Customs, Excise and Gold Tribunal - Delhi
Vijay Kumar vs Commissioner Of Customs, Raipur on 25 January, 2002
Equivalent citations: 2002(80)ECC565, 2002(142)ELT241(TRI-DEL)
ORDER
K.K. Usha, J. (President)
1. These appeals arise out of an order passed by the Commissioner of Central Excise & Customs, Raipur, dated 26-4-2001 pursuant to an order of remand passed by this Tribunal in Final Order Nos. 1520-1521/2000-B, dated 3-10-2000. Appeal E/357 is filed by Shri Iqbal Singh, Proprietor of M/s, Allite Enterprises and Appeal E/356 is at the instance of Shri Vijay Kumar, an employee of the above mentioned proprietary concern.
2. M/s. Allite Enterprises (hereinafter referred to as the importers) having IEC No. 1399004671 filed a Bill of Entry dated 24-1-2000 at Container Freight Station, Raipur for clearance of import consignment of 45,000 pieces of 'Blank Video Cassettes' made in Japan imported from Singapore. The import consignment was declared as 1/2" Blank Video Cassette of Panasonic Brand; made in Japan for use on S-VHS/Digital S-VCR ITC (HS)-85239003-20 in the Bill of Entry. It was claimed that the import was under 'OGL'. The customs authorities took the view that the cassettes imported were not suitable for use in S-VHS/Digital S Type VCR and therefore they were classified under ITC Heading 85239003.90 instead of Heading 85239003.20 as claimed by the importer. Doubts were also raised regarding correctness of the transaction value claimed by the importer. A show cause notice was issued to the importer as well as Shri Vijay Kumar who had signed as Proprietor while filing the Bill of Entry. In the show cause notice it was proposed -
(1) to classify the goods under ITC(HS) Classification Heading 85239003.90 under EXIM Policy 1997-2002 and held the same to be a restricted item for import otherwise than under special import licence/authorisation;
(2) to confiscate the goods under Section 111(d) of the Customs Act;
(3) to assess the goods at value of US $ 1.10 plus freight from Mumbai to Raipur loading/unloading and handling charges associated with the delivery of the goods, the cost of insurance and other charges in terms of Section 14 of the Customs Act read with Rule 5(1)(a) of Customs Valuation (Determination of price of imported goods) Rules, 1988;
(4) to impose penalty on each of them under Section 112(a) of the Customs Act; and (5) to recover special additional duty @ 4% of the value of the imported goods.
Adjudicating authority by his order dated 11-5-2000 held that the imported video cassettes are to be classified under ITC (HS) Heading 85239003.90 and since the goods were not covered by valid import licence or customs clearance permit were liable to confiscation. He directed confiscation of the goods with an option for redemption on payment of a fine of Rupees four lakhs. He also took the view that the value of the goods has to be fixed at the rate of US $ 1.10 per cassette at Mumbai. The assessable value was fixed on this basis by including cost of transportation from Mumbai to Raipur, cost of insurance and landing charges. He also held that the importer was not entitled to exemption from special additional duty under Notification No. 22/99-Cus., dated 28-2-99. A Penalty of Rs. 2 lakhs was imposed on Shri Iqbal Singh and M/s. Allite Enterprises jointly and severally under Section 112(a) of the Customs Act. He found mala fide on the part of Shri Vijay Kumar and found him liable for personal penalty for his acts of commission and omission. A penalty of Rs. 1 lakh was imposed on him.
3. The order was taken in appeal by Shri Iqbal Singh as Proprietor of M/s. Allite Enterprises and Vijay Kumar as appeal Nos. C/237-238/2000 before this Tribunal. Four issues were raised in the above appeals, namely, -
(1) ITC-HS Classification of the imported goods.
(2) Valuation of the goods.
(3) Special Additional Duty on the goods.
(4) Confiscation and Penalty.
Tribunal by order dated 3-10-2000 held that the invoice price of US $ 0.60 declared by the importer in the Bill of Entry has to be accepted for the purpose of valuation of the goods under Section 14 of the Customs Act. The Tribunal also took the view that the goods imported would attract Special Additional Duty.
4. Issue regarding classification was elaborately considered in detail by this Tribunal. The relevant main heading of ITC(HS) Classification under EXIM Policy 1997-2002 reads as follows :-
"85.23 Prepared unrecorded' media for sound recording or similar re-cording of other phenomena, other than products of Chapter 37.
In this heading, free import of audio or video cassettes is not permitted. They will be treated as Re-stricted Goods.
The rival headings are also reproduced below :-
85239003.20 ½ Video Cassettes suitable to work Belacam/Betacan SP/M-II S-VHS/ Digital-S type VCR.
Free 85209003.90 Restricted Consumer goods, Not permitted to be im-ported except against a licence or in accor-dance with Public No-tice issued in this be-half."
In order to classify blank video cassette under Heading 85239003.20, it has to be shown that the cassettes are 1/2" in tape width and that they are suitable to work with Betacam/Betacan SP/M.II S-VHS/Digital S-type VCR. After referring to the relevant literature on different types of VCR, this Tribunal came to the conclusion that Betacam SP and M-II formats are improved versions of the earlier formats, namely, Betacam and M respectively. S-VHS format has features for the professional market including full editing capabilities, dynamic tracking and has been adopted for professional use. 'VHS' from Panasonic and 'Betamax' from Sony are consumer cassette recorders. It was also found that M-II and S-VHS are two different formats/systems known to the professional market, whereas VHS is meant for the consumer. It was also found that S-VHS VCR can play and, in many instances, record tapes in the VHS mode. A video cassette which is suitable for a VHS type VCR can be played in a S-VHS type VCR also, but for recording purpose such a video cassette is not, m all cases, suitable for S-VHS type VCR. It was noted that according to the opinion by expert video cassette which is suitable for VHS type VCR cannot be used in S-VHS recorder without disabling certain notches in the VCR. The Tribunal therefore took the view that a blank video cassette can be considered to be suitable to work with S-VHS recorder only if it can be used for recording without any structural or operational modification of the VCR and the quality of such recording is determined by the original VCR format as such. After referring to the guidelines given by the DGFT to the effect that, if necessary, video cassettes are to be checked by actual demonstration by the Customs, the Tribunal observed that the Commissioner had not done or caused to be done any such demonstration. Finally, the following direction was given by the Tribunal to the Commissioner:
14.3 We are told that the goods are still in Customs custody. Having regard to this fact as well as the aforesaid facts and circumstances, we are of the considered view that the Commissioner shall decide afresh the suitability or otherwise of the imported video cassettes to work with S-VHS type VCRs, by actual demonstration with VCR of the specified type and representative samples of the cassettes. Such demonstration shall be held (in the presence of the importer or his authorised representative) either by the Commissioner or by such officer of customs not below the rank of Assistant Commissioner as may be authorised in this behalf by the Commissioner. The statement of the person in-charge of the VCR shall also be taken regarding the demonstration. A reasonable opportunity of hearing shall be given to the importer by the Commissioner before taking decision on the question of suitability of the cassettes to work with S-VHS VCRs. Due regard shall be had to the contours laid down in this order, in taking such decision.
5. In view of the above finding the Tribunal set aside the order of confiscation and penalty imposed on the appellant but it was made clear that it w ill be open to the Commissioner to decide afresh whether the goods are liable to confiscation under Section 111(d) of the Customs Act, depending on his findings on classification and importability of the goods. Similar direction was given in the case of imposition of penalty also.
6. Pursuant to the above order the matter was taken up by the Commissioner. He issued notices to the parties fixing 9-1-2002 as the date for demonstration. Shri A. Martin and Shri R.N. Kulkarni of Doordarshan Kendra, Raipur presented a video cassette recorder Model No. BR-S 522E (JVC). It was explained by Shri Martin that the said VCR was S-VHS video cassette recorder. As requested by the Counsel for the defence installation of the VCR was explained. JVC Service Manual of the above mentioned VCR model was made available to the learned Counsel for the Importer and photocopy of the same was also handed over. It is recorded in the order of the Commissioner that the importer agreed with the demonstration with the S-VHS VCR presented by the Doordarshan Kendra, Raipur. Doordarshan Kendra, Raipur was asked to produce a S-VHS Cassette and it was inserted into the said VCR through the flap. It was found that recording could be done with S-VHS video cassette in the VCR made available by the Doordar-shan Kendra. Thereafter a representative sample of the video cassette obtained from the sealed packet was placed in the same VCR. It was noticed that recording could not be done with the said VHS video cassette on the S-VHS VCR. As a result of the above demonstration the Commissioner took the view that the imported cassette can be classified only under Heading No. 85239003.90 of ITC (HS) Classification.
7. In these appeals the main attack on the above finding is on the ground that the demonstration was not properly carried out. According to the appellants the machine provided by Doordarshan Kendra was a complex one with very many attachments and it was for this reason recording was found not possible with the imported video cassettes. Appellant further contends that the Commissioner's action in refusing to do the demonstration with the VHS VCR made available by the appellant was unjust and unfair. The learned Counsel points out that the Commissioner has failed to comply with the direction in the remand order as he has not taken a statement from the person-in-charge of the VCR. It is further pointed out that Kolkata Bench of this Tribunal has held in Shree Salasar Impex v. CC (Port), Calcutta - 2001 (131) E.L.T. 44 that similar imported cassettes are suitable for recording in S-VHS VCR and therefore would come under Heading 85239003.20.
8. The learned Counsel for the appellant points out that inspite of this Tribunal holding that the transaction value has to be accepted the Commissioner has accepted it only provisionally 'so as to keep the matter open in the event an appeal against the said order, as it related to valuation aspect, is filed or fresh evidence necessitating loading of the value is brought on record'. The order also reflects that he has made a provisional assessment at US $ 0.60 which is totally unwarranted in the light of the finding of the Tribunal. It was also submitted that the Commissioner has erred in enhancing the redemption fine to Rs, 13.5 lakhs from Rs. 4 lakhs in the original order which was set aside by this Tribunal at the instance of the assessee.
9. The learned Departmental Representative submitted that there is no merit in the complaint of the appellant that the demonstration was not properly done. A reference to the relevant portion of the impugned order would show that all required opportunity was given to the appellant to raise objection and take part in the demonstration. Under the circumstances there is no need for a further demonstration to find the suitability of the imported cassettes for the purpose of recording in S-VHS VCR.
10. We find the Commissioner has conducted the demonstration as per direction issued by this Tribunal in its order dated 3-10-2000. He has taken necessary precaution as is evident from his order. But, at the same time, we notice that he had failed to get a report from the person-in-charge of the VCR made available by the Doordarshan Kendra. The Commissioner cannot be found fault with for not accepting the VCR made available by the appellant for the purpose of demonstration. The appellant has a case that the VCR made available by the Doordarshan Kendra was having several other adaptation and it was for this reason the imported cassette could not be used in it for the purpose of recording. But the appellant does not explain as to how such adaptation could affect the playing of the cassette for the purpose of recording. Under these circumstances, we do not propose to interfere with the finding of the Commissioner that the imported cassettes are to be classified under Heading 85239003.90., import of which was restricted during the relevant period. The decision of Kolkata Bench of this Tribunal reported in Quick International v. CC, Calcutta - 2001 (131) E.L.T. 471 (T) = 2001 (44) RLT 429 cannot be of any help to the appellant since in that case cassettes were demonstrated before the Deputy Commissioner of Customs and it was found that the imported cassettes could be played on S-VHS type of VCR for recording. In the present case, as mentioned above, the result of the demonstration was against the claim of the appellant.
11. Learned Counsel for the appellant submits that the redemption fine imposed at Rs. 13,50,000/- is highly excessive especially in view of the long lapse of time. The import was in January, 2000. He submits that it cannot be disputed that the price of video cassettes has come down much during the period of last two years. Under such circumstances if the appellant is compelled to pay redemption fine of Rs. 13,50,000/- it will be equivalent to denying the appellant the remedy of redemption at all. We find merit in this contention. We are also of the view that there was no justification on the part of the Commissioner to enhance redemption fine from Rs. 4 lakhs as ordered in the earlier order which was set aside by this Tribunal on appeal filed by the assessee. Taking into consideration the above facts, we reduce the redemption fine to Rs. 50,000/-.
12. There is no justification -for the Commissioner to treat the assessment at the rate of US $ 0.60 per video cassette as provisional. Since the Tribunal had directed him to take the transaction value at the above rate the assessment has to be final assessment on the above basis and not provisional assessment. We clarify that the assessment is not provisional but final.
13. A penalty of Rs. 2 lakhs has been imposed on Shri Iqbal Singh, Proprietor of M/s. Allite Enterprises and M/s. Allite Enterprises under Section 112(a) jointly and severally. Taking into consideration the entire facts and circumstances of the case, we reduce the penalty to Rs. 20,000/-.
14. The Commissioner has imposed a penalty of Rs. 1 lakh on Shri Vijay Kumar under Section 112(a) of the Customs Act. This is only for the reason that Shri Vijay Kumar who is an employee of M/s. Allite Enterprises, alleged to have claimed himself to be the Proprietor of M/s. Allite Enterprises, Ajmer and had filed Bill of Entry. It has come out from the earlier order of this Tribunal dated 3-10-2000 that Shri Vijay Kumar is an employee of the importer and had acted only as authorised representative of the importer in filing the Bill of Entry etc. It is true that he signed with the seal of the Proprietor. We are of the view that there are no sufficient reasons in this case for imposing personal penalty on Shri Vijay Kumar. We, therefore, set aside the penalty imposed on him.
15. In the light of the above, we allow Appeal E/356/2001 in full and Appeal E/357/2001 in part.