Custom, Excise & Service Tax Tribunal
Farokh S. Todywalla vs Acc, Mumbai Zone Iii on 11 December, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: C/86671/2013
[Arising out of Order-in-Appeal No. 57 &58/Mumbai-III/2013 dated 16/01/2013 passed by the Commissioner of Customs (Appeals), Mumbai Zone III.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Ramesh Nair, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Farokh S. Todywalla
Appellant
Vs
Commissioner of Customs (Import)
ACC, Mumbai Zone III
Respondent
Appearance:
Shri Prashant Patankar, Advocate for the appellant Shri Senthil Nathan, Dy. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 11/12/2014 Date of decision: 30/12/2014 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal is directed against Order-in-appeal No. 57 &58/Mumbai-III/2013 dated 16th January, 2013 passed by the Commissioner of Customs (Appeals), Mumbai - III. Vide the impugned order the ld. Lower appellate authority has upheld the order of the adjudicating authority dated 16-12-2010 wherein he had classified the goods imported by the appellant under CTH 97050090 and has confiscated the same under the provisions of section 111(d) of the Customs Act, 1962, with an option to redeem the same on payment of a fine of ` 90,000/-. As regards the value of the goods, the assessing authority has directed that the assessments be kept provisional as the value of ` 9,62,713/- declared is only notional. He has further imposed a penalty of `10,000/- on the appellant Farokh S. Todywalla under section 112(a) of the Customs Act. Aggrieved of the same, the appellant is before us.
2. The facts relevant to the case are briefly as follows. The appellant imported assorted silver coins of Indian or foreign origin, assorted gold coins of British India, assorted silver/copper/bronze medallion of Indian and Foreign Origin and assorted silver ware/table ware, totally valued at ` 9,48,284/- (with an invoice value of 11980 GBP C&F) and filed B/E No. 295721 dated 07/11/2009 classifying the goods under importation under CTH 71141100/ 71189000/74199500, claiming the benefit of notification No. 62/2004-Cus and 20/2006-Cus. The goods had been procured on consignment basis from M/s Andre P. Deelermon, U.K., a numismatist. Some of the goods were more than 100 years old. Examination of the goods revealed that the goods were of historical or numeric importance and were collectors items. Accordingly a show cause notice dated 31/07/2010 was issued proposing classification under CTH 9705 0090 and confiscation under Section 111(d) of the Customs Act, in as much the goods were restricted for imports and a licence was required for the import of the same which the appellant did not have. The said notice was adjudicated vide Order No. ADC/RM/171/10/ADJN/ACC dated 16/12/2010. In the said adjudication order, the goods under import were classified under CTH 97050090 as Collectors items and the benefit under notification 62/2004 was denied. The goods were also confiscated under section 111(d) for non-production of an import licence with an option of redemption. Since the imports were on consignment basis, it was ordered that the assessments be kept provisional in as much as the value declared is only a notional value. A penalty of `10,000/- was also imposed on the appellant. On appeal, the lower appellate authority upheld the order of the lower adjudicating authority and rejected the appeal. Hence the appellants are before us.
3. The ld. Counsel for the appellant made the following submissions.
(1) To merit classification under CTH 9705, the goods should be Collections and collectors pieces of historical, ethnographic, palaeontological or archaeological interest or numismatic interest. The goods under import are not collections or collectors pieces. Merely because the goods have been procured from a numismatist, it cannot be presumed that they have numismatic interest.
(2) As regards gold and silver coins, they are specifically covered under CTH 71.18 which includes both legal tenders and coins which are no longer legal tender. So is the case with copper/brass coins which merit classification under CTH 7419. If the goods are of more than 100 years age, they might merit classification under CTH 9706 as antiques. As regards gold/silver/copper/brass medals/medallions, and other metal ware, they are appropriately classifiable under CTH 71.14 or 74.19 as articles of precious metals or copper or brass.
(3) There is no evidence adduced by the Revenue to show that the goods under import are collectors pieces or collections. The evidence placed by the Revenue is based on the appellants statement and the appellant has merely explained how the goods are dealt with by the appellant. Hence no adverse inference can be drawn by the Revenue based on such statement.
(4) There is no cause for imposition of any penalty as the appellant bonafidely believed the goods to be silver/gold/copper/brass ware and accordingly sought to classify the same under the respective metal tariff. Penalty cannot be imposed in such situation.
(5) The adjudicating authority has kept the assessment provisional despite passing an order in adjudication, which is contrary to law.
(6) The appellant will not be able to redeem the goods if the classification under CTH 9705 is upheld and if the proposed classification is confirmed, the appellant should be permitted to re-export the goods.
4. The ld. Dy. Commissioner (AR) appearing for the Revenue while supporting the orders passed by the lower authorities submits that in his statement recorded under section 108 of the Customs Act, Sri. Todywala has admitted that he procured the old coins and medals from collectors and he also has a collection of old coins and notes and these are also put up for auction. He has further admitted that he had visited London in September/October, 2009 and had personally selected the coins and other items and had selected mostly old Indian coins as they have a big market in India. He has also admitted that the goods imported by him are old and used collectors items and would be sold through auction to collectors who have numismatic or historic interest in collections. The ld. AR further submits that since the goods are imported on consignment basis, the transaction value is not known and the value will be known only after their sale in India when the appellant remits the sale proceeds to the foreign supplier after deducting the sales commission. Therefore, the decision to keep the assessment provisional in the impugned order is justified. Accordingly he pleads for upholding the impugned order and rejecting the appeal.
5. We have carefully considered the rival submissions.
5.1. According to the appellant, the imported goods are articles of precious metals or of copper/brass falling under Chapters 71 or 74 of the Customs Tariff. In respect of articles which are more than 100 years of age, the appellants contention is that they might merit classification under CTH 97.06 as antiques. The Revenues contention is that the appropriate classification is CTH 97.05 as collections and collectors pieces. It will be useful at this juncture to peruse the description of the competing tariff entries.
71.14 Articles of goldsmiths or silversmiths wares and parts thereof, of precious metal or of metal clad with precious metal 7.18 Coin 74.19 Other articles of copper 9705 Collections and collectors pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest 9706 Antiques of an age exceeding one hundred years Chapter Note 3 (p) to Chapter 71 specifically excludes collectors pieces (heading 97.05) or antiques of an age exceeding 100 years (heading 97.06) from the scope of Chapter 71. Similarly note to Chapter 74 also excludes articles more specifically covered elsewhere in the nomenclature from the scope of the said chapter.
5.2. In the consignment/sale invoice dated 16/10/2009 issued by the foreign supplier Andre P. de Clermont, Numismatist, the goods are described as Old & used- many over 100 years old - assorted silverware/table ware, assorted silver medallion of Indian and foreign origin, assorted silver coins of Indian origin, assorted silver coins of foreign origin, assorted gold medals of British India, assorted gold coins of Indian origin and assorted copper and bronze medals and the total value indicated is GBP 11980. When the goods were examined in the presence of the importer, the appellant-importer provided the information and the goods were segregated as more than 100 years old and less than 100 years old. The good more than 100 years old consisted of half rupee coins (1862-1900); mughal coins; mughal token king Akbar; Indo-Greek coins; Cooch Behar coins; Bengal sultanate coins; Delhi sultanate coins; coins of native states such as Hyderabad, Bundi, Alwar, Durrani, Sassaninan, Sikh, Islamic, Indo-Greek, Nahapana and Iran, foreign coins, foreign and Indian medals and so on. Similarly, goods less than 100 years old consisted of gold medals (British India), Kutch coins, foreign coins, medals (Indian and foreign), silver utensil and so on. In his statement, the appellant Sri. Farokh S. Todywala has clearly admitted that he is in the business of procuring old coins and medals from collectors and these are put to auctions. He had visited London for this purpose and had personally selected these items as they have a big market in India. He has further admitted that the goods imported by him are old and used items which would be sold to collectors who have numismatic or historic interest in collections. From these evidences available on record, it is difficult to accept the plea that the goods merit classification under Chapter 71 or 74. Goods falling under these chapters are traded by dealers in these goods and are for use as such. They are not sold by numismatists or through auctions and they also do not have any historic or numismatic interests. Therefore, the classification of these goods under Chapter 71 or 74 based on the metal content is clearly ruled out. In any case, Chapter Note 3(p) to Chapter 71 and Chapter note to 74 clearly exclude these items from the scope and coverage of the articles falling under the said chapters.
5.3. The next question is whether these goods under importation merit classification under CTH 97.05 as collections or collectors pieces or under CTH 97.06 as antiques. As regards goods which are less than 100 years old, they do not qualify as antiques because of the age factor and therefore, they would more appropriately fall under heading 97.05. As regards goods of age more than 100 years, only goods which are not covered under CTH 97.01 to 97.05 merit classification under CTH 97.06 as is clear from the HSN Explanatory Notes. Therefore, the question is, are they covered under CTH 97.05 as Collections or Collectors pieces. As per HSN Explanatory Note to Heading 97.05, the said heading covers Collections and collectors pieces of historical, ethnographic, palaeontological, or archaeological interest or collections and collectors pieces of numismatic interest. As per the statement of the appellant importer, the goods imported by him are old and used items and would be sold through auction to collectors who have numismatic or historic interest in collections. From these evidences available on record and the coverage of CTH 97.05 as given in the HSN explanatory notes, we are of the considered view that the goods imported by the appellant merit classification under CTH 97.05. As per the ordinary dictionary meaning (Collins English Dictionary), a collectors item or collectors piece means- a thing regarded as being exquisite or rare and thus worthy of the interest of one who collects such things. Since the goods falling under CTH 97.05 are restricted items, they need a licence for importation. In the present case, it is a fact on record that the appellant did not have the requisite licence and the goods are liable to confiscation under section 111(d) of the Customs Act. In view of this legal position, the confiscation and the option to redeem the goods on payment of fine ordered by the adjudicating authority cannot be faulted at all. The fine of Rs.90,000/- imposed on the appellant for redemption cannot be said to be excessive or unreasonable when compared to the declared value of Rs.9,62,713/-. Since the goods are liable to confiscation, imposition of penalty under section 112(a) is also justified as no mens rea is required to be proved for imposition of penalty under the said section. Further the penalty imposed is only nominal at `10,000/- and the same does not call for any interference.
5.4. As regards the appellants plea for allowing re-export of the goods, the same was not raised either before the adjudicating authority or the appellate authority. Since this point has not been taken up before the lower authorities, it will not be proper for us to consider the same at the second appellate stage. However, the appellant is at liberty to place this plea before the lower authorities and if such a plea is made, the lower authorities are directed to consider and dispose of the same in accordance with law.
5.5. The last issue is regarding the direction given in the impugned order to keep the assessments provisional since the value declared is notional and not the real transaction value. However, in the show cause notice issued to the appellant, there is no such proposal and the show cause notice specifically proposes to levy the goods to duty on a value of `9,62,713/- at the rate applicable to goods falling under CTH 9705. Thus, the direction to keep the assessment provisional is contrary to the proposal in the show cause notice and therefore, cannot be sustained and accordingly, we set aside the same.
6. Thus while we uphold the classification of the goods under CTH 9705 and the consequent confiscation with option for redemption and imposition of penalty, we set aside the direction to keep the assessment provisional on account of valuation. The appeal is disposed of in the above terms.
(Operative Part Pronounced in Court on 30/12/2014) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2