Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs Cc, Jaipur on 4 August, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. II Customs Appeal Nos. 529-530 of 2008 [Arising out of the Order-in-Original No. 07/2008-Cus dated 04/04/2008 passed by The Commissioner of Customs, Jaipur. ] For Approval and signature : Honble Shri D.N. Panda, Judicial Member Honble Shri Rakesh Kumar, Technical Member 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 would be released under Rule 27 of : the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3. Whether their Lordships wish to see the fair : copy of the order? 4. Whether order is to be circulated to the : Department Authorities? 1. M/s Sagar Suitings (P) Ltd. ] Appellant 2. Shri Lalit Gulati ] Versus CC, Jaipur Respondent
Appearance Shri B.L. Narasimhan, Advocate for the appellant.
Shri Sansar Chand, Authorized Representative (DR) for the Respondent.
CORAM:Honble Shri D.N. Panda, Judicial Member Honble Sh. Rakesh Kumar, Technical Member DATE OF HEARING : 29/06/2009.
DATE OF DECISION: 04/08/2009.
Order No. ________________ Dated : ,,,,,,,,,,,_____________ Per. Rakesh Kumar :-
The facts leading to these appeals are, in brief, as under :-
1.1 M/s Sagar Suitings Pvt. Ltd., G 222-223, RIICO Industrial Area, Phase II, Bhilwar (Raj.) [hereinafter referred to as the appellant company] are manufacturers of textiles. Shri Lalit Gulati is the Director of the appellant company. Since they wanted to import second hand Sulzer looms with accessories, and since as per the EXIM policy, for import of second hand machines more than ten years old, an import licence is required, they, in April 2002, obtained a licence for import of thirty two second hand Sulzer looms of 1979 make alongwith accessories. This licence was revalidated upto 8/4/04. Against this import licence, the appellant company in April 2004, imported six second hand Sulzer looms alongwith accessories from M/s Pacific International overseas Inc., British Virgin Iceland. The declared CIF value per loom, alongwith accessories was 27,000/- EURO C&F Mumbai. While the proforma invoice No. 848/059/04 dated 1/3/04 mentioned 80-90 TLLs (Central Tucking Units) among the supplied parts, the commercial invoice No. 786/022/04 dated 19/3/04 and the packing list which was subsequently issued, did not mention the TLLs. The bill of entry for clearance of this consignment was filed on 7/4/04 and accordingly bill of entry while mentioning the details of the imported machines and spares, did not mention the Central Tucking Units. On examination of the consignment it was found there were ninety three second hand Central Tucking Units. Though as per the Chartered Engineers Certificate dated 1/3/04 produced by the importers, the year of manufacture was 1979, the officers had doubt about the year of manufacture and accordingly a detailed examination of the machinery was conducted with the help of Forensic Laboratory which submitted its report dated 25/5/04 mentioning that
(a) In the machine bearing serial No. 69331, the original plate on the electronic panel was missing but some parts of the machine bear embossed description 19/5/71 which indicates the year of manufacture as 1971 ;
(b) in the machine bearing No. 69332, the original plates were found missing ;
(c) the machines bearing No. 69380 and 69379 had the dates 10/2/69 and 28/2/69 respectively embossed on the left side wall and right side wall respectively ; and
(d) the machines bearing Sl. No. 69329 and 69330, had the dates 27/8/64 and 28/4/64 respectively embossed on them which indicate the year of their manufacture.
Thus, according to the forensic report, the looms were much older than of the year 1979.
1.2 Since the import licence was valid only for the import of the machines of 1979 make, while as per the forensic report, the machines were actually found to be much older and since ninety three central tucking units had not been mentioned in the invoice and declared in bill of entry, the machines alongwith the tucking units appeared to be liable for confiscation and hence the same were placed under seizure. Subsequently the statement of Shri Lalit Gulati was recorded on 27/5/04, wherein he stated that on seeing the forensic report dated 25/5/04, he has no reason to deny that machines are older than 1979, that it is the suppliers who have done the manipulation to show the wrong year of manufacture to impress the customers, that had he known that the machines are older than year 1979, he could have got the licence amended accordingly and that as regards the ninety three Central Tucking Units, their value would be about 1100 EURO per unit and that he is ready to pay the duty. Earlier statement of Shri Lalit Gulati had been recorded on 27/4/04, wherein he had stated that he had never visited any foreign country till date and is not even having any passport, that the Central Tucking Units are mentioned in the proforma invoice from which it is clear that the suppliers forgot to mention the same in the commercial invoice and the packing list and the tucking units were not mentioned in the bill of entry as they did not provide the copy of proforma invoice to the clearing agent, that as per his knowledge the market price of second hand tucking units should be between Rs. 20,000/- (Rupees Twenty Thousand) to Rs. 25,000/- (Rupees Twenty Five Thousand) per piece and that since the machines bear the dates of the year 1964, 1969 and 1971 etc. he accepts that the machines are older than 1979.
1.3 Shri Lalit Gulati however vide letter dated 8/6/04 informed that his statements dated 27/4/04 and 27/5/04 had been given without understanding the law and implications and the same had not been tendered voluntarily and that these statements may be treated as retracted. It was also mentioned in this letter that actual price of tucking unit is around 300 to 350 EURO per piece and not 1100 EURO per piece, which has been mentioned by him without actually ascertaining the price. Vide letter dated 9/6/04 the importer submitted copy of the letter dated 8/6/04 from M/s Roland Schmidt GmbH showing the price of such tucking unit in the year 1979.
1.4 Statement of Shri Lalit Gulati was recorded again on 27/7/04, wherein he stated that though vide letter dated 8/6/04 he had retracted his statements dated 27/4/04 and 27/5/04, he has read those statements again and admits that there is no contradiction in his statements and hence the same may be treated as correct, that he, however, wants to reconsider the value of tucking units 1100 EURO per piece as given by him earlier, as in his view the international price is less than the same and that according to him the price of second hand sulzer tucking unit would be 250 to 400 EURO per piece. Subsequently vide letter dated 9/8/04, the importer company enclosed a bill of entry showing the price of central and side tucking units at 200 dollars per piece.
1.5 Market inquiry was conducted for ascertaining the price of Central Tucking unit and as per the market inquiry the price was found to be ranging from 50,000 to 80,000 per piece. Accordingly to the department was of the view that correct price of tucking units is 1100 EURO per units as admit by Shri Lalit Gulati.
1.6 In view of the above, a show cause notice dated 10/9/04 was issued proposing confiscation of the imported second hand sulzer shuttleless looms with accessories and of ninety three second hand tucking units valued at Rs. 56,72,535/- (Rupees Fifty Six Lakh Seventy Two Thousand Five Hundred Thirty Five) and also for demanding duty amounting to Rs. 22,23,634/- (Rupees Twenty Two Lakh Twenty Three Thousand Six Hundred Thirty Four) on the ninety three tucking units. The show cause notice also proposed imposition of penalty on the appellant company as well as on Shri Lalit Gulati under Section 112 (a) of Customs Act. This show cause notice was adjudicated by the Commissioner, Central Excise, Jaipur II vide order-in-original No. 12/04 dated 10/12/04 by which -
(a) The six second hand sulzer shuttleless looms alongwith accessories with assessable value of Rs. 15,29,133/- (Rupees Fifteen Lakh Twenty Nine Thousand One Hundred Thirty Three) were ordered to be confiscated under Section 111 (d), 111 (m) and 119 of Customs Act, 1962 with option to be redeemed of payment of redemption fine in lieu of confiscation of Rs. 3,00,000/- (Rupees Three Lakh) in addition to payment of duty ;
(b) The ninety three Central Tucking Units were ordered to be assessed @ 1100 EURO per piece and charged to duty without benefit of exemption Notification No. 21/02-CUS on that basis and accordingly the duty demand of Rs. 22,23,634/- (Rupees Twenty Two Lakh Twenty Three Thousand Six Hundred Thirty Four) was confirmed in respect of these tucking units;
(c) The ninety three second hand central tucking units were ordered to be confiscated with option to be redeemed on payment of redemption fine in lieu of confiscation of Rs. 12,00,000/- (Rupees Twelve Lakh) in addition to payment of duty ; and
(d) Penalty of Rs. 5,00,000/- (Rupees Five Lakh) each was imposed on appellant company as well as Shri Lalit Gulati, Director of appellants company.
1.7 Against this order of the Commissioner, the appellant company as well as Shri Lalit Gulati filed appeals before the Tribunal which were disposed off vide final order No. 486-487/07 dated 5/11/07 by which
(a) Confiscation of the looms was upheld on the ground that their year of manufacture had been misdeclared ;
(b) Confiscation of tucking units was also upheld on the ground that that the same has not been declared.
The Tribunal also upheld the quantum of redemption fine in respect of the second hand sulzer shuttleless looms. However, the matter was remanded to the Commissioner for denovo adjudication on the issue of valuation of the Central Tucking Units and their eligibility for concessional rate of duty under Notification No. 21/2002-CUS. The Tribunal directed that the Adjudicating Authority after deciding the issue of valuation of the tucking units will decide the afresh the issue regarding quantum of redemption fine in respect of them and also the quantum of penalty to be imposed on both the appellants.
1.8 In pursuance of this order of the Tribunal, the points remanded by the Tribunal were adjudicated denovo by the Commissioner vide order-in-original No. 7/08 dated 31/3/08 by which the Commissioner again held that the correct value of the tucking units is 1100 EURO per piece and on this basis he again imposed the redemption fine of Rs. 12,00,000/- (Rupees Twelve Lakh) and also imposed same penalty of Rs. 5,00,000/- (Rupees Five Lakh) on the appellant company as well as on Shri Lalit Gulati. The Commissioner also held that the appellants are not eligible for Notification No. 21/2002-CUS as the tucking units cannot be treated as spare parts of the looms and accordingly upheld the duty demand of Rs. 22,23,634/- (Rupees Twenty Two Lakh Twenty Three Thousand Six Hundred Thirty Four) which had been determined in the earlier adjudication proceedings.
1.9 It is against this order that the present two appeals have been filed.
2. Heard both the sides.
2.1 Shri B.L. Narasimhan, Advocate, the learned Counsel, representing the appellants, made the following submissions.
2.1.1 There is no evidence other than the statement of Shri Lalit Gulati regarding the price of Euro 1100/- per piece for Central Tucking Units, adopted by the Department. Shri Lalit Gulati has retracted his statement. The actual price of the Central Tucking Units is 200 U.S. $ per piece which is supported by the bill of entry regarding contemporaneous import produced by the appellant.
2.1.2 The price in the local market cannot be the basis for determining the price of the imported goods.
2.1.3 When the Tribunal had remanded the matter to the Commissioner with specific direction to consider the evidence produced by the appellant that the second hand Central Tucking Units had been imported by other importers during the same period at U.S. $ 200 per piece, the Commissioner should have followed the direction of the Tribunal and considered this evidence but he has not done so.
2.1.4 The Department has stated that the price of new tucking units was 6612 Swiss Francs equivalent to Rs. 2,50,000/- (Rupees Two Lakh Fifty Thousand) on the basis of a letter from M/s Sultex (India) Pvt. Ltd., Mumbai who is representative of M/s Sulzer in India. Since the Department alleges that machinery was 1964 to 1971 make, in such a case, the price in Swiss Franc must be converted into Indian rupees based on the exchange rate prevailing in the year 1971 and on that basis, the price of new unit would come to Rs. 11,985/- (Rupees Eleven Thousand Nine Hundred Eighty Five) only.
2.1.5 The appellant had presented a letter from M/s Roland Schmidt GmbH indicating that the price of new Central Tucking Unit was Swiss Franc 5150 in the year 1979. The department has not accepted this letter merely because of it was submitted subsequent to the filing of bill of entry. If the price indicated in the letter from M/s Roland Schmidt GmbH is accepted, the original price in 1979 would come to Rs. 25,169/- (Rupees Twenty Five Thousand One Hundred Sixty Nine) per piece. In any case, since the appellant have produced evidence that contemporaneous import of second hand Central Tucking units has been made at U.S. $ 200 per piece, that value should have been adopted in this case.
2.1.6 Central Tucking units are spare part of the imported looms and the same do not have any use other than being used with the imported looms. Serial No. 251 of the Notification No. 21/2002-CUS dated 1/3/2002 prescribes concessional rate of duty of 5% for machinery or equipment specified in list 31 and also the spare parts for the maintenance of these machines falling under Chapter 84, 85 and 90. List 31 mentions shuttleless looms (air jet, water jet, rapier and projectile and narrow width high speed needles). Since the goods imported are covered by list 31 of Notification No. 21/2002-CUS and since Central Tucking Units are part of these looms, the same are eligible for concessional rate of duty under this notification. Textile Commissioner, Government of India, Ministry of Textile vide letter dated 17/2/2005 has clarified that the benefit of this exemption Notification would be available to the Tucking units which are spare parts of shuttleless looms. The Commissioner has altogether ignored this clarification. Beside this, the Parts catalogue for sulzer weaving machines Vol. 3 functional groups 31 59, tools and appliances WZ published by Gebruder Sulzer, Switzerland, Edition 1974, also mentions the Central Tucking Units as spare part of the shuttleless loom. The grounds on which the exemption had been denied by Commissioner are totally incorrect.
2.2 Shri Sansar Chand, the learned Departmental Representative, defending the impugned order, pleaded that Central Tucking Unit is not a part of the machinery, and that it is only an accessory and hence it is not part or spare part and, therefore, the exemption under Notification No. 21/2002-CUS has been rightly denied. With regard to valuation, he pleaded that as per the letter of M/s Sultex India Ltd., the price of the new tucking units is Swiss Franc 6612 and since tucking units in this case are second hand the price of 1100 EURO per piece mentioned by Shri Lalit Gulati in his statement is reasonable and for this reason only this has been adopted by the Department.
3. We have carefully considered the submissions from both the sides and perused the records.
3.1 The points of dispute to be decided in these appeals are
(a) Whether Central Tucking Units are spare part of the imported looms and hence eligible for concessional rate of duty under Notification No. 21/2002-CUS and
(b) Whether the value of 1100 EURO per piece adopted by the Department in respect of the second hand Central Tucking Units is correct or otherwise and if it is not correct what should be the correct value.
Once these two issues are decided, the quantum of redemption fine in respect of Central Tucking Units and the quantum of penalty to be imposed on the appellant company and Shri Lalit Gulati is to be re-determined.
4. Coming to the first issue regarding eligibility of the Central Tucking Units for concessional rate of duty under Notification No. 21/2002-CUS, we find that S. No. 251 of table annexed to this Notification prescribes a concessional rate of duty of 5% adv. for machinery or equipment specified in list 31 and spare parts for maintenance of the above machines. List 31 covers Shuttleless looms (air jet, water jet, rapier, projectile and narrow width high speed needles). There is no dispute that the goods are shuttleless looms covered by list 31. The point of dispute is as to whether the central tucking units are spare parts of these looms. Thus, the concessional rate of duty for central tucking units depends upon the facts as to whether or not the same are the part of the imported Sulzer Projectile Shuttleless Loom. In this regard, we find that Director, Ministry of Textile, Office of the Textile Commissioner vide letter dated 17/2/05 addressed to the Commissioner of Customs, Jaipur has given a specific clarification that Tucking Unit is a spare part of shuttleless weaving machine and that the Tucking Units get worn out after some use and have to be replaced and that both the shuttleless looms and the Tucking Units are covered under Chapter 84 of the Customs Tariff and hence they would be eligible for the concessional rate of duty. The Central Tucking Units are required to regulate the width of the fabric to a required length and this is done by using one or more than one Tucking Units at a time. Since without the Tucking Units, the weaving of the cloth of a required width is not possible, the same have to be treated as a part/spare part of the shuttleless looms. We find that the Commissioner in the discussion and finding portion (page 7) of the impugned order, while acknowledging that the imported looms are 85 width machine on which fabric of 85 can be woven without using Tucking Unit and if the fabric of lower width is required to be woven Tucking Units are required, has still held that Tucking Unit is not an integral part of weaving machine but an optional device. We do not agree with this logic of the Commissioner as no manufacturer will import a costly machine for weaving a fabric of only one particular width. Since for different uses, the fabric of different width are required and it is by the Central Tucking Unit by which the width can be regulated, the same has to be treated as a part of the shuttleless loom and, therefore, the same would be eligible for concessional rate of customs duty under Notification No. 21/2002-CUS.
5. The next point of dispute is regarding the value. The department has adopted the value of 1100 EURO per piece mainly on the basis of the statement dated 27/5/04 of Shri Lalit Gulati readwith a letter from M/s Sultex (India) Pvt. Ltd. mentioning the price of new Central Tucking Unit as 6612 Swiss Franc per piece. However, we find that Shri Lalit Gulati in his subsequent statement dated 27/7/04 retracted his earlier statement about the price of the Central Tucking Units and claimed that as per his market inquiry, the second hand Central Tucking Units are available at the price of 350 EURO to 400 EURO per piece. We also find that the Department has not produce any bill of entry showing the import of similar new Central Tucking Units by M/s Sultex (India) Pvt. Ltd. at the price mentioned by them. On the other hand, the importers have produced a bill of entry showing import of second hand Central Tucking Units by M/s Parbatsar Synthetics Ltd., Miraz, Maharashtra from M/s Meiyo Boeki Shokai, Japan at the price of 200 U.S. $ per piece in June 2004. However since two second hand goods cannot be treated as identical and as per Shri Gulati, the price of second hand Central Tucking Units should be between Euro 250 to 400 per unit, we are of the view that price of 400 EURO per piece for second hand Tucking Units, as mentioned by Shri Lalit Gulati in his statement dated 27/7/04 can be adopted. We, therefore, hold that for the purpose of assessment of duty, it would be fair and reasonable to adopt the price of Central Tucking Units as 400 EURO per piece.
6. In view of our above findings, we order as under :-
(a) The ninety three second hand Central Tucking Units be valued @ EURO 400 per piece, for the purpose of assessment of duty.
(b) The benefit of concessional rate under Notification No. 21/2002-CUS is available to Central Tucking Units and the duty demand is to be re-determined accordingly.
(c) The redemption fine in lieu of confiscation in respect of ninety three Central Tucking Units is reduced to Rs. 4,00,000/- (Rupees Four Lakh).
(d) The penalty under Section 112 (a) of Customs Act, 1962 on the Appellant company and Shri Lalit Gulati, Director of the Appellants company is reduced to Rs. 1,50,000/- (Rupees One Lakh Fifty Thousand) each.
The impugned order stands modified as above.
6.1 The Commissioner is directed to re-quantify the duty demand on the basis of our directions, as above.
(Pronounced in open court on 04/08/2009.) (Rakesh Kumar) Technical Member (D.N. Panda) Judicial Member PK