TMI Blog1999 (12) TMI 217X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner has held that the software seized from the premises of the appellant liable to confiscation under Section 111 (m) of the Act on the grounds that its value was mis-declared and permitted its release on payment of fine. He has imposed penalties on the company and Khanna for the undervaluation for rendering the goods liable to confiscation. 2. The importer imported software mainly from M/s. Microsoft Corporation and M/s. Santacruz Operations, USA. The goods supplied by these two consisted of floppy discs in which the software was actually recorded and of manuals intended for optimum utilisation of the software. The importer received the goods under one invoice for each of the consignment, which quoted one price for the whole package i.e. for the combined value of the software contained in of floppy discs and for the manuals. However, the importer declared in the bills of entry the software in the form of floppy discs and the manual separately; the first was classified under Heading 85.24 (recorded media) of the tariff and the second under the Heading 49.01 (printed books and manuals). The value of each consignment was split up in the ratio of 60 : 40 for the software in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessing officer. He further points to the correspondence between Ravi Khanna, Business Manager of the importer and other officials to the suppliers of the software asking them to issue revised invoices (in place of invoices showing the value of the complete package) in which the value of the software and the printed books is separately shown as indicated above; emphasising that this was a special favour done to the importer at its request. 6. We have not considered it necessary to reproduce the arguments of the Departmental Representative to show that the goods were in fact supplied to the importer and in turn sold by the importer to its buyers as a single package and that there was no question of these two things separately traded despite few instances which he pointed out the software and manuals being sent separately. The Advocate for the applicant did not seriously question that in the main these goods were bought and sold as a single package. 7. The question that is to be seen with regard to the Mumbal matter is whether the extended period would apply. The contention is that it was a general practice in all custom house at the time when the goods were imported, to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Customs authorities were split the value for import duty purposes of the diskettes and manuals separately and for this the split up of 60 : 40 has been accepted by the Customs authorities for the proportion of the value. This position remains undisputed and unchallenged. 8. Now the Commissioner goes on to say that the question is not relevant to decide the applicability of time bar, because no duty has been demanded under Section 28(1). However, he has for the purpose of deciding on the issue of limitation, devoted so much attention to this aspect and his emphasise repeated, that it was the department s practice, till it was changed in 1991 to split up value between the diskettes and the manual, even in cases where a total value was given, and that the split up of the value by the appellant is the consequence rather than the cause of the goods being assessed separately, could not be challenged by the Departmental Representative. This part would hold true for imports at Bombay, in this case through the Sahar Airport. The only reason that the Collector of Customs, Sahar, cites for applying the extended period is the fact that Ravi Khanna split up value into the ratio of 60 : 40. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged for that integrated package. The reply made it clear that the goods would be invoiced separately at the ratio of 60 : 40 although they would always be supplied as one. From these facts, it is clear that the appellant had intimated it to Special Valuation Branch that the goods would be supplied at a single price i.e. 50% of the US retail price although the invoice shows the value separately. 11. The Departmental Representative s answer to this is that the intimation to the Special Valuation Branch is not intimation to the assessing officer. He says that this Branch is not concerned with the assessment of the goods. 12. We have at this point to examine the function of Special Valuation Branch. This branch at the relevant time, and no doubt, presently, specialised in deciding the pattern of assessment of the goods were not imported in consequences of a sale in the ordinary course of trade between two unrelated persons. It was concerned with cases where, either on account of relationship between the buyer and seller or other factors, the assessment of a class of goods or goods imported by a particular importer, directions has to be issued to arriving at the assessable value. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of this case. 15. The order of the Collector, which has been reproduced in the Tribunal s decision, is almost identically worded in its relevant portions with the order before us. We find the reasoning by that where the particulars of the importation are known, it is under Section 28 and not under Section 125(2) that duty will have to be recovered is eminently reasonable. The relevant portions of sub-section (2) of Section 125 demanding duty on confiscated goods entitled to be redeemed were introduced in 1985. Harmonizing the two, Section 125 would appear to come to play in cases where notice cannot be issued under Section 28 for the reason that there was no documentation relating to details of imports of the goods. In that event the provisions of sub-section (2) of Section 125 would be applicable i.e., in cases where goods are ordered to be confiscated without the point of their legal limitation having been established. Where such legal importation is established, this provision will not apply for recovery of short levy. In addition, the basis for the confiscation itself is open to question. At the relevant time the goods have already been cleared from the Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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