No MRP Based Assessment of CVD for Set Top
Boxes to be Supplied Free to Consumers Ratio of Bharati
Telemedia Case to be Followed, Says CBEC
[CBEC Circular No. 1020 dated 11th March
2016]
Subject: Valuation of imported Set top boxes under Section 4 of the Central Excise Act, 1944.
Reference has been received in Board regarding
assessment of CVD payable on set top boxes (STBs), when imported by a
Direct to Home (DTH) broadcasting service provider and where STBs are provided free
of cost to the consumers of DTH service. The issue is, in such conditions,
should the value for the purposes of calculation of CVD
be determined on the basis of Retail Sale Price (RSP) in terms of
proviso to section 3(2) of the Customs Tariff Act, 1975.
2. The issue stands decided by Hon'ble Tribunal in case of M/s Bharti Telemedia
Ltd. Vs Commissioner of Customs (Import), Nhava Sheva reported as [2016 (331) E.L.T. 138 (Tri.-Mumbai)] or
[2015-TIOL-1863-CESTAT-MUM], wherein it has been held that one of the
conditions to be met for CVD to be levied on Retail Sale Price is that under
the Legal Metrology Act, there should be requirement to declare on the package,
the retail sale price (RSP) of the goods. Hon'ble
Tribunal in this case in paragraph 7 has inter alia held that-
".............
(k) "retail
package" means the package which are intended for retail sale to the
ultimate consumer for the purpose of consumption of the commodity contained
therein and includes the imported packages:
Provided that for the purpose of this clause, the
expression 'ultimate consumer' shall not include industrial or institutional
consumers;
.............
(m) "retail sale
price" means the maximum price at which the commodity in packaged form may
be sold to the consumer and the price shall be printed on the package in the
manner given below ;
.............
The retail sale price is defined above as the maximum
price at which retail package may be sold. And retail package means packages
which are intended for retail sale to the ultimate
consumer. In other words the retail price will be required to be declared on
the package only if it is intended for retail sale
............. It is seen from the definition that there should be a
transfer of property for any consideration or there should be a transfer on the
hire-purchase system or by any system of payment by any instalments. We find in
the present case that there is no transfer of property or hire-purchase system
involved nor there is a system of payment by instalments. Thus there appears to
be no sale in the use of the Set Top Box by the ultimate consumer
3. After detailed analysis, Hon'ble
Tribunal held that in the given circumstances CVD shall not be leviable on the basis of Retail Sale Price. In view of the
above, it is clarified the judgement of Hon'ble Tribunal in case of M/s Bharti Telemedia
Ltd (supra), may be followed for assessment of CVD on imported STBs, where the
circumstances are identical.
4. Difficulty experienced, if any, in implementing the circular should
be brought to the notice of the Board.
F.No.
6/5/2015-CX.I