the indication that the product in question may be manufactured by the appellant. We find that on this aspect, the Commissioner (Appeals) has said that the appellant has not affixed any such mark on the package whereas the appellant has claimed that they have put the brand "Henkel CAC Pvt. Ltd." on the imported package. The appellant has also claimed that the goods in question are being sold by them to the industrial consumers and this fact, is verifiable from the records. We find that in case of Nitco Tiles Ltd. (supra) the view was taken by this Tribunal that the bur-den lies on the appellant to establish before the lower authorities that the provisions of Chapter II of the PC Rules are not applicable to the packaged commodity imported by them. We are, therefore, of the view that since the appellant claims that the entire goods imported by them are being sold to the industrial consumers and also they are putting the mark "Henkel CAC Pvt. Ltd." on the imported packages, they should get a reasonable opportunity of producing evidence be-fore the original authority to prove their claim that they are covered under ex-emption from MRP based assessment under Rule 2A of PC Rules. We, therefore, set aside the impugned order and remand the matter back to the original authority for deciding the matter afresh after giving an opportunity of being heard to the appellant and to produce the evidence in support of their contention. In case the appellant succeeds in establishing that the goods covered by the Bills of Entry was sold to the industrial/institutional consumers then they will be entitled to the exemption under Rule 2A as claimed by them.

Decision:- Appeal disposed off by way of remand.

Comments:- The MRP based valuation is applicable to imported goods also but the Standards of Weights and Measures Act says that the MRP is not to be printed on goods meant for industrial purpose. Thus, there is no need to print MRP. Hence the MRP based valuation cannot be applied on the same.

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PJ/Case Laws/2012-13/1227

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