Customs, Excise and Gold Tribunal - Delhi
Tele Shop (India) Pvt. Ltd. vs Commissioner Of Customs on 19 August, 1997
Equivalent citations: 1998(97)ELT188(TRI-DEL)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from the Order-in-Appeal dated 7-8-1996 passed by the Commissioner (Appeals), New Delhi. By this order the Commissioner has confirmed the spot adjudication order passed by the Additional Commissioner of Customs Import Air Cargo Unit, New Custom House. By this Order-in-Original, the Additional Commissioner ordered for confiscation of the imported leather covers totally valued at Rs. 3,78,106/- under Section 111(d) of the Customs Act, 1962, however, granting redemption on payment of fine of Rs. 1,20,000/- and also imposed a penalty of Rs. 30,000/- on the importers under Section 112 of the Customs Act, 1962.
2. The facts of the case are that the appellants filed Bill of Entry seeking clearance of the consignment of 2,300 pcs. of leather cases of different colours and makes meant for different models of cellular phones namely Ericsson, Siemens, Nokia and Motorola. On examination of the goods, it was reported that the goods are in the nature of consumer items requiring a specific import licence for their clearance. In the absence of a licence, the importation of the aforesaid leather cases appeared to be unauthorised.
3. It was represented by the importers before the adjudicating authority that they had imported leather covers for cellular telephones and that the item imported is not merely a cover but basically it has a clip attached and a handle which enables the cellular phones to be attached either to the belt or to the pocket or some other apparel on the body of the person. They claimed that, these leather covers be allowed against a SIL vide Sl. No. 67(x) of Appendix 35 of the Handbook of Procedures which covers 'attachments for telephones'. They further pointed out that these leather covers are essential for cellular phones because they provide the necessary protection for the instruments as such from atmospheric factors. They also protect the screen of the cellular phones of scratches. They also referred to their letter dated 3-1-1996 in which it has been stated that the leather cases squarely fall within the definition of attachment/accessory as given in Para 7(1) of Chapter 3 of the EXIM Policy since the leather covers attribute to the efficiency and effectiveness of cellular phones.
4. The Additional Commissioner did not agree with their submissions. He has held that the item can be directly used to satisfy human needs and therefore, they are in the nature of consumer goods. The Additional Commissioner referring to the Sl. No. 67(x) of Appendix 35 has observed that it satisfies "subscriber and telecom equipments." The specified entries include cellular telephones, cordless telephones, pagers, VSA terminals and other such electronic items. The reference to attachments for telephones would normally refer to plugs, sockets, epters for power supply, recording devices and other such equipments. He has observed that it does not refer to leather cover for cellular telephone. He has held that when leather covers are imported separately they had to be treated on merits both for its classification and also for their eligibility for importation. Therefore, he has held that it is for this reason, that the covers had been classified under Heading 4201.00 of the Customs Tariff and not in the heading relevant for cellular telephones. He has held that these have to be treated on its own merits and certainly these are not importable against SIL as attachments for telephones. He has held that the goods had therefore, been imported without a valid licence hence they are liable for confiscation and he ordered for the same including granting them an option to redeem the goods on payment of a fine and penalty as stated earlier. The Commissioner in her order has noted the appellants' plea that though the appellants have not made any claim that the leather covers imported are 'parts', 'sub-assembly' or 'assembly' of the cellular phones in terms of the aforesaid definition they had claimed that the leather covers are "attachments" on the ground that "attachments" is the same as "accessory" in the definition appearing in Para 7(i) of the Policy. She had also noted the appellants' contention that the covers for cellular phones are akin to seat covers of cars and as such the same were also accessories and being accessories were attachments and thus eligible to be imported vide Entry at Sl. No. 67(x) of Appendix XXXV of the Handbook of Procedures. Referring to this contention the Commissioner has held that she is unable to accept the logic and has not been able to persuaded herself to agree with the judgment rendered in the case of Mehra Brothers v. Joint Commercial Officer as reported in 1991 (51) E.L.T. 173, wherein the Hon'ble Supreme Court in the case of sales tax had held that seat covers of cars are motor accessories and parts of motor vehicles. The Commissioner has also held that the said judgment was delivered in the context of levy of sales tax and does not support the appellants' plea that the cellular phone covers imported are attachments for telephones freely importable under entry at Sl. No. 67(x) of Appendix XXXV of the Handbook of Procedures. She has observed that the leather covers in question are definitely not 'part', 'sub-assembly' or 'assembly' within the definition of "accessory" at Para 7(i) of the Policy as such the same are clearly not attachment/accessories permitted to be freely importable under the Policy. Referring to the appellants' plea the Commissioner held that the covers protect the phones from dust etc. and enhance the effectiveness of the phones, as such they are treated as "accessories" and are permitted to be freely imported in Para 22 of the Policy. The learned Commissioner has held that the said plea is also not acceptable, as Para 22 itself says that capital goods, raw materials, intermediates, components, consumables, spares, parts, accessories, instruments and other goods may be imported without any restriction except to the extent such imports are regulated by the Negative List of Imports or any other provision of this Policy or any other law of the time being in force." The learned Commissioner held that as the leather covers imported are A undoubtedly consumer goods, the said leather covers would remain restricted items for import in terms of Para 22 of the Policy even if they are regarded as accessories of cellular phones. Hence she rejected the appeal.
5. Arguing for the appellants the learned Advocate relied on the judgment rendered in the case of Mehra Brothers. He submits that the item has to be treated as accessories as it attributes to the efficiency and effectiveness as per definition of the said term accessories/attachments appearing at Para 7(i) of the Policy. On a query from the Bench, he admitted that the licence did not cover leather cases but it was a special import licence as per the Policy for goods listed in Appendix 35 of Handbook. He also submitted that the item falls under Sl. No. 67(x) as "attachments for telephones" and hence there is no need for licence. He also submits that there is no mala fide in the import, hence penalty is not imposable.
6. The learned DR reiterated the departmental arguments. We are in agreement with the detailed and speaking order passed by both the authorities in the present case. The item cannot be considered as "attachment for telephones", as claimed by the appellants under Sl. No. 67(x). The Para 7(i) of the Policy defines "accessory" or "Attachment" which is noted herein below :
"Accessory" or "Attachment" means a part, sub-assembly or assembly that contributes to the efficiency or effectiveness of a piece of equipment without changing its basic functions."
7. The appellants have not been able to show that this leather cover can attribute to the efficiency and effectiveness of the cellular phones or equipments without changing its basic function. This is not a 'part', 'sub-assembly' or 'assembly' that contributes to the efficiency and effectiveness of the cellular phones. The cellular phone is complete in itself and it is sold without a leather case. The leather case has been independently imported. These leather covers are as good as keeping the spectacles. Therefore, these types of cases which are meant for keeping the telephone is in the nature of only an extra cover. The company who has sold the telephone have not indicated that it has to be used along with it, to increase its effectiveness or to contribute to the efficiency of the equipments. These leather cases have been independently imported by the consumer. They are also manufactured in India as held by the lower authorities. The licence issued to the appellants was also a general licence not for specific items for attachments for telephone as has been held by the lower authorities. Para 156 of the Policy refers to Negative List which specifically covers to consumer goods to be imported only with licence. The licence has not been granted for the leather cases as noted by the lower authorities. There is no infirmity in the impugned order on this aspect of the matter. The appellants have not produced copies of the licence. However, the learned Advocate conceded that the licence was not a general licence and not specific for attachment of telephones. Their plea is that the goods are to be considered as "attachment for telephones" in terms of the definition appearing in Para 7(i) of the Policy defining the term 'accessory' or 'attachment.' On this aspect, the lower authorities have given a detailed finding and have held that the item is a consumer goods and does not contribute to the efficiency and effectiveness of the cellular phones. The term 'attachment' for telephone appearing in Sl. No. 67(x) refers to "Subscriber and telephone equipments." Therefore, the attachment has to be something which has become a 'part', 'sub-assembly' or 'assembly' contributing to the efficiency and its effectiveness of the equipment without changing its basic functions. The appellants have not produced any evidence nor they have shown how a cover can increase its effectiveness or efficiency of the equipment. The learned Advocate also conceded that the cellular phones are sold without leather covers. It is open for the buyers to cover with a cellular case, if they so desires. Therefore, their contention that it is an accessory or attachment for telephone is required to be rejected.
8. The learned DR relied on the judgment rendered in the case of Mehra Brothers (supra). On examination of this judgment, the lower authorities held that the same pertains to examination of the term appearing in Item 3 of Schedule 1 read with Section 3(3) of the Tamil Nadu General Sales Tax Act which refer to "motor vehicle, motor cars, motor taxi cars ... all articles (excluding batteries) adapted to use generally as parts and accessories of motor vehicles." In this regard the Hon'ble Supreme Court held that seat covers are accessories in the motor car as articles adopted for use in the motor vehicles were made for that purpose before use in the motor vehicles and according to the measurement of the customers' vehicles, motor car seat covers as well as other items for the use in motor car and the use thereof would certainly contribute to the beautification of the motor vehicle in which they are used. The car seat covers would add to the passengers' comfort in the motor vehicles. Therefore, the Court held that seat covers must be regarded as accessories to the motor vehicles as contemplated in Clause (2) of Entry 58 of the Sales Tax Act. In the present case as held by the lower authorities deals with licensing aspect under the EXIM Policy. The term 'accessory' or 'attachment' has been defined in Para 7(i) of the Policy and the interpretation has to be based in terms of these definitions and not in terms of the definition appearing in Tamil Nadu Sales Tax Act pertaining to the motor vehicles. Therefore, the Hon'ble Supreme Court's judgment is totally distinguishable. There is no case made out for reducing the redemption fine or penalty. In that view of the matter, I do not see any reason to interfere with the impugned order, hence the appeal is rejected.