Custom, Excise & Service Tax Tribunal
Neotric Informatique Ltd vs Nhava Sheva on 26 November, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEALS NOS: C/394 & 401/2012
[Arising out of Order-in-Original No. 80/2011/CC(I) JNCH dated 09/02/2012 passed by the Commissioner of Customs (Import), Nhava Sheva.]
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
APPEAL NO: C/394/2012
Neotric Informatique Ltd.
Appellant
Vs
Commissioner of Customs (Import)
Nhava Sheva
Respondent
APPEAL NO: C/401/2012 Commissioner of Customs (Import) Nhava Sheva Appellant Vs Neotric Informatique Ltd.
Respondent Appearance:
Shri J.H. Motwani, Advocate for the appellant-importer Shri Senthil Nathan, Dy. Commissioner (AR) for the Revenue CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 26/11/2014 Date of decision: 26/11/2014 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
There are two appeals, one by the appellant, M/s. Neotric Informatique Ltd., and the other by the Revenue against Order-in-Original No. 80/2011/CC(I) JNCH dated 09/02/2012 passed by the Commissioner of Customs (Import), JNCH, Nhava Sheva.
2. Vide the impugned order, the learned adjudicating authority has classified the VGA card/box/TV Tuner imported by the appellant falling under CTH 8528 7100 as reception apparatus for television not designed to incorporate video display or screen as against the claim of the appellant that the same falls under CTH 8473 3099 as parts/accessories of the computer. Consequently, he has confirmed a duty demand amounting to ` 1,73,85,081/- by invoking the extended period of time under the provisions of Section 28(1) of the Customs Act, 1962 along with interest thereon under Section 28AB. He has also ordered confiscation of the goods valued at ` 15,10,880/- seized on 22/01/2011 with an option to redeem the same on payment of fine of ` 4 lakhs. He has imposed a penalty of ` 15 lakhs on the appellant-importer under Section 112 of the Customs Act, 1962. While the appellant is aggrieved of the confirmation of duty demand subsequent imposition of fine and penalties confirmed in the impugned order, Revenue is aggrieved because the Commissioner did not impose equivalent amount of penalty under Section 114A of the Customs Act. Hence the appeals.
3. The learned counsel for the appellant submits that the VGA box imported by the appellant performs a specific function of converting the TV signals into digital signal so that the same can be viewed on the computer. The said VGA box is specifically designed for use along with the computer system and cannot be used as a stand alone device or with any other electronic equipment and, therefore, the same merits classification as pars and accessories of a computer under CTH 8473 3099 and not under CTH 8528 7100. He further submits that the said item has been sold by the appellant to various dealers in computers and he has submitted a list of such dealers from where it can be seen that all of them are dealers in computer and peripherals and accessories. It is also his submission that, previously the appellant had imported the same item and the classification claimed by the appellant under CTH 8473 3099 was accepted after examining the goods under importation and no dispute was ever raised with regard to classification. Only after issue of Circular No. 52/2011-Cus dated 11/11/2011wherein it was clarified by the Board that the TV tuners both internal and external are more appropriately classifiable under CTH 8528 7100, the show cause notice dated 20/07/2011was issued to the appellant in the instant case invoking the extended period whereas the period of demand pertains to 2005-06 to 2010-11 (up to 05/01/2011). Since the show cause notice has been issued after lapse of more than six months from the date of importation, the impugned demands are time-bared and accordingly they are not sustainable. From the Boards Circular, it is evident that divergent practices were in existence with regard to the classification of the goods under import and one of the classifications adopted by the department was CTH 8473.
3.1. The learned counsel also refers to a decision of this Tribunal in the case of Zenith Computers Ltd. vs. Commissioner of Customs 2004 (172) ELT 316 wherein, considering the classification of the entity TV box designed to convert TV signals into digital signals which can then be sent for display, storage, print out on a computer, this Tribunal held that such TV box merits classification under CTH 8473 30 as an accessory to machines under heading 8471. The ratio of this decision would also apply squarely to the facts of the present case.
3.2. The learned counsel further points out that the Commissioner while recording his finding, has observed that the appellant mis-declared the product as computer parts and accessories in the Bill of Entry whereas in the invoices, the products were mentioned as VGA card/box and this amounts to deliberate mis-declaration with an intent to avail ineligible duty exemption. This finding of the Commissioner is contrary to the facts as the show cause notice itself states the description given in the Bill of Entry as external VGA card (various model numbers) and external VGA box (various model numbers) and so on. Therefore, there is no mis-declaration of the goods and/or any suppression on the part of the appellant. The appellant entertained a bona fide belief that the goods were liable to classification as parts and accessories of computers and, accordingly classified the same under CTH 8473 30.
3.3. He also relies on the decision of the honble apex Court in the case of Northern Plastics Ltd. vs. Collector of Customs & Central Excise (2001) 1 SCC 545 in support of the above contention. He further relies on the honble apex Courts decision in the case of Commissioner of Trade Tax, U.P. vs. Kartos International 2011 (268) ELT 289 (SC) wherein it was inter alia held that classification cannot be made on scientific and technical meaning of the product and it is only common parlance meaning of term which should be taken into consideration for determination of the tax liability. In the present case, in the common trade parlance, the product is known as accessory of a computer and, therefore, the correct classification of the impugned goods are under CTH 8473 3099. Accordingly, he pleads for setting aside the impugned order and allowing the appeal.
4. The learned Dy. Commissioner (AR) appearing for the Revenue reiterates the finding of the adjudicating authority. He submits that the Commissioner has come to the conclusion that the appellant mis-declared the goods and, therefore, confirmed duty liability by invoking the extended period of time. He further submits that since he has confirmed duty on the basis of mis-declaration/suppression of facts, the Commissioner should have imposed penalty under Section 114A of the Customs Act which mandates imposition of penalty equal to the duty and interest confirmed against the appellant. Therefore, while imposing the penalty, the Commissioner committed an error and hence the penalty imposed on the appellant should be enhanced as provided under Section 114A of the Customs Act. The learned Dy. Commissioner (AR) also points out that in the present case, the show cause notice has been issued even prior to issue of the Circular dated 11/11/2011 and, therefore, it is not that the show cause notice is based on this circular at all and the conclusion thereon is independent of the circular.
5. We have carefully considered the submissions made by both the sides.
6. We observe that in the present case, the show cause notice has been issued on 20/07/2011 whereas the demands pertain to the period 2006-07 to 05/01/2011 i.e, the show cause notice has been issued after a lapse of six months from the date of import of the impugned goods, and has been issued beyond the normal period of limitation. Therefore, the first question for decision is whether extended period could be invoked in the present case at all.
6.1. There is no dispute that the appellant had been regularly importing these goods for a long period of time and has been claiming classification under CTH 8473 3099 and the department has also accepted the said position. The appellant has claimed in its reply to the show cause notice that the goods were subjected to first check before they were finally assessed and, therefore, the department was fully aware of the nature of the product imported. Therefore, the question of invoking the extended period of time would not arise at all. Further, the Commissioner has based his finding entirely on the Boards Circular dated 11/11/2011 and the said circular itself in the opening paragraph states that:
Reference have been received on divergent practices being followed by field formations regarding classification of TV tuners. It was reported that external TV tuners are being classified in heading 8528 of 8529, and internal PCI TV tuners/cards are being classified in sub-heading 8528 of 8529 or sub-heading 8473. 6.2. From the circular of the Board, it is clear that there were divergent practices with regard to the classification of the TV tuners used for the ADP machines and, therefore, the appellant is right in entertaining a bona fide belief that the classification of the goods imported by them could be under CTH 8473 3099. Further, in the case of Zenith Computers Ltd. (supra), this Tribunal had held that TV box designed to convert TV signals to digital signals which are then sent for display/storage, print out on computer is classifiable under CTH 8473 30 as accessory to the machine of heading 8471. This decision of the Tribunal has not been challenged before any other superior forum.
6.3. In these circumstances, the bona fide of the belief entertained by the appellant cannot be questioned at all. Therefore, invocation of extended period of time, in the present case, is clearly contrary to the legal provisions. Consequently, the entire demand and the consequent liability to confiscation and imposition of penalty are not legally sustainable. Accordingly, we set aside the same by allowing the appeal of the appellant-importer with consequential relief, if any, in accordance with law.
6.4. Since the entire demand is not legally sustainable, the appeal filed by the Revenue fails and accordingly the same is dismissed.
6.5. Since we have set aside the demand of duty on account of time-bar, we are neither required nor expressed any opinion on the classification of the goods under importation.
(Dictated in Court) (Ramesh Nair) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2