Custom, Excise & Service Tax Tribunal
) Mech & Tech vs Commissioner Of Customs, Tuticorin on 31 March, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal Nos.C/183/06, C/184/06, C/185/06,
C/230/06 & C/231/06
[Arising out of Order-in-Original No.59/2006 dated 10.3.2006, OIO No.58/2006 dt. 10.3.2006, OIO No.63/2006 dt. 10.3.2006, OIO No.56/2006 dt. 10.3.06 and OIO No.55/2006 dt. 10.3.06 passed by the Commissioner of Customs, Tuticorin]
For approval and signature:
Honble Ms.JYOTI BALASUNDARAM, Vice-President
Honble Mr. P.KARTHIKEYAN, Member (Technical)
1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? :
2. Whether it should be released under Rule 27 of the
CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? :
3. Whether the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
1) Mech & Tech
2) Shree Ganapati Kutir Udyog
Appellant/s
Versus
Commissioner of Customs, Tuticorin
Respondent/s
Appearance :
Shri N.Viswanathan, Advocate Shri V.V.Hariharan, JCDR Shri M.K.A.K.Mohiddin, JDR For the Appellant/s For the Respondent/s CORAM:
Honble Ms.Jyoti Balasundaram, Vice-President Honble Mr. P. Karthikeyan, Member (Technical) Date of hearing : 31.3.2009 Date of decision : 31.3.2009 Final Order No.____________ Per Jyoti Balasundaram In all the above cases, the common issues involved are free importability of old and used photocopiers imported by the appellants herein and the valuation thereof. The goods have been held liable to confiscation in terms of Section 111 (d) of the Customs Act, 1962 read with Section 3 (3) of Foreign Trade (Development & Regulation) Act,1992 for import without specific licence and in terms of Section 111 (m) for misdeclaration of value, and the value of the goods has been enhanced; penalty has also been imposed upon the importers under Section 112 ibid, as per the details set out in the annexure to this order.
2) We have heard both sides. The contention of the importers that the goods imported by them were freely importable and their import did not require to be covered by a licence is to be accepted, in the light of apex courts judgement dt. 24.2.09 in Civil Appeal No.2999/2007 etc. in the case of M/s.Atul Commodity Pvt. Ltd. and Others Vs Commissioner of Customs, Cochin, holding that import of old and used photocopiers is not restricted prior to 19.10.05 (imports in all these appeals are prior to this date) and that Notification No.31 dt. 19.10.05 restricts imports of such goods only on and after 19.10.05. The apex court has upheld the decision dt. 11.5.05 of the Larger Bench of the Tribunal in M/s.Atul Commodity Pvt. Ltd. and the Honble High Court of Andhra Pradesh also took the same view in Central Excise Appeal No.52/05 and the apex court set aside the judgment dt. 7.4.06 of the Honble Kerala High Court (which was challenged before the Supreme Court) holding that import of secondhand photocopiers prior to 19.10.05 also warranted a licence for import. The relevant extract from the apex courts judgement is reproduced herein below :-
20. Policy circular No.20/05 appears to be in continuation of Policy circular Nos. 16/03 and 19/03. In this connection, para 1 of Policy circular No.20/05 requires to be noted. As stated above, under FTP (2002-07) import of second-hand goods could be made only against a licence. They came in the restricted category. However, in the Handbook (2002-07) it was inter alia provided that old and used capital goods which were not more than 10 years old could be imported freely. Those goods, therefore, were treated as new goods. This resulted in confusion. Therefore, DGFT stepped in to clarify that second-hand photocopying machines, irrespective of the period of use, shall fall in the restricted category (see Policy circular No.19/03). Para 1 of Policy Circular No.20/05 recites that photocopying machines are not to be imported without a licence even if they are less than 10 years old and even if the photocopying machines are imported for service providers. Vide para 3, the Policy circular No.20/05 clarifies that second-hand photocopying machines are covered under the definition of second-hand goods, therefore, their import shall be governed by the provisions of para 2.17 of the Policy and shall not be permitted to be imported under para 5.1 of the Policy. Reverting to para 2.17 of FTP (2004-09) read with para 2.33 of the Handbook (2004-09) one finds that import of second-hand capital goods is made free. Para 2.17 of FTP (2004-09) is in two parts. The first part deals with the meaning of the words second-hand goods. The second part states that import of second-hand capital goods shall be allowed freely. Para 3 of the Policy circular no.20/05 states that import of second-hand goods shall be governed by the provisions of para 2.17 of the Policy. Para 2.17 has to be read in its entirety. That para draws a dichotomy between second-hand goods and second-hand capital goods. Para 2.33 of the Handbook (2004-09) places restriction only qua computers and not qua photocopying machines. In our view, therefore, one has to give weightage to the second part of para 2.17 which allows free import of second-hand capital goods. What is not permitted vide para 3 of the Policy circular no.20/05 is importation under EPCG. As stated above, in this case, we are concerned with imports under general category and not under EPCG. We are in agreement with the view expressed by the Larger Bench of the Tribunal that photocopying machines are capital goods as defined under para 9.12. The Tribunal has held that the use of these machines for rendering services makes them capital goods. In fact, this finding on the user is not challenged by the Department. Therefore, import of old and used photocopying machines stands covered by the concept of second-hand capital goods in para 2.17 (particularly in the light of the last statement in the said para, which we have underlined hereinabove.
21. One more aspect needs to be mentioned. Para 2.33 expressly states that import of old and used computers/second-hand computers are restricted. Para 2.33 of the Handbook do not restrict photocopying machines. Import of photocopying machines are expressly restricted only by Notification No.31 dated 19.10.2005. This itself indicates that categorization/re-categorization cannot be done by policy circulars. Such exercise has to be undertaken by specific amendment to the Policy vide Section 5 of the 1992 Act. In this case, Notification No.31 dated 19.10.2005 indicates that the Central Government has brought in photocopying machines into the category of second-hand goods vide amendatory Notification, therefore, import of photocopying machines stand restricted only on and after 19.10.2005. In fact, if the argument of the Department is to be accepted, then there was no need to issue Notification No.31 dated 19.10.2005.
3) In the light of the above decision, we set aside the finding of contravention of provisions of Section 111 (d) of the Act.
4) Now, we take up the issue of contravention of Section 111 (m) for misdeclaration of value. We note that the appellants produced a load port Chartered Engineers certificate certifying the value of the imported goods. No reason has been given by the adjudicating authority for rejection of such value except to state that valuation certificate was based on valuation in the US market. The appellants explained that although the goods were supplied from UAE, they were manufactured in different countries including USA. The local Chartered Engineer certificate relied upon by the Revenue does not show the basis of arriving at the value adopted by the Commissioner, such as international price or price of new goods in the year of manufacture or the selling price of such or like goods in the domestic market. It is not the case of the department that the load port Chartered Engineers certificate is not genuine or it has been fraudulently obtained. In the case of Anish Kumar Spinning Mill Vs CC Tucitorin,, 2004 (172) ELT 394 (Tri.-Chen.), the Tribunal held that the rejection of evidence in the form of suppliers Chartered Engineers certificate in support of the transaction value on the basis of subsequent opinion of another expert is not justifiable and that the opinion of one expert cannot be rejected on the basis of opinion of another expert unless there is sufficient independent reason for such rejection. The appeal of the department against the above order was dismissed by the apex court as seen from 2005 (182) ELT A92 (SC) and hence the Tribunals decision cited (supra) has attained finality. Further, it has not been shown as to how the import falls within the special circumstances statutorily particularized under Rule 4(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 so as to reject the transaction value, in the light of the apex courts decision in Eicher Tractors Ltd. Vs CC Mumbai, 2000 (122) ELT 321 (SC) which has been followed in Tolin Rubbers Pvt. Ltd. Vs CC Cochin, 2004 (163) ELT 289 (SC) and by the Tribunal in Oswal Fats & Oils Vs CC Amristar, 2007 (220) ELT 795 (Tri.-Del.) and Balaji Office Equipment Vs CC Chennai, 2007 (216) ELT 611 (Tri.-Chennai) (in which it has also been held that empanelment of load port Chartered Engineer certificate under the EXIM Policy is not a legal requirement for import of secondhand machinery) and M/s.Digitech Photocopier Vs CC Mumbai Final Order No.C/551/08 dt. 16.6.08 and M/s.Bosch Ltd. Vs Commissioner of Customs, (A), Mumbai, 2009-TIOL-12-CESTAT-BANG.
5) In the light of the above discussion, we hold that the enhancement of the value of the goods imported cannot be sustained and, accordingly, set it aside.
6) In the result, we hold that the appellants have not contravened either provisions under Section 111 (d) or (m) of the Customs Act, set aside the impugned orders and allow the appeals.
(Operative part of the order was
pronounced in open court on 31.3.2009)
(P.KARTHIKEYAN) (JYOTI BALASUNDARAM)
MEMBER (T) VICE-PRESIDENT
gs
Annexure : Tabulated Statement.
ANNEXURE
S.No.
Appeal No.
Appellant
Declared value
Enhanced value
Penalty
1.
C/183/06
Mech & Tech
US$ 26,945
Rs.11,82,886
C&F
US$ 37,075
Rs.16,27,593
C&F
1,00,000
2.
C/184/06
Mech & Tech
US$ 31,675
Rs.13,90,533
C&F
US$ 45,050
Rs.19,77,695
C&F
1,20,000
3.
C/185/06
Mech & Tech
US$ 28,135
Rs.12,35,127
C&F
US$ 37,075
Rs.16,27,593
C&F
1,00,000
4.
C/230/06
Shree Ganapati Kutir Udyog
US$ 32,025
Rs.14,05,898
C&F
US$ 40,375
Rs.17,72,463
C&F
1,05,000
5.
C/231/06
Shree Ganapati Kutir Udyog
US$ 56,055
Rs.24,74,828
C&F
US$ 67,070
Rs.29,61,141
C&F
1,75,000
1
9