2026-VIL-608-CESTAT-HYD-CU
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CUSTOMS CESTAT Cases

Customs - Alteration of MRP by distributor, Duty evasion on imported cellular phones - The appellants are engaged in import of cellular phones under 'Celkon' brand, which are distributed to various dealers for sale - Department alleged that the appellants were resorting to evasion of Customs duty by declaring Retail Sale Price (RSP) less than Rs.2,000/- at the time of import and thereafter, altering the Maximum Retail Price (MRP) printed on the label affixed to individual unit of cellular phones subsequent to the clearance from the customs, which carried MRP higher than Rs.2,000/- - Whether the differential Customs Duty can be demanded from the appellants on account of alleged alteration of MRP by their distributor, who is a separate legal entity – HELD - The core issue is whether the appellants have discharged CVD wrongly on the imports made by them by mis-declaring their actual RSP or otherwise. The evidence relied upon by the department, such as photographs of the label on the outer package of cellular phones and statements of certain individuals, are not sufficient to establish that the appellants themselves had intentionally mis-declared the RSP at the time of import and later on replaced the label by showing higher MRP – The alteration, if any, to some extent in respect of some models has taken place in the premises of distributor, which is an independent legal entity. There is no evidence to suggest that the appellants were engaged in the day-to-day operations or activities of distributor or that there was any flow back from the distributor to the appellants - The provisions of Rule 5 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 would not be applicable to the appellants as they are not the manufacturers of the goods. The demand of differential Customs Duty under the Customs Act in such cases, where the alteration of MRP has been done by the distributor, a separate legal entity, is not sustainable - The impugned order is set aside and the appeals are allowed
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