TMI Blog1999 (11) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... entered into technical collaborations with leading manufacturers in their own fields abroad. The agreements provided for exchange of technology in the form of supply of know-how, supply of drawings and designs on media, training of personnel staff and similar other activities. As a part of fulfilment of this contract, the contracting parties abroad, from time to time sent drawings, designs etc. In the case of M/s. Videocon, these drawings etc. were imported by hand of one Mr. Kato. In all other cases the drawings etc. were imported through professional couriers, or by post parcels. 4. The imports referred to in the present batch of appeals took place during the period 1993-1996. In all cases the value was shown at token rates i.e. one U.S. Dollar or in the alternative the goods were shown as of No Commercial Value. At a later stage the Customs authorities undertook an examination of these imports. 5. During the course of this examination all importers barring three voluntarily came forward and deposited the duties thought to be payable by them as per the classification then suggested. 6. The sums paid ranged from Rs. 51,600/- in the case of M/s. TECIL to Rs. 40,41,575/- b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2) of the Customs Act was an inclusive definition and was wide enough to cover such drawings, designs etc. Shri Parthasarathy following a medium path suggested that if the drawings etc. accompanied the machinery, then they may be called goods but otherwise they could not qualify for the term. Shri Nankani states that for qualifying for the term goods an article must be usable, saleable and marketable. It was his claim that any specific drawings would be of value to the recipient but to none else. It was his further claim that any document embodying a concept provides service and cannot be called goods. According to him it is embodiment of knowledge and cannot be taxed merely because it is mentioned in the tariff entry. 11. We have considered the rival proposition. All the appellants before us are corporations engaged in manufacturing activities. In all the cases the corporations entered into technical collaboration agreements with leading corporations abroad for receipt of technology, machinery and expert advice. In return, the Indian corporations paid consideration. The agreements speak of disclosure and making available the concepts translated into practical terms. These incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertilizer - (1997) 91 E.L.T. 3 (S.C.) has accepted that Molten Urea was undisputedly classifiable under Heading 31.02 of the CETA. 13. The Supreme Court in a judgment reported in AIR 1996 page 2080 were examining the question (Vikas Sales Corporation v. Commissioner of Commercial Taxes, State of Karnataka) whether transfer of an import licence constituted sale of goods or not. In holding in the affirmative, the Court held that such a licence was Property , and therefore goods . They further held that even when it was not related to the goods which could not be imported under its power, it had a value by itself. In holding so, the Supreme Court referred to another judgment reported in AIR 1986 SC 63 in which the Court had observed that incorporeal right like a copyright could be regarded as goods . 14. Drawings and designs are specifically mentioned in the Customs tariff. These are not the sole reflection of the products of knowledge. Magnetic tapes containing software merit classification under Heading 8524.40. 15. The judgment of the Bombay High Court in the case of Wipro Products Ltd. - 1986 (25) E.L.T. 485 was cited by one of the appellants. In this case the court he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the owner of the goods carried by him. Section 77 of the Customs Act, 1962 was referred which describes the passenger as the owner of the baggage. On the basis of the language of this section it was asserted that the goods imported by courier could not be termed as baggage and therefore would not merit classification under Heading 98.03. We find that the Commissioner in the impugned order had mentioned that prior to the notification of the cited regulations, courier imports were treated as baggage. The circular of the CBEC cited by Shri Chatterjee also confirms (Circular No. 56 of 1995-Cus., dated 30-5-1995) this practice. 21. Shri Nankani submitted that a wrong practice could not be the basis of levy of duty and that taxability must flow from the provisions of law. We have carefully considered this submission. 22. In the circular cited above reference is made to Notification 86/94-Cus., dated 1-3-1994. The preamble to the notification says as under: In exercise of the powers conferred by sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts goods f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted duty. 27. In a number of cases it was argued that the specific drawings imported by those appellants merited classification under the Heading 4906 which at the relevant time attracted Nil rate of duty. The distinction between goods not leviable to duty and goods leviable to concessional rate of duty was brought out by Supreme Court in the case of Vazir Sultan Tobacco 1996 (83) E.L.T. page 3. SC. In this judgment and in other judgments it was held that the description dutiable would include an article leviable to Nil rate of duty also. We find that at the material time the tariff rate, of duty for articles falling under Heading 4906 was 10% and the Nil rate was prescribed by a notification. Therefore such articles when classified under Heading 98.03 would attract duty as prescribed thereunder. 28. Counsels argued that the exclusion made in Chapter Note 4 to page 98 of goods imported through courier services by amendment made in 1995, was clarificatory in nature and that therefore during the period prior to this explicit entry also, goods imported by courier would fall out the purview of Chapter 98. The notification referred to above is enough to dispel this suggestio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of the contract was taken up for levy of duty. Grievance is now made on this court. 34. We now come to the aspect of limitation. It is agreed that the period of demand is within the extended period prescribed under the proviso to Section 28 of the Act, even if it is accepted that the corrigenda to the show cause notice were fresh show cause notice. The first limb of the argument on limitation is that the appellants themselves had not imported the goods but that the goods were imported by the couriers and in the case of M/s. Videocon by Mr. Kato and therefore the guilt of mis-declaration or suppression of the value would attach to the person who physically carried the goods and not to the appellants. 35. During the argument from the Revenue side it was contended that the persons who carried the goods were in fact the agents of the appellants and the principal liability would therefore continue to be on the appellants. In rejoinder it was claimed that Section 77 itself described the passenger as the owner and by classifying the goods imported by the courier as baggage, the Govt. had acknowledged the couriers as owners of the goods carried by them. 36. We have considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remittances prescribed by the RBI to the appellants. For remittance there were two formats. Format A1 was used where the remittance was for goods received and Format A2 was used for the remittance for the services received. It is demonstrated that the RBI had advised Format A2 i.e. for service as the appropriate format. The claim uniformly made is that the assessees were under a genuine presumption that the documents embodied service and were not goods. It is also argued that in certain cases the taxes were deducted at source at the time of making these remittance. It was claimed that the taxes were so deductible where services are rendered. On these two grounds it is claimed that there was a genuine belief in the minds of the importers and therefore the charge of mis-declaration is without basis. 40. We have given a careful consideration to these contentions. We have also taken into account the very large body of case law cited before us on limitation. The Courts and the Tribunals have given relief on the grounds of limitation on two considerations. The first is where by some action or communication of the assessees or the importers, the department had taken cognizance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o small industries sector, the units are split into several, each with a corporate front. In such cases, there are judgments where the courts have upheld the department s case of unity, and therefore upheld the denial of the benefit. 44. In the present cases we find that each of the appellant is a substantial corporate entity to whom are available the finest legal brains both in-house and outside. Each one possessed modern technology and was desirous of securing an even better technology. Each one had entered into a collaboration agreement with industrial giants abroad. The entire exercise was intricate, involving technical, managerial and legal brains. In each case the transactions were finalised involving the top most echelons of the management of each corporation. The agreements were drafted with very clear knowledge as to what benefit was being derived and what payment was being made therefor. Hours were spent in fine-tuning the transactions in each board room. In certain agreements a specific allocation of the total consideration was shown in the agreements. In all other cases the corporation had a very clear idea of the value apportionable to drawings and designs. This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by saying that in spite of their conviction that no duty was leviable the importers had made the gesture to maintain good relations with the Dept. We find this hard to believe. In some cases we have found that the assessees spent greater amount on litigation than the amount which they were required to pay. It is therefore difficult to believe that the present appellants collectively paid more than Rs. 2 Crores just to buy peace with the Dept. To our mind this is indicative of guilty mind. 50. Thus on perusal of the facts we hold that the pleas on limitation have no force. 51. On this observation the orders of confirmation of the differential duty as made by the learned Commissioner are upheld. 52. As we have observed above, the differential duty has been calculated on the basis of specific apportionments made on the basis of the specific indications available in the respective contracts. The only exception is of M/s. Videocon VCR Ltd. The Commissioner states the calculation of duty for Rs. 2,40,67,000/- was as per confirmation of three letters of their Chartered Accountants. Shri Bulchandani while arguing the case submitted that the letters of the Chartered Accountant di ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
