TMI Blog2015 (9) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... has been uploaded/scanned into Oracle Order Management System only after the customer agreed to pay the licence fee for the software and this information was available to Oracle USA as well as Oracle Ireland before the shipment was made. OIPL was incorrect when it claimed initially that it was a case of stock and sale and that the software imported from Ireland could be given to any customer, commercial or non-commercial. It comes out clearly that each software which was shipped was in the knowledge of Oracle USA and each shipment came for a particular Indian customer identified by the unique order number generated. - In the wake of the factual matrix of the case, we hold that in respect of commercial imports of media packs, the licence fee remitted by OIPL to Oracle USA was includible in the assessable value. - Decided against the assessee. However, any subsequent (post importation) increase in the number of users of the software imported in the form of physical media packs was neither known at the time of import nor was it a condition of sale and therefore licence fee remitted on that account cannot be said to be a condition of sale and hence would not be includible in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rge of wilful mis-statement / suppression of facts, therefore allegation of wilful mis-statement/suppression of facts is not sustainable – Impugned demands, redemption fines and penalties on appellants set aside – Demand set aside on the ground of period of limitation - Decided in favour of assessee. - Application No. C/MISC/56041/2013-CU[DB], Appeal Nos. C/148 -150/2011-CU[DB] - Final Order Nos. 52353-52355/2015 - Dated:- 29-7-2015 - Hon ble G. Raghuram, President And Hon ble Mr. R.K. Singh, Member (Technical), JJ. For the Petitioner : Shri V. Lakshmi Kumaran, Advocate, Shri S. Vasudevan, Advocate, Shri Rachit Jain, Advocate, Shri Abhinav Jaganathan, Advocate For the Respondent : Shri Govind Dixit, DR, Shri Amresh Jain, DR ORDER Per Mr. R.K. Singh: Appeal has been filed against Order-in-Original No.MIJM/ACE/01/2011, dated 12.01.2011 in terms of which:- (i) The declared prices of the Oracle packaged software imported under Bills of Entry filed by Oracle India Pvt. Ltd.(OIPL) and the subject matter of the Show Cause Notice dated 02.06.2009 were rejected under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. (ii ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y OIPL by adding licence fee to the value of the media pack. Thus, while importing and clearing the goods through Customs, OIPL declared value of the imported goods (media pack) without adding licence fee paid to the Oracle, USA, whereas while delivering the goods to the buyers, separate invoices reflecting the value of media pack and licence fee were issued. Thus, OIPL was not including the licence fee of the software in the import value of the media packs and was thus allegedly indulging in duty evasion because the said licence fee was includible in the assessable value in terms of Rule 9(1)(c)/10(1)(c) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 1988/2007 on the ground that such licence fee was a condition of sale. Even in respect of such media packs where no licence fee was actually paid by OIPL to Oracle USA, the value of the licence fee notionally payable by OIPL to Oracle, USA was computed for the purpose of computing the duty evaded. Forty nine consignments awaiting delivery were seized on the ground that they were similarly under-valued. The Show Cause Notice was issued on 03.06.2009. The adjudicating authority held that the licence fee paid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee paid for the software contained in the media pack cannot be treated as a condition of sale. 3.6 Whenever required for delivery of media pack to customer, OIPL availed services of Oracle EMEA, Ireland (hereinafter referred to as Oracle Ireland ) to replicate oracle software on a media pack. For supply of such medial pack, Oracle Ireland raised an invoice on OIPL on the basis of the value of media pack, replication cost and mark-up. OIPL imported the media pack and paid Customs duty on such invoice price. 3.7 This arrangement between OIPL and Oracle Ireland was independent of the SDDA between OIPL and Oracle Corp., USA. The amount charged by Oracle Ireland remained the same whether or not OIPL paid 56% licence fee to Oracle USA. 3.8 A pictorial description of the aforesaid transactions as submitted by OIPL is reproduced below:- 3.9 Various activities undertaken OIPL in India are as follows: Commercial Transactions Media pack shipments OIPL supplied software to customers through different modes discussed above. Only in those cases where a customer specifically requested for supply of software in physical form, OIPL provided a media pack. 56% of the license fee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplied to IT Professionals on the prices displayed on the Oracle website for such supplies. Internal shipments Oracle software was imported and consumed internally by OIPL. Licence fee was not charged by OIPL and there was no remittance of any amount to Oracle Corp., USA. Free of Charge External Shipments These represent import and supply of media pack/ Dox as replacements for defective or damaged media pack/printed certificate. Such imports were for both commercial and non-commercial customers. 3.10 The issue involved is inclusion of royalty/license fee paid by OIPL to Oracle Corp., USA in the value of media pack containing software imported from Oracle Ireland under Rule 9(1)(c)/10(1)(c) of the Customs Valuation Rules, 1988/2007 (hereinafter referred to as Rule 10(1)(c) of the Customs Valuation Rules ). 3.11 This dispute is not about the dutiable value of the media pack itself, but instead solely whether certain actual and notional royalties should be added to the dutiable value of the media pack. Under Rule 10(1)(c) of the Customs Valuation Rules, if a buyer imports a product and is required to pay a royalty as a condition of sale, the amount of the royalty must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SA for grant of right to distribute software (either electronically or physically) and not for purchase of media pack from Oracle Ireland. Thus, licence fee was not a condition of sale of media pack from Oracle Ireland. As per Section 12(2) of the Sale of Goods Act, 1930 a condition of sale is such stipulation, whose breach gives rise to the right to repudiate the contract itself. Following facts show that the payment of licence fee to Oracle Corp., USA is not a condition of sale of media pack by Oracle Ireland. Price charged by Oracle Ireland from OIPL for supply of media pack is same whether or not licence fee is paid to Oracle Corp., USA. Neither the SCN nor the impugned order has disputed the correctness of the price charged for media pack. The dispute is solely with regard to addition of licence fee to the price of media pack. Media pack is also supplied by Oracle Ireland for non-commercial transaction where no licence fee is paid. Therefore, payment of licence fee to Oracle Corp., USA is certainly not a condition of sale. Licence fee is liable to be paid by OIPL to Oracle Corp., USA even when the customer does not opt for physical delivery of software in a media pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Gujarat (supra) is not for the proposition that every license fee paid by the importer is to be added to the declared value of the imported goods. Fees relatable to the pre-importation stage are includible. SCN invoked Rule 10(1)(c) for inclusion of licence fee. If licence fee is not includible under the said rule, resort to Rule 10(1)(e) cannot be made. Commissioner of Customs vs. Ferodo India Pvt Ltd., [2008 (224) E.L.T. 23 (SC)]. 3.12 IMPORTS UNDER NON-COMMERCIAL TRANSACTIONS ARE NOT IDENTICAL TO IMPORTS UNDER COMMERCIAL TRANSACTIONS. Even if it is held that licence fee is includible for commercial transactions, no additions can be made under Rule 10(1)(c) for non-commercial transactions. This is because indisputedly, no licence fee was paid/ payable by OIPL to Oracle Corp., USA for non-commercial transactions. The Ld. Commissioner has re-determined the value of non-commercial transactions on the basis of the licence fee that OIPL should have paid to Oracle Corp., USA and not on actuals. This approach is erroneous. Inclusions under Rule 10(1)(c) are based on actual contractual liability to pay licence fee and not based on assumptions and surmises. The license va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the customers. Whereas in the case of FOC imports for non-commercial transactions, no licence fee is charged either at the time of original import or subsequent import of media pack. 3.15 Other discrepancies on the face of the records: OIPL claimed that severe errors have been made in the duty calculations for commercial as well as non-commercial transactions and submitted details in that regard, adding that the same have not been dealt with in the impugned order. Neither the SCN nor the impugned order has identified the bills of entry vide which the media packs were imported. Consequently, there is no one to one co-relation between the imported media packs and royalty/licence paid thereon. Further, interest liability also cannot be ascertained in these cases. Within the commercial transactions, the impugned order has confirmed duty demand on Dox import which is merely a certificate of authenticity issued to the customer who receives Oracle software in electronic form. OIPL provides Dox to assure the customer that the software downloaded by it is genuine software. For Global Deals, OIPL receives royalty/licence fee on the basis of number of users in India and 56% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008 with effect from 16.05.2008. ENTIRE DUTY DEMAND IS BEYOND THE PERIOD OF LIMITATION. EXTENDED PERIOD IS NOT INVOCABLE. 3.17 The entire duty demand is barred by limitation as it has been raised beyond the period of six months. There is no collusion or wilful mis-statement or suppression of facts by OIPL or the foreign supplier. OIPL correctly declared the price, which it was paying to Oracle Ireland for the media pack. It was of a bona fide belief that the licence fee paid to Oracle Corp., USA was not includible in the value of media pack as the royalty payments were not a condition of sale of the imported media pack. CVD on import of software was levied from 01.03.2006. Prior to 01.03. 2006, there was no Customs duty on import of software. OIPL, however, was following the same practice of valuing media pack on the basis of the price paid to Oracle Ireland both prior and post the said date. OIPL made a complete disclosure in the submissions filed before the Assistant Commissioner of Customs (Group-5B), New Customs House, New Delhi (SVB authority) vide their letter dated 19.01.2007. Information relating to remittance of 56% of license fees to Oracle Corp., US was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 130; (ii) I. K. International vs. CC, 2002 (142) ELT 185; (iii) Tarsem Singh Multani Sons vs. CC, 2001 (134) ELT 753; and (iv) Setia Woollens Pvt. Ltd. vs. CC, 2006 (206) ELT 500. (Page 103, Appeal Memorandum) Interest for delayed payment of duty is not payable in the absence of any substantive provision relating to interest. {India Carbon Ltd. vs. State of Assam, [1997 (6) SCC 479]}. In V. V. S. Sugar vs. Government of Andhra Pradesh [1999 (44) SCC 192], the Constitution Bench of the Supreme Court, while dealing with the question of levy of interest for delay in payment of purchase tax on sugar cane, once again re-affirmed principles laid down in India Carbon s case. Sections 8B, 8C, 9 and 9A of Customs Tariff Act, 1975 were amended by Finance Act, 2009 to borrow provisions relating to interest and penalties from Customs Act, 1962 for these Sections of Customs Tariff Act, 1975. However, there is no amendment in Section 3(8) of the Customs Tariff Act, 1975 relating to CVD. GOODS ARE NOT LIABLE FOR CONFISCATION. 3.19 There is no mis-declaration by OIPL. Therefore, goods are not liable for confiscation under Section 111(m) of the Customs Act. With ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the payment of licence fee was the condition of import of the goods, the same was includible in the assessable value. (vii) Oracle USA develops the software being imported by OIPL (OIPL) and is a copyright holder of that software. OIC has entered into a Distribution Agreement with OIPL whereby OIC has granted a license to OIPL to distribute/ market its software in India. As per this Agreement, the software belongs to OIC, the Master and not to OIPL its vassal, since OIC controls OIPL through the Master Services Agreement. OIPL is required to pay OIC a royalty on a fixed/pre determined basis @ 56% of the license fees collected by OIPL from customers of Oracle software in India. OIPL imports the software from Oracle, Ireland (a related party) in the form of media packs. Oracle, Ireland charges US$ 59.95 per media pack containing the software. The media is generally in the form of a Compact Disk (CD) earlier referred to as media pack. (viii) Software is goods as has been unambiguously held by the Hon ble Supreme Court of India in the case of Tata Consultancy Services vs. State of Andhra Pradesh [2004 (178) E.L.T. 22 (S.C.)]. (ix) Thus, software of any kind being intangi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nned into Oracle s Order Management System (common Group System for the Oracle Group members) and thereafter the Order was booked by OIPL, in the Oracle Order Management System. The seller, Oracle Ireland used the same system to access and ascertain details about the software users in India negotiated by the OIPL team and on the basis of information fed by OIPL into the Oracle System, it shipped the software through DHL to India. The sorting and further despatch of the software as per OIPL s instructions and list of Indian buyers for every mother consignment sent by Oracle Ireland was done at DHL s sorting centre in Gurgaon. (xv) Wherever the Indian customer opted to have a physical media pack, Oracle, Ireland shipped the media packs to OIPL. The Indian customer is required to pay for the software as per the conditions of the contract entered into by the Indian customer prior to the import. Investigation for the import of Oracle Media pack from Ireland after their interception and seizure by Customs authorities, revealed a lot of facts not known earlier to Customs. Each consignment imported from Oracle Ireland was a mother consignment containing several baby consignments and eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red into the Oracle Order Management System (Group System). Without the generation of the Unique Order No. for OIPL s Indian customer in the Oracle Group s System, Oracle Ireland was not obliged to ship these softwares from Ireland. (xviii) All transactions whether commercial or non-commercial involved the question of royalty/ license fee either PAID or PAYABLE . (xix) Sales team of OIPL negotiated with the Indian customers for sale of Oracle products on the basis of Oracle s Global price list, the terms and conditions for the sale and discounts. Upon agreed terms, the price between OIPL and customer was settled. Oracle s internal approval was obtained to these terms and conditions. Thereafter, a written agreement was signed between OIPL and the Indian customer. The signed agreement was scanned in the Oracle system so that the Order Number (Unique Number for each order) was generated. On the basis of the order booked in the Oracle System, shipments were shipped from M/s Oracle Ltd., Ireland to M/s OIPL. Once the order was entered into the Oracle System, the order would be integrated with Oracle s Distribution software application. OIC was (in real time) able to release the CD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Article 8.1(c) of the WTO CVA (Customs Valuation Agreement). The contention of the Revenue is also supported by Commentary 25.1 on WTO Valuation Agreement and Commentary N 11 regarding addition of amounts of Royalties and Licence Fees in the EU. Also, the Revenue s arguments are supported by Hasbro-II Ruling of the US Customs according to which a three pronged test has been laid down to determine whether royalty payment was a condition of sale. This is a complete reversal by U.S. Customs of its earlier ruling in Hasbro I. (ii) In case of what is called Dox imports or import of subsequent version updates, what is material is the first licence agreement entered into by the customer along with the global price list for the software. There were no pure air to air transactions and every Dox import and subsequent version updates was a link to the initial physical import of the Media Pack. This was confirmed by the statement of Mr. T. Srinivasan, Vice President, to the effect that licences are sold by OIC through OIPL in respect of databases and no databases are sold without licences. (iii) OIPL is not a buyer of the media pack. It is merely a facilitator/agent of OIC. The genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d perpetually be assessed on a provisional basis. Ld. counsel for the appellants placed reliance in the cases of Haryana Ship Breakers Pvt. Ltd. Vs. Union of India [1997 (96) ELT 5 (Guj.)], Union of India and others Vs. Tata Iron and Steel Co. Ltd. [1978 (2) ELT (J439)(SC)] and Kinetic Engineering Ltd. Vs. CCE, Pune, Nagpur, Nashik [2012 (283) ELT 29 (Tri. Mumb.)]. 7. OIPL had all along disclosed the fact of imports being made from related persons and even in 2005 it had made detailed information to SVB in the context of import of VPN hardware. As regards non-disclosure of licence fee, it was clearly disclosed in reply to the SVB questionnaire submitted on 19.01.2007. Analysis of Evidence/Arguments/Contentions/Pleadings 8. We have considered the evidence on record and contentions/arguments/pleadings of both sides. The issues involved in this case which are required to be adjudicated upon are summarised as under:- (i) Whether the licence fee paid by OIPL to its parent company Oracle USA is includible in the assessable value of imported media packs in terms of rule 9(1)(c)/10(1)(c) of the Customs (Determination of Value of Imported Goods) Rules, 1988/2007 as applicable du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- (i) The buyer is required to pay directly or indirectly the royalties/licence fees related to the imported goods which are sought to be added the price actually paid/payable and (ii) The buyer is required to pay such royalties/licence fees as a condition of sale of the goods being valued. 10. OIPL has argued that the valuation of media packs imported in case of non-commercial transaction where no licence fee was paid or required to be paid, the licence fee cannot be added to the price actually paid or payable for import of such media packs on the ground that the software imported in such media packs is identical/similar to a software imported under commercial transactions. The adjudicating authority on the other hand has observed that (i) It is not for Customs to go into what is the sale price of OPIL to its buyers in India. (ii) These goods are identical goods vis-a-vis those in respect of which licence fee was paid and therefore these should also be assessed at same value as per Rule 4 of the Customs Valuation Rules. (iii) Consequently all the goods imported for different users are to be assessed at a value inclusive of licence fee which should have been paid and henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the purpose of charging duty. In other words the only issue in dispute which has been decided by the primary adjudicating authority has been whether that value can be adjusted in terms of Rule 9(1) (c) / 10 (1)(c) of the Customs Valuation Rules, 1988/2007 by including the license fee paid or payable by OIPL to M/s Oracle, USA. In terms of the said Sub Rule, there is no scope for adding license fee/royalty on notional basis on the ground that the same should have been paid even though for certain transactions, the customers were not required to pay directly or indirectly any royalty/licence fee. The primary adjudicating authority has however held that the license fee which was not paid in respect of such non-commercial transactions was payable. The primary adjudicating authority has however not given any basis to conclude that the license fee was payable in respect of consignments of media packs where it was admittedly never paid by OIPL to Oracle USA. We do not find any document to even suggest that in respect of such non-commercial consignments the license fee was required to be paid. The word payable as per Websters comprehensive dictionary means due and unpaid that can or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply of software) was correctly done as that remains of no consequence. 12. We shall now discuss whether the software electronically downloaded via internet will qualify to be called goods imported and if so, whether the same will be liable to customs duty on the same lines as the duty leviable on such software imported as media packs. In the case of Digital Equipments India (supra), CESTAT held that e-mail transfers not being transfer of movable property are not to be regarded as goods. The WTO Ministerial Conference Declaration on Global Electronic Commerce No.WT/Min(98)/Dec/2, dates 25.05.1998 also stated that we also declare that Members will continue their current practice of not imposing customs duties on electronic transmission . The General Council was to review this declaration and its extension was to be decided by consensus. Ld. Departmental Representative strenuously argued that electronic download of the impugned software tantamounts to import of goods and relied heavily on the judgement of the Supreme Court in the case of Tata Consultancy Services (supra). The Hon'ble Supreme Court in para 24 of its judgement stated as under:- 24. In our view, the term good ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erials, commodities and articles and also corporeal and incorporeal materials, the definition of goods will have to be rewritten, of comprising tangible goods only which is impermissible. 74. It is not in dispute that when a programme is created it is necessary to encode it, upload the same and thereafter unloaded. Indian law, as noticed by my learned Brother, Variava, J., does not make any distinction between tangible property and intangible property. A goods may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of transmitted, transferred, delivered, stored and possessed. If a software whether customized or non-customized satisfies these attributes, the same would be goods. Unlike the American Courts, Supreme Court of India have also not gone into the question of severability. From this judgement, it is clear that software even in its intangible form has been declared to be goods by the Supreme Court and therefore electronic download of software from a server located abroad would get captured in the scope of import of goods . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Setty (supra)]. Thus, we hold that electronically downloaded software is not liable to customs duty. Consequently, the demand of service tax relating to electronically downloaded software is not sustainable even for such downloads in respect of which OIPL remitted licence fee to Oracle USA. The reasoning is also squarely applicable with regard to duty demand in relation to what is referred to as global deals mentioned in paras 3.11 and 3.15. Incidentally, paper licences (for software already downloaded) are classifiable under Chapter 49 as has been opined by CBEC also vide Circular No.15/2011-Cus, dated 18.03.2011 and such paper licences under Chapter 49 are fully exempt from customs duty. 13. It now leaves us to deal with the impugned demand only related to the commercial physical imports of media packs where the licence fee has actually been collected from the customers and a part of it (56%) remitted by OIPL to Oracle USA. Ld. counsel has strenuously argued that the licence fee remitted by OIPL to Oracle USA was not a condition of sale and only a condition of use. He has cited several judgements/opinions (including the extracts from Customs valuation Commentary on GATT Cust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed legal position with which both sides also agree and therefore we do not need to refer to each of those judgements/opinions. As it is, whether the licensee fee paid or was required to be paid as a condition of sale is essentially more a question of fact than of law. None of the judicial pronouncements are directly on the issue at hand. In other words, none of the judgements cited decide whether the licence fee remitted abroad in the facts and circumstances obtaining in this case is includible in the assessable value. The Supreme Court in the case of CC (Port), Chennai Vs. Toyota Kirloskar Motor Pvt. Ltd. [2007(213)ELT4(SC)] has cautioned that (i) the ratio of a decision is to be understood in factual metrics involved therein, (ii) the ratio of a decision is to be culled out from facts of given case and (iii) a decision is an authority for what it decides and not what can be logically deduced therefrom. In that case [i.e., Toyota Kirloskar Motor Pvt. Ltd. (supra)], the technical assistance and know-how was to be given not as a condition of sale but on request and therefore the payment therefor was not held to be includible in the assessable value of the capital goods. However in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Management System only after the customer agreed to pay the licence fee for the software and this information was available to Oracle USA as well as Oracle Ireland before the shipment was made. OIPL was incorrect when it claimed initially that it was a case of stock and sale and that the software imported from Ireland could be given to any customer, commercial or non-commercial. It comes out clearly that each software which was shipped was in the knowledge of Oracle USA and each shipment came for a particular Indian customer identified by the unique order number generated. In case of commercial transactions, the unique order number was generated only after the agreement was signed by the customer to pay the licence fee also. It needs to be re-emphasised that each commercial shipment, came for an identified customer as per the unique order number generated and that number was generated only after the customer signed to the agreement agreeing to pay the licence fee also. Thus, it is evident that in case of commercial imports of media packs, payment of licence fee was a condition of sale. In case of Indo Overseas Films Vs. Union of India [2007 (210) ELT 308 (Mad)], Madras High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racle USA was includible in the assessable value. However, any subsequent (post importation) increase in the number of users of the software imported in the form of physical media packs was neither known at the time of import nor was it a condition of sale and therefore licence fee remitted on that account cannot be said to be a condition of sale and hence would not be includible in the assessable value and customs levy thereon would also be hit by the absence of collection mechanism as per the discussion in para 12. 14. Coming to the contention that from 2008 OIPL was paying service tax on the licence fee paid by it to Oracle USA and therefore the value of the licence fee could not be added in the value of the media packs imported, we find that OIPL has relied upon the judgement of Supreme Court in the case of Imagic Creative Private Ltd. (supra) in support of this contention. The said judgement essentially laid down the ratio that payment of service tax and VAT are mutually exclusive. The said ratio laid down by the Supreme Court cannot be extrapolated to mean that customs duty and service tax are also mutually exclusive. In this regard it is pertinent to recall once again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of CC Vs. Sudarshan Cargo Pvt. Ltd. [2010 (258) ELT 197 (Bomb)] observed that the order of confiscation and redemption fine can be passed only if goods are available for confiscation and consequently redemption. The Supreme Court has also held the view that confiscation and redemption fine are not imposable when goods are not available for seizure [Commissioner Vs Finesse Creation Inc.{2010(255) ELT A120 (SC)}]. Accordingly we hold that redemption fine cannot be imposed in respect of goods which had already been cleared and were not available for seizure/confiscation. In any case, the Show Cause Notice did not propose any redemption fine on goods already cleared and it is settled law that adjudicating authority cannot travel beyond the Show Cause Notice. 16. The appellants have also contended that penalty, interest and confiscation cannot be invoked in respect of evasion of countervailing duty (levied under Section 3 of the Customs Tariff Act, 1975) on the ground that the provisions relating to these aspects have not been borrowed into Section 3 of the Customs Tariff Act, 1975. In support of the principle that the penalty cannot be levied in the absence of penalty provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reunder have been clearly borrowed into the said Section 3 to apply to the impugned CVD and so it is obvious that provisions relating to fine, penalty and interest contained in Customs Act, 1962 are expressly made applicable with regard to the impugned countervailing duty. We must, however, fairly mention that in case of Torrent Pharma Ltd. Vs. CCE, Surat, CESTAT set aside penalty for evasion of Anti-dumping duty, CVD and SAD (para 16 of the judgement) on the ground that penal provisions of Customs Act, 1962 had not been borrowed in the respective sections of Customs Tariff Act, 1975 under which these duties were levied, but this decision of CESTAT regarding CVD suffered from a fatal internal contraction in-as-much-as CESTAT itself in para 14 of the said judgement had expressely taken note of the fact that vide Section 3(8) of the Customs Tariff Act, 1975, the provisions of Customs Act, 1962 and the rules and regulations made thereunder had been made applicable to CVD charged (under Section 3 of Customs Tariff Act, 1975). In the light of this analysis, we hold that this contention of the appellant is legally not sustainable. 17. We now come to the issue of wilful mis-statement/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ₹ 19 crores is sustainable on merit. Further, the very fact that OIPL had made complete disclosure regarding its commitment to remit 56% of licence fee to Oracle USA in its FIPB application is certainly indicative of the fact that it did not have any intention to hide this fact. We are aware that disclosure before FIPB authorities would not amount to disclosure before the customs authorities but it does lend credence to the appellants contention that having obtained FIPB approval after declaring the fact regarding OIPL s commitment to remit 56% of licence fee or Oracle USA, it would not have attempted to hide this fact from Customs. In fact, in January, 2007, OIPL disclosed this fact during SVB investigations (in its reply to SVB questionnaire). The seizure took place in January, 2008 when customs could hardly claim that OIPL had not disclosed the facts about its relationship with Oracle Ireland or about the remittance of licence fee to Oracle USA when these facts were made known to Customs SVB in January, 2007 in response to its (SVB s) questionnaire. Even earlier on 22.09.2005, OIPL wrote to Dy. Commissioner of Customs, Gr. VB, New Custom House, New Delhi in response to h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d [2010 (250) ELT 260 (Tri. Ahd)]. Supreme Court in the case of Tolaram Relumal Vs. State of Bombay [AIR 1954 SC 496] way back in 1954 observed that it is a well settled rule that when two reasonable constructions can be put upon the penal provision, court must lean towards that construction which exempts subject from penalty rather than one which imposes penalty . When no penalty is held to be imposable when the issue involved is interpretational, it almost axiomatically follows that even extended period cannot be invoked in such cases. Indeed we do not find even marginal support/ evidence to sustain the charge of wilful mis-statement / suppression of facts and therefore we hold that the allegation of wilful mis-statement/suppression of facts is not sustainable and penalties relating thereto are not imposable. As a result, the demand even in relation to commercial physical imports of media packs (except those which were seized) is hit by time bar. 19. We shall now take up the issue of confiscability of seized goods and the duty leviable thereon. It has been brought out that OIPL had disclosed their relationship between OIPL, Oracle USA and Oracle Ireland way back in 2005. As br ..... X X X X Extracts X X X X X X X X Extracts X X X X
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