TMI Blog2014 (8) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... d does not leave any doubt to treat technical collaboration agreement to be independent of divisible contract of supply and service. The drawings, designs and technical documents are no doubt goods being integrally connected with the plant and machinery and not classifiable under CTH 49.01. In the present case, those were inevitable necessity of the capital goods to come into existence. Inseparability of each other was their virtue. Therefore it does not appeal to common sense to treat the import consignment independent of plant and machinery to be called "book". When it transpires that the entire contract of supply of plant and machinery (capital goods) and supply of drawing and design were integrally connected with each other that shows allocation of part of value of contract towards drawings and designs to escape duty on capital goods. Such division brings the case to the purview of section 28 of Customs Act 1962. Once the goods (drawing and designs) were not books, the notification benefit claimed by appellant is also deniable and adjudication was not time barred. Even the alternate claim of the appellant that the import of drawing and design shall fall under the Tariff H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entific Engineering Housing Ltd's case were rendered in the context of income tax law. The basic issue therein was - whether 'books' were covered by the entry 'plant' under the Income Tax Act. Those decision, therefore, have no relevance to the issue in question since the Custom tariff entries are different from income tax. It was also submitted on behalf of Revenue that since the article in question was to be used by the assessee only and that was prepared according to its requirement, that had no utility to others for which that cannot be said to be a 'book' in general sense. 4. It was observed by Hon'ble Court in the case of Gujarat Perstorp Electronics Ltd. (Supra) that HSN has dealt with the point of classification and as per Explanatory Note, the goods imported in that case would fall under Chapter Heading 49.01. If it is so, it would not be covered by sub-heading 4911.99. The principle of classification envisaged by HSN was explained in the case of Collector of Central Excise, Shillong v. Wood Craft Products Ltd. - 1995 (77) ELT 23 (S.C.) = (1995) 3 SCC 454 as under: we are of the view that the Tribunal as welt as the High Court fel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods in terms of section 2(22) of Customs Act, 1962 and related to imported machinery and goods were liable to Customs duty and there was a transfer of property in such goods came to India on import, with a value. 8. The issues before learned adjudicating Authority were: (i) Whether the impugned items are goods or not? (ii) Issue of classification and definition of Baggage. 9. Ld. Adjudicating Authority in Para 3.2 of the order recorded that according to Article 3 of the agreement GMF was to supply plant and equipment as well as to render technical assistance and training in India to the appellant for consideration in terms of a contract dated 28/05/1993 and amendments thereto. Consideration was linked with commencement of commercial production. 10. Appellant contended before ld. Adjudicating Authority that when the goods were imported by courier who was not the owner of the goods nor a passenger, there shall not be levy of duty since drawing and design brought by courier cannot be treated as baggage. But ld. Authority considering Circular No. 56/95-Cus dated 30th May 1995 held that the goods brought was owned by the appellant was liable to duty. 11. Ld. Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of ₹ 2,00,00,000/- (Rupees Two Crores only) was imposed under Section 125 of the customs Act, 1962. 15. Further, for violation of Notification No. 86/94-Cus dated 1.3.94, penalty of ₹ 2,00,00,000/- (Rupees Two Crores only) was imposed on the appellant under Section 112(a) of the Customs Act, 1962 and penalty of ₹ 1,00,00,000/- (Rupees One Crores only) was imposed on Sh. M.K. Dhir, the Managing Director and Vice-Chairman of KBT under Section 112(a) of the Customs Act, 1962. 16.1 On behalf of appellant it was argued that the drawings, designs, specimens and documentation are only the means for imparting or instructing the knowledge which is exclusive and proprietary in nature in the present case. Such documents can neither be sold by the appellants nor be purchased by anybody as the right to impart the knowledge contained therein is proprietary and exclusive to the drawings, designs, specimens and documentation supplied by Marzotto have not acquired the essential properties of goods . Thus, such documents cannot be goods as the same has not acquired the essential ingredients of being goods. Accordingly the definition of goods under section 2(22) of the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question were imported, Notification No. 38/94 was in operation. According to the terms of this Notification, Printed Books (including covers for Printed Books) are exempt from the whole of duty of Customs. 16.8 The impugned order classifying the drawings, designs, specimens and documentation in question under Heading 98.03 is incorrect and unsustainable. Heading 98.03 does not cover courier imports as cargo. According to the show cause notice, the drawings, designs, specimens and documentation during the period of import would fall under Heading 98.03 and attract Customs duty at 200% ad valorem. However, the show cause notice has not led any evidence whatsoever to classify the drawings, designs and documentation in question under the Heading 98.03. Heading 98.03 is a specific entry for passenger baggage. Heading 98.05 covered all dutiable articles imported by a passenger or a member of a crew in his baggage . Thus, for any article to be classified under this Heading, the same has to be necessarily a baggage of a passenger containing dutiable articles. As stated supra, the drawings, designs, specimens and documentation were not articles of a passenger baggage, meriting class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods imported were covered under sub-heading 98.03 being baggage brought by courier. Therefore the adjudication resulted in confiscation of drawing, design and documents valued at ₹ 6,31,00,000/- under section 111(m)(o) of the Customs Act, 1962 with the consequence of levy of duty on the appellant company and penalty on the company as well as on Sri Dhir. When the appellant as well as the courier failed to provide information relating to import, enquiry was conducted. Arrival of consignment was proved. Bank remittance also proved discharge of consideration towards acquisition of drawing and design. 17.2 Revenue further argued that the appellant entered into technical agreement with Singapore as well as the Italian concern to make import of the plant and machinery as well as drawing and designs. Article 3 thereof showed that the agreement was to supply the plant as well as supply of drawing and design and impartation of know-how and technical services. Documentation and training in Italy was also provided as per Engineering Contract. The supplier was under obligation to set up the manufacturing unit and render training to the personnel of the appellant to make use of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to custom duty, or exempt from duty being books. The Show Cause Notice disclosed the custom Tariff Heading 98.03 attracting duty and the said heading reads as: all dutiable articles imported by a passenger or a member of crew in his baggage . But appellant pleaded that the import shall fall under the tariff heading 49.01, which reads as printed books, brochures, leaflets and similar printed matters, whether or not in single sheet . 21. The appellant submitted that the goods falling under Chapter 49 relating to printed books shall be liable to nil rate of duty in terms of Notification No.38/94-CUS and No.107/93-CUS, dated 30.03.1993. Revenue negated the plea on the ground that the imports were goods, not being books at all and liable to duty being baggage. 22. Hon'ble Supreme Court while remitting the civil appeal of the appellant expressed opinion in Para 53 of the judgment reported in 2005(186) ELT 532 (SC) that the goods in question whether shall be books shall depend on the facts situation. 23. Normally, books mean, text books or reference books meant for reading by general public, professionals and students. The imported goods were meant for sole purpose of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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