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2019 (8) TMI 1697 - AT - CustomsClassification of imported Software - customized software or not - Benefit of N/N.06/2006Central Excise (Entry No 27) dated 01.03.2006 - reassessment of software Bones Application TE Ver 2 and software Da Vinci 2K - under Rule 5(1)(b) of the Customs Valuation rules 1988 - determination of assessable value - Confiscation - redemption fine - penalty - HELD THAT - Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification - When there is ambiguity in exemption notification which is subject to strict interpretation the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. Valuation of imported software - HELD THAT - Commissioner has determined the value of the goods on the basis of contemporaneous imports made by similarly placed importer namely M/s Shemaroo from the same suppliers at about the same time i.e. March April 2006. The on the basis of value of the contemporaneous imports Commissioner has determined that undervaluation in respect of Bones Software was o the extent of 38.98% and for Da Vinci software 48%. It is settled law that the value of contemporaneous imports can be a good reason for rejection of transaction value - thus the value determine by the Commissioner on the basis of contemporaneous imports rejecting the transaction value cannot b faulted with. Penalty - HELD THAT - Since appellants have suppressed the value and have misdeclared the description by using the phrase Customized to avail the benefit of exemption from payment of CVD in terms of Notification No 6/2006CE the penalty imposed under Section 114A of Custom Act 1962 cannot be faulted with - while imposing the penalty under Section 114A Commissioner has imposed penalty equivalent to duty plus interest which is contrary to provision of the section itself wherein section prescribes that the penalty impossible to be equal to Duty or Penalty. Confiscation - Redemption fine - HELD THAT - The goods were not seized and provisionally released to the appellants against any bond and bank guarantee. Since the goods were never seized or released against the bond and bank guarantee we are not in position to uphold the order of confiscation of goods and imposition of redemption fine in view of the decision of larger bench of Tribunal in case of M/S. BHAGYANAGAR METALS LTD SHRI NARENDERSURANA MD SHRI BALASUBRAMANIAN VP M/S. SURANA TELECOM LTD SHRI BALASUBRAMANIAN VP M/S LG ELECTRONICS M/S. HUAWAI TECHNOLOGIES CO LTD VERSUS COMMISSIONER OF CENTRAL EXCISE HYDERABAD-II CCE GOA 2016 (2) TMI 614 - CESTAT HYDERABAD . Appeal allowed in part.
Issues Involved:
1. Eligibility for exemption under Notification No. 06/2006-Central Excise. 2. Reassessment of imported software under Customs Valuation Rules, 1988. 3. Confiscation of goods under Section 111(m) of the Customs Act, 1962. 4. Demand of duty and interest under Section 28 and Section 28AB of the Customs Act, 1962. 5. Imposition of penalties under Section 112(a) and (b) of the Customs Act, 1962. 6. Imposition of penalty under Section 114A of the Customs Act, 1962. Detailed Analysis: 1. Eligibility for Exemption under Notification No. 06/2006-Central Excise: The Commissioner held that the imported software were not "customized software" as defined in the notification and thus not eligible for exemption. The Tribunal upheld this finding, agreeing that the phrase "customized software" was clearly defined in the notification and was not open to interpretation. The appellants' use of the term "customized" on the invoice was deemed an intentional misdeclaration to avail the exemption. The Tribunal cited the Supreme Court's decision in Dilip Kumar & Co, which emphasized strict interpretation of exemption notifications. 2. Reassessment of Imported Software under Customs Valuation Rules, 1988: The Commissioner reassessed the value of the imported software based on contemporaneous imports by a similarly placed importer. The Tribunal found this method valid, rejecting the appellants' reliance on the Eicher Tractors case. The Tribunal cited Supreme Court decisions in Sanjay Chandiram and Radhey Shyam Ratanlal, which support the rejection of declared values in cases of misdeclaration. 3. Confiscation of Goods under Section 111(m) of the Customs Act, 1962: The Commissioner ordered the confiscation of the software, allowing the importer an option to pay a fine in lieu of confiscation. However, the Tribunal set aside this order, noting that the goods were not seized and provisionally released against a bond and bank guarantee. The Tribunal cited the Larger Bench decision in Bhagyanagar Metals Ltd, which held that confiscation and redemption fine are not sustainable in the absence of seizure or provisional release under bond. 4. Demand of Duty and Interest under Section 28 and Section 28AB of the Customs Act, 1962: The Tribunal upheld the demand of duty amounting to Rs. 21,17,500/- and interest amounting to Rs. 3,83,122/-, agreeing with the Commissioner that the extended period of limitation was rightly invoked due to suppression of value and misdeclaration. 5. Imposition of Penalties under Section 112(a) and (b) of the Customs Act, 1962: The Commissioner imposed penalties on two individuals under Section 112(a) and (b) for their roles in the misdeclaration. The Tribunal set aside these penalties, finding no specific acts of omission or commission attributed to these individuals that rendered the goods liable for confiscation. 6. Imposition of Penalty under Section 114A of the Customs Act, 1962: The Tribunal upheld the penalty imposed on the importer under Section 114A but restricted it to the amount of duty confirmed, citing Supreme Court decisions that the penalty should not exceed the duty amount. The Tribunal reduced the penalty by the amount of interest. Conclusion: The Tribunal's final order included the following key points: 1. Upheld the demand of duty and interest. 2. Upheld the penalty on the importer but restricted it to the duty amount. 3. Set aside the order of confiscation and redemption fine. 4. Set aside the penalties imposed on the two individuals under Section 112(a) and (b). The appeals were partly allowed to the extent indicated above.
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