Customs, Excise and Gold Tribunal - Delhi
Sharp Business Machines (Pvt.) Ltd. vs Collector Of Customs on 31 October, 1988
Equivalent citations: 1989(21)ECR229(TRI.-DELHI), 1990(46)ELT317(TRI-DEL)
ORDER G.P. Agarwal, Member (J)
1. All the three captioned appeals are directed against the common impugned order passed by the Collector of Customs, Bangalore.
2. Factual backdrop: The appellants M/s. Sharp Business Machines (Pvt.) Ltd. imported components/consumables in SKD/CKD for plain paper copiers. They through their Custom House Agents filed three Bills of Entry bearing No. 2044, 2045 and 2046 all dated 3-2-1987 at Bangalore for clearance of the goods said to have been covered under invoices bearing No. 992/SBI/87,991/SBI/87 and 990/SBI/87 all dated 20-1-1987 of M/s. Paralax Industrial Corpn., Hong Kong. The importers subsequently filed another Bill of Entry bearing No. 4993 dated 11-3-1987 for clearance of the imported goods said to have been covered under invoice No. 2080 dated 18-2-1987 of M/s. Alpha Papyrus Trading Pvt. Ltd., Singapore and AWB No. 098 4925 4914 dated 19-2-1987. The appellants declared the value as Rs. 32,182/-; Rs. 43,359/-; Rs. 5,412/- and Rs. 18,659/- as the assessable value of the goods covered by Bills of Entry No. 2044,2045 and 2046 all dated 3-2-1987 and 4993 dated 11-3-1987, i.e. to say they declared total value Rs. 99,612/- for clearance under Section 14 of the Customs Act, 1962. The imported goods were examined in the presence of Shri P.N. Sadanand, (Appellant herein) Managing Director of the importers, Shri Shodan, representative of the CHA and Shri K. Jagdeesh Babu, Engineer, M/s. Keonics Ltd. After usual investigation it was found that the licence produced for clearance of the goods covered under Bill of Entry No. 2044,2045 and 2046 all dated 3-2-1987 was not valid except the tonner and developer which could be released under OGL and without a valid import licence and that among the goods imported and covered by said 3 Bills of Entry, goods valued at Rs. 3,77,364/- appeared to had been imported in contravention of the ITC Regulations. Consequently, a show cause notice bearing No. S. 10/69/87 BACC dated 30-3-1987 was issued to the appellants M/s. Sharp Business Machines (Pvt.) Ltd. and also to Shri P.N. Sadanand calling upon them to show cause as to why the value of the goods covered by the aforesaid three Bills of Entry be not enhanced from Rs. 80,953/- (declared) to Rs. 5,27,158/- and also to show cause as to why the entire goods be not confiscated and why the goods covered by the aforesaid three Bills of Entry and valued at Rs. 3,77,364/- be not confiscated and also why penalty be not imposed. Likewise the importers M/s. Sharp Business Machines (Pvt.) Ltd. and Shri P.N. Sadanand, the Managing Director of the importers were also served with another show cause notice bearing No. 10/93/87 BACC dated 30-3-1987 in respect of the goods covered by the Bill of Entry No. 4993 dated 11-3-1987 calling upon them to show cause as to why the value of the goods covered under the said Bill of Entry be not enhanced from Rs. 18,659/- (declared) to Rs. 1,88,327/- and also to show cause as to why the entire goods covered by the said Bill of Entry be not confiscated and why penalty be not imposed. In reply both the appellants submitted their various defence. The Adjudicating Authority took both the said show cause notices for adjudication together and ultimately held that the correct assessable value of the goods covered under all the aforesaid Bill of Entry was Rs. 7,15,485/-. It further held as follows -
"81. I hold that the importers have misdeclared the value of the goods to the extent of Rs. 615873/- with a motive to evade customs duty to the extent of Rs. 1096228.20.I also hold that whereas the substantial part of the goods imported are complete copiers in SKD/CKD condition, the importers have misdeclared their description as components of copiers with a motive to suppress their real identity and thereby prevent detection of the offences relating to evasion of duty and ITC Regulations. I also hold that the importers have misdeclared the description of several parts of copiers imported. The entire goods valued at Rs. 715485/- are therefore confiscated under Section 111(m) of the Customs Act, 1962.
82. The licence produced is not valid for any of the items imported. Among the goods imported, the items valued at Rs. 563332/- require a valid Import Licence for clearance. These goods valued at Rs. 563332/- have been imported in contravention of ITC Regulations and hence are confiscated also under Section lll(d) of the Customs Act, 1962 read with Section 3 of the Imports & Exports (Control) Act, 1947.
83. Having regard to the facts of the case, I allow the importers an option to redeem the goods on payment of a fine of Rs. 3,00,000/- (Rupees Three Lakhs only).
84. I hold that the importers and their Managing Director Shri P.N. Sadanand are guilty of the grave acts of misdeclarations and other commissions and omissions indicated in the show cause notices. I therefore impose a penalty of Rs. 1,00,000/- (Rupees One Lakh only) on each of the importers and Shri P.N. Sadanand under Section 112 of the Customs Act, 1962."
3. Aggrieved by the said impugned order the importers M/s. Sharp Business Machines (Pvt.) Ltd. have filed their two separate appeals. Appeal No. C/808/87 with respect to the show cause notice No. S.10/69/87 BACC and Appeal No. C/809/87-A with respect to show cause notice No. S.10/93/87 BACC. The Managing Director of the importers Shri P.N. Sadanand had also filed the present appeal No. C/810/87-A against the imposition of penalty. Hence in all the present 3 appeals by the appellants.
4. Shri Habibullah Badsha, Sr. Advocate duly assisted by Shri Ilias Ali, Advocate contended that the Collector erred in holding that the licence produced was not valid for the goods imported. Elaborating his arguments he submitted that the Collector was clearly wrong in his view that merely because the components put together would form one complete copier they could not be considered as components and what the importer had imported was the complete machine. Because, according to learned counsel the question for consideration before the Collector was whether the imported parts in SKD/CKD condition were components or not and not whether if they are put together then would form one complete copier. To support his contention he cited the case of Mebod v. The Collector of Customs, Madras, (1970) I.S.C.W.R. 366 and the case of Union of India v. Tarachand Gupta & Bros., 1983 (13) E.L.T. 1456 (S.C.) = AIR 1971 SC 1558. While refuting the contention raised by the learned counsel for the appellants and supporting the impugned order Shri V.N. Doiphode, learned SDR submitted that in the facts and circumstances of the case the Collector was right in holding that the SKD/CKD parts of the copiers imported should be deemed as fully assembled copiers for the purpose of Schedule-I to the Imports (Control) Order 1955. Shri Doiphode also cited the case of Girdharilal Bansidhar v. Union of India, AIR 1964 SC 1519 emphasising that the case of Girdharilal Bansidhar was noticed by the Hon'ble Supreme Court in the case of Union of India v. Tarachand Gupta, supra but was never over-ruled and on the other hand it was distinguished on the facts and circumstances of the case. Thus, according to him the law laid down in the case of Girdharilal Bansidhar still holds the field and support the impugned order. He also cited the case of Hindustan Teleprinter Ltd. v. Collector of Customs, 1986 (24) E.L.T. 111 decided by the Tribunal to support his view. In the alternative he submitted that even if all the parts contained in SKD/CKD packs of copiers imported are to be viewed individually, the licence produced by the appellants was not valid for any of the items imported. For this submission he drew our attention to paragraph 73 to 75 of the impugned order to indicate that this alternative case of the appellants was also considered by the Collector and ultimately it was found by him that even if all the imported parts contained in SKD/CKD conditions are viewed individually the licence produced by the appellants was not valid for any of the items imported.
5. We have considered the rival contentions raised by the parties. For coming to the conclusion that the goods imported should be viewed as one consignment and the SKD/CKD parts of the copiers imported be deemed as fully assembled copiers the Collector had recorded the following findings -
"39. The goods covered by the three Bills of Entry No. 2044; 2045 and 2046 all dated 3-2-1987 have been shipped from Hong Kong on the same day i.e. on 21-1-1987 against three AWBs bearing No. 098 4960 3105,098 4960 3120 and 098 4960 3116. The goods covered by the above three Bills of Entry have arrived on the same day (i.e., on 30-1-1987) and by the same flight. All the three Bills of Entry have been filed on the same day. The goods covered by all the three Bills of Entry have been supplied by the same supplier viz. M/s. Paralax Industrial Corporation, Hong Kong. As such, for the purposes of assessment to duty and applicability of Import Policy the goods covered by all the three Bills of Entry have to be viewed as one consignment and treated as if they are covered by one Bill of Entry and one AWB.
71. In view of the findings indicated at para 39, the goods covered by the three Bills of Entry No. 2044, 2045 and 2046 all dated 3-2-1987 are deemed as one consignment covered by one Bill of Entry and one AWB. The goods covered by these Bills of Entry are 10 Nos. copiers in SKD/CKD condition, accessories, spares, consumables and excess items. The goods covered by the fourth Bill of Entry are 4 Nos. copiers in SKD/CKD condition, and consumables. In terms of Rule 2(a) of the Rules of Interpretation of the Customs Tariff Act, 1975 the SKD/CKD parts of copiers are to be classified under one heading as if they are fully assembled copiers. In terms of the note in Schedule I to the Imports (Control) Order, 1955 each heading number in Column (1) of the said schedule correspond to the respective chapter and heading number of the First Schedule to the Customs Tariff Act, 1975 and each entry in Column (2) in the Schedule I to the Imports (Control) Order, 1955 has the same scope and meaning as the corresponding chapter and heading or description against any heading in the First Schedule to CTA, 75. First Schedule to CTA, 75 has to be necessarily read with the Rules on Interpretation of First Schedule to CTA, 75. The said Rules of Interpretation are integral parts of the said First Schedule or any heading therein. That is, the Rules of Interpretation of the said Schedule have to be taken as parts of Schedule I to the Imports (Control) Order 1955. Accordingly the SKD/CKD parts of the copiers imported are deemed as fully assembled copiers for the purposes of Schedule I to the Imports (Control) Order 1955. The said Schedule I is a part and parcel of the Imports (Control) Order 1955 the goods of the description specified in the said Schedule I require a valid Import licence for import and clearance. Further, in terms of the above clause the goods imported should conform in all respects - value, description, quantity, specification etc. with these indicated in the licence. The Import Policy of any licensing year is issued in accordance with the provisions of the Imports (Control) Order, 1955. In view of these the description of any article covered by any Appendix/part of the Import Policy or indicated in any Import Policy will have the same meaning as that in Schedule I of the Imports (Control) Order, 1955. That is, the Rules of Interpretation of First Schedule to CTA, 75 will apply for the purposes of interpretation of Import Policy for any entry in any appendix covered by the said Policy unless it is otherwise, specifically provided in the said Policy. In view of the above, for the purposes of the Import Policy and in deciding the validity of the licence produced, the CKD/SKD parts of the copiers have to be treated as fully assembled copiers. The licence produced is valid for certain components and is not valid for fully assembled copiers. The fully assembled copiers are the end products of the importers and hence cannot be imported by them.
72. Plain paper copiers are electronic equipments. Hence the copiers in SKD/CKD condition imported are kits/ready to assemble sets of copiers which are covered by Sl. No. 610 of Appx. 3A of AM 85-88 Policy Book. The licence produced is not valid for kits/ready to assemble sets of copiers falling under Sl. No. 610 of Appx. 3A of AM 85-88 Policy Book. Hence, even if Rules of interpretation of First Schedule of CTA 75 are not applicable for the purposes of interpretation of the Import Policy and in deciding the validity of the Import licence, the licence produced is still not valid for the SKD/CKD parts of the copiers."
6. In support of his findings on the alternative that even if all the parts contained in SKD/CKD packs of copiers imported are viewed individually, the licence produced was not valid for any of the items imported, the Collector has recorded the following findings -
"73. Even if all the parts contained in SKD/CKD packs of copiers imported are to be viewed individually, the licences produced is not valid for any of the items imported for the following reasons-
(a) In terms of the PMP of the importers approved by the Govt. of India, the importers are allowed to import in the first phase 62% of the components of the copiers. The import licence produced has been issued in terms of the above PMP and is valid for 62% of the components required for the assembly of copiers. The SKD/CKD packs of copiers imported comprise of all the components of copiers (i.e. 100%);
(b) The licence produced is valid for 5 sets of SKD/CKD components of copiers model FP 1300 (Provided the components account for more than 62% of the kit) whereas the quantity of FP 1300 copiers in SKD/CKD condition imported are 6 sets and the components account for 100% of the kit;
(c) the description of most of the items imported - such as main frame assembly, paper feed unit, developer unit, fuser unit, Carona unit etc. does not agree with that indicated in the licence;
(d) the value of each item allowed to be imported is indicated in the list attached to the licence. In no case the value declared agrees with that indicated in the list attached to the licence;
(e) the printed circuit boards imported are covered by Sl. No. 11 3 of Appx. 2B of AM 85-88 Policy Book. The lenses, the electric motors, the lamps, the bearings, HV unit (described as the transformer in the invoice/Bills of Entry) DPP Rubber are covered by Sl. Nos. 549,513, 516, 452, 577 and 370 of Appx. 3A to AM 85-88 Policy Book. The licence produced is not valid for the items falling under any of the above Sl. Nos. of Appx. 2B/Appx. 3A.
(f) The Drums, cassettes, timing reader, trays, guide plate and cleaning blades, imported do not figure in the list attached to the licence.
74. In terms of the provisions of clause 3 of the Imports (Control) Order, 1955 the goods imported should agree in all respects - value, description, quantity etc. with those indicated in the licence. In view of the findings indicated in the previous paragraphs, the licence produced is not valid for any of the items contained in SKD/CKD packs of the copiers have to be viewed individually while deciding the validity of the licence the licence produced is not valid for any of the items contained in the SKD/CKD packs of the copiers.
75. The accessories imported viz. the automatic feeder, the sorter and the table do not figure in the list attached to the licence. Similarly, the licence produced is not valid for spares and excess items also. None of the items imported except the toner and developer is allowed to be imported under OGL.
76. In terms of clause 2(e) of the Imports (Control) Order, 1955 the term value for the purposes of said order and any import licence issued thereunder has the same meaning as in Section 14(1) of the Customs Act, 1962. The total value of the goods imported which require an import licence for clearance has been determined under Section 14(1) of the Customs Act, 1962 at Rs. 563332/-. The Import licence produced is valid for goods valued at Rs. 494500/-. Thus there is a shortfall in the overall value of the licence to the extent of Rs. 68832/-.
77. In view of the findings indicated in paras 70 to 76, the goods valued at Rs. 563332/- among the entire goods covered by the four Bills of Entry have been imported in contravention of the ITC Regulations, thus rendering them liable for confiscation under Section lll(d) of the Customs Act, 1962 read with Section 3 of the Imports & Exports (Control) Act, 1974."
7. On our careful consideration we find that on the facts and circumstances of the case the Collector erred in treating in SKD/CKD packs of the copiers imported as assembled copiers for the purpose of Schedule-I to the Imports (Control) Order, 1955 and the case of Union of India v. Tarachand Gupta & Bros. applies on all fours to the instant case, wherein it was held that the action of Collector in putting up the two consignments together and then to hold that they made up 51 "Rixe" Mopeds in CKD condition was not correct. In that case the case of Girdharilal was distinguishable on the ground that "it is not as if motor cycles and scooters are prohibited articles as was the case there. The restriction is not against licensees importing motor cycles and scooters under entry 294 and parts and accessories under entry 295 but against the licensees under entry 294 importing motor cycles and scooters in CKD condition. The question in the instant case was not under which of the two entries 294 or 295, the goods fell, but whether the goods were parts and accessories covered by entry 295". The same effect is the decision of the Calcutta High Court also. In the case of Collector of Customs, Calcutta v. Mitsuny Electronic Works decided on 13-6-1984 [since reported in 1987 (30) E.L.T. 345 - not cited by either party] a Division Bench of the Calcutta High Court held that one has to look into the respective licence and not to the fact that if all the consignments covered by all the Bills of Entry are assembled together, there will be complete machines. The relevant observations runs thus -
"6. The first contention of Mr. Dipankar Ghosh for the Customs authorities is that if all the consignments covered by all the Bills of Entry in the case of three export houses are assembled together, there will be complete T.V. Sets and as such their import is prohibited. Such a course, however, cannot be adopted to find out whether individual licence covers the goods imported. It is a sheer coincidence that all the consignments have arrived at a time. One has to look into the respective licence. The writ petitioner may have purchased all the articles covered by all the licences but that cannot be a ground for withholding the goods alleging that complete T.V. Sets have been imported. We are, therefore, unable to accept this contention of Mr. Ghosh."
8. The case of Hindustan Teleprinter Ltd. v. Collector of Customs, supra decided by this Tribunal is distinguishable on the facts of the case and it appears that the case of Tara Chand Gupta & Bros., supra decided by the Apex Court was not brought to the notice of the Bench deciding the case. However, on a careful examination of the findings recorded by the Collector for holding that even if all the imported parts contained in SKD/CKD packs of copiers are viewed individually the licence produced was not valid for any of the items imported we find no cogent reason to differ.
9. Thus we hold that the Collector was right in holding that the imported goods were not covered by the valid licence.
10. Shri Habibullah Badsha next contended that the Collector erred in enhancing the value and also in rejecting the various quotations produced by the appellants. Elaborating, he submitted that the Collector erred in rejecting the invoice value as declared and fell in error in determining the value on the basis of the quotations of M/s. Shun Hing Technology Ltd., Hongkong. In any event submitted the learned counsel for the appellants the fixation of the value by the Collector was exorbitant and very high. In reply Shri Doiphode submitted that the Collector was right in rejecting the invoice value as well as the quotations submitted by the appellants. He emphasised that the quotations of M/s. Shun Hing Technology Ltd., Hongkong on the basis of which the Collector had determined the value was submitted by the appellants themselves to the Development Commissioner (Small Scale Industries), Government of India, New Delhi alongwith their application for approval of Phased Manufacture Programme (PMP). He further submitted that the Collector was right in determining the value of the items which were not covered by the above quotations under Section 14(1) of the Customs Act, 1962 read with Rule 8 of the Customs (Valuation) Rules, 1962.
11. We have considered the submissions and find that the Collector was right in rejecting the price shown in the invoice. It is pertinent to note that the importers themselves have admitted through the statement of their Managing Director Shri P.N. Sadanand (who is also appellant before us) recorded before the Appraiser of Customs, ACC, Bangalore, and in their replies to the show cause notices and also during the personal hearing that the invoices under the cover of which the goods have been imported do not represent the correct prices of the goods imported as can be seen from para 45 of the impugned order which was not challenged before us. On the point of rejection of the quotations and the Telex we have also examined the reasonings and findings of the Collector recorded in para 44 to 62 of the impugned order and agree with him as we find no cogent reason for taking a different view. For the same reason we also agree with the valuation made by the Assistant Collector on the basis of quotations of M/s. Shun Hing Technology Ltd., Hongkong which was submitted by the importers themselves to the Development Commissioner (Small Scale Industries), Govt. of India, New Delhi alongwith their application for approval of PMP and for determining the valuation of those items which were not covered by above quotations under Section 14(1) of the Customs Act, 1962 read with Rule 8 of the Customs (Valuation) Rules, 1962.
12. Thus we reject the contention of the learned Counsel for the appellants and hold that the valuation made by the Collector is neither exorbitant nor very high. The other contention of the learned counsel for the appellants that there was no case for fine or penalty also cannot be accepted. The Collector has found the appellants guilty of misdeclaring the description of the imported goods and also of misdeclaration of the value and has given cogent reason for imposing the fine and penalty both on the importers and Shri P.N. Sadanand, their Managing Director.
13. In the result we dismiss the appeal being devoid of any merit.
14. Misc. Application for permission to file additional documents is also rejected as it was not pressed during the hearing.