Custom, Excise & Service Tax Tribunal
M/S. National Copier Equipment vs Cc, Delhi-Iii, Gurgaon on 28 June, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-DB
Customs Appeal No.C/689/2008
[Arising out Order-in-Appeal No.149/ANS/GGN/2008 dated 14.07.2008 passed by Commissioner (Appeals) Central Excise, Gurgaon]
M/s. National Copier Equipment Appellant
Vs.
CC, Delhi-III, Gurgaon Respondent
Customs Appeal No.C/664/2008 [Arising out Order-in-Appeal No.149/ANS/GGN/2008 dated 14.07.2008 passed by Commissioner (Appeals) Central Excise, Gurgaon] C.C., Delhi-III Appellant Vs. M/s. National Copier Equipments Respondent Customs Appeal No.C/688/2008 [Arising out Order-in-Appeal No.148/ANS/GGN/2008 dated 14.07.2008 passed by Commissioner (Appeals) Central Excise, Gurgaon] M/s.Bhagwan Electro Photocopiers Appellant Vs. CC, Delhi-III, Gurgaon Respondent Customs Appeal No.C/665/2008 [Arising out Order-in-Appeal No.148/ANS/GGN/2008 dated 14.07.2008 passed by Commissioner (Appeals) Central Excise, Gurgaon] CCE, Delhi-III, Gurgaon Appellant Vs. M/s. Bhagwan Electro Photocopiers Respondent Present for the Department : Shri R.K.Verma, Advocate Present for the Assessee : Shri.Jitin Saghal, Advocate Coram: Honble Mr.D.N.Panda, Judicial Member Honble Mr.Manmohan Singh, Technical Member Reserved on: 03.05.2013 Pronounced on:28.06.2013 FINAL ORDER NO. 56835-56838/2013 DATED: 28.06.2013 PER: D.N.PANDA The importer National Copier is in appeal No.C/689/08 against Order in Appeal dated 14.7.2008 challenging that to be unsustainable which held that the value of Rs.14,09,535/-declared by that appellant in respect of old and used photocopier machines imported by bill of entry No.0016 dated 24.01.2008 was low compared to the NIDB date for which that should be enhanced to Rs.17,33,555/- and confirmed the adjudication on such aspect. So also confiscation was held to be proper in law as the impugned goods was imported without licence. However, ld. Commissioner (Appeals) reduced the redemption fine to Rs.4,25,000/- as against Rs.8,50,000/- imposed by ld. Adjudicating Authority. Similarly, he reduced penalty to Rs.4.00 Lakhs as against penalty of Rs.17.00 Lakhs imposed in adjudication.
2. Revenue is in Cross Appeal against the same appellate order dated 14.07.2008 challenging reduction of redemption fine and penalty. Accordingly, both sides are in appeal for the respective relief they sought.
3. Challenge of the appellant in above appeal is that enhancement of the value of the imported old and used photocopier machines was arbitrary and neither redemption fine nor penalty was imposable.
C/688/2008
4. The importer Bhagwan Electro Photocopiers is in appeal No.C/688/08 against order in appeal dated 14.07.2008 challenging that to be unsustainable which held that the value of Rs.9,30,150/- declared by that appellant in respect of old and used photocopier machines imported by bill of entry No.17 dated 30.01.2008 was low compared to the NIDB date for which that should be enhanced to at Rs.16,00,653/- and confirmed the adjudication order on such appeal. So also confiscation was held to be proper in law as the impugned goods imported without licence. However, the order passed by ld. Commissioner (Appeals) reduced the redemption fine to Rs.4,00,000/- as against Rs.8,00,000/- imposed by ld. Adjudicating Authority. Similarly, he reduced penalty to Rs.4,00,000/- Lakhs as against penalty of Rs.16.00 Lakhs imposed in adjudication.
5. Revenue is in Cross appeal against the same appellate order dated 14.07.2008 challenging reduction of redemption fine and penalty. Accordingly, both sides are in appeal for the respective relief they sought.
6. Challenge of the appellants in above appeals is that enhancement of the value of the imported old and used photocopier machines was arbitrary and neither redemption fine nor penalty was imposable.
7. The facts of both the cases of assessee being almost similar and the consequence of adjudication followed being also of the same degree, all the 4 appeals are taken up together for common disposal by this order. So far as the appeal No.C-689 is concerned the import was made on 24.01.2008 while in case of appeal No.C/688 the import was made on 30.01.2008. Both the imports were made after 19.10.2005 when the licensing regulation in respect of old and used photocopiers was mandatory. Import of old and used second hand photocopier were subjected to the amendment to the EXIM Policy made by section 5 of the 1992 Act. The Notification No.31 dated 19.10.2005 issued by Central Govt. brought out the photocopy machines to the category of second hand goods by amendment Notification. As a result of which import of the said goods became restricted goods after 19.10.2005. The moment the goods became restricted, import licence was the necessity.
8. In both the cases the value declared by importers was not acceptable to Customs because the NIDB data indicated the value thereof to be higher on the basis of contemporaneous imports. There was no challenge by the assessees as to the value of the contemporaneous import. The Chartered Engineer who was engaged for examination of the goods was of the opinion that the value of the goods Rs.14,09,535/- declared by assessee should be Rs.15,50,488/- in appeal case No.C/689/2008. In so far as appeal case No.C/688 is concerned while Chartered Engineer certified the value to be Rs.10,83,982/- the value declared by importer was Rs.9,30,150/-. As there was a variation between declared value and the value ascertained by Chartered Engineer that warranted verification from NIDB data and Customs did so. While determining the value of the goods imported in both the appeals Customs has also applied Rule 8 of the Customs Valuation Rules, 1988. The manner of valuation was not challenged by any of the appellants.
9. Appellants in both the cases only challenged that when they declared proper value that should not be disturbed. But Revenue repels that argument on the ground that they have imported the goods without import licence while licence became necessity of law w.e.f. 10.10.2005. So also when the value were not declared properly that was bound to be enhanced under Rule which was usually done by Customs. Nothing could be contradicted by appellant producing any evidence as to possession of licence nor evidence relating to purchase of the goods at a lesser value under any peculiar trade/import conditions or circumstances. They failed to substantiate the value declared by them to be proper in law.
10. It was a fact on record that the importer appellants were importing similar such goods in past which was noticed by ld. Adjudicating Authority in respective adjudication orders. When he found that they repeatedly imported above goods without licence and mis-declaring value thereof he considered that levy of redemption fine to the extent indicated in the adjudication order in each case should be levied. So also he justified that penalty to the extent imposed by him was warranted to deter such unlawful import of the restricted goods without license. Without considering the conduct of the appellant as to the past imports made contrary to law and such goods confiscable being became smuggled goods, learned Commissioner (Appeals) for no reason reduced the redemption fine and penalty to the extent indicated by his order for which Revenue was aggrieved by his action and came in appeal.
11. Both the appellant failed to argue that they have a good case on the basis of evidence as to the valuation. They also failed to argue that they had not imported in the past old and used photocopier causing detriment to the interest of Customs. Further, they failed to show the reason why fine and penalty to the extent levied in adjudication were unwarranted dose.
12. Revenues submission was that there should not be sympathy to the habitual offenders who were importing old and used photocopiers in the past without license and caused detriment to the interest of Revenue. Accordingly the adjudication consequence as to the redemption fine and penalty should not have been interfered by ld. Commissioner (Appeals), when he appreciated that the goods were confiscable and undervalued by the importer appellants.
13. Tribunal has an occasion to hear similar such matter in the case of Unitech Enterprises Versus Commissioner of Customs, Chennai reported in 2012 (279) E.L.T. 236 (Tri. - Chennai). It was clearly noticed in that case that case that the licensing regulation came into force from 19.10.2005 and upon analysis of various judgements, Tribunal in para 17 to 23 recorded its decision as under:-
17.As stated? earlier, import restriction is not in terms of the Customs Tariff Schedule, it is in general terms and hence the restriction must be understood in the way the industry and the users understand the same apart from the fact that these multifunction machines are digital photocopiers which require the printing function to complete the process of photocopying. All such machines are used mainly for photocopying work in offices and establishments. Our view in this regard is in accordance with the cited decision of the Honble Supreme Court in the case of Akbar Badruddin (supra) which holds, in para 53, as follows :-
It is, of course, well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule. Since the said para 2.17 in the Policy has not used any expression identical to any Tariff entry, much less in a scientific or technical sense, the restriction on old/used photocopier machines has to be understood in the common parlance. The learned counsel raises a point that import policy is to protect the local industry and that since there are no manufacturers of the impugned goods in India, the entire requirement is met by import and there can be no restriction to import such goods. In fact import of the photocopier machines as per the policy and the ITC HS Schedule is free for the new equipment including multifunction equipment. The restriction is only in respect of secondhand photocopier machines. The understanding of the DGFT, is also that the multifunction digital machines in question are used as photocopiers, photocopying being their primary function and further that these are restricted for import as seen from their Writ Appeal No. 1802/2011 filed before the Honble Madras High Court vide Ground (v) thereof which is as follows -
It is submitted that as per Notification No. 31/2005, the import of second hand photocopier machines are restricted and will be allowed against a licence issued in this behalf Therefore, digital multifunction machines functioning as photocopier besides other features will be restricted for import. The petitioner had admitted that one of the functions of the multipurpose digital photocopier is photocopy also. The restriction in para 2.17 does not differentiate between photocopier machines in technology, features or single/multiple uses. The multifunction digital machines is used as a photocopier which is one of their primary functions. The second hand multipurpose photocopier is also restricted like a photocopier machine. The above being the official view of the DGFT, the same has to be considered as final and binding as per para 2.3 of the Policy.
18.The learned? counsel has also referred to the minutes of the Technical Review Committee. In fact, the proceeding thereof is very much in favour of the Department. The representative of the Department of Information Technology has categorically mentioned therein that the basic function of multifunction devices is photocopying. His stand supports the view of the Department and does not advance the case of the appellants in any way. The discussion reflected in the minutes indicates that the representative of DIT has merely suggested for a specific amendment so that the dispute of the kind that has arisen cannot arise in the future. The affidavit of the customs authorities referred to by the learned counsel also does not advance the case of the appellants. It has been merely stated therein that the impugned goods are different from analog photocopier machines which is factual. As indicated above, we are of the view that both analog photocopier and digital photocopiers whether stand alone or in combination with another device come under the import restriction since the restriction in para 2.17 applies to all secondhand photocopiers and it does not differentiate between different photocopiers on the basis of technology, features or single/multiple uses.
19.As regards the? point raised by the learned counsel that in the show-cause notice there was no case made out for the goods being restricted for import as e-waste, we agree that it is so and the impugned order also does not hold the impugned goods to be e-waste and hence, we are not required to give any finding in this regard.
20.In view of our? findings as above, we are of the considered view that the import policy restricting import of secondhand photocopier machines is applicable to all kinds of photocopying machines including analog photocopiers, digital photocopiers and multifunction copying and printing machines whose primary function is photocopying and which requires printing for the purpose of completing the photocopying process and producing a photocopy. The expression used in the import policy is not identical to any of the expressions in any of the Tariff Headings nor any particular Tariff Heading is mentioned in the import policy restriction and hence the expression photocopier machines in the policy is to be interpreted as commonly understood to include all those machines which are used for photocopying. As held by the Honble Supreme Court in Atul Commodities (supra), the import restriction on secondhand photocopying machines apply with effect from 19-10-2005 and accordingly, all the cases decided by different Benches of the Tribunal have held photocopying machines similar to the impugned goods as restricted for import and have upheld confiscation and penalty (though there were differences about the level of fine and penalty). The said order of the Bangalore Bench in the case of Shivam International (supra) is a departure from the earlier orders of the Tribunal without making a reference to the Larger Bench apart from the fact that it wrongly relies on the ratio of the Honble Supreme Courts decision in the case of Xerox India (supra) which dealt with classification dispute for the earlier period and has no application for the present when there is no classification dispute. Hence, the said order of the Tribunal in the case of Shivam International (supra) has been clearly rendered per incurium and the same cannot be taken as a precedent to be followed in our respectful view. We accordingly uphold the confiscation of the impugned secondhand goods imported without a valid licence.
21.As regards the? enhancement of the value of the impugned goods by the adjudicating Commissioner from the declared value of US % 59,870 (C&F) to US $ 69,395 (C&F), the learned counsel has not offered any arguments except referring to the grounds of appeal. Apart from that, the adjudicating Commissioner himself has recorded that the impugned goods were not accompanied by the Chartered Engineers certificate from the load port and hence the value has been re-determined by ascertaining the value from a local Chartered Engineer. The appellants have also, vide their letter dated 21-8-2009, have accepted the value determined by the customs authorities as per the assessment of the local Chartered Engineer. As such, we uphold the valuation done by the adjudicating Commissioner.
22.As regards the? fine and penalty imposed, we find that against the assessed value of Rs. 34,15,893/-, the adjudicating Commissioner has imposed a redemption fine of Rs. 10,25,000/- and penalty of Rs. 13,70,000/- after recording that the appellants are being repeatedly importing the impugned goods without valid import licences and that this is the fourth instance. The fine imposed is only 30% of the value determined by the customs authorities and the same cannot be considered to be excessive and therefore, it calls for no reduction. The question of imposing higher fine and penalty in respect of repeated offenders has been adequately dealt with by the Tribunal in the case of Sagar Enterprises (supra). The relevant extract is reproduced below :
11.?After hearing both sides and perusal of the case records and the cited case laws, I find that there is only a short question to be decided in respect of these seven appeals. That question is whether the lower appellate authority was justified in reducing the redemption fine and penalty to a lower level of 15% and 5% (total 20%) uniformly in all these cases, thereby interfering with the discretionary power exercised by the original authorities. I find that several batches of cases have been decided earlier by the Tribunal Benches at Chennai and Bangalore as evidenced from the orders cited before me. It is quite obvious that despite imposition of fines and penalties on such imports, large scale imports of these goods are taking place at ports of Chennai, Tuticorin and Cochin at undervalued prices and without necessary import licences. It is quite obvious that the low levels of fines and penalties determined by the Tribunal earlier have not proved to be effective to stop such illegal imports which are being made repeatedly contrary to the law of the land.
12.?I also find that the cited decision of the Bangalore Bench of the Tribunal in the case of Shri Dilip Ghelani (supra) states in paragraph 9 that the restriction of fine and penalty to 10% and 5% has also been upheld by the Honble High Court of Madras. This order does not give reference to which order of the Honble Madras High Court has upheld restriction of fine and penalty to the level of 10% and 5%, based on which the Bangalore Bench has reduced the fine and penalty to such lower levels. In fact, the learned counsel Shri P. Saravanan who cited this decision of the Bangalore Bench was not able to either refer to or submit any decision of the Honble Madras High Count in this regard.
13.?The only decision of the Honble Madras High Court which has been shown is that of the cited decision in the case of Sai Copiers (supra). The relevant extract of the same is reproduced below :-
There is no statutory prescription that the penalty should not be reduced by the appellate authority. Before the Tribunal, the importers relied on the earlier order of the Tribunal in the case of Sri Venkatesh Enterprises v. Commissioner of Customs, Chennai - 2005 (192) E.L.T. 818, wherein the quantum of redemption fine imposed in lieu of confiscation of second-hand photocopiers valued at Rs. 17.7 lakhs was restricted to Rs. 2.5 lakhs and the quantum of penalty was restricted to Rs. 85,000/-. The same was followed in the case of the respondents also by the Tribunal. The fixation of the quantum of redemption is an exercise of discretionary jurisdiction of the authorities under the Customs Act. The Court can interfere only in the circumstances in which it was demonstrated before it that the order of the Tribunal is thoroughly arbitrary, whimsical and resulting in miscarriage of justice. As already stated, the Tribunal has followed its own earlier decision wherein the Tribunal has consistently imposed the redemption fine at 15 percent and penalty under Section 112(a) at 5 percent of the value of the goods, which factum has not been disputed by the counsel appearing for the Department. In the above said view of the matter, we find no question of law, much less a substantial question for entertaining these appeals. Hence the appeals are dismissed.
14.?From the above cited decision of the Honble Madras High Court, it is clear that fixation of the quantum of redemption fine is an exercise of discretionary jurisdiction of the authorities under the Customs Act. It is also clear that the fixation of the quantum of redemption fine and penalty can only be interfered if the same is fixed in an arbitrary and whimsical manner resulting in miscarriage of justice. The Honble High Court has also held that there is no statutory prescription that the penalty should not be reduced by the appellate authority and also that in the Departmental appeal against the Tribunals order in the cited case there was no question of law involved. The cited decision of the Honble Madras High Court nowhere imposes a restriction on the discretion of the customs authorities nor it can be taken to authorize imposition of a low level of fine and penalty even in cases of repeated imports contravening the provisions of Import Policy, mis-declaring the value of the goods as found in all these seven cases. As such, it appears that the lower appellate authority was not correct in placing reliance on the aforecited decision of the Honble Madras High Court in arbitrarily reducing the fines and penalties to a lower level without taking note of the fact that he was dealing with cases of repeated offences and habitual offenders.
The higher courts have always taken a stricter view in?15. respect of habitual offenders. For example, in the case of Sophisticated Marbles (supra), the Honble Bombay High Court had held as follows :-
The petition is directed against the final order dated 18th December, 2003 incorporated at Exhibit - D to the petition. The challenge is at the instance of the petitioners wherein the fine and penalty is levied upon for importing marbles without the licence.
Whenever, petitioners import marble without licence, they pay?2. fine and penalty, as may be levied under the provisions of the Customs Act.
In the past similar consignments were imported by the?3. petitioners and in spite of levy of fine and penalty the petitioners continued to import marble without any licence. In other words, penalty and fine did not get as deterrent to stop further illegal import. In other words, petitioners continued to indulge in illegal import of marble without licence and litigation ensued therefrom was used to get fine and penalty reduced on technical legal pleas. This petition is product of such illegal activities of the petitioners. An act constituting import of marble without licence has given rise to the present litigation which reached up to the Tribunal. The Tribunal was pleased to allow the release of goods subject to imposition of duty, redemption fine and penalty as determined by the adjudicating authority. The Tribunal has specifically observed in the order that it is clear from the facts that the fine imposed earlier did not act as deterrent to stop further illegal imports.
4.?It is thus clear that the petitioners who are in the business of marble and have become a habitual importer of goods in spite of the fact that they are very well aware of the law that the imports have to be backed by a valid licence. In spite of this, if the petitioners are repeatedly indulging in importing marbles without licence, or subsequently obtain licence to cover up illegal imports then it would be a duty of writ Court to arrest such tendency prevailing amongst the importers of the goods. The Apex Court in the case of Her Shankar and Others v. Deputy Excise & Taxation Commissioner and Others [1975 (1) SCC 737] ruled that the writ jurisdiction of High Court under Article 226 of the Constitution of India is not intended to facilitate avoidance of legal obligation and to commit breach of law for the time being in force. The extraordinary jurisdiction of the High Court under Article 226, which is of a discretionary nature and is to be exercised only to advance the interest of the justice, cannot certainly be employed in aid of such persons; who have no respect for the law of land and who are deliberately indulging in committing breach thereof This Court would not be justified in invoking writ jurisdiction in favour of such persons. Writ jurisdiction is available to further the cause of regime of law, not to abrogate the same. In the facts of this case the consignments confiscated by the Customs authorities cannot be allowed to be released on the licence which were sought to be produced by the petitioners. The importers who are importing goods without licence and then seek to validate the import by obtaining subsequent licence or licences cannot be allowed to take advantage of their own wrong. The petitioners are one of them.
5.?The petition, in die circumstances, is dismissed in limine, with no order as to costs.
16.?In the case of Vaibhav Exports (supra), the Bombay High Court noted that the premium on import of imported diamonds in that case was around 3% only and that the importers in that case could have made profit of about 3% by the illegal imports without valid licences. Yet, the Honble Bombay High Court authorized imposition of redemption fine equal to 20% of the value of the imported diamonds with observations that the importers should not find it profitable to make the imports without proper licence. The Honble High Court took into account the fact that if the offender is required to pay only the amount which he has saved by not paying the premium for securing a genuine licence, he will never feel the pinch of being caught. He may commit same wrongs repeatedly and as and when he is caught, he may pay amount equivalent to the premium only. In the considered opinion of the Honble High Court the redemption fine should be more than such amounts.
17.?In the appeals filed by the Department it is clearly mentioned that all these cases are repeated offences and that the respondents are repeatedly importing second-hand digital photocopiers without licences, undervaluing the same and in one case even the quantity was found to be misdeclared. In respect of Appeal No. C/70/2010 and C/71/2010, it has been indicated by the learned SDR that these are the 4th and 6th imports of the same kind by the same importers. As stated earlier, fines and penalties imposed on such importers previously have not deterred the respondents from continuing to make illegal undervalued imports. In fact, the fine and penalty at some what higher levels (together ranging from about 30% to about 55%) imposed in these cases are not at all excessive as the respondents have found it still profitable to clear the goods on payment of the fines and penalties levied and have only subsequently filed appeals before the lower appellate authority. Reductions in fine and penalty granted by the said authority has only gone to further increase their profit margin.
18.?Under the circumstances, I am of the considered view that the fines and penalties imposed by the original authorities in these cases of repeated offences are not unreasonable or arbitrary or whimsical considering the fact that the authorities under the law have a duty cast upon them to prevent illegal imports and effectively implement the Import Policy validly laid down by the Government and to curb undervaluation and misdeclaration apart from preventing repeated offences. Hence, the lower appellate authority is totally unjustified in reducing the fines and penalties in these cases to very low levels totaling 20% only. Accordingly, I set aside the impugned orders passed by the lower appellate authority insofar as they relate to lowering of redemption fines and penalties and restore the orders passed by the original authorities. All the seven departmental appeals are allowed in the above terms.
23.Keeping the? above observations of the Tribunal in the case of Sagar Enterprises (supra) in view, while we find no justification for reducing the fine imposed, we are of the view that the ends of justice would be met if the penalty is reduced from Rs. 13,70,000/- to Rs. 6,85,000/- (Rupees six lakhs eighty five thousand only) which comes to about 20% of the assessed value. The appeal is otherwise rejected except for the reduction in the penalty amount as indicated above.
14. Licensing regulation having been prescribed w.e.f. 19.10.2005 the appellant failed to gain from the judgement of Apex Court in the case of Commissioner of Customs, Trichirapalli vs. Competent Business Machine 2009 (236) ELT 629 which relates to pre-licensing era. Revenue gains from the decision of Tribunal in the case of Unitech Enterprises vs. Commissioner of Customs, Chennai reported in 2012 (279) ELT 236 (Tri. Chennai). When it is not possible to find that the value declared by both the importer appellants was correct, the valuation aspect confirmed by ld. Appellate Authority below remained undisturbed. So far as the redemption fine and penalty is concerned, the Tribunal in terms of para 22 and 23 in the case of Unitech Enterprises Versus Commissioner of Customs, Chennai reported in 2012 (279) E.L.T. 236 (Tri. - Chennai) has discussed how the dose of redemption fine and penalty shall deter illegality without being perpetuated. Said paras extracted above provide guidelines to confirm the redemption fine levied in adjudication. Penalty is only to be reduced to Rs.8,50,000/- in Appeal No.C-689/08 and to Rs.8,00,000/- in Appeal No.C/688/08. Thus, adjudication is modified only on penalty aspect and order of ld. Commissioner (Appeals) is upheld on valuation aspect setting aside his order on fine and penalty in both cases. Thus, the adjudication order in both the cases sustains in respect of valuation and redemption fine while penalty aspect is modified to above extent.
2. Appeals of both sides are disposed in above manner.
[Pronounced in the open Court on 28/06/2013].
(MANMOHAN SINGH) (D.N.PANDA) TECHNICAL MEMBER JUDICIAL MEMBER Anita 6 16 C/664-665/2008 C/689-688/2008