Customs, Excise and Gold Tribunal - Delhi
M/S Unitop Office Automation vs Cc, Delhi on 4 April, 2001
Equivalent citations: 2001(135)ELT1368(TRI-DEL)
ORDER
V.K. Agrawal
1. In this appeal, filed by M/s Unitop Office Automation, the issue involved is whether the copier components imported by them are classifiable under Sub-heading No 9009.90 of the First Schedule to the Customs Tariff Act, as claimed by them or under Sub-heading 9009.21 as ordered by the Commissioner of Customs, under the impugned Order No. 30/2000 dt. 24-4-2000 and whether the enahncement of value declared by them is warranted.
2. Shri B.B.Gujral, ld. Advocate, submitted that the Appellants are regularly importing old and used re-conditioned components of photocopier machine against special licences for marketing them since these are available at cheap prices at abroad; that in the present matter also, they imported a consignment of components of photocopier machine from England; that they filed a Bill of Entry on 15-4-99 for clearance of 123 items of components in different quantities declaring them as old and used reconditioned copier components classifable under sub-heading 9000.90 of the Customs Tariff Act (CTA); that the value declared by them was Rs. 2,17,638.34 p, based on the invoice; that the Commissioner of Customs, under the impugned Order, held that they had imported the complete photocopiers classifiable under Sub-heading 9009.21 of CTA; no significant parts here missing from the consignment of unassembled or disassembled photocopiers; import of old and used photocopier was allowed only under a specific license which they did not possess and the correct value of the goods was Rs. 20,37,757.80 paise; that the Commissioner, therefore, confiscated the goods with an option to redeem the same on payment of fine of Rs. 1 Lakh and imposed a penalty of Rs. 50,000/-
3. The ld. Advocate, further, submitted that they have not imported complete photocopiers and as such they have not mis-declared any fact in the Bill of Enry filed by them; that the component parts imported by them were about 80-85% only which would not make a complete machine ready to use; that accordingly Rule 2(a) of the Rules for Interpretation of the Customs Tariff is not applicable to the import made by them; that Chartered Engineers have clearly certified that they had carefully inspected and valued the old, used and reconditioned photo copier components; that they had further mentioned in the certificate that they had taken into consideration the period of use of the components and their present condition after reconditioning; that such a specific certificate cannot be rejected on the basisof a mere routine examination of the Shed Appraiser; that the exporter, M/s Virtual International have also mentioned, in their letter dt 22-10-1999, that they had exported old/used component parts which had been properly re-conditioned and were fit for further use as components of photocopier machine; that exporter had also given a list of important parts which were missing in the said letter. The ld. Advocate also mentioned that the expert opinion of Training and Technical, Canon India Pvt. Ltd, has been obtained behind their back and as such cannot be relied upon by the Department; that Shri Arun Saxena, Training and Technical Support Manager, Cannon India Ltd. in his cross examination has clearly mentioned that only 80 to 85% parts were available and that he had never said that it was a complete photo copier. He also mentioned that M/s Cannon India Pvt. Ltd in their letter dt. 19-8-99 has thanked the Commissioner for his time and effort in trying to stop the illegal export of second hand Cannon Coppier and as such they had become an interested party and any report submitted by them is not legally admissible under the law; that thus Department has failed to discharge its responsibility and the conclusions arrived at by the Adjudicating Authority that the imported goods are only old and used photo coppier machines are incrorrect and based on suspicion without any basis.
4. The ld. Counsel also contended that Rule 2(a) of Interpretative Rules is a rule for classification and cannot be made applicable for interpretating notification or Import Policy; that under the relevant policy there is no restriction on the import of any number of these parts; that there is no provision in the said Import Policy akin to Rule 2(a) and accordingly Rule 2(a) cannot affect the validity of an import. Reliance has been placed on the decision in the case of Wipro Ltd. Vs. Commissioner of Customs, Chennai, 1999 (80) ECR 861, wherein it was held that Rule 2(a) is not applicable to ITC policy or exemption notification. He also said that following judgments of the Supreme Court and the Calcutta High Court lay down that unless specifically provided in the Import Policy in respect of any particular machines putting an embargo on the number of percentage of components that can be legally imported, there can be no restrictions on their import irrespective of their quantity or number.
(a) CCE Vs. Tarachand -1983 (13) ELT 1456(SC)
(b) H.C.L.Ltd Vs. U.O.I.-1992(59) 507 (Cal)
(c) Dynamatic Hydraulics Ltd. Vs. Collector -1992 (58) ELT (SC)
5. The ld. Counsel mentioned that the goods imported by them are covered by a Special Import Licence which explicitly permits the import of old, used, and reconditioned components of photocopier machine; that the customs authorities have no power to challange this explicit permission and hold that since these components parts can, by applying Rule 2(a), be regarded as a complete photocopier, their import is not licit, since there is no legal restriction in the Import Policy to import any number of components against import licence. The ld. Counsel relied upon the decision in the case of Shivaji Works Ltd. Vs. CCE, Aurangabad 1994 (69) ELT 674 where in it was held that Rule 2(a) is not applicable when an article squarely falls under a particular heading; that the Tribunal in the case of Modi Zerox Ltd Vs. Collector of Customs 1998(103) ELT 619, had held that the items as imported and as presented for assessment were not incomplete or unfinished fax machines; they were parts and the process of completion of fax machines had not been undertaken by the suppliers; that in the case of Netlon India Ltd Vs. CCE Vadodara 2000 (40) RLT 429, it was held that rule 2(a) can b e invoked only when the goods cannot be classified interms of Tariff Heading, Section, and Chapter Notes. Reliance was also placed on the decision in the case of Wipro Ltd Vs. CCE, Channai 1999 (80) ECR 861 wherein it was held that Rule 2(a) cannot be used to Interpret Import Policy. He also mentioned that in the past they had imported similar old, used and reconditioned Photocopier parts which were duly assessed as such and clearance was allowed by Delhi Customs which goes to show that there was a consistant practice on the part of the Department to allow clearance of similar components against Special Import License and assess them as components and not as complete machines; that it has been held in a large number of cases by the Tribunal and the High Courts that in the cases where there was consistant practice of releasing the goods, that practice should not be denied to another importer suddenly and without prior notice. Some of the cases relied upon by the Ld Advocate are as follows:-
(1) Newsprint Trading and Sales Corporation Vs. Commissioner of Customs Mumbai -1999(112)ELT 1007(T) (2) Gujarat State Export Corporation, Vs. U.O.I. 1984(17)ELT 50(Bom) (3) Vinod Gupta Vs. Collector of Customs, 1988(37)ELT 44(Cal) (4) Ruby Simplex Ltd. Vs. CCE 2000 (38) RLT 234
6. He relied upon the decision in the case of Data Enterprises Vs. Commissioner of Customs , 1999(113) ELT 876(T) in which case the Tribunal held that only component or photocopier machines had been imported as Populated Circuit Board was not imported without which a machines could not perform any function. The ld. Advocate highlighted that in that case 90% components of Photocopier machines were imported. In this regard reliance was also placed on the decision in the case of HCL Vs. U.O.I. 1992(59) ELT 507 (Cal) (in view of absence of selenium drum), in which it was held that whole photocopier machines was not imported; in the case of B.E.Automation Products Vs. CC Amritsar, 2000(122) ELT 908 and in the case of Bhagwan Electric Copiers Vs. CC New Delhi, 1999(106) ELT 66.
7. Shri B.B.Gujral, ld. Advocate, further mentioned that the value declared by them is a transaction value within the meaning of Rule 4 of the Customs Valuation rules which, in absence of the value of contemporeously imported comparable goods, has necessarily to be accepted as the genuine assessable value, unless there is any evidence such as any extra foreign exchange remittance, casting doubt about the genuineness of transaction value; that there is no such allegation in the show cause notice; that M/s Ikon Office Solutions of U.K., Chartered Engineers and Valuers, in their letter dt. 2-1-99, has certified that the prices mentioned in the list were Fair international prices at which similar goods are exported from U.K.; that as held by the Tribunal in the case of Golden Iron Steel Forgoing Vs. CC Mumbai 1999(82) ECR 88, Value as certified by the Chartered Engineer should be accepted in preference to the opinion of shed appraiser;that the Commissioner has accepted the value as given by the Document Company Modi Zerox; that M/s Canon India Pvt. Ltd have also given the price after giving discount; that the Collector has determined the price under Rule 8 of the Custom Valuation Rules without examining the applicability of any other Rules; that the price indicated by the interested parties are the prices for the complete and new photocopier and not the old, used and reconditioned components; that the prices of complete and new machines are not comparable with the old and used reconditioned components; that, further, as the impugned goods are not proved to be complete photocopier it is wrong to apply the prices of complete photocopier; that even for components of Agfa photocopier price has been determined on the basis of Cannon Photocopier; that as held by the Tribunal in the case of Rajnath Motor Pvt. Ltd Vs. Commissioner of Customs, Delhi(118) price cannot be determined on the basis of goods of different Models. The ld. Advocate relied upon the decision in the case of Medak Rubber Ltd. Vs. CC, Chennai 2000(117) ELT 700 (T) wherein it was held that unless Rule 4 is clearly held as not applicable due to either fraud etc. or comtemporaneous imports at higher Prices, one cannot proceed to apply any other subsequent Rule, let alone, jump straightway to Rule 8, merely because the manufacturer's price for original goods is available. Section 14 of the Customs Act read with Rule 4 recognises the primacy of transacation value, whether it be new goods or second hand machines. The reliance was also placed on the decision of the Tribunal in the case of Collector of Customs, Delhi Vs. Blue Star Enterprises 1996(81) ELT 287 (T), wherein it was held that there must be some reasonable ground for the authority to come to the conclusion that there is no international trade and there is no determinable prices.
8. Countering the arguments, Shri Prahbat Kumar, ld. SDR, submitted that on examination of the goods it was noted that the goods were not component of the old photocopier machines though some component parts were found missing in the machines; that out of 50 main frame which were complete photocopier 46 were Cannon make, 2 for Agfa make and two were Zerox make; that apart from main frames several other components were also found which were detached parts of photocopier which cannot be allocated to any specific model in absence of catalogue and literature; that Commissioner had given specific findings that the parts of the photocopier which were claimed to be missing were otherwise contained in the impugned consignment and after comparing the two lists, given in the show cause notice, of the goods, the Commissioner came to the conclusion that loose components found in the consignment were essentially those which were claimed to be missing parts by the importer; that admittedly goods imported were used ones and no sensible person would leave certain parts of the photocopier abroad; that as found by the Adjudicating Authority the importer has choosen an easy way to clear the goods by -declaring them as reconditioned components of photocopier since old and used photocopier are restricted items in para 5.3 in the EXIM Policy and requires Special Import Licence; that Rule 2(a) of the Interpretative Rules provides that any reference in a heading to an article shall be taken to include a reference to that article as complete or finished goods provided that as presented, the incomplete or unfinished article has the essential character of the complete or finished goods; that in the present matter the article has the essential character of complete photocopier machines and interms of Rule 2(a) will have to be classified as photocopier machines. The ld. SDR referred to the decision in the case of Greaves Cotton & Co. Ltd. Vs. U.O.I. 1989(43) ELT 263 (BOM), wherein it was held that imported goods cannot be differently classifiable for ITC and Customs duty purposes.
9. The ld. SDR, further submitted that as imported goods were found to be different from what had been declared by the Appellants, transaction value cannot be accepted. Reliance was placed on the decision in the case of Shiv Shakti Enterprises Vs. Collector of Customs 1991 (52) ELT 439, wherein the value declared by the Appellant was in respect of rivets and the goods on examination were found to be snap fasteners. In these circumstances the Tribunal held that the declared price cannot be said to be transcation value and the question of iis acceptance does not arise and the residual method adopted under Rule 8 by the Collector was upheld by the Tribunal. Reliance was also placed on the decision in the case of Photo Copy Centre Vs. Collector of Customs 1991 (56) ELT 801. The ld. SDR, also mentioned that the Commissioner had determined the assessable value by best judgement method as other prices of comparable/ identical goods were not available; that the amount of depreciation which is prescribed by the Department and which has been accepted by the Tribunal in many cases was allowed; the Tribunal has also upheld the best judgement assesment in the case of Shiv Shakti Enterprises. He also referred to the decision in the case of Metal and Alloys Industries Vs. Collector of Customs 1989(40) ELT 207 (T) wherein the best judgement assessment resorted to by the Collector on the basis of costing method was upheld by the Tribunal. He also mentioned that out of the 50 machines only 2 machines were of Agfa make and two Zerox made and applying the best judgement assessment under Rule 8, the valuation can be done on the basis of the price of Canon make machines; that the certificate given by the Chartered Engineers was only for technical purposes and not for valuation purposes; that the Chartered Engineer has only mentioned that these are fair prices without giving any basis or comparing them with the existing prices. Reliances was placed by him on the decision in the case of Sharp Business Machines Pvt. Ltd Vs. Collector of Custom 1990(49) ELT 640 SC. In reply the Ld Advocate for the Appellant mentioned that the value has been determination after taking into consideration current prices and given 70% or 40% discount arbiteraily, that in case of Debabrata Ghosh Vs. Assistant Collector of Customs, 1993 (68) ELT 551 (Cal), the Calcutta High Court did not agree with the determination of price of a second hand car on the basis of price of a new car and allowing depreciation thereon at a lower rate than the rate of 20% Per Annum adopted for income tax purposes. The ld. Advocate also submitted that all the reports were not made available to them and mere providing of summary of report/document, relied upon by the Departments is not sufficient for the purpose of principles of natural justice as held by the Bombay High Court in the case of General Spare Industry Vs. U.O.I. 1998 (36) ELT 562 Bom. He finally submitted that by applying the fiction and treating goods as complete photocopier transaction value cannot be changed.
10. We have considered the submission of both the sides. The first issue to be decided is whether goods imported by the Appellants are components parts or photocopier machines themselves. The Appellants have relied upon the certificate given by the Chartered Engineer and letter from exporter that the goods imported by them were nothing but old, used and reconditioned components parts of the photocopier machines. On the other hand the Department has relied upon the examination report given by the Trading and Technical Manager of M/s Canon India Pvt. Ltd according to which the imported goods have the basic essential characteristics of photocopier though some parts were removed. We also observe that during the cross examination, Training and Technical Manager has clearly answered that 80 to 85% parts were available. We also observe from the letter dt. 22-10-99 of M/s Virtual International, exporter of the goods the components were less than 70% to 80% of the parts needed to complete the machines. The exporter in addition had given a list of missing parts which, as per findings of the Commissioner, were found in the consignment and make up for the missing components/parts of the photocopier. Rule 2(a) of Interpretative Rules clearly provides that if the incomplete or unfinished goods have essential character of the complete of finished goods if will be classifiable as complete or finished goods. As the missing part were found in the loose condition, we find no infirmity in the impugned Order in treating the imported goods as photocopier machines instead of components parts of photocopier machines. The decisions relied upon by the ld. Advocate are not applicable to the facts of the present matter, as for example, in the case of Data Enterprises, supra, an important components was found to be missing without which photocopier would not have worked at all and as such it could not be said that the incomplete or unfinished goods had the essential character of the complete or finished goods. Similarly in the case of HCL. Solenium Drum was not imported. It was goods imported by the Appellants are held to be photocopier machines, for the purpose of import regulation these cannot be treated as components parts. The ld. SDR, in this connection, has relied upon the decision in the case of Greaves Cotton. In the said case the Customs Authorities assessed the Diamonds for ITC purposes as gem quality Diamonds and for the purpose of Customs duty was assessed of the very same diamond as industrial diamonds Bombay High Court allowed the writ petition observing as under:
"It is difficult to see how the custom authorities can blow hot and cold at the same time. Either the diamond imported by the petitioner were gem quality or they were Industrial Diamonds. The Customs Authorities had to make up its mind. Apparently the reason for this contradictionary stand taken by the Custom Authority seems to flow from the fact that the duty on Industrial Diamond is 40% advalram where as the duty of gem quality diamond is a mere 2 1/2 advaloram", Accordingly if the impugned goods are treated to be Photocopier machines, the import of which is restricted and in absence of special import licence the goods are liable for confiscation under Section 111(d) of the Customs Act.
11. The second issue to be decided is whether the value declared by the Appellants is to be accepted for the purpose of assessment or the value as enhanced by the Adjudicating Authority is correct. We observe that the Commissioner has not accepted the value declared by the Appellants and found the basis of valuation adopted by the Department to be correct. It is not disputed by the Appellants that out of 50 machines 46 were Canon make and 2 of Zerox make and 2 of Agfa make. The Commissioner has determined the prices under Rule 8 of the Customs Valuation (Determination of Price of Import Goods) Rules, 1988 which provides that where the value of imported goods cannot be determined under provisions of any preceding Rules the value shall be determined using reasonable means consistent with the principle of general provisions of these Rules and Section 14 of Custom Act on the basis of data available. The ld. SDR has rightly pointed out that the value by the Appellants was not acceptable as the goods on examination have been found to be different from what were declared by the Appellants. He has relied upon the decision in the case of Shiv Shakti Enterprises and Photo Copy Centre in this regard. In photo copier Centra Case the importer had imported complete photocopier in SKD condition under two bills of entry. The Tribunal while dealing with the valuation aspect held that "since there has been a mis declaration of the description of the goods, the declared price cannot be said to be the transaction value and question of its acceptance does not arise." As no other Rule was applicable in absence of availability of value of identical or similar goods, the Commissioner has rightly determined the assessable value under residual method as provided under Rule 8 of the Customs Valuation Rules. It has been contended by the Appellants that current prices had been taken by the Department and arbitrarily, discount has been granted. We find from the letter of the Document Company Modi Zerox that they had given the price of the photo copier machines as prevalent in 1993 and not the current price and, therefore, it cannot be said that the Commissioner had adopted the current price. In respect of Canon the Commissioner had allowed the discount as prescribed. They have also not come forward with any other prices of the photocopier machines and in absence of which the price determined by the Commissioner under the best judgement assessment has to be accepted. The same applied to two machines of Agfa make. Accordingly, we find no reason to interfere with the price determined by the Commissioner in the impugned Order. We also do not find any substance in the contention of the ld. Advocate that there was violation of principle of natural justice as the complete examination report by technical and training manager of Canon India Pvt. Ltd was not given to them in view of the fact that they had cross examined the Technical and Training Support Manager. However, in view of the fact that the goods imported were old and used and taking into consideration all the facts and circumstances of the case, we reduced the redemption fine to Rs. 25000/- and Penalty to Rs. 15,000/-.
But for these modification, the appeal is rejected.