Importer Not Liable for Post-Sale MRP Revision: CESTAT Quashes Differential Duty Demand on Imported Watches

The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), Delhi, has set aside a demand of differential customs duty amounting to Rs. 4.47 lakh holding that an importer cannot be held liable for post-sale revision of Maximum Retail Price (MRP) by independent dealers. The bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that Rule 5 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008 is vis-a-vis a manufacturer who alters or tempers the retail sale price declared on the package of the goods after their removal from the place of manufacture resulting in increase of price and in such situation the said increase price shall be taken as retail sale price of the goods removed. However, since the appellant herein is the importer as different from the manufacturer the said rule is held to has wrongly been invoked. The case arose from imports of luxury watches by the appellant, who acted as an authorized distributor of globally renowned watch brands in India. At the time of import, the company declared the Retail Sale Price (RSP) and discharged applicable Countervailing Duty (CVD), and the consignments were duly assessed and cleared by customs authorities. Subsequently, investigations conducted by the Directorate of Revenue Intelligence (DRI) at the premises of certain authorized dealers revealed instances where MRP tags were allegedly altered or replaced, and in some cases, were absent altogether. Based on these findings, the department alleged that the importer had revised RSP upwards post-import, differential CVD was not paid on the revised prices, and such conduct warranted demand of duty, confiscation, and penalty. The department contended that revised RSP circulated by the importer should be treated as the correct assessable value, the importer exercised control over pricing through internal communications, upward revision applied even to unsold stock, triggering additional duty liability, and suppression of facts justified invoking extended limitation and penalty under Section 114A. The adjudicating authority confirmed the demand of ₹4.47 lakh along with interest, imposed penalty, and ordered confiscation with redemption fine. This was upheld by the Commissioner (Appeals). The appellant argued that CVD was correctly paid based on declared RSP at the time of import, goods were sold to dealers on a principal-to-principal basis, ownership and control passed to independent dealers after sale, any subsequent MRP revision by dealers could not be attributed to the importer, and there was no evidence of suppression or intent to evade duty. The appellant also relied on various tribunal decisions to assert that Rule 5 of the 2008 Valuation Rules does not apply to importers. The Tribunal found no material evidence showing that the importer altered or had knowledge of any post-sale upward revision of RSP by dealers. Once goods were sold to authorized dealers, the importer had no control over pricing or resale. Therefore, liability for any subsequent changes in MRP could not be imposed on the importer. Relying on earlier precedents, the Tribunal held that Rule 5—relating to post-clearance alteration of retail price—applies to manufacturers, not importers. The Tribunal rejected reliance on statements recorded under Section 108 of the Customs Act due to non-compliance with procedural safeguards under Section 138B. Since the differential duty demand itself was not justified, the Tribunal also quashed interest under Section 28AA, penalty under Section 114A, and confiscation and redemption fine The Tribunal set aside the order of the Commissioner (Appeals) and allowed the appeal, holding that an importer cannot be held liable for post-import revision of MRP by independent dealers in the absence of evidence of involvement or control. Case Details Case Title: M/s. Richemont India Pvt. Ltd. Versus The Commissioner of Customs (Appeals) Citation: JURISHOUR-723-CES-2026(DEL) Case No.: Customs Appeal No. 51905 of 2021 Date: 09.04.2026 Counsel For Petitioner: Harpreet Singh Ajmani Counsel For Respondent: Shiv Shankar Click Here To Read Order Read More: State Govt to Deploy AI-Based System to Combat Rising GST ITC Fraud

Importer Not Liable for Post-Sale MRP Revision: CESTAT Quashes Differential Duty Demand on Imported Watches

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