3 Lakh Free Tamil Nadu Laptops Needed No Retail Price Label; CESTAT Says Customs Couldn’t Set an Undeclared Price for CVD

ICMC imported 3,00,000 laptops for Tamil Nadu’s free-laptop scheme under a contract with ELCOT.

The laptops were supplied to educational institutions for free distribution to students; their packaging stated that they were for Government of Tamil Nadu supply and not intended for retail sale.

ICMC declared no retail sale price (RSP) and paid CVD on the value determined under the main part of Section 3(2) of the Customs Tariff Act, 1975.

Customs issued a notice proposing differential CVD of ₹3,83,46,628, using the ELCOT contract price as the RSP, and also proposed confiscation, interest and penalty.

The Commissioner dropped the proceedings. Revenue appealed.

Section 3(2) of the Customs Tariff Act applies the RSP-based measure of CVD only where the imported article is legally required to bear an RSP declaration; its deeming provision operates on the RSP declared on the article and does not itself provide a method to ascertain an undeclared RSP.

Section 4A(4) of the Central Excise Act and the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 provide an ascertainment mechanism for excisable goods, but that mechanism is not incorporated into Section 3 of the Customs Tariff Act.

Under Jayanti Food Processing (P) Ltd. v. CCE, 2007 (215) E.L.T. 327 (S.C.), and CCE & Service Tax, Kanpur v. A.R. Polymers Pvt. Ltd., 2023 (384) E.L.T. 512 (S.C.), RSP-based assessment requires a legal mandate to declare an RSP; goods supplied through an intermediary for free distribution to the ultimate consumer, without a retail sale of the package, need not attract that requirement.

Tax liability and its measure require statutory authority; a valuation method cannot be supplied by implication or by an adjudicating authority.

Under Pushpam Pharmaceuticals and Uniworth Textiles, suppression for extended limitation requires deliberate withholding of facts with intent to evade duty.

The Tribunal held that neither Section 3 of the Customs Tariff Act nor the Customs Act or its valuation rules authorised Customs to determine an RSP that had not been declared.

The ELCOT contract price could not fill that gap; it was an institutional contract price that included a backpack and software and VAT, and was not the declared RSP of the imported laptops.

Independently, the laptops were specially packaged for the Government scheme, were not alleged to have been sold in the retail market, and were distributed free to students.

Applying Jayanti Food Processing and A.R. Polymers, the Tribunal found no sale of the package to the ultimate consumer and no legal requirement to declare an RSP.

The declared Bills of Entry, the respondent’s correspondence and its disclosure of the contract and price negated deliberate suppression; the notice’s confiscation proposals likewise lacked an established contravention or an identified unfulfilled exemption condition.

It held that the demand for differential CVD was unsupported by statutory authority and, in any event, the laptops were not required to bear an RSP declaration.

The extended limitation period was unavailable; confiscation, interest and penalty were not sustainable.

Any provisional assessments still pending were directed to be finalised under Section 18 of the Customs Act on the value determined under the main part of Section 3(2), within three months of receipt of the order.

The security and bond were to be dealt with accordingly, and consequential relief was allowed in accordance with law.