CESTAT: Importer Not Liable for Differential Duty on Post-Sale RSP Increase by Dealers

April 9, 2026 : The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), New Delhi has held that an importer cannot be saddled with differential customs duty merely because the Retail Sale Price (RSP) of goods is increased by independent dealers after the goods are sold on a principal-to-principal basis.

In Richemont India Pvt. Ltd. v. Commissioner of Customs (Appeals), New Delhi, the Tribunal comprising Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) allowed the appeal filed by Richemont India Pvt. Ltd., setting aside the demand of differential duty, along with interest, confiscation, and penalty.

The dispute arose from allegations by the Directorate of Revenue Intelligence (DRI) that the RSP of imported luxury watches had been revised upward after import, and that such revised RSP should form the basis for reassessment of Countervailing Duty (CVD). The Department relied on search proceedings conducted at dealer premises, where altered MRP tags and price lists were allegedly found.

Richemont contended that it had correctly declared the RSP at the time of import based on exporter-provided pricing and had duly discharged applicable customs duty. It emphasized that the watches were sold to unrelated authorized dealers on a principal-to-principal basis, transferring full ownership, risk, and control. Any subsequent revision in price by dealers, it argued, could not be attributed to the importer.

Accepting these submissions, the Tribunal noted that there was no material evidence to establish that the importer had altered, tampered with, or even had knowledge of any upward revision in RSP of goods lying with dealers. It held that once the goods were sold, the importer lost control over them and could not be held responsible for subsequent actions of independent dealers.

The Tribunal further clarified that Rule 5 of the Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 applies to manufacturers and not importers. It reiterated that any alteration in MRP at a later stage in the domestic market does not imply that the importer had altered the declared RSP.

On the evidentiary aspect, the Tribunal rejected reliance on the statement recorded under Section 108 of the Customs Act, observing that the mandatory procedure under Section 138B had not been followed. In the absence of corroborative evidence, such statements could not sustain the demand.

Concluding that the demand of differential duty was unsustainable, the Tribunal also set aside the associated interest, confiscation, and penalty, holding that these could not survive independently once the primary demand failed.