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2012 (7) TMI 233 - AT - CustomsWhether ADG DRI was competent to issue the impugned show-cause notices - there is both appointment as Collector/Commissioner and special authorization by the Board to issue show-cause notices in respect of cases investigated by DRI – Held that:- All persons appointed as officers of Customs under sub-section (1) of Section 4 before the 6th day of July, 2011 shall be deemed to have and always had the power of assessment under section 17 and shall be deemed to have been and always had been the proper officers for the purposes of this section. Whether there is violation of principles of natural justice in not allowing the cross-examination of the group of scientists involved in preparing the CAIR report - There is no absolute right for cross examination of any witness in the adjudication proceedings – Held that:- When cross examination was sought for, apparently, not all the members of the Team were available with CAIR. Therefore, the cross examination of the Team from CAIR was not given. Instead, BAL was requested to give a questionnaire, which was answered by the Team-Head, which is part of the adjudication proceedings. Further, the Commissioner has permitted expert opinions of two experts to be were produced by the appellants, and considered the same as well – there is no violation of principles of natural justice in this regard. What are the nature/characteristics of goods imported by the assessee/appellants as hardware and software separately - What is the true nature of transactions involved in such imports - import is of telecom equipment system - They did not disclose preloading of software in the factory in Sweden - comprising both hardware and software units – Held that:- Not only the software has been preloaded in flash memory or hard disc but a backup of the same was taken and stored in the hardware imported - What was imported as software separately was lying in original packing condition, without being opened and therefore, without being used for a few years. That does not mean that the hardware was not put into use. Hardware was installed and tested by the officials of EIL and the system was put into operation. They did not find any need for use of the software imported separately - it is not proper to consider the telecom equipments as a specialized computer as claimed by the appellants - decisions in respect of classification/valuation of hardware and software of computers cannot be mechanically applied to hardware and software relating to telecom equipments. Whether the value of software preloaded at factory in Sweden before shipment took place requires to be excluded from the value of hardware as claimed by the assessees or to be included as held by the department – Held that:- Without the preloaded software, the imported equipments cannot get the identity as telecom equipments and cannot serve the purpose - software preloaded in the equipments imported and which is undisputedly essential not only for its functioning but for giving identity to the equipments cannot be treated as presented with the equipments - no justification to pull out or disintegrate the preloaded software from the imported equipment and grant it separate status and to classify it under Chapter sub-heading 85.24 and to exclude its value (which was artificially split from the composite value of the equipment) to arrive at the value of the equipment - it is a case of importing equipments which contained essential software/intrinsic software giving the functional identities to the imported equipments Whether the decision of the Tribunal in the case of Vodafone is applicable to the facts of the present case or not – Held that:- In the case of Vodafone came to the conclusion that the software was contained only in Winchester hard disc and therefore, could not be considered as embedded or etched software - In the present case, software meant for BTS is contained in the flash memory which is a form of EEPROM - facts of the present cases are different from the facts of Vodafone case - software in the form of tapes/CDs having come separately in CDs and Tapes was not embedded or etched - there is fraud in preparation of ODs and CDs and sending them to Sweden and re-importing the same to be dumped as e-waste - It is settled law that fraud nullifies everything - This crucial fact also distinguishes the present case from Vodafone case. Whether all the imported goods are liable to confiscation or only goods which were seized by the department are liable to confiscation – Held that:- Goods are offending in nature and they are liable to confiscation - confiscation under Section 111 applies to any goods in respect of which offences have been established and not necessarily to all goods which have been seized - there is no restriction under Section 124 to issue show-cause notice proposing confiscation of only the seized goods - provisions of Sections 110 and 124 are independent, distinct and exclusive of each other - imported goods are offending in nature due to deliberate misdeclaration of value of the goods, they are liable to confiscation - goods were imported over a long period August 2001 to April 2006 and that the order of confiscation was made in April 2008, and that the goods were meant for the importers own use for rendering services and not for sale, we are of the view that there is some scope for reducing the quanta of redemption fines imposed by the Commissioner Whether the quantum of duty has been correctly worked out - assessee submitted that the department, instead of valuing the software on the basis of payments made to the supplier, computed the value on a completely notional basis and the same was against the provisions of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 – Held that:- Adoption of software value for the full capacity of the imported hardware based on the appellants own documents cannot be held to be erroneous. The appellants claim to rely on value mentioned in corresponding software orders is not acceptable - appellants have deliberately split the value of equipments between hardware and software without any basis. Whether extended time limit is applicable and whether penalties are liable to be imposed - There is clear evidence of deliberate underdeclaration of value of the imported equipments by the assessee-appellants through a grossly deceptive method with intention to evade payment of duty - invocation of extended period for demand of duty, confiscation of the imported goods, and imposition of penalties on the assessees are justified
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