Customs, Excise and Gold Tribunal - Mumbai
P.R. Trivedi, S.C. Soni And V.B. Patel vs Commissioner Of Customs on 18 March, 2005
Equivalent citations: 2005(101)ECC351, 2005(192)ELT801(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. These three appeals arise out of the same common order and are being disposed of by this common Order; after hearing both sides, and considering the issues, it is found:
(a) M/s Saidut Clearing Agency Pvt Ltd, Clearing Agent (CHA No. 11/978) filed Bills of Entry as follows as accepted in the notice itself.
Sr No IGM No Bill of Lading & Date Invoice No . & Date Bill of Entry & Date Importers Name Assessable Value
1. 1 1980/2002 dt 27.7.02 SIBBOM008857 dt 20.07.02 2070221 dt 22.07.02 281755 dt 30.07.02 M/s Saumya Marketing Rs54S552/-
21 1980/2002 dt 27.07.02 SINBOM 008857-22 dl 20.07.02 2070222 dt 22.07.02 281952 dt 30.07.02 M/s Mega bnterprises Rs743840/-
311980/2002 dt 27.07.02 SINBOM008857-1 dl 20.07.02 2070223 dt 22.07.02 281758 dt 30.07.02 M/s Saumya Marketing Rs 349343 Total Rs 16,41,735 Since the three consignments were supplied by the same foreign supplier M/s Lim Manufacturing (Pte) Ltd, Singapore and they had arrived by the same vessel and invoices raised were in consecutive serial numbers and Bill of Lading and IGM were issued on same day and had examined these goods based on intelligence with DRI, Mumbai Zonal Unit that certain electronic goods namely CD/VCD Hi-Fi Systems and Car Cassettes Playes were being imported in the guise of electronic components and the importers were misdeclaring the description of the goods and also were evading MRP based CVD. These consignments imported by M/s Saumya Marketing and M/s Mega Enterprises, consisting of parts of electronic components for Car Cassette Player and Audio with Radio of Kenwood, Sony, Pioneer, Philips and Thomson brands were taken up for investigation. It is alleged that examination of the consignments revealed that the description given was not complete in the sense that while invoice showed different components parts, many items had come assembled in to a cabinet and there were other misdeclarations of the products. It was also found from the markings on the cartons that these items imported were constituting of a matching quantities, which when taken in its entirety along with inverted cartons would result in a fuel audio /video players. Therefore, prima facie it appears that complete sets of audio systems etc had been imported in disassembled condition spread over the three Bills of Entry. It was alleged in the Show Cause Notice after that all the parts to the last screw were imported to make a complete system and no indegenuous part is to be added to make the system functional. Statements of various persons were recorded which revealed that the proprietor of the importing firms were being advised and then controlled by Pundarik Trivedi who claimed to be actual owner of the said firms and their proprietors were given a sum of Rs. 4000/- to Rs. 5000/- per month for operating the said firms in their names. The goods were released after accepting provisional bond and on submission of bank guarantee and a Show Cause Notice was issued alleging under valuation and import of full electronic audio systems, cassette player etc.
(b) The Commissioner, after considering the material, came to the conclusion that:
(i) the goods covered under the 3 Bills of Entry referred to above in this case were actually imported by Pundarik Trivedi only and hence they deserve to be assessed together by clubbing. Relying upon the decision in the case of Monica Enterprises v. Collector of Customs 2002 (149) ELT 1264 (Tribunal)
(ii) also found importing firms were not functioning at the addresses and ordered clubbing of the imports which were to be assessed as complete articles as alleged in the Show Cause Notice.
(iii) He also redetermined the value of the imports collectively.
(iv) He found that since the misdeclarations were made at the behest of Trivedi and correct and true declaration about the goods on the Bills of Entry were not given, contravention of Section 111 (m) of the Customs Act, 1962 were attracted and the goods were liable to confiscation and penalty under Section 112 (a) of the Customs Act, 1962 was required to be imposed.
(v) Accordingly, he ordered clubbing together of the three Bills of Entry and the imports to be treated as complete unit of 2189 systems of car cassette players and five-in-one audio systems classifiable under Heading 8527.90 and should be subjected to levy of CVD on the basis of MRP or on ad veloram whichever is higher. The value was enhanced to Rs. 89,09,602/- and differential duty of Rs.37,95,206/- was ordered to be recovered from the importers and or Pundari Trivedi. The goods were confiscated in terms of Section 111 (m) of the Customs act, 1962 and redemption fine of Rs.20.00 lakhs were offered. A penalty of Rs. 5.00 lakhs on Pundari Trivedi and Rs. 1.00 lakh each on Vinodbhai Patel and Shohanbhai Soni was imposed. The present appeals are filed by these three persons.
(c) The issue of clubbing of imports made on different BE's of components of electronic entity is not res integra. After considering the catena of decisions on the above subject including the Supreme Court's decisions, the Larger Bench of this Tribunal in the case of Sony India Ltd v. CC, ICD, New Delhi 2002 (143) ELT 411 (Tri-LB) have held that components imported (TV components in that case) cannot be treated as complete colour TV set by clubbing. It held that duty demanded, direction for confiscation and imposition of penalty were not sustainable under law. In that case, the same appellant had imported parts of colour TV from April 1995 to 1997 which were treated by the Department as import of 'Colour TV' for the purpose of assessment. In that case, there were certain violations of licence under the EXIM Policy to be granted by DGFT. The Commissioner in that case had come to a finding "there is no doubt the goods imported under Bills of Entry mentioned in the Annexure to Show Cause Notice are the components which would be TV sets, when assembled."
And further observed "The above analysis would clearly indicate that the components imported by M/s Sony India were the colour TVs in unassembled condition. They were certainly not the components in disassembled condition which implies the manufacture of a colour TV set first and then its dismantling for the purpose of convenience for its transport into semi knocked down condition or a completely knocked down condition."
And charges of violation of Import Policy were also upheld for certain period. In view of this finding of the Larger Bench, we find no reason, to come to a conclusion, to consider the imports in the present case, that import of a complete Car Audio Set or Five in one Audio Systems has been effected. More so, when we find that provisional assessment and clearances have been effected and granted to the importers independently as declared on the Bills of Entry. We find, no reason to club, the imports made by different proprietary firms to be made and considered as an import of a complete set as is made out by Customs department in this case. This view of the Customs i.e. to club imports of different proprietary firms, would lead to a situation, of no imports of components of such electronic goods or other machinery etc could be independently effected, rendering the separate Tariff Entry nugatory. Since parts and components are being imported by various persons which eventually may result in assembly of the entire goods when taken together or for being used as replacement parts. The decision of the Larger Bench does not permit clubbing of imports made by same person, following the same we have to hold that clubbing of imports by different independent importers cannot be clubbed.
(d) We also rely on the decision of RR Electronics 2001 (127) ELT 504 wherein it was held that different components (VCRs) imported through Bombay Port, Airport, and Ahmedabad. The assemblies in CKD need not be prohibited and especially when imports were made at different times the goods were not liable for confiscation under Section 111 (d) of the Customs Act, 1962. We also rely upon the case of Vishal Electronics Pvt Ltd v. CC, Bombay 1998 (102) ELT 188 (Tri).
(e) It is settled position that goods are to be assessed for classification in the manner and condition in which the same are imported, as held by the Larger Bench in New India Industries Ltd. v. Collector of Customs (1994 (73) ELT 723). The goods herein have been imported as components after clearances also, as certified by the Chartered Accountant whose certificated has been placed on record based on the sale bills of the two importers, the goods have been sold disposed as components. There is no evidence to show that the goods imported in each of the consignment were assembled and thereafter sold as complete electronic items. Section 17 deals with assessment of each Bill of Entry. There is no provision for clubbing more than one Bills of Entry. Section 14 also provides for assessment of value of the goods imported into India. The goods imported into India are in the form of parts /components, which has also been confirmed on examination.
For classification, Rule 2(a) of the Interpretative Rules thus provides for an incomplete article as a complete article provided it has the essential characteristics of the complete article. Rule 2(a) applies to the single importer and for the goods covered by particular Bill of Entry. In other words, if the goods presented for assessment under one Bill of Entry filed by the two respective importers do not have the essential characteristics of a complete article. The case relied upon by the DR in Goel Pvt Ltd. v. CC (Final Order No. A/1418/WZB/2004/C-I dated 19.8.2004) is based on different facts since in that case one single importer imported parts of wrist watches having the essential characteristics of a complete watch in CKD condition. The larger Bench in case of Sony (India) Ltd (2002 (140) ELT 411) held that only when the components are presented together for assessment at the same time by the importer can resort to 2(a). Rule 2(a) will not apply where two different importers have separately imported components and filed separate Bills of Entry and further have shown that the goods were also cleared as components and sold as components after clearance.
(f) When we find that the goods cannot be considered as imports of Car Audio Cassettes and 5-in-1 Audio Systems, we do not find and uphold the liability to confiscation under Section 111 (m) of the Customs act, 1962 and/or valuation arrived at by the lower authorities. When the confiscation liability and misdeclaration of valuation liability cannot be upheld. When confiscation under Section 111 (m) cannot be sustained , there could therefore be no cause for penal action on the appellants who are the importers herein i.e. Sohanbhai C Soni and Vinodbhai Patel.
(g) We also find that the Commissioner has not indicated in the impugned order the Section of the Customs Act, 1962 under which the penalty of Rs.1.00 lakh each has been imposed on Sohanbhai Soni and Vinodbhai Patel. Therefore, the penalties on these two appellants cannot be upheld.
(h) As regards penalty imposed on Pundari Trivedi, a penalty of Rs.5.00 lakhs under Section 112 (a) of the Customs Act, 1962 has been imposed. The Commissioner has considered the case of Tribunal vide its decision in Dhirubhai N. Sheth v. Collector of Customs 1995 (75) ELT 697 (Tribunal) and has come to the conclusion. That reliance on that decision is not seem to be legally correct because within the meaning of Section 2 (26) of the Customs Act, 1962, the word also includes "any owner or any person holding himself ought to be the importer and since Trivedi in his statement under Section 108 of the Customs Act, 1962 had categorically claimed the impugned goods and the importers were shown in the documents. Therefore, based on this admission he is to be held as an importer in an indirect manner and would fall within the definition as given under Section 2 (26) of the Customs Act, 1962. Therefore, he would be liable for penalty under Section 112 (a) for having done in any manner which renders the goods liable for confiscation, abates or omission and Trivedi did more than abetting and rendering the goods liable to confiscation. In view of the finding that liability to confiscation under Section 111 (m) by considering these goods to be import of Car Audio Cassette player and 5-in-1 Audio System and they were misdeclared as components thereof is not being upheld. Following the Larger Bench and other catena of decisions on the subject, we find no reasons to differ from them & that the decision of this Tribunal in the case of Dhirubhai N. Sheth (supra) induces us to accept the position of Trivedi to be not an importer under Customs Act 1962. We also find that Trivedi is not supporting the admission extracted from him under Section 108 of the Customs Act, 1962 relied upon by the adjudicator. He is contesting the position and is even in appeal. We find therefore no reason to consider him to be an importer and that of Car Audio etc in this case to be liable to penalty under Section 112 (a) of the Customs act. In view of the findings, the penalties on Trivedi is also required to be set aside.
(i) In this view of the findings as hereinabove, the under valuation arrived on the 'clubbed' imports on BE's filed by different importers cannot be upheld.
2. In view of the findings hereinabove, these appeals are to be allowed after setting aside the order.
3. Ordered accordingly.
(Pronounced in Court on 18/03/2005)