TMI Blog1989 (4) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... . Nirmal Sea Freight Pvt. Ltd., Madras Custom House Agents on 18-3-1986 : - (i) M/s. Alconic International Merchandise, H-328, New Rajinder Nagar, New Delhi. (ii) M/s. Amber Electronics, H-317, New Rajinder Nagar, New Delhi. (iii) M/s. Shivam Electronics, 69-04, Nabikarim, Pahar Ganj, New Delhi, (iv) M/s. Monica Enterprises, Blk Nil-36-B, First Floor, Malvia Nagar, New Delhi-110012. (v) M/s. Cosmopolitan Electronics, A-2/217, Paschim Vihar, New Delhi-63. The particulars of the 10 bills of entry are given below :- Sr. No. Bill of entry/duly Deposit No. Date. Name of the Importer, as declared in the bill of entry. 1 2 3 1. 2. D-765/17-3-86 M/s. Shivam Electronics. 3. D-780/17-3-86 M/s. Amber Electronics. 4. D-771/17-3-86 M/s. Alconic International Merchandise. 5. 6. 7. 8. D-816/17-3-86 D-767/17-3-86 D-766/17-3-86 M/s. Monica Enterprises. 9. D-768/17-3-86 M/s. Cosmopolitan Electronics. 10. D-772/17-3-86 M/s. Alconic International Merchandise. (ii) The General M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignorance of supply of any excess quantity in the consignments till the receipt of the telex message on 21-3-1986. The General Manager of the Custom House Agents M/s. Nirmal Sea Freight Pvt. Ltd., in his statement dated 25-3-1986, denied having filed such letters on behalf of the importers seeking amendment of the quantity declared in the 10 bills of entry in question. The Custom House Agents also confirmed that from the time the assessment of those bills of entry was over, the duplicate copies of the same were retained by Shri Jatinder Uppal himself. He further stated that the Custom House Agents were not aware of the attempts made on 20th and 21st March, 1986, if any, in placing the goods for examination and clearance. (v) Enquiries made at New Delhi revealed that M/s. Alconic International Merchandise and M/s. Amber Electronics were existing at the given addresses, but no firms by the names of M/s. Monica Enterprises at Block Nil 36-B, First Floor, Malvia Nagar, New Delhi-12, M/s. Shivam Electronics at 6904, Nabikarim, Pahar Ganj, New Delhi and M/s. Cosmopolitan Electronics at A-2/217, Paschim Vihar, New Delhi-63 were existing/working at the given addresses. Statements re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ponents under the firm s name. He floated another Company in the name of M/s. Amber Electronics, obtained import licence and started imports in the name of the new firm; apart from this, M/s. Unisef Electronics India were also floated by him with a non-resident Indian as partner; in 1984, another company in the name of Unisef Electronics (India) Pvt. Ltd. was floated by him. He further stated that he had interest in the following firms : - Sr. No. Name of the Company. Partners/Proprietors. His Connection. 1. M/s. Alconic International Merchandise Jatinder Uppal Proprietor. 2. M/s. Amber Electronics. Self Proprietor. 3. M/s. Unisef Electronics (India) (a) Self (b) Sunder Das (c) Narayan Singh Partner. Partner. Partner. 4. M/s. Unisef Electronics (India) Pvt. Ltd. (a) Self (b) Mrs. Uppal Mg. Director. Director. 5. M/s. Shivam Electronics. (a) Mrs. Uppal (b) Sudharsan Kumar Partner. Partner. 6. M/s. Ramintons (India). (a) Mrs. Uppal Proprietor. 7. M/s. Om Electronics. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mples drawn from seven bills of entry as detailed below : - Sr. No. Bill of Entry/ Duty. Name of the Importer. Assembled Product. 1. D-764 D-765 both dt. 17-3-86 M/s. Shivam Electronics Sanyo Red sound Hi-Power Cassette Car Stereo Play Model FT 420 2. D-780 Dt. 17-3-86 Sanyo and Slide Stereo Radio Cassette recorders Model M-7010 K. 3. D-771 Dt. 17-3-86 M/s. Alconic International Merchandise 4. D-773 Dt. 17-3-86 M/s. Monica Enterprises 5. M/s. Monica Enterprises Sanyo Radio Cassette Recorders Model M-1700H 6. D-767 Dt. 17-3-86 In the statement given before the Assistant Director, Directorate of Revenue Intelli gence, Madras, Shri Shabbir Ahmed stated that the imported articles were nothing but complete units (three models referred to above) in semi-knocked-down condition and were capable of being assembled into full sets as mentioned supra. (xi) (a) It was found that M/s. Shivam Electronics imported 740 sets of SANYO car Stereo cassette players FT 420M Red Sound in SKD condition vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as against the declaration of Plastic moulded fabricated extruded components (toys) assorted numbering 12,666 pieces. (xii) In his letter dated 17-4-1986 addressed to the Deputy Director, Directorate of Revenue Intelligence, Madras, Shri Jatinder Uppal stated that the excess goods had been shipped erroneously by the Shipping Department of M/s. Gatwick Private Ltd., Singapore and alleged that he was not allowed to record the same in his statement given before the Assistant Director, D.R.I., Madras on 22-3-1986. (xiii) On 28-4-1986 Shri Jatinder Uppal gave another statement before the Assistant Director, D.R.I., Madras, stating, inter alia, that he had not revealed the receipt of the telex to the Assistant Director, DRI, Madras on 22-3-1986 although he had knowledge about it, as it was not in hand. (xiv) Examination reports on the bills of entry, expert s opinion and the representative samples of the consignments were shown to Shri Uppal and he was asked to offer his explanation. After seeing the examination reports, he admitted that the goods imported under 7 bills of entry bearing Nos. D-780, D-771, D-773, D-816, D-767, D-764, and D-765 all dated 17-3-1986 were in SKD con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... components of Video Cassettes including pancakes by M/s. Monica Enterprises vide Bill of Entry No. D-766 dated 17-3-1986 under OGL Appendix-6 of Import Trade Control Policy for 1985-88 was not permissible in the light of the foregoing facts; (iv) The import of components of Audio Cassettes including pancakes by M/s. Cosmopolitan Electronics vide Bill of Entry No. D-768 dated 17-3-1986 under OGL Appendix-6 Import Trade Control Policy 1985-88 was also not permissible in the light of the foregoing facts; (v) The goods imported by M/s. Alconic International Merchandise vide Bill of Entry No. D-772 dated 17-3-1986 were not permissible to be imported under OGL Appendix-6 of I.T.C. Policy, 1985-88 as those were fully finished goods; (vi) Shri Jatinder Uppal, who represented all the five firms, could not produce valid import licence in respect of complete articles imported under the 7 bills of entry referred to supra, such electronic consumer goods being listed as restricted items under Appendix 2, Part-B, Sl. No. 112 of the Import Policy, 1985-88; (vii) The description of the goods in the 7 bills of entry mentioned in sub-para (i) hereinabove as electronic component ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nic consumer goods imported in SKD condition under bills of entry No. D-764, D-765, D-780, D-771, D-773, D-816 and D-767, all dated 17-3-1986 and electronic toys imported under bill of entry No. D-772 dated 17-3-1986, under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports Exports (Control) Act, 1947 and Section 111(m) of the Customs Act, 1962. (ii) Confiscation of Video magnetic tapes in pancakes and shells imported under bill of entry No. D-766 dated 17-3-1986 under Section 111(m) and (l) of the Customs Act, 1962 with redemption fine of Rs. 50,000/-. He directed that the goods should be assessed on the basis of US $ 18,900 since the quantity found was double the quantity declared. (iii) Confiscation of Electronic Audio tapes imported under Bill of entry No. D-768 dated 17-3-1986 under Section 111(m) of the Customs Act with redemption fine of Rs. 20,000/- as the quantity found was double the quantity declared. (iv) Imposed a penalty of Rupees one lac under Section 112(a) of the Customs Act, 1962 on Shri Jatinder Uppal as he engineered the import of all the consignments in question. (v) As regards the five firms, the Collector hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ectronics : D-764 Dt. 17-3-86 Tape Deck Mechanism, Sub-assembly Hardware. 370 pieces each. D-765 Dt. 17-3-86 Press Punch Parts. These are used for manufacture of Car Cassette Player. Without speaker and transformer Car Cassette Player does not work. M/s. Cosmopolitan Electronics : D-768 Dt. 17-3-86 Components of Audio Cassette Tapes. 9. The learned Consultant for the appellants has stated that there are three allegations against the appellants. The first allegation is that the items imported by the different firms, if put together, will make complete articles import of which is banned in terms of Serial No. 112 of Appendix 2-B of the Import Policy 1985-88, as those items are consumer goods. Section 111(d) of the Customs Act has been invoked for confiscation of the goods. There is no allegation that individual items are not covered by the licence or Open General Licence. It has been held by the Collector that out of the 5 importing firms, M/s. Alconic International Merchandise and M/s. Amber Electronics were in existence, whereas the other three firms were not functionally existing. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of (i) Union of India v. Tara Chand Gupta and Brothers, reported in 1983 (13) E.L.T. 1456 (S.C.) = AIR 1971 Supreme Court-1558 (Paragraphs 9 to 15) (ii) Collector of Customs, Calcutta v. Mitsuny Electronic Works, reported in 1987 (30) E.L.T. 345 (Cal.), (Paragraphs 1 to 6) and (iii) this Tribunal s order No. 851/57-WRB dated 3-8-1987, 1989 (39) E.L.T. 588 (T) in the case of Susha Electrical Industries v. Collector of Customs and Central Excise, Rajkot in Appeal No. C-534/87-Bom. The learned Consultant has argued that Shri Jatinder Uppal had nothing to do with M/s. Monica Enterprises and hence, the goods imported by that firm cannot be clubbed with those of M/s. Alconic International Merchandise and M/s. Amber Electronics. He has also argued that the Collector was not correct in holding that the appellants adopted colourable devices to evade Import Trade Control Regulation and payment of customs duty. The individual importing firms are manufacturers of electronic goods. They imported the components of electronic goods without any mala fide intention. According to the learned Consultant, the confiscation of the goods under Section 111(d) of the Customs Act, is not legal and proper. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter they came to know the fact of excess shipment through telex referred to supra, they brought the matter to the notice of the Assistant Collector and volunteered to pay duty on the supplementary bills of entry for which they sought permission of the Assistant Collector of Customs. Therefore, they acted bona fide. So far as the mis-declaration of value is concerned, the learned Consultant has argued that the allegation of mis-declaration of value has two parts, viz., (i) due to customs authorities holding that complete articles were imported and not the component parts and hence, the value of the goods is much higher than the declared value. Secondly, the value of the goods which were wrongly shipped in excess were not originally declared by the appellants. So far as the first part is concerned, the learned Consultant has denied the allegation. So far as the second part is concerned, he has stated that the appellants declared the value in the bills of entry on the basis of the documents sent by the foreign suppliers. As soon as they came to know about the shipment of the excess goods, they brought it to the notice of the Assistant Collector. Therefore, they should not be charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 986 Shri Jatinder Uppal managed to obtain telex dated 21-3-1986. This telex is dated after the issue of the summons by the D.R.I. Officers. She has also argued that according to paragraph-7(3) of the Import and Export Policy, 1985-88, units must be functioning for availing of the benefit of the actual users. In this case, three firms were not in existence and were not functioning at the given addresses. They were not, therefore, entitled to the benefit available to the actual users. Regarding the penalty, she has argued that Shri Jatinder Uppal was the prime-mover in this offence case. He has planned to evade Import Control restrictions and the payment of duty. The Collector has rightly followed the judgment of Hon ble Supreme Court in the case of McDowell Company Ltd., reported in 1985 (5) ECC 259 which deals with colourable devices to evade duty. She has, therefore, stated that the penalty of Rs. one lac under Section 112(a) of the Customs Act has been correctly imposed on Shri Jatinder Uppal. 15. Replying to the arguments of Smt. Saxena, Shri Srinivasan has stated that Note in the Schedule-I of the Import (Control) Order, 1955, is about the description of the items in that Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 68 Dt. 17-3-86 Components of Audio Cassette tapes, including pancakes (iv) Whether there had been a deliberate misdeclaration of value of video magnetic pancakes imported under Bill of Entry No. D-766/17-3-1986. (v) Whether M/s. Shivam Electronics and M/s. Monica Enterprises and M/s. Cosmopolitan Electronics were in existence and engaged in the manufacture of electronic goods and be eligible for import under OGL as for actual user (industrial)? 17. The Collector has discussed the first issue in great details in Paragraphs 69 to 71 of the impugned order. For better appreciation of his analysis of facts and evidence, and his findings and conclusion, we reproduce below those paragraphs : - 69. As regards issue No. 1 referred to above, during the Personal Hearing, the samples were shown to the counsel and marked as EXHIBITS 1, 2 and 3. Exhibit 1 has been assembled out of the imported goods covered by Bills of Entry No. D-816 and 767 both dated 17-3-1986 imported by M/s. Monica Enterprises. This Exhibit 1 is found to be a Sanyo Radio Cassette Recorder Model M 1700H put in a cardboard carton with thermocol packing readily marketable as a consumer unit. Exhibi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is no need for importing the carton showing the chassis no and also the marking of the Japanese manufacturers. Moreover, on seeing the individual items imported, it is observed that the plastic cabinet is fully assembled with lead wires, micro phone, etc. and the other assembly is just to be inserted following the circuit diagram. The import policy envisages import of components required for the manufactures of electronic items. It cannot, by any stretch of imagination, be deemed to be applicable to such imports, where Japanese electronic consumer goods (which can be readily offered for sale in the market) could be imported in factory packed condition by just dismantling them with the sole objective of fitting them into the description as components. If the importers are actual user (Industrial) and have imported components for manufacture of electronic goods, there is no need for importing packing cartons showing them as of Sanyo brand, indicating their model no. and chassis no. Normally, any such Indian manufacturer importing components for manufacture would market them under their own name or mark. Here, what has been imported in Sanyo make electronic consumer goods in factory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent on behalf of other firms and in the context of the positive evidence in the form of the proforma invoices produced by the parties themselves during the personal hearing showing Mr. Uppal as the importer, I have no hesitation to come to the conclusion that all these imports have been made only for M/s. Alconic International Merchandise (Mr. Uppal) as indicated in the proforma invoices and subsequent to the shipment individual documents have been created to suit the needs. In the circumstances, I am unable to agree with the contention that the goods covered by different bills of entry are separate consignments and cannot be clubbed with the other. The judgment cited in their favour is not a case of this type, where the documents clearly show that the entire goods covered by all the bills of entry have been imported by one individual as is evident from the proforma invoices. Hence, the judgment of the Supreme Court cited does not fit in such a case. The facts and circumstances of the case are more akin to the case of McDowell, there colourable devices for circumventing law have been created. 71. In view of the aforesaid discussions, I have no hesitation to come to the conclus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been imported by five independent firms, who have separate small scale industries registration, sale tax registration, importers code numbers and separate L-4 licence (except one firm). The goods imported by more than one importer and even those imported by one importer in more than one consignment cannot be clubbed together to make them into complete electronic articles. In support of this argument, he has relied on Supreme Court judgment in the case of Union of India v. Tarachand Gupta and Brothers, reported in AIR 1971 S.C. 1558 and Calcutta High Court judgment reported in 1987 (30) E.L.T. 345 (Cal.) in the case of Collector of Customs, Calcutta v. Mitsuny Electronic Works. 20. In the case of Tarachand Gupta and Brothers (supra), the respondents therein imported parts and accessories of Mopeds , except tyres, tubes and saddles against specific licence for import of parts and accessories of motor cycles and scooters issued under entry 295 of Section 11 of Part IV of Schedule-I of the Import Trade Control Policy for the period July-December, 1956. The Customs authorities held that the goods were not imported as spare parts but as complete vehicles in a knocked-down condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sembled (See Webster s New International Dictionary, Vol. II, p. 1371 and also Words and Phrases, Permanent Edition Vol. 23, p. 560). 13. Under Entry 295, except for rubber tyres and tubes for whose import a separate licence could be obtained under Entry 41 of Part V, there are no limitations as to the number or kind of parts or accessories which can be imported under a licence obtained in respect of the goods covered thereunder. Prima facie, an importer could import all the parts and accessories of motor cycles and scooters and it would not be a ground to say that he has committed breach of Entry 295 or the licence in respect of the goods described therein, that the parts and accessories imported, if assembled, would make motor cycles and scooters in C.K.D. condition. There are no remarks against Entry 295, as there are against Entry 294, that a licence in respect of goods covered by Entry 295 would not be valid for import of spares and accessories which, if assembled, would make motor cycles and scooters in C.K.D. condition. Apart from that, the goods in question did not admittedly contain tyres, tubes and saddles, so that it was impossible to say that they constituted motor c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estrictions whatsoever against imports of parts and accessories. 25. That being so, if an importer has imported parts and accessories, his import would be of the articles covered by entry 295. The Collector could not say, if they were so covered by entry 295, that, when lumped together, they would constitute other articles, namely motor cycles and scooters in C.K.D. condition. Such a process, if adopted by the Collector, would mean that he was inserting in entry 295 a restriction which was not there. That obviously he had no power to do. Such a restriction would mean that though under a licence in respect of goods covered by entry 295 an importer could import parts and accessories of all kinds and types, he shall not import all of them but only some, so that when put together they would not make them motor cycles and scooters in C.K.D. condition. In the present case even that was not so because he would have to buy tyres, tubes and saddles to convert them into motor cycles and scooters in C.K.D. condition. That would be tantamount to the Collector making a new entry in place of entry 295 which must mean non-compliance of that entry and acting in excess of jurisdiction during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the goods on high seas under separate sale agreements. It was a sheer coincidence that all the consignments arrived at a time. In the said case, components of colour T.V. sets were imported by three separate export houses. The papers for customs clearance were filed by the export houses, separately. All import documents, namely, invoice, packing list, certificate of origin, bill of lading, marine insurance policy etc. were in the names of the export houses duly signed by the foreign shippers and the shipping agency. The said documents were negotiated and retired by the export houses through the respective bankers. High Sea Sale Agreements were made by the export houses with the writ petitioners (importers who bought the goods on high sea). According to the said agreements, customs duties were to be paid by the writ petitioners and he had to bear the costs and expenses of the clearance of the goods. Customs authorities also allowed clearance of identical goods against identical licences in respect of other export houses. In those facts and circumstances of that case, the Division Bench of Calcutta High Court held that the goods imported in those consignments could not be clubbed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect to the clearance of the OGL items on the ground that those items if clubbed with other items imported against licences would constitute complete T.V. sets in S.K.D. condition. We do not propose to follow this decision as the facts are clearly distinguishable, and also because of the fact that there are two contrary judgments, which are discussed in the next paragraph. 23. In the case of Girdharilal Banshidhar v. Union of India, reported in 1964 (7) S.C.R. Page-62, the appellants were granted a licence to import iron and steel bolts, nuts, set screws, machine screws and machine studs, excluding bolts, nuts and screws adopted for use on cycles. They imported nuts and bolts which were components of Jackson type single bolts, oval plate belts fasteners, which were described in the bill of entry as Stove bolts and nuts . The importation of Jack type single bolt oval plate belt fasteners had been prohibited. Single bolt belt fasteners were composed of three components, viz. (i) a bolt, (ii) a nut and (iii) washers. The washers to fit into the bolts and nuts imported by the appellants were found to have been separately imported by a firm called Nawanagar Industries Ltd., whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere imported. The importers contended that parts of Video Cassettes were imported in each consignment. This Tribunal upheld the contention of the Department. 24. In the light of the foregoing discussions, we hold that the Collector s findings that complete consumer electronic articles were imported in SKD condition in the seven bills of entry, and not the components thereof and that the value declared in the bills of entry was apparently less than the actual value of those electronic articles, are correct. Import of these goods was prohibited vide serial No. 122 of Appendix-2, Part-B of the Import Export Policy for 1985-88. The imported goods were, therefore, liable to confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act, 1947, as held by the Collector. 25. A dispute has been raised before us that Rule 2(a) of the Rules for Interpretation of the Customs Tariff Schedule is not applicable for interpreting the Import Policy. As we have already held that complete electronic consumer goods have been imported by the appellants in S.K.D. condition, any discussion regarding Interpretative Rules will be superfluous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 111(m) of the Customs Act. The excess goods which were imported in the consignments, but not declared in the bills of entry are also liable to confiscation under Section 111(l) of the Customs Act. The value of the excess goods was not declared in the bills of entry, which also rendered the goods liable for confiscation under Section 111(m) of the Customs Act. 28. The fourth issue dealt with by the Collector is whether the value of video magnetic tapes imported under bill of entry No. D-766 dated 17-3-1986 by M/s. Monica Enterprises was misdeclared. The Collector has dropped the charge of mis-declaration of value, but has confirmed the charge of mis-declaration of quantity. We do not find any wrong in his findings. 29. The fifth issue dealt with by Collector in para 78 of the impugned order is the question whether M/s. Shivam Electronics, M/s. Monica Enterprises and M/s. Cosmopolitan Electronics were in existence and engaged in the manufacture of electronic goods and were eligible for import under OGL as actual users (industrial). Enquiries made by the Department revealed that these firms were not functionally in existence at the addresses declared in the bills of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned order. We confirm his decision. Redemption fine of Rs. 50,000/- and Rs. 20,000/- has been imposed by him in respect of goods covered by the above two bills of entry. Considering the value of the goods and their nature, we do not consider the fine to be excessive and the same is also confirmed. 31. The Collector has imposed a penalty of Rs. one lakh on Shri Jatinder Uppal under Section 112(a) of the Customs Act vide paragraph 85 of the impugned order. He has observed that the entire import was engineered by Shri Uppal as proved by departmental evidence. He has relied on the judgment of Hon ble Supreme Court in the case of Mc Dowell Company Ltd. v. Commercial Tax Officer [1985 (5) E.C.C. page 259 (S.C.)] in support of his finding that colourable devices were adopted by the appellants to evade Import Trade (Control) Restrictions and Payment of Customs duty. In the said case, it was held by the Hon ble Supreme Court that : Tax planning may be legitimate provided it is within the framework of law. Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubiou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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