TMI Blog2004 (12) TMI 644X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are discussed in the above said AOs, the brief facts relevant for settlement as brought out in the SCN are as under. 2.0 According to the aforesaid SCN, based on intelligence that the main applicant company had evaded customs duty, by under-valuing Data Communications Equipments (DCE, for short) imported by them, the office and factory premises of the main applicant company were searched on 14-1-2003. Based on the materials/records recovered during the said search, and subsequent investigation, the SCN alleges that the invoices produced to customs by the main applicant company along with relevant Bills of Entry (Bs.E) detailed in Annexure I to the said notice did not represent the price actually paid for the goods imported by them. It is alleged that the declared prices in the said invoices represented only 65% of the actual value transacted and that the difference in amounts, i.e. the remaining 35% of the actual value on each transaction, was passed on to the supplier against invoices raised for software by the said supplier, as the software was exempted (totally) during the material period. It is also mentioned that the software so imported had been admitted to be j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,225.23 proposed to be demanded on the items allegedly hand carried by Shri H Nandi, Managing Director of the main applicant company. Accordingly, they admitted a net liability of only Rs. 1,70,72,039/- with respect to demand of Rs. 6,47,99,089/- and submitted that they have already paid Rs. 1,00,00,000/-. Allowing the application to be proceeded with, based tentatively on the admitted duty liability of Rs. 1,70,72,039/-, the AO dated 17-12-2003 directed the main applicant company to pay the balance unpaid amount of Rs. 70,72,039/-, within 30 days from the date of the receipt of the AO. 3.1 The applications of the co-applicants, including that of Shri J Ramoo received independently and later on, were also admitted vide the above cited. AO, in the light of their plea that the main applicant company has filed an application for settlement and has expressed acceptance to pay duty due. 4.0 The main applicant company and the other co-applicants excluding Shri J. Ramoo, were heard for settlement of the dispute on 15-9-2004. They were represented by Shri B. V. Kumar, Advocate and Shri R. Ramaswamy, Company Secretary. The Revenue was represented by Shri Uma Shankar, Assistant Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 49 or 85.24 referred to under Serial No: 261 of the Table annexed to the Customs Notification No: 16/2000-Cus., dated 1-3-2000. It was contended that the benefit of this exclusion for assessment may not be denied because it is being claimed only subsequent to the initial assessment, just as not denying the benefit of MODVAT/CENVAT credit, duty abatement from cum-duty value etc. 7.0 Subsequently, the applicants Counsel has filed a further petition dated 17-9-2004, received by the Bench on 20-9-2004. This summarizes the various pleas raised at different stages and also refers to the decision of the CEGAT in the case of SEARLE (India) Limited v. Collector of Customs, Mumbai [1996 (87) E.L.T. 640] referred to in the written submission filed by DRI for final hearing. It is pleaded that this is no more a good law in the light of the decision of the Hon ble Supreme Court in the case of ORG Systems referred to by them. They have also proceeded to rely on a few other Tribunal decisions. It is further proposed in the said petition that though initially they sought for the abatement of the functional value as determined by IISc, Bangalore, except where the said value exceeded the equipment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court in the case of PSI Data Systems Limited related to software supplied as add on software and hence there is a difference between the two. Accordingly, the Revenue representative insisted that the additional duty liability proposed to be demanded from the main applicant company is Rs. 6,48,59,259/- (Rs. 6,75,77,826 (-) Rs. 27,18,567/-). 9.0 The application of Shri J. Ramoo, received independently and later on, as stated above, was heard for settlement on 12-10-2004. Shri S Murugappan, Advocate, appeared for the applicant and Shri Uma Shankar, Assistant Director, DRI, Bangalore, represented the Revenue. 9.1 The main plank of Shri Murugappan, Counsel of Shri J. Ramoo, was that no duty has been demanded from his client, as the invoices pertaining to the hand carried goods reflected in Annexure III to the SCN related to 1997 and, hence, a demand at this stage was hit by the time bar. This plea was confirmed by the Revenue representative also. It was clarified vide Revenue s submission dated 21-10-2004 that the duty involved in respect of the alleged hand carried goods by Shri Ramoo, which is not demanded due to time bar, is Rs. 15,53,961/-. The applicant s counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of duty, taken out for repair, and brought back, and hence no duty is payable as alleged by DRI. They have also filed copies of a note dated 27-4-1999 made by the applicant company to the overseas supplier and an email reply dated 9-5-1999 received from the supplier, to establish that the transactions pertain to three of the nine invoices to which the impugned goods pertain as per DRI to contest the duty liability of Rs. 15,53,961/-, indicated as relating to hand carried goods by Shri J Ramoo, and not demanded due to time bar. 11.0 The Bench has considered the submissions of all the applicants and the Revenue. The Bench has also perused the relevant records. The allegations in the Show Cause Notice are basically two fold - one is on under-valuation of the DCEs imported by the main applicant company who are reported to have repatriated the differential amount (price) to the overseas supplier in Israel as the price of junk software imported from the said supplier and which software was destroyed on import. The other allegation relates to non-declaration and non-payment of duty on certain equipments from the items imported as personal baggage by its employees and the persons connec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, it is clear that the subject decision was with reference to a case where no dispute was raised for exclusion of the value of firmware or etched software implanted into a computer, and from the said opening remark reproduced above, it is obvious that if it had related to the value of the firmware or etched software, the decision of the Hon ble Apex Court would have been different. On the other hand, the Apex Court had more recently in the case of CCE, Pondicherry v. Acer India Limited [2004 (172) E.L.T. 289 (S.C.) = 2004-TIOL-SC-LB], dated 24-9-2004 specifically observed that the value of firmware etched on to the EEPROM is includable in the assessable value of the relevant components. This strikes at the very root of the claim for abatement of the value of software embedded in the equipments whose value is alleged to have been mis-declared. 11.4 In addition, the Bench also observes that the Notifications relied upon by the counsel to plead that the subject software is, per se, exempt from duty is also not relevant. Sl. No. 261 of the Table Annexed to the Notification 16/2000-Cus., dated 1-3-2000 and the earlier Notification 23/98-Cus., dated 2-6-98 as amended by Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty is for the first time brought under the duty net. On the other hand, the issue is the subject case is of an assessment already made in respect of which claim is made at this stage to re-assess. 12.0 Accordingly, the Bench is not persuaded to agree to re-assess the subject goods after grant of any reduction or abatement of the value of software. The only reduction permissible out of the duty on the differential duty proposed to be demanded on the mis-declared value portion is Rs. 2,73,342/- which had occurred on account of exchange errors in worksheet and double entries, which the Revenue has also admitted on verification. 12.1 As regards the second allegation on the duty liability of Rs. 27,78,737/-, in respect of the hand carried goods by its employees, (Shri H. Nandi and Shri Levi Shimon) which is proposed to the demanded from the main applicant company, the plea advanced by the main applicant company that no duty is chargeable in respect of the alleged hand carried goods by Shri H. Nandi raised has been accepted by Revenue also. Therefore, this calls for a reduction of the duty demand by Rs. 24,45,225/-. Therefore, the total duty due from the main applicant company is f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted into the country by the applicant company after paying the appropriate duties and sold to customers in the normal course of business. Whenever, such equipment developed defects not rectifiable, by their engineers, they were re-exported to the overseas supplier for purposes of repair and rectification and replacement, if, during the warranty period. It is only at times of emergency when any customer pressurized for immediate rectification, such defective equipments were sent personally through the engineers of the applicant company, who got them rectified and returned duly supported by valid invoices. It is also contended that since the impugned imports took place in the year 1997, the applicant company is unable to furnish documentary proof at this point of time that the equipment was sent only for the purpose of repair and return, and not as procurement for the first time. It is also submitted that they did not make and retain a copy of the certificate issued by the customs officials at the time of boarding the aircraft by its executives with the equipment and that such erroneous practices have been since stopped for over four years, and every transaction for repair and return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential duty due is settled at Rs. 6,48,59,259/-. As the applicant has admittedly paid only Rs. 1,70,72,039/- till this stage, the balance of Rs. 4,77,87,220/- shall be paid M/s. MRO Tek limited in not more than 90 days from the date of receipt of this order in three monthly equal instalments, the first instalment should be paid on or before the end of 30 days from the date of receipt of this order and the remaining two within 30 days each from the date of payment of first instalment. They are also liable to pay interest on the amount paid after the first 30 days @ 18% per annum in terms of sub-section (10) of Section 127 F of the Customs Act, 1962 and report compliance to the Revenue and Bench. (ii) Immunity is granted from interest in excess of 10% p.a. Simple Interest. The Revenue shall work out and communicate to M/s. MRO Tek Limited the interest amount due under Section 28AB of the Customs Act, 1962 on the above settled duty liability within 15 days from the date of receipt of this order, or from the date of receipt of compliance report on the completion of the payment of the above settled amount, whichever is earlier. M/s MRO Tek Limited shall pay the said interest amount ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
