Custom, Excise & Service Tax Tribunal
Buhler India Pvt Ltd vs Commissioner Of Customs And Service Tax ... on 7 August, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No.21331 / 2014 Application(s) Involved: C/Stay/28574/2013 in C/27965/2013-DB Appeal(s) Involved: C/27965/2013-DB [Arising out of OIO No.15-2013 dated 31/07/2013 passed by Commissioner of CUSTOMS , BANGALORE ] Buhler India Pvt Ltd 13-d,12d, 13c And 13-b, Kiadb Industrial Area, Attibele BANGALORE - 562107 KARNATAKA Appellant(s) Versus Commissioner of Customs and Service Tax Bangalore-cus C.R. BUILDING,QUEENS ROAD, P.B.NO. 5400, BANGALORE, - 560001 KARNATAKA Respondent(s)
Appearance:
Shri B.V.KUMAR, Advocate 103, 17 'C' MAIN ROAD, 5TH BLOCK, KORAMANGALA, BANGALORE-560 095 For the Appellant Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 07/08/2014 Date of Decision: 07/08/2014 Order Per : B.S.V.MURTHY Briefly, the allegations made against the appellants are the following:
The appellants are manufacturers of food processing machines. They have been importing various goods, viz. adhesive tape, battery pack, bearing, coil vibrator and encapsulated coils for FT01, panel control 90000, earthing, fan, Dust Filters / Screen Dust Filters, Fuse, Magnetic thermal strip, Nilos type Ring, PSU of various models, Cable Assembly for Dual PSU, Seal-O-Ring, Steel Flat, Limit switch and Reed Switch, Transducer Assembly, Strip, Tension Pulley, Seal EPDM and Strip Seal, Wire Cloth / MTSC Wire Cloth, PSU Assemblies, etc., from their suppliers. The Appellant importer has been describing the goods, in the Bills of Entry filed for clearance of the said imported goods, as 'Parts of Rice Mill Machine', 'Parts of Sortex M/C for Sorting of Seed Grain or Dried Leguminous Vegetables' and 'Parts of Flour Mill Machine' and classifying the goods under CTH 8437 90 10/ 8437 90 20 / 8437 90 90 and clearing the goods at nil rate of Additional duty under Section 3(1) of the Customs, Tariff Act, 1975.
On verification it was found that the importer manufactures food processing machines and the imported goods such as wire mesh/cloth, earthing, strips, adhesive tapes, etc, are articles of general use and appeared to be rightly classifiable under the respective headings of Chapters 39, 40, 73; and articles such as tension pulley, PSU, fuse, motor battery pack, etc. appeared to be rightly classifiable under the respective headings of Chapters 84 and 85 as per the Chapter Notes and Section Notes of the Customs Tariff Act, 1975. The Chapter Heading as it appeared that the importer had mis-classified and mis-declared the goods and has short paid duties of Customs, the $1113 of Air Cargo Complex took up a detailed investigation relating to the classification of the aforesaid goods.
From the statements and the technical details provided by the importer, it appears that the importer is using the imported goods to manufacture food processing machinery such as Rice / Flour Milling Machines, De-stoner, Classifier, Hullers etc. It appears that the imported goods, i.e., Adhesive tape, Battery pack, Bearing, Coil Vibrator and Encapsulated Coils for FT01, Panel Control 90000, Earthing, Fan, Dust Filters / Screen Dust Filters, Fuse, Magnetic Thermal Strip, Nilos Type Rinq, PSU of various models, Cable Assembly for Dual PSU, Seal-O-Rinq, Limit Switch and Reed Switch, Transducer Assembly, Strip, Steel Flat, Tension Pulley, Seal EPDM and Strip Seal, Wire Cloth / MTSC Wire Cloth, PSU Assemblies, are being assembled by the importer into such machineries. Further, the importers have classified such goods under CTH 8437 90 10 / 8437 90 20 / 8437 90 90, as parts of machines for cleaning, sorting, etc. However, from the technical details provided and the statements of the representatives of BIPL, it appeared that the above goods have been, classified wrongly and have to be classified according to the Section Notes and Chapter Notes of the Customs Tariff Act, 1975.
2. On this basis, proceedings were initiated which has culminated in confirmation of the demand for customs duty of Rs.76,88,454/- with interest and penalty equal to the amount under Section 114A of Customs Act, 1962 and a penalty of Rs.5.5 lakhs under Section 114AA of Customs Act, 1962. The appellants have paid the entire amount of customs duty and interest thereon before the issue of show-cause notice.
3. The learned counsel submitted that the appellants have paid the entire amount of customs duty with interest and therefore this is a case where no further proceedings should have been initiated. He submits that the Commissioners observation that a portion of the amount has not been paid with interest is not correct and this has arisen because of a calculation mistake. Further he also submits that the appellants did not indulge in any misdeclaration.
4. Since this matter was heard for sometime and after hearing both the sides, it was found that the matter itself can be disposed of finally and both sides have no objection to this proposal, we take up the matter after waiving the requirement of predeposit of balance dues.
5. The learned counsel submitted that there was no mis-declaration on the part of the appellants and the appellants paid the differential duty and interest before issue of show-cause notice as mentioned above and therefore no further proceedings should have been taken up.
6. Learned AR drew our attention to the impugned order wherein the Commissioner has considered the submissions and has reached the conclusion which according to the learned AR is the correct conclusion. Paragraphs 26 & 27 of the impugned order are relevant and are reproduced below:-
26. The noticees have, in all fairness, not contested the classification of goods proposed in the show-cause notice. It has been contended that the goods were inadvertently classified under the heading relevant for parts of rice milling machine; that they had described the goods correctly; and that there was no mis-declaration. As such, the show-cause notice should not have been issued in terms of Section 28(1)(b) and 28(2) of the Customs Act, 1962 and no penalty is leviable. In view of this, the issue left to be decided is whether there was a mis-declaration and whether the noticees are liable for penalty or not.
27. It has been alleged in the show-cause notice that the notice willfully camouflaged the description and misclassified the goods and thereby evaded duty. The noticees have stated that they have inadvertently claimed wrong classification. I have carefully gone through the description declared by the noticees on the Bills of Entry. It is observed that the description of the goods such as wire mesh, tape adhesive, dust filter, timing/toothed belt, seal/seal o ring, steel flats, strip, nilos type ring, fan, transducer assembly, bearing, tension pulley, meter, PSU, cable assembly for dual PSU, batter pack, thermal magnetic strip, limit switch, panel control, earthing and PSU assembly has been qualified by the mchine for which they same were imported. To illustrate:
(i) In Bill of Entry No.4525835 dt. 02/09/2011, the adhesive tape has been declared as tape adhesive D/sided P/N 72146 Pts for Sortex Model Z series machinery for Sorting of Seal Grainer Dried Leg. Vg..
(ii) In Bill of Entry No.8504159 dt. 16/11/2012, the dust filter was declared as screen dut filter papst P/N 62571 Part for Sortex Model Z series M/C for Sorting of Seed Grain or Dried Leg. Veg.
(iii) In Bill of Entry No.4837808 dt. 04/10/2011, the Seal O Ring was declared as Seal O Ring 0060 -10-NIT AN 72596- Parts for Sortex Moedl Z Ser. M/C for sorting of Seal Grain as Dried Leg. Veg.
(iv) In Bill of Entry No.971648 dt. 17/02/2009, the wire mesh was declared as wire mesh P/N UXF-10500-033 718X397 MM (Part of Rice Mill M/C).
(v) In Bill of Entry No.820968 dt. 01/08/2008, the fan was declared as fan 24V RG 160-28/14 NR P/N:62568 (Part of Sortex M/C).
As brought out in Annexure I of the show-cause notice, in all Bills of Entry the items/parts imported have been declared to be parts of specific machines and not parts of general use, as illustrated above. Further, the material of which such parts/items are made of was also not declared. It is important to note here that in terms of relevant Section Notes these parts/items have to be classified based on the material of which they are made of. Therefore, I find merit in the allegation made in the show-cause notice that the description of the goods was camouflaged/ mis-stated and relevant facts were suppressed to claim incorrect classification and noticees thereby evaded duty.
7. We find merit in the submission of the learned AR. According to Note 2(b) of Section XVI of Customs Tariff Act, 1975, parts, if suitable for use solely or principally with a particular kind of machine, or with a number of machines of the same heading, they are to be classified under the heading of the same machines. However, in this case, many of the items were found to be of general use and not found suitable for use solely or principally with the machines manufactured and sold by the appellants. The learned counsel fairly agreed that the investigating officers had considered this aspect and had omitted several items while issuing show-cause notice which were actually solely or principally used with the machines manufactured by them. Under these circumstances, the appellants clearly have no case on merits at all. Further the observations of the Commissioner reproduced above and not contested by the learned counsel or by the appellants at any stage and coupled with the description of the inputs and Bills of Entry would clearly show that there was a misdeclaration of the goods in the classification. If the appellants were not to mention the machine number / machine description with the items imported which amounted to stating that they were proposed to be used or useful solely or principally with the machine manufactured by them, if the items were of general use, this claim clearly is a misdeclaration.
8. Under these circumstances, as held by the learned Commissioner, the provisions of Section 28 which provides for non-issue of show-cause notice wherein the importer pays the entire amount of duty with interest would not be applicable to the appellants at all. Therefore this claim of the appellants counsel that no proceedings should have been initiated cannot be accepted and is denied. Similarly the duty demand and the interest thereon also has to be upheld as not contested.
9. Since the misdeclaration has been established and appellant is not eligible for the benefit claimed by them, it is clearly a case of misstatement of facts and as a result appellant is liable to penalty under Section 114A of the Customs Act, 1962 and therefore penalty imposed is upheld.
10. As regards penalty under Section 114AA, we find that Section 114AA reads as follows: If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods:. In this case, penalty under Section 114A has already been imposed for misdeclaration of the goods without considering the chapter notes. The question is whether for the same offence, penalty under 2 sections can be imposed. We are unable to agree with this proposition. In this case there is no allegation of any activity covered by Section 114AA which is actually not covered by Section 114A. Therefore, in our opinion, under the facts and circumstances of this case, penalty under Section 114AA need not be imposed.
11. In view of the above discussion, penalty under Section 114AA is set aside and in respect of all other issues, appeal is rejected.
(Operative portion of the order pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja 8