TMI Blog2012 (8) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... :- 2-3-2012 - Chittaranjan Satapathy, D N Panda, JJ. For Appellant: Shri N Viswanathan, Adv. For Respondent: Shri Parmod Kumar, SDR Per: Chittaranjan Satapathy: Heard both sides at length. BRIEF FACTS OF THE CASE 2. The brief facts of the case as recorded in the Miscellaneous Order No. 252/2010 dated 7.5.2010 are as follows:- "The appellants in this case have been penalized to the extent of Rs.13,70,000/- after taking note of the fact that they are habitually involved in violation of rules and regulations warranting a heavy penalty and also that the instant import is the fourth such offence committed by the appellants. The adjudicating Commissioner has also imposed a redemption fine of Rs.10,25,000/- after confiscating the impugned goods imported by the appellants. He has also rejected the declared value of USD 59,870 (C F) and has redetermined the customs value to be USD 69,395 (C F) on the basis of which the assessable value has been arrived at Rs.34,15,893/-. The duty amount payable on the reassessed value is not recorded in the impugned order passed by the adjudicating Commissioner. The adjudicating Commissioner has recorded in the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he import policy is based on classification of goods under HSN and hence same classification for Import Policy and Customs Tariff purposes has to be applied as held by the Tribunal in the case of Collector of Customs, Bombay Vs. Hargovindas Co. 1987 (29) ELT 975. (iv) The common parlance test cannot be applied, as such test is ruled out by the Hon'ble Supreme Court's decision in the case of Akbar Badruddin Jiwani Vs. Collector of Customs 1990 (47) ELT 161 (SC) as statutory definitions in Customs Tariff Schedule must prevail over trade parlance. The impugned goods cannot also be brought under the category of digital photocopiers. (v) The import policy is to protect local industry. There are no manufacturers of the impugned goods in India and the entire requirement is to be met by import, and hence there can be no restriction on import of such goods. (vi) In the minutes of the 24 th Meeting of the Technical Review Committee held on 16.11.2011 in the Ministry of Environment and Forests, it has been recorded in paragraph 5 as follows:- "It was also informed that in the EXIM Policy, there is no specific mention about multifunction devices. There are separate ITHS cod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, further, states that in the pending appeals before the Hon'ble Madras High Court, the licensing issue of the impugned goods in similar cases have not yet been decided but the DGFT authorities in their writ appeal against order of provisional release on payment of 25% of enhanced value in one case have submitted before the Hon'ble High Court that the impugned goods are in the category of e-waste and that those are not freely importable. He also states that application of import policy restrictions and classification for customs duty are two different matters. He states that while there is no dispute regarding classification in this case under the specific sub-heading 8443 31 00, the impugned goods are to be treated as restricted for import policy purposes being photocopiers. He also states that the printing engine and the basic hardware are the same which are used for photocopying purposes. FINDINGS 6. We have considered submissions from both sides, the case records, the legal provisions and the cited decisions. The issues for decision by us are the following:- (i) Whether the impugned goods imported by the appellants declaring the same as "old and used digital multifu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said decision, the Hon'ble Supreme Court has held as follows:- "One more aspect needs to be mentioned. Para 2.33 expressly states that import of old and used computers/second-hand computers are restricted. Para 2.33 of the Handbook does not restrict photocopying machines. Import of photocopying machines are expressly restricted only by Notification no. 31 dated 19-10-2005. This itself indicates that categorization/re-categorization cannot be done by policy circulars. Such exercise has to be undertaken by specific amendment to the Policy vide Section 5 of the 1992 Act. In this case, Notification no. 31 dated 19-10-2005 indicates that the Central Government has brought in photocopying machines into the category of second-hand goods vide amendatory Notification, therefore, import of photocopying machines stand restricted only on and after 19-10-2005. In fact, if the argument of the Department is to be accepted, then there was no need to issue Notification no. 31 dated 19-10-2005." It is clear from the aforecited decision of the Hon'ble Supreme Court that import of photocopying machines are expressly restricted by Notification No. 31/2005 dated 19.10.2005, that the Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary regarding violation of the import licensing condition and confiscability of the impugned goods. In fact, in the present case itself, while disposing of the writ petition, the Hon'ble High Court ordered payment of 50% of the redemption fine which goes to show that not even a prima facie view was entertained that the impugned goods have not violated import licensing condition or were not liable to confiscation. If the High Court had entertained even a prima facie view that the goods are not restricted and therefore not liable to confiscation, it would not have ordered payment of part of the redemption fine. In this background, when all the Benches of the Tribunal had upheld confiscation of similar goods but had upheld various levels of fines and penalties, the Bangalore Bench which has passed a contrary order unsettling a settled practice and holding the impugned goods not to be attracting licensing restriction, in our respectful view, it ought to have referred the matter to a Larger Bench as a matter of judicial discipline. In fact, the Bangalore Bench itself has been imposing fines and penalties in such cases earlier. 11. Further, we find that the Bangalore Bench in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by new Heading 8441 31 00. According to the legal text of the Interpretative Rule 1, which forms an integral part of the Customs Tariff Act, 1975, classification is mandated to be determined according to the terms of the Headings in the first instance. In view of the fact that the terms of Heading 8443 31 00 clearly and unambiguously cover the impugned goods, there is no need to look at any of the other interpretative rules or any other criteria evolved in the past to decide upon the classification of the impugned goods. Hence, there is no scope at all to apply the ratio of the Hon'ble Supreme Court's decision in the case of Xerox India (supra), which decided the disputed classification between two competing entries 8471.60 and 8479.89 in the absence of specific Heading for the impugned goods during the earlier period for the imports made in the year 1999. 12. Moreover, as held by the Hon'ble Supreme Court in the case of Atul Commodities (supra), the import of photocopying machines stand restricted on or after 19.10.2005. Neither in the amending Notification No. 31/2005 dated 19.10.2005 nor in the said judgment of the Hon'ble Supreme Court, there is any reference to the import re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Items, that the policy against many of these aforementioned items such as multifunction machines, electrostatic photocopying machines, other optical photocopying apparatus, other contact type photocopying apparatus, the policy provision is indicated as freely importable. This is of no significance to the dispute at hand as the ITC HS Classification Schedule is undisputedly applicable to new and original equipment and the specific provision made under paragraph 2.17 of the Import Policy through the amending Notification No. 31/2005 dated 19.10.2005 is an over-riding provision which would apply to secondhand photocopier machines in general not being limited to any particular Tariff item. We have, to, therefore, accordingly interpret the expression "photocopier machines" used in the context of amendment made to the EXIM policy by Notification No. 31/2005, which has been issued in the public interest to mean all kinds of photocopiers irrespective of its classification. 14. It has been argued on behalf of the appellants that there is a difference between analog photocopiers and digital photocopiers and multifunction printing and copying machines. We do not find any such distinction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on to the photoreceptor 2. The optical image is converted to digital data which is sent to the printer engine to create the printed image on to the photoreceptor 3. The image is developed on the photoreceptor and copied on the paper 3. The image is developed on the photoreceptor and copied on the paper 15. The impugned machines described as multifunction printing and copying machines are also essentially digital photocopiers which can be connected to an automatic data processing machine. The original to be photocopied is optically scanned and the image is digitalized before a copy is produced. Production of the copy of the original is achieved through printing using the digital image. Hence, the printing function of the machine sub serves and is essential to produce a photocopy. If the printing function was not available in the machine, the photocopies cannot be produced. No doubt, the same printing function can be also used for taking a print-out by giving a command from the computer to which the machine should be connected. That in no way makes the printing function totally separate from the photocopying function. While the machine would act as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows:- "It is, of course, well settled that in Taxing Statute the words used are to be understood in the common parlance or commercial parlance but such a trade understanding or commercial nomenclature can be given only in cases where the word in the Tariff Entry has not been used in a scientific or technical sense and where there is no conflict between the words used in the Tariff Entry and any other Entry in the Tariff Schedule." Since the said para 2.17 in the Policy has not used any expression identical to any Tariff entry, much less in a scientific or technical sense, the restriction on old/used photocopier machines has to be understood in the common parlance. The learned counsel raises a point that import policy is to protect the local industry and that since there are no manufacturers of the impugned goods in India, the entire requirement is met by import and there can be no restriction to import such goods. In fact import of the photocopier machines as per the policy and the ITC HS Schedule is free for the new equipment including multifunction equipment. The restriction is only in respect of secondhand photocopier machines. The understanding of the DGFT, is also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... echnology, features or single/multiple uses. 19. As regards the point raised by the learned counsel that in the show-cause notice there was no case made out for the goods being restricted for import as e-waste, we agree that it is so and the impugned order also does not hold the impugned goods to be e-waste and hence, we are not required to give any finding in this regard. 20. In view of our findings as above, we are of the considered view that the import policy restricting import of secondhand photocopier machines is applicable to all kinds of photocopying machines including analog photocopiers, digital photocopiers and multifunction copying and printing machines whose primary function is photocopying and which requires printing for the purpose of completing the photocopying process and producing a photocopy. The expression used in the import policy is not identical to any of the expressions in any of the Tariff Headings nor any particular Tariff Heading is mentioned in the import policy restriction and hence the expression "photocopier machines" in the policy is to be interpreted as commonly understood to include all those machines which are used for photocopying. As held by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms authorities and the same cannot be considered to be excessive and therefore, it calls for no reduction. The question of imposing higher fine and penalty in respect of repeated offenders has been adequately dealt with by the Tribunal in the case of Sagar Enterprises (supra). The relevant extract is reproduced below: "11. After hearing both sides and perusal of the case records and the cited case laws, I find that there is only a short question to be decided in respect of these seven appeals. That question is whether the lower appellate authority was justified in reducing the redemption fine and penalty to a lower level of 15% and 5% (total 20%) uniformly in all these cases, thereby interfering with the discretionary power exercised by the original authorities. I find that several batches of cases have been decided earlier by the Tribunal Benches at Chennai and Bangalore as evidenced from the orders cited before me. It is quite obvious that despite imposition of fines and penalties on such imports, large scale imports of these goods are taking place at ports of Chennai, Tuticorin and Cochin at undervalued prices and without necessary import licences. It is quite obvious tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question for entertaining these appeals. Hence the appeals are dismissed." 14. From the above cited decision of the Hon'ble Madras High Court, it is clear that fixation of the quantum of redemption fine is an exercise of discretionary jurisdiction of the authorities under the Customs Act. It is also clear that the fixation of the quantum of redemption fine and penalty can only be interfered if the same is fixed in an arbitrary and whimsical manner resulting in miscarriage of justice. The Hon'ble High Court has also held that there is no statutory prescription that the penalty should not be reduced by the appellate authority and also that in the Departmental appeal against the Tribunal's order in the cited case there was no question of law involved. The cited decision of the Hon'ble Madras High Court nowhere imposes a restriction on the discretion of the customs authorities nor it can be taken to authorize imposition of a low level of fine and penalty even in cases of repeated imports contravening the provisions of Import Policy, mis-declaring the value of the goods as found in all these seven cases. As such, it appears that the lower appellate authority was not correct in plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hankar and Others v. Deputy Excise Taxation Commissioner and Others [1975 (1) SCC 737] ruled that the writ jurisdiction of High Court under Article 226 of the Constitution of India is not intended to facilitate avoidance of legal obligation and to commit breach of law for the time being in force. The extraordinary jurisdiction of the High Court under Article 226, which is of a discretionary nature and is to be exercised only to advance the interest of the justice, cannot certainly be employed in aid of such persons; who have no respect for the law of land and who are deliberately indulging in committing breach thereof. This Court would not be justified in invoking writ jurisdiction in favour of such persons. Writ jurisdiction is available to further the cause of regime of law, not to abrogate the same. In the facts of this case the consignments confiscated by the Customs authorities cannot be allowed to be released on the licence which were sought to be produced by the petitioners. The importers who are importing goods without licence and then seek to validate the import by obtaining subsequent licence or licences cannot be allowed to take advantage of their own wrong. The petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the fact that the authorities under the law have a duty cast upon them to prevent illegal imports and effectively implement the Import Policy validly laid down by the Government and to curb under valuation and mis-declaration apart from preventing repeated offences. Hence, the lower appellate authority is totally unjustified in reducing the fines and penalties in these cases to very low levels totaling 20% only. Accordingly, I set aside the impugned orders passed by the lower appellate authority insofar as they relate to lowering of redemption fines and penalties and restore the orders passed by the original authorities. All the seven departmental appeals are allowed in the above terms." 23. Keeping the above observations of the Tribunal in the case of Sagar Enterprises (supra) in view, while we find no justification for reducing the fine imposed, we are of the view that the ends of justice would be met if the penalty is reduced from Rs.13,70,000/- to Rs.6,85,000/- (Rupees six lakhs eighty five thousand only) which comes to about 20% of the assessed value. The appeal is otherwise rejected except for the reduction in the penalty amount as indicated above. (Pronounced in op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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