Custom, Excise & Service Tax Tribunal
Champion Photostat Industrial ... vs New Delhi(Icd Tkd) on 14 September, 2020
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CUSTOMS EXCISE & SERVICE TAX APPLELLATE TRIBUNAL
NEW DELHI.
Customs Appeal No.50041 of 2019
[Arising out of Order-in-Appeal No.CC(A)/CUS/D-II/ICD-TKD/IMP/2635/2018 dated
31.10.2018 passed by the Commissioner of Customs (Appeals), New Customs House, New
Delhi]
M/s. Champion Photostat Industrial Corporation Appellant
17, Dev Colony, Rohtak (Haryana).
Versus
Commissioner of Customs Respondent
ICD,TKD, New Delhi.
APPEARANCE:
Shri K.K. Sharma, Advocate for the appellant. Shr Rakesh Kumar, Authorised Representative for the respondent/Department.
CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL ) FINAL ORDER NO. 50766/2020 DATE OF HEARING:14.02.2020 DATE OF DECISION: 14.09.2020 ANIL CHOUDHARY:
The issue in this appeal is whether vide the impugned order-in- appeal, rejection of transaction value and enhancement of the value of the imported goods (old and used Digital Multifunctional Devices ) on the basis of Chartered Engineer‟s Certificate, with further order of confiscation for non-submission of specific licence for importation from the DGFT is justified or not.
2. The appellant filed Bill of Entry No.4711941 dated 28.03.2016 for clearance of goods declared as "Used & Old Digital Multifunctional Devices, Canon IR 2270/2870, Canon IR 3025/3030, Canon IR 2230/2830/2200/2800/3300" from Singapore under Invoice No.GCR/EXP/1602018 dated 27.02.2016 and classified the same under CTH 2 84433100. The declared assessable value of goods was USD 14850 (C&F) equivalent to Rs.10,23,029.88. On perusal of the documents, it was found that the appellant had imported old and used Digital Devices Canon IR series as under :-
Sl.No. Description No. of Pieces Declared Value (C&F) US $ per piece
1. CANON IR 2270/2870 25 110.00
2. CANON IR 3025/3030 15 110.00
3. CANON 2230/2830/2200/2800/2830/3300 95 110.00 TOTAL 135
3. Since the goods were old and used and having photocopying function, it appeared that the import of such goods is restricted under the provisions of Para 2.31 of FTP 2015-2020 and the importer is required to obtain specific licence for import of such items from DGFT. The appellant could not produce the specific import licence against import of goods vide the above said Bill of entry.
4. Further, it also appeared that the goods are also covered under Sr.No.B1110 of Schedule III of Hazardous Wastes (Management, Handling & Trans-Boundary Movement) Rules, 2008, which requires permission from the MOEF before import.
5. The Appellant submitted an Office Memorandum F.O. No.23-85/2012- HSMD dated 10.09.2013 issued by Dr. Chanda Chowdhury, Director, Ministry of Environment & Forest ( MOEF) which states as below:-
"This has reference to the application submitted by M/s.CHAMPIAN PHOSTAT INDUSTRIAL CORPORATION, New Delhi regarding permission to import „used Digital Multifunction Device‟ for direct use.
The application were considered in the 37th Meeting of the Expert Committee held on 20th March, 2013 and it is to inform that the 3 Ministry has no objection to the import of 1500 nos. of used Digital Multifuntion Print and Copying Machine By M/s.Champion Photostat Industrial Corporation, Rohtak (Haryana) through ICD, Tughlakabad, ICD, Hyderabad and Kolkata Port, subject to the following conditions:
(a) MEDs must have a residual life of five years as certified by the Chartered Engineers or surveyors empanelled by DGFT/Customs Authorities;
(b) The importer has licence from DGFT, if applicable.
(c) The importer will have to provide a copy of the invoice and contract relating to sale and /or transfer of ownership of the equipment ensuring that the equipment is destined for direct re-
use and is fully functional."
6. As the goods imported were declared as old and used, the same were examined under 100% first check examination order. The Import Shed also directed to get the goods examined by an approved Chartered Engineer for arriving at the correct valuation and residual life of the goods.
7. As per the examination report dated 06.04.2016, "100% examination was carried out in the presence of Superintendent (Shed) and found to contain Old & Used Multifunctional Device of Canon Brand as per Invoice, B/L & B/E. The goods were also examined by the approved Chartered Engineer having Regn. No.M-063649-5 dated 03.05.2014 vide Certificate No.RK/CPIC/ICD-TKD-IMP/4711941.
8. The condition of all the machines were good and having residual life of 7 years or more and accordingly meant for re-use and not for disposal or recycling. Further, none of the machines had shown any defect and no physical damage that impairs their functionality upon examination. Hence, in view of all such parameters, the goods did not appear as "E-waste". 4
9. The details of the goods and their value declared by the appellant vis- a-vis as ascertained by the Chartered Engineer in his certificate dated 6.4.2016 are as follows:-
SNo Description YOM No.of Declared Value Value Total Pcs. Value (C&F) proposed by proposed Assessable USD (Rs.) CE per piece by CE per Value (INR) (USD) piece (INR)
1. CANON IR 2002-2008 25 110.00 211.00 14231.95 355799 2270/2870
2. CANON IR 2002-2008 15 110.00 223.00 15041.35 225621 3025/3030
3. CANON 2002-2008 95 110.00 222.00 14973.90 1422521 2230/2830/2200 2800/2830/3300 Total 135 10,23,030/- Rs.20,03,941/-
10. As per the certificate issued by the Chartered Engineer, it was observed that the conditions mentioned in Para 5 (a) and (c) as well as the conditions relating to the residual life of five years as mentioned in the Office Memorandum dated 25.04.2013 issued by the MOEF appeared to have been fulfilled by the appellant.
11. However, the appellant had imported the old & used goods without having specific import licence/authorisation as required under the FTP and therefore, violated the provisions of FTP 2015-2020 read with the provisions of the Customs Act, 1962. The assessable value declared by the appellant was Rs.10,23,030/- and the value proposed by the Chartered Engineer was Rs.20,03,941/-. The declared value was therefore, held liable to rejection under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods), Rules, 2007 (hereinafter referred to as "CVR") read with provisions of Rule 9 of the said Rules and Section 14 of the Customs Act, 1962. The said goods appeared liable for confiscation under 5 Section 111(d) of the Customs Act, 1962 and rendered themselves liable for imposition of penalty under Section 112 (a) of the Customs Act, 1962.
12. The appellant vide letter dated 07.04.2016 made a request for waiver of issuance of show cause notice as well as grant of personal hearing in the matter. Accordingly, the Adjudicating Authority held that the appellant imported the old & used goods without having valid import licence/authorisation as required under the Foreign Trade Policy 2015-2020 read with the provisions of Customs Act, 1962. The appellant also suppressed the correct value of the imported goods, which was ascertained/arrived at by the Chartered Engineer. Therefore, it was held that the declared value is liable to be rejected under Section 14 of the Customs Act, 1962. The appellant rendered the said goods liable for confiscation under Section 111(d) and 111(m) of the Customs Act, 1962 and rendered themselves liable for imposition of penalty under Section 112(a) of the Customs Act, 1962. Accordingly, the Adjudicating Authority passed the following order:-
"i. I reject the value declared of Rs.10,23,029.88 by the importer under Rule 12 of the Customs Valuation (Determination of Value of the Imported Goods) Rules 2007 read with the provisions of Rule 19 of the said Rules and Section 14 of the Customs Act, 1962 and order payment of duty of Rs.3,47,947/- on the enhanced value of Rs.20,46,749/- (Assessable Value).
ii. I order for confiscation of the goods valued at Rs.20,46,749/- under Section 111(d) & 111(m) of the Customs Act, 1962. However, I give an option to the importer to redeem the goods on payment of fine of Rs.3,00,000/- (Rupees Three Lakh only) under Section 125 of the Customs Act, 1962.6
iii. I also impose penalty of Rs.2,00,000/- (Rupees Two lakh only) on the importer, M/s. Champion Photostat Corporation under Section 112(a) of the Customs Act, 1962."
13. Being aggrieved, the appellant preferred appeal before the ld. Commissioner (Appeals). The ld. Commissioner (Appeals) recorded the following findings:-
a) As per Foreign Trade Policy for the period 1.4.2015 to 31.03.2020, wherein the import of Photocopier Machines/Digital Multifunctional Print and copying machines is under restricted category and is importable against the authorisation. Thus, in absence of import licence from DGFT, the appellant has violated the provisions of the Foreign Trade Policy read with the Customs Act. Thus, the goods have been rightly confiscated.
b) As regards the enhancement of the value, it has been observed that the same is on the basis of the physical verification and scrutiny of the relevant documents by the approved Chartered Engineer. Further, the enhancement /valuation is in conformity with CBEC Circular No.4/2008-Cus dated 12.02.2008, which deals with valuation of second hand machinery/capital goods.
c) Redemption fine was reduced from Rs.3 lakhs to Rs.2 lakhs.
d) Penalty under Section 112(a) was reduced from Rs.2 lakh to Rs.1 lakh.
14. Being aggrieved, the appellant is before this Tribunal, amongst others, the following grounds.
15. It is urged that the impugned order is in violation of the principles of natural justice. The Commissioner (Appeals) heard the appellant on 7 4.8.2017 and thereafter, the impugned order had been passed after more than 15 months on 31.10.2018.
16. As regards the enhancement of the value, it is urged that the value has been declared as per the invoice of the shipper at Rs.10,23,029.88. There is no reason given for arbitrary enhancement of almost 100%. The enhancement is in violation of the provisions of Section 14 of the Customs Act, which provides for levy of the duty on the transaction value except in special circumstances. In the facts of this case, there is no evidence that the transaction value was not genuine or did not represent the correct transaction value. Thus, the enhancement is wholly arbitrary and contrary to the Customs Act read with Customs Valuation Rules. Further, there is no evidence of any amount paid over and above the transaction value to the foreign supplier. Admittedly, the appellant and the foreign supplier are not related persons and the transaction is at an arm‟s length and not influenced by any extra commercial consideration. Revenue has erred in relying on the valuation as proposed by the Chartered Engineer. It is further urged that the re-valuation is bad as the transaction value is not rejected as per the process of the law. Reliance is placed on the ruling of this Tribunal in the case of Omex International Vs. CC, New Delhi - 2015 (328) ELT 579 (Tribunal - Delhi) and also on the ruling of the Apex Court in the case of CC Vs. H.T. Company - 2016 (367) ELT A-101.
17. As regards the requirement of specific licence for importation of old and used digital multifunctional devices, imposition of redemption fine and penalty under the aforementioned rulings as well as other rulings, which have laid down that the redemption fine and penalty should be imposed in the ratio of 10% and 5% only of the assessable value. 8
18. Ld. Counsel further urges that there is no reference to NIDB data. There is absence of any extra consideration and admittedly, the parties are not related. Thus, in absence of any incriminating evidence, the transaction value ought to have been accepted. Accordingly, ld. Counsel prays for allowing the appeal with appropriate relief.
19. Ld. Authorised Representative for the Department relies on the impugned order and in support of his contention, he relies on the following rulings:-
(i) Vikas Spinners Vs. CC, Lucknow -
2001 (128) ELT 143 (Tribunal-Delhi).
(ii) Bedy Associates Vs. CCE, New Delhi -
2017 (349) ELT 289 (Tribunal-Delhi).
(iii) Advanced Scan Support Technologies Vs.CC, Jodhpur 2015 (326) ELT 185 (Tribunal-Delhi).
(iv) Gajra Bevel Gears Vs. CC, Bombay 2000 (115)ELT 612 (SC)
20. It is further stated that once the importer has waived the right of show cause notice and personal hearing and opting for assessment on merits, hence, they cannot dispute the assessment done by the Department, which is in accordance with law. Further, as the goods under import are second hand machines /photocopiers, the goods are distinct and cannot be compared on the basis of NIDB data. Further, the Commissioner (Appeals) has already given relief by way of reducing the redemption fine and penalty and accordingly, this appeal may be dismissed.
21. Having considered the rival contentions, we find that the ld. Commissioner (Appeals) has relied upon the CBEC Circular No.4/2008-Cus 9 dated 12.02.2008, which deals with valuation of second hand machinery/capital goods and has upheld the enhancement of the declared value based on the valuation done by the Chartered Engineer at the instance of the Department. In the same circular in Clause 2(iii), it has been provided that however the transaction value of Rule (3) cannot be rejected by ab initio application of Rule 9, in as much as, one cannot, before rejecting the transaction value of Rule 3 with sufficient evidences, straight away arrive at notional value under Rule 9. The said circular has relied upon the ruling of the Hon‟ble Supreme Court in Gajra Bevel Gears (Supra), wherein it has been held that the value of the second hand machine, when new, based on the certificate produced by the importer and scaling down that price by giving depreciation does not appear to be an arbitrary method of ascertaining its value. To this observation, the Hon‟ble Supreme Court dismissed the appeal by the importer, who had declared the value of the second hand car based on the auction price in England. We further find that Rule 3 read with Rules 12 requires that where the proper officer has reason to doubt the truth or accuracy of the declared value in relation to the imported goods, he may ask the importer to furnish further information including the documents or other evidences. If after receiving such further information, or in the absence of the response of the importer, the proper officer still have reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of Rule 3 (1).
22. We find that in the present case, no such exercise has been done by the proper officer. Thus, rejection of the transaction value is held to be arbitrary and thus, we set aside the same and restore the declared value for the purpose of assessment.
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23. So far the confiscation is concerned, the same is upheld as the goods imported, admittedly, fall under the category of "restricted goods" under the Import Policy of the relevant period and the appellant, as required, failed to produce specific import licence from DGFT. However, we find that the appellant had obtained permission from the Ministry of Environment & Forest vide O.M. F.No.23-85/2012/HSMD dated 10.09.2013, wherein they are permitted to import 1500 nos. of digital multifunctional print and photocopying machines, subject to the conditions that MED must have residual life of 5 years as certified by Chartered Engineer, which has been certified. Secondly, the appellant should obtain licence from DGFT, if applicable, which the appellant has failed and thirdly, the importer was required to provide a copy of the invoice and contract relating to the sale of equipments ensuring that equipment is still for re-use and is fully functional, which condition has been satisfied as per report of the Chartered Engineer.
24. Accordingly, we uphold the order of confiscation. However, following the precedent ruling of this Tribunal in the case of Omex International (supra), we reduce the redemption fine to 10% and penalty under Section 112 (a) to 5% of the assessable value.
25. Accordingly, we allow the appeal in part. The appellant shall be entitled to consequential benefit in accordance with law.
(Pronounced on 14.09.2020) (Anil Choudhary) Member (Judicial) (C. J. Mathew) Member (Technical) Ckp 11