Customs, Excise and Gold Tribunal - Tamil Nadu
Emrc Engg. Mechanical Research India ... vs C.C.E. on 4 November, 1994
Equivalent citations: 1995(77)ELT747(TRI-CHENNAI)
ORDER V.P. Gulati, Member (T)
1. By this application the applicants have pleaded dispensation of pre-deposit of a duty of Rs. 63,04,570/- and also a penalty of Rs. l,00,000/- imposed on the appellants company and Rs. 1,00,000/- on Dr. Kant S. Kothwala. After hearing both the sides, the operative portion of the order has been dictated in the open Court and the appellants were directed to pre-deposit a sum of Rs. 20 lakhs on or before 30th December, 1994 and Dr. Kant S. Kothwala was directed to pre-deposit a penalty of Rs.1,00,000/- by the said date and report compliance by 30th December, 1994.
2. The learned Advocate for the appellant pleaded that the appellant Dr. Kant S. Kothwala is an expert in computer software and has established a company in USA and he has been getting the copies of the software from there to be copied in India for sale. He has pleaded that Dr. Kothwala had been bringing the material with him as baggage during his trips to India or during his transit through India to other countries in connection with his business. He pleaded that it was in this connection that he was carrying with him the software on media valued at l,39,17,000/- and which was found in his briefcase when the premises of the appellant was searched. He pleaded that this particular software was not made for use in India and the appellant Dr. Kothwala was taking it to use in Japan. On a query from the Bench, the learned Advocate stated that the appellant was bringing the software with him in his baggage as export of software was said to be restricted from USA. He pleaded that the appellant has been charged with the sale of imported software which had been earlier cleared through Customs without payment of duty and without declaration to the authorities. He pleaded in fact the appellant was bringing the only one copy each such software which was copied in India and sold to the customers and the imported software as such which is alleged to have been sold by the appellant was in fact manufactured in India and was sold to the customers. The only imported item which the appellant brought was software locks which could not be manufactured in India and which were necessary for the use of the software sold by the appellant to safegaurd against any tampering with the software. He pleaded that the authorities placed heavy reliance on the statements of Shri Bhushan V. Dandavate who is no longer the General Manager of the appellant's company. He referred to the statement of Dr. Kothwala wherein he has stated that they have copied NISA software in India and further the software brought in India could not be used without properly tuning the same in India. He pleaded this would clearly show that the appellant had been manufacturing the software in India. Regarding the software seized from the appellant's briefcase, he pleaded, the same were brought in for being taken out of India and was intended for demonstration purposes. He however conceded that this software was brought in without declaring the same to the authorities and the appellant Dr. Kothawala cleared through the customs. The learned Advocate pleaded that Dr. Kothawala had been in India during transit and the provisions regarding passengers in transit should be made applicable to him and therefore the order of confiscation of software found in his briefcase should be set aside. He however, could not refer to any legal provisions under the Customs Act under which the passenger who had cleared through the Customs with the goods could be treated as in transit and so also the goods brought into the country could be given the benefit of the goods in transit. He could not refer us to any such provision. The learned Advocate also pleaded that there was non-application of mind and also denial of principles of natural justice.
3. The learned Departmental Representative pleaded that the appellant Dr. Kothawala, on his own admission, had been smuggling goods into the country without declaring the same to the Customs Authorities. He pleaded that there is no infirmity in the learned lower authotity's order.
4. We have considered the pleas made by both the sides. We observe that admittedly the software valued at Rs. 1,39,17,000/- has been brought by Dr. Kothawala without declaring the same to the customs. He has also been getting, on his own admission, software on earlier occassions without declaring them for stated purpose of copying the same in India for sale. We find from the record as referred to in para 26 where Shri Bhushan V. Dandavate, the then General Manager of the appellant's company has sent him FAX message regarding non-receipt of the customs documents to prove the licit importation of the software and that Dr. Kothawala had not responded to this FAX and only instructed Shri Dandavate that his job was only to receive the software from him personally and to ensure customers' satisfaction. Shri Dandavate has also stated in his statement that the appellant's company had not sold any software or made any modification in the family of programmes and that whenever Dr. Kothawala gave him any developed software on his arrival to India, he delivered the same to the customers and that Dr. Kothawala never gave him any customs supporting documents in regard to the same. It is also seen from the documents seized, the FAX message dated 8-1-1992 from Shri Gopal Rajan of M/s. EMRC, USA, in which Dr. Kothawala is connected, addressed to Shri Subhash Tonapi, M/s. EMRC Engineering Mechanic Research India (Pvt.) Ltd. lists out the items requested for by Shri Subhash Tonapi which will be hand carried by Dr. Kothawala and includes 6 professional plugs, 4 production plugs, one copy of disks for all modules, 5 Nos. of 386 production plugs, disks for Bangalore Institute of Technology and a number of other items. It is also the admitted position that the computer locks had also been brought by Dr. Kothawala. Various status reports which were sent by the General Manager Shri Dandavate to Dr. Kothawala also show that the goods brought by Dr. Kothawala were received personally by Shri Dandavate. Shri Dandavate has given a detailed statement about how all the modalities of the operation in India and the role of Dr. Kothawala in the import of the software from USA. Dr. Kothawala in his statement has stated that he was a high-tech computer aided engineer having well established multi national software engineering establishments in the name and style of M/s. EMRC, USA, EMRC, Japan, EMRC, Korea, EMRC, Europe, EMRC, London, EMRC, India and he is engaged in developing computer software for designing atomic power plants, missiles, satellites, aircrafts, automobiles etc. and that he marked NISA brand of software (NISA is the Brand Name of EMRC, USA) in India to various agencies like ISRO and that the software is developed at EMRC, USA for various purposes and that the package of software sold to the customers basically consists of the programmes, instruction diskettes, setting lock and serial number and that the instruction diskettes and safety locks have been brought from USA and that the software brought in India was not declared to Customs and no duty of Customs has been paid by him, though he had to pay customs duty on his software packages brought by him from abroad and sold in India through the agents. He also stated that the need for bringing any software as per the customer requirments from USA is because copying takes much longer time and also errors get generated without a second automatic check. He also stated that he binds himself to whatever statement Shri Dandavate makes. It is clearly seen from the statements of Shri Dandavate and Dr. Kothawala and also from the records seized that the appellant Dr. Kothawala who had set up a company EMRC, India at Bangalore had been importing, without payment of duty and declaring to Customs, software packages including the locks which were prima fade being sold as such to the customers. No evidence has been produced to show that in fact copies made in India were sold and not the copies which were brought from USA by Dr. Kothawala. In view of the above we hold that prima facie there is no infirmity in the learned lower authority's order. Pleading on the financial hardship, the learned Advocate for the appellant pleaded that the appellant company's turn over has been only Rs. 37 lakhs during the year ending March, 1993. When specifically asked when the appellant's company itself is a high-tech computer software company, why consultation charges over Rs. 14 lakhs have been shown as expenditure, he had no information in that regard. We further observe that the appellant's company is a part of a network of multi-national companies and therefore, taking into consideration the facts and circumstances of the case and the various entries shown by way of provisions in the Loans and Advances and also the status of the company being a part of the network of the multi-national company, we order the appellant company to pre-deposit Rs. 20 lakhs (Rupees twenty lakhs) on or before 30th December, 1994 and report compliance, subject to which pre-deposit of the balance of duty and entire penalty would stand dispensed with pending appeal. Taking into consideration the gravity of the case and the role of Dr. Kothwala, we hold that Dr. Kothawala should pre-deposit the entire penalty of Rs. 1,00,000/- (Rupees one lakh) on or before 30th December, 1994. The matter will be called on 30th December, 1994 for reporting compliance.