Customs, Excise and Gold Tribunal - Mumbai
Sanjiv Goyal And M.P. Uni-Magna Teckh ... vs Cc on 30 April, 2002
Equivalent citations: 2002(83)ECC424, 2002(150)ELT137(TRI-MUMBAI)
ORDER P.G. Chacko, Member (J)
1. One of these two appeals is by M/s. MP. Uni-Magna Teckh Ltd. Bhopal and the other by Shri Sanjiv Goyal, Director of the company. The appeals are against the order of the Commissioner of Customs. The Commissioner by the impugned order, confiscated certain goods imported by the company but permitted them to redeem the goods on payment of a fine of Rs. 2 Lakhs. He further ordered that the goods be assessed to duty as full CT. Scanner as also that an amount of Rs. 1,80,000 be loaded to the invoice value (FOB) of the goods in determining the assessable value. He also gave room for "usual additions as per law" to the invoice value. Further, he imposed penalties of Rs. 4 Lakhs and Rs. 2 Lakhs on the company and its Director respective under Section 112(a) of the Customs Act. Inthis appeal, Shri Sanjiv Goyal (Director) is aggrieved by the imposition of the penalty of Rs. 2 Lakhs, while, in their appeal, the company is aggrieved by the rest of the Commissioner's order.
2. The relevant facts of the case are briefly as under:
The company imported two consignments of components of Computerised Axial Tomography Scanner (for short, CT Scanner) from a Japanese supplier against two separate Letters of Credit. Both the consignments were shipped by the same vessel, A Bill of Entry for clearing the first consignment was filed in the Jawahar Custom House on 31.7.94. That consignment consisted of six different components of CT Scanner, viz. Gantry, Data Acquisition System, Patient Table, High Voltage Tank, Computer and Image Formater, which were cleared at Customs on 7.7.95 upon assessment to 15% basic customs duty 10% additional customs duty in terms of Exemption Notification No. 83/94 dated 1.3.94, which exempted "parts required for manufacture of specified medical equipments" subject to recommendation by the Joint Director in the Directorate of Industries to the effect that such parts were required for the special purpose of manufacture of medical equipments. The Bill of Entry for clearing the second consignment was filed on 31.7.95, a year later. The consignment consisted of some other components of CT Scanner viz. Console, System Transformer, High Voltage Controller, Mechanical Controller, Fibre Covers, Cables Phantoms and Accessories. In the Bill of Entry, the company claimed concessional assessment of the said components under Notification No. 83/94, for which purpose they also produced the necessary recommendation letter issued by the Joint Director of Industries. While this Bill of Entry was awaiting assessment, the Marine and Preventive Wing of Bombay Customs detained the goods and conducted investigation. As part of the investigation, statements of Shri Sanjiv Goyal were recorded under Section 108 of the Customs Act.
On the basis of investigative results, the department alleged that the company had imported a complete CT Scanner, or an incomplete CT Scanner having the essential character of a complete one, classifiable under Customs Tariff Sub-heading 9022.11 and further that the company misdeclared the goods as components of CT Scanner with intent to evade customs duty. More precisely, the allegation was that the company had misdeclared the goods as components of CT Scanner classifiable under Tariff Sub-Heading 9022.90 for claiming the concessional rate of Basic Customs duty of 15% in terms of Notification No. 56/95 Cus. whereas, according to the Customs authorities, the goods were classifiable as complete CT Scanner under Tariff Sub-Heading 9022.11 in terms of Rule 2(a) of the Interpretative Rules and chargeable to BCD @ 40%. It was further alleged that the company had suppressed the cost of software and manuals required for the manufacture of CT Scanner, thereby misdeclaring the value of the goods. The goods were also alleged to be liable to confiscation under Section 111(m) of the Customs Act. Both the company and its Director were alleged to have rendered the goods liable to confiscation and they were held to be liable for penal action under Section 112(a) of the Act. The appellants waived show-cause notice and paid the differential duty of Rs. 4,37,010. Despite such payment of duty, the customs authorities did not release the consignment for months together. The appellants made representation to the Addl. Commissioner of Customs and the Commissioner of Customs in May 1996, pleading for speedy clearance of the goods. They submitted that vital components such as X-ray tube. Tetrode tube and Disc drive, required for making CT Scanner, had not been imported along with the consignment. They also produced the relevant Bills of Entry to show that the said components had been separately imported by them in the past through Air Cargo Complex, Delhi. The appellants also submitted that there was no undervaluation of the goods. The Commissioner, however, rejected their contentions and passed the impugned order.
3. Heard both sides.
Ld. Counsel for the appellants reiterated the grounds of the appeal and relied on the following decisions of the Tribunal:
(a) Wipro Ge Medical Systems v. CC. Bangalore
(b) Polar Appliances Limited v. CC. New Delhi 2001 (43) RLT 32 (CEGAT-Delhi)
4. Ld. DR for the Revenue reiterated the findings of the adjudicating authority.
5. Considered the submissions.
A consignment of certain components of CT Scanner, imported by the appellant-company from Japan was cleared on payment of duty @ 15% (basic) + 10% (additional) in terms of Exemption Notification No. 83/94 dated 1.3.94 under a Bill of Entry dated 31.7.94. Such clearance was allowed by the Customs authorities upon production of a recommendation letter from the Joint Director of Industries, Madhya Pradesh, which certified that the imported components were required for the special purpose of manufacturing medical equipment. It was when a second consignment of CT Scanner components (which had also been shipped along with the earlier consignment in the same vessel) was sought to be cleared likewise at Customs that the authorities wanted to treat both the consignments together as a Complete CT Scanner or as an incomplete CT Scanner with the essential character of a complete one and to charge duty therefore under Tariff Sub-heading 9022.11 @ 40% (basic) + 5% (additional). The company waived show-cause notice and paid the differential amount of duty. Shri Sanjiv Goyal Director of the company, admitted in his statements dated 13.10.95 and 20.11.95 that a whole-body scanner was imported by them by misdeclaring the same as "parts of whole body scanner". He also admitted liability to pay duty on the goods @ 40% + 5%. He further went on record saying that the differential duty amount of Rs. 4,37,010 was being paid voluntarily. Answering a query about valuation of the goods. Shri Goyal, in his statement, stated that they had not undervalued the goods, but in the event of the department proving any under-valuation, they would pay the differential amount of duty on differential value of the goods. Shri Goyal acknowledged that his statement was voluntary, true and correct and requested the department to take a lenient view in the matter. The adjudicating authority relied on these statements given by the Director of the company and held that the goods contained in the two consignments i.e., the goods cleared on 7.7.95 under Bill of Entry dated 31.7.94 (first consignment) and the goods sought to be cleared after one year under Bill of Entry dated 31.7.95 (second consignment) constituted an incomplete CT Scanner having the essential character of a complete one in terms of Rule 2(a) of the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act and that the same fell to be classified under Tariff sub-heading 9022.11 attracting basic duty of customs at 40%. The Commissioner further held that the consignment included the software and manuals required for making the scanner and, therefore, the cost thereof, estimated at Rs. 1,80,000, was also liable to be included in the assessable value of the goods. It was further held that the company and its Director had intentionally misdeclared the imported goods as components of whole-body scanner in a mala fide manner and with a mischievous intent to evade duty.
6. It has been pleaded in these appeals that a CT Scanner is based on the use of X-rays and, therefore, in the absence of X-ray tube in the imported consignment, the goods cannot be held to have assumed the essential character of a CT. Scanner. It has also been contended that Tetrode tube and Disc drive are also vital components of a CT Scanner and, therefore, in the absence of these items in the consignments in question, the goods can hardly acquire the essential character of a CT Scanner. According to the appellants, the Commissioner has erred in applying Rule 2(a) of the Interpretative Rules to the goods in question. It is the further submission of the appellants that, once the certificate from the it. Director of Industries was produced along with the Bill of Entry, it was incumbent upon the Customs authorities to accept the same and grant the benefit of exemption under Notification No. 83/94-CE, which was available to components of medical equipments. Yet another argument of the appellants is that 9022.90 was a specific tariff entry which squarely covered the imported goods and, therefore, there was no good reason to put the goods under Tariff Sub-heading 9022.11, which covered complete CT Scanner but not components thereof. It has also been stated by the appellants that the statements of Shri Sanjiv Goyal, relied on by the Commissioner, were only dictated and false statements and, therefore, no credence ought to have been given to them. The appellants have challenged the order of confiscation of the goods, on the strength of the fact that they had deposited the entire amount of duty demanded. They have challenged the penalties also on the same ground as well as on the ground that there was no mala fide intent on their part. The appellants have prayed for assessing the goods as components of CT Scanner under Tariff sub-heading 9022.90 and granting the benefit of exemption under Notification No. 83/94-CE. They have also opposed any addition to the declared value of the goods. There is a prayer for refund of the differential duty of Rs. 4,37,010 paid by them. The confiscation and penalty are also sought to be set aside.
7. Certain facts are not in dispute. Both the consignments were received in India by the same shipment. The first consignment, which was cleared on 7.7.95 under Bill of Entry dated 31.7.94 consisted of a set of CT Scanner components viz. Gantry, Data Acquisition System, Patient Table, High Voltage Tank, Computer and Image Formater. The second consignment, for which a Bill of Entry was filed on 31.7.95 consisted of a different set of CT Scanner components viz. Console, System transformer, High Voltage Controller, Mechanical Controller. Fibre Covers, Cables, Phantoms and Accessories. Three other components viz X-ray tube, Tetrode tube and Disc drive had already been procured from abroad prior to the above shipment. All the components hitherto mentioned would make a complete CT Scanner by a process of assembling, aligning, wiring, calibration and testing. These are undisputed facts. Though both the aforesaid consignments had come by the same shipment, the appellants chose to file Bill of Entry for one in July 1994 and, for the other, one year later, claiming the benefit of concessional rate of duty under Notification 83/94 available to components (parts) and accessories falling under TSH 9022.90. The Customs authorities took the aid of Interpretative Rule 2(a) and held that the components covered by the two consignments constituted an incomplete CT Scanner having the essential character of a complete one classifiable under TSH 9022.11 and chargeable to Basic and Additional Customs duties at the rates of 40% and 5% respectively. We find that this case of the department was accepted in to by the appellants as evidenced by the statements dated 13.10.95 and 20.11.95 of Shri Sanjiv Goyal, Director of the appellant-company. Shri Goyal also admitted that they had separately procured three other components of CT Scanner earlier from abroad, which were X-ray tube, Tetrode tube and Disc Drive. The Commissioner has found that, even without the X-ray tube, Tetrode tube and Disc Drive the components in the two consignments would constitute an incomplete CT Scantier with the essential character of a complete CT Scanner classifiable under TSH 9022.11. He has, in this connection, relied on Rule 2(a) of the Interpretative Rules. In the present appeals, the appellants have submitted that Rule 2(a) was wrongly applied by the adjudicating authority. Their plea is that Shri Goyal was compelled to admit the department's case and that he had retracted the admissions and pleaded for assessment of the goods as components of CT Scanner under TSH 9022.90 by way of letters dated 17.5.96, 20.5.96 and 30.5.96. We have perused the copies of these letters available on record.
In the letter dated 17.5.96 addressed to the Additional Commissioner of Customs, the appellants stated to the effect that the consignments covered by Bills of Entry dated 31.7.94 and 31.7.95 consisted of sub-assemblies/components of CT Scanner, which, together with X-ray tube, Tetrode tube and Disc drive, constituted a CT Scanner. In their subsequent letter dated 20.5.96, the appellants provided the costing of the goods and submitted that the prices declared in their invoices were true and correct. In their last letter dated 30.5.96, the appellants informed the Commissioner thus' "we accepted views of the department and are eager to clear the consignment at the earliest". According to our understanding, none of these letters contains any retraction of earlier admissions or any rebuttal of the department's case. On the other hand, the appellants categorically admitted the department's case and requested for early clearance of the goods covered by Bill of Entry filed on 31.7.95. The clear admission by Shri Sanjiv Goyal in his statements dated 13.10.95 and 20.11.95 was only affirmed in the letter dated 30.5.96 submitted to the Commissioner of Customs. We, therefore, are unable to accept the appellants' contention that Shri Goyal's statements dated 13.10.95 and 20.11.95 were false and dictated statements. It is also an admitted fact that the appellants have deposited the differential duty assessed on Bill of Entry dated 31.7.95, amounting to Rs. 4,37,010. There is nothing on record to show that this payment was involuntary or made under protest. Therefore, the appellants' case, insofar as their liability to pay duty on the imported goods is concerned, is apparently an afterthought.
8. We need not examine the applicability of any Interpretative Rule or of any Exemption Notification, nor the cited case law. On the basis of the appellants' categorical and unqualified admission of the department's case, we hold that the goods imported by them were a CT Scanner classifiable under TSH 9022.11 and chargeable to Basic and Additional Duties of Customs at the rates of 40% and 5% respectively. However, we do not find any justification in loading an amount of Rs. 1,80,000 on account of software and manual to the assessable value of the goods. The Commissioner has loaded this amount merely on the basis of an observation that "it does not seem plausible that the software is not contained in the goods imported." The adjudicating authority, obviously, has not categorically found that the consignments did contain software or manuals. Without a clear finding that software and manuals formed a part of the consignments, it was not open to the Commissioner to order loading of the cost of software and manuals to the assessable value. In the impugned order, the Commissioner has held that the goods shall be assessed to duty on the basis of FOB value as declared in the two invoices plus Rs. 1,80,000 "plus usual additions as per law." He has not spelt out "the usual additions". We are unable to sustain any such unspecified additions. We hold that the goods be assessed to duty on the basis of the value declared in the invoices.
9. We find that the conduct of the company, already exposed, rendered the goods liable to confiscation under Section 111(m) and rendered themselves liable to penalty under Section 112(a) of the Customs Act. In the circumstances of the case, however, we are of the view that a redemption fine of Rs. 2,00,000 is too high. We reduce the same to Rs. 1,00,000. Similarly, the penalty imposed on the company also appears to be harsh, and we reduce the same to Rs. 1,00,000. There is neither any evidence on record nor any finding in the impugned order to connect Shri Sanjiv Goyal personally with the aforesaid conduct of the company. There is no finding of mens rea against him. We set aside the penalty imposed on Sanjiv Goyal.