Importer Not Liable For Post-Sale RSP Revision By Dealers: CESTAT New Delhi

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 9 April, held that an importer cannot incur liability for differential customs duty based on a post-sale upward revision of Retail Sale Price (RSP) by independent dealers, once the parties complete the sale on a principal-to-principal basis.

A Bench comprising President Dilip Gupta and Technical Member Hemambika R. Priya set aside the demand raised against Richemont India Pvt. Ltd., holding that the importer loses control over the goods after such sale and cannot bear liability for subsequent price changes. The Tribunal observed:

“There is no evidence on record to demonstrate that the appellant had altered, tampered or had knowledge of any alteration/upward revision of the RSP of any existing stock available with the authorized dealers. Once the watches were sold by the appellant to the authorized dealers, the appellant had no control over the watches and cannot be held liable for any subsequent revision in the RSP by the authorized dealers.”

The dispute arose from a demand of differential customs duty under Section 28(4) of the Customs Act on the ground that the RSP of imported watches was revised upward after import, and therefore higher Countervailing Duty (CVD) became payable. The Department alleged that the appellant circulated revised price lists to dealers and suppressed material facts.

The Tribunal noted that the appellant declared the RSP at the time of import and paid duty accordingly. It found no evidence to show that the importer altered or knew of any change in RSP after selling the goods to independent dealers.

It further held that Rule 5 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 does not apply to importers, and found the Department's reliance on post-import price revision misplaced. The Bench also rejected reliance on statements recorded under Section 108 of the Customs Act, noting non-compliance with the procedure prescribed under Section 138B.

Accordingly, the CESTAT held that the demand was unsustainable and set aside the duty demand, interest, confiscation, and penalty.

Appearance for the Appellant: Shri Harpreet Singh Ajmani, Shri Sagnik Chatterjee and Ms. Gunjan Panda

Appearance for the Department: Shri Shiv Shankar, Authorized Representative for the Department