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2015 (9) TMI 1135 - CESTAT CHENNAI

2015 (9) TMI 1135 - CESTAT CHENNAI - 2015 (325) E.L.T. 759 (Tri. - Chennai) - Imposition of penalty u/s 114A - MEPZ/SEZ unit - DTA clearance - appellant did not carry out sustained exports instead transferred about ₹ 1.62 crores worth of service to DTA without proper intimation to customs authorities and without payment of required duty - appellants cleared printed materials and chromatogram which are research papers are specifically covered under 49011010 of the CTA.

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or which the Development Commissioner has imposed a penalty of ₹ 5 lakhs but they have also violated the procedure and rules prescribed under the Customs Act.

There is enough evidence for imposing penalty under Section 112(a) of the Customs Act, 1962 - appellants are liable for penalty for contravening the procedures prescribed for clearance to DTA. Accordingly, we impose penalty of ₹ 1,00,000 each on the appellants in respect of their appeals. - Decided partly in favour .....

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is common and identical in nature. 2. The brief facts of the case are that the appellants have set up a unit at MEPZ (now SEZ) and registered with MEPZ, Development Commissioner for providing export of service in respect of generating Clinical Bio Analytical Statistics and Data Management. It appeared that the appellant did not carry out sustained exports instead transferred about ₹ 1.62 crores worth of service to DTA without proper intimation to customs authorities and without payment of .....

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Senior Advocate appearing on behalf of the appellant submitted written synopsis and submitted that the entire demand of customs duty under section 28(2) is purely based on the order issued by the Development Commissioner which relates to the removal of goods to the DTA. The present order does not deal with the question of demand and also the question of classification whether the goods are printed books or not. He further submits that the show-cause notice was issued by Development Commissioner, .....

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ion of FTP relates to transferring the service to the DTA without obtaining proper permission and the same is nothing to do with the demand. He further submits that the goods removed from MEPZ were only printed documents falling under Chapter 4901 of Customs Tariff Act. The classification of books has not been discussed by the adjudicating authority or the lower appellate authority. He further submits the goods or stock cleared to DTA sales are falling under Chapter 4901 and not under Chapter 49 .....

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re books. He further submits that what is cleared is books even though they are not bound. He relied on the Hon ble Supreme Court s decision in the case of Commissioner of Customs (General), New Delhi Vs. Gujarat Perstorp Electronics Ltd. 2005 (186) ELT 532 (SC). He relied on paragraphs 26, 46, 47, 50, 54 to 58. He further submits that what they have cleared is books classifiable under 4901. He also drew the attention to HSN Explanatory Note of Chapter 49 which includes printed books, brochures, .....

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classified under 4901 and held these cannot be classified under residual entry of 4911 and specific entry will prevail over residual entry. He further submits that the demand is also hit by limitation and that no penalty is imposable as what they have cleared to DTA are books classifiable under 4901 and not chargeable to any duty. He also submits that currently there is no dispute as they were clearing the same goods under Chapter 4901 to DTA at nil rate of duty by following the procedure and fi .....

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attention to para 18 of Order-in-Original at page 30. She further submits that they gave two different figures one to Development Commissioner and another to the Customs which has been clearly brought out in page 46 of Order-in-Appeal. Regarding the classification of the goods, she submits that the issue started with the Tribunal s Larger Bench decision in the case of Parasrampuria Synthetics Ltd. vs. Commissioner (supra) which has been reversed by the Hon ble Supreme Court as reported in Commi .....

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e Supreme Court in the case of Gujarat Electronics and the decision has attained finality. 7. We have carefully considered the submissions of both sides and perused the records. The issue to be decided in the present appeals relate to demand of customs duty of ₹ 24,48,632/- on the goods cleared from MEPZ/SEZ to DTA sales classifiable under chapter 4901 or chapter 4911 of Customs Tariff Act and whether chargeable to appropriate customs duty or otherwise. We find from the proceedings that th .....

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hallenged the third denovo Order-in-Original dated 20.9.2007 before the Commissioner (Appeals) and the Commissioner (Appeals) rejected their appeal and upheld the adjudication order which is under challenge before the Tribunal by the appellant. 8. On perusal of the impugned order, we find that the appellant-unit is registered with MEPZ/SEZ. The appellant has set up the unit in MEPZ/SEZ for rendering service in relation to clinical data research meant for multinational corporate. We find that the .....

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ompetent authorities. The customs authorities initiated proceedings and issued show-cause notice dated 29.5.2006 demanding customs duty on the DTA sale and also proposing penalty under Section 114A of the Customs Act, 1962. The adjudicating authority in the impugned order classified the goods cleared to DTA under Chapter Heading 49119990 of Customs Tariff Act corresponding to Chapter Heading 49119990 of CETA and confirmed the demand of customs duty. We find from the impugned order that the basic .....

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davits could be given from consignee s end to prove that the cleared goods were books. This order is a denovo order arising out of the directions given by the Commissioner (Appeals) Order-in-Appeal C. Cus. 120/2007 dated 26.2.2007 wherein certain direction have been given to adjudicate afresh after re-examining the issue in the light of Apex Court s order in 2005 (186) ELT 532 (SC). As discussed in para 12 of this order the application of the Apex Court s order is applicable only if it is shown .....

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d on the decision of the Hon ble Supreme court in the case of Commissioner Vs. Parasrampuria Synthetics Ltd. (supra). The impugned order also referred to the Hon ble Supreme Court s decision in the case of Commissioner Vs. Gujarat Perstorp Electronics Ltd. (supra) and held that the above cases are not applicable. Revenue has demanded customs duty by classifying the products under 49119990 whereas the appellant s classified under 4901. In this regard, the Hon ble Supreme Court in the case of Comm .....

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ts, whether or not folded -Other 4901.91 - Dictionaries and encyclopedias, and serial instalments thereof 4901.99 - Other This heading covers virtually all publications and printed reading matter, illustrated or not with the exception of publicity matter and products more specifically covered by other headings of the Chapter (particularly) Heading 49.02, 49.03 or 49.95. It includes : (A) Books and booklets consisting essentially of textual matter of any kind and printed in any language or charac .....

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soft or stiff covers) in one or more volumes, or may be in the form of printed sheets comprising the whole or a part of the complete work and designed for binding. Dust covers, clasps, book-marks and other minor accessories supplied with the books are regarded as forming part of the book. (B) Brochures, pamphlets and leaflets, whether consisting of several sheets of reading matter fastened together (e.g., stapled), or of unfastened sheets, or even of single sheets. These include publications su .....

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(other than children s picture books of Heading 49.03). (3) A collection of printed reproductions of works of art, drawings, etc. with a relative text (for example, a biography of the artist), put up with numbered pages and forming a whole suitable for binding. (4) A pictorial supplement accompanying and subsidiary to a bound volume containing the relative text. 27. A question similar to one with which we are concerned came up for consideration before the authorities in Parasrampuria Synthetics .....

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on the point which could appropriately be resolved by a Larger Bench and accordingly by an order dated March 14, 2000, the matter was ordered to be placed before the President for constituting a Larger Bench. As already observed earlier, the Larger Bench in 2000 (119) E.L.T. 211 decided the question in favour of assessee and against the Department. Resultantly, the appeals were allowed by holding that printed materials imported by the Company could be said to be Books falling within Tariff Head .....

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serves to be quashed and set aside by allowing the appeals of the Department. It was submitted that two appeals have been filed by the Department for enhancement of penalty imposed by the Commissioner of Customs since the penalty was inadequate and required to be enhanced. In view of the fact, however, that CEGAT allowed the appeals of the assessee and quashed the Order in Original passed by the Commissioner of Customs, the appeals filed by the Department were dismissed. In the light of the deci .....

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inally concluded in favour of assessee and against the Department in Parasrampuria Synthetics Ltd. The Larger Bench observed that in several cases, Drawings, Designs and Plans were held to be covered under Chapter 49 and would fall under Heading 49.01 (Printed books, brochures, leaflets and similar printed matter whether or not in single sheets); 49.06 (Plans and drawing etc. for architecture, engineering, industrial, commercial, topographical or similar purposes, being originals drawn by hand; .....

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ves or sheets of paper or of other substance, blank, written or printed, of any size, shape and value, held together along one of the edges so as to form a material whole and protected on the front and back with a cover of more or less durable material. The Court also referred to dictionary meaning. It was observed that one must refer not only to the physical, but also functional characteristic of book . It must be functionally useful for the purpose of assessee s business or profession. To put .....

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dge so as to form a material whole and protected on the front and back with covers of some kind and functionally useful to the assessee for carrying on his business or profession. 35. The Court also referred to English decisions on the point. A reference may be made in this connection to a decision of Court of Chancery in Pretyman v. Pretyman, (1931) 1 Ch 521. The testator in that case had by his will inter alia bequeathed all the pictures, prints, statues, sculptures, articles of vertu books, f .....

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g the question in affirmative, Maugham, J. stated; To my mind it is plain that a book is not necessarily a printed book But in addition, according to the ordinary meaning of the English word book . There are many books which are not necessarily the sort of books which one finds in a library at all, and which yet are books. I might mention as an example the book which I have before me, a judge s notebook. I do not know how that could be described otherwise than as a book. Referring to earlier dec .....

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tters bound up in the books. I observe further that they are not detachable letters in the ordinary sense, but have been so inserted in the sheets that they are in substance permanent parts of the volumes, unless, indeed, they should be cut out or removed by some forcible effect. xxxxxxx xxxxxxxxxx xxxxxxxxxx 42. It is, no doubt, true that in Parasrampuria Synthetics Ltd., a two Judge Bench of this Court reversed the decision of CEGAT and held that Drawings, Designs and Plans imported by the ass .....

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ght in submitting that when the expression book is not defined in the Act, natural and ordinary meaning of the said expression must be kept in view. According to him, nowhere it is provided that all the nine characteristics or ingredients as highlighted by the learned Attorney General in Parasrampuria Synthetics Ltd. and referred to by this Court in paragraph 10 must be considered essential or sine qua non. He, therefore, submitted that a wrong test was applied by this Court in Parasrampuria Syn .....

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tual aspect is concerned, CEGAT was right in holding that Drawings, Designs and Plans imported by the assessee were covered by Tariff Heading 49.01 and were also entitled to exemption under Notifications No. 107/93-Cus. and 38/94-Cus. Alternatively, it was submitted that if this Court is of the view that CEGAT has not entered into the said question in view of the Larger Bench decision, the matter may be remitted to CEGAT directing it to consider the case afresh by applying correct test and to ta .....

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equirement, it had no utility to others. Hence, it cannot be said to be a book in general sense. It was argued that this Court has considered the factual position in Parasrampuria Synthetics Ltd. and held that the article was not a book. It would not, therefore, be appropriate to hold otherwise in the present case. 53. In our opinion, all these questions have to be considered and decided by the CEGAT in the fact-situation of the case in hand. As already noted by us, some of the tests applied in .....

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xxx xxxxxxxxxx 57. There is still one more aspect which is relevant. It cannot be disputed and is not disputed before us and is also concluded by a decision of a three Judge Bench in Associated Cement Co. Ltd. that the basic heading is 49.01. It deals with Printed books, brochures, leaflets and similar printed matter, whether or not in single sheets . 49.11 covers Other printed matter, including printed pictures and photographs . Thus, specific or basic heading is 49.01 and residual entry is 49. .....

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ny other specific item. If they are covered by a specific item, residuary item has no application. 10. The Hon ble Supreme Court in the above order has taken into consideration the earlier decisions of the Hon ble Supreme Court in the cases of Commissioner Vs. Parasrampuria Synthetics Ltd. (supra), Scientific Engineering House Ltd.. Vs. Commissioner (supra) and Commissioner Vs. Wood Craft Products Ltd. 1995 (77) ELT 23 (SC) and held that the basic Chapter Heading 4901 covers printed books, broch .....

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le Supreme Court s decision in Commissioner Vs. Gujarat Perstorp Electronics Ltd. (supra) as the adjudicating authority initially classified the goods under 4911 based on the Hon ble Supreme Court s decision in the case of Commissioner Vs. Parasrampuria Synthetics Ltd. (supra), for the very reason the Commissioner (Appeals) has remanded to the adjudicating authority to examine the above Hon ble Supreme Court s decision. Both the adjudicating authority and the appellate authority while passing th .....

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Apex Court has clearly dealt and discussed the classification and also discussed HSN Explanatory Notes in detail and held that the goods are classifiable under 4901. In the present case the facts on record that the appellants cleared printed materials and chromatogram which are research papers are specifically covered under 49011010 of the CTA. 12. By respectfully following the Apex Court s decision referred above, the goods cleared classifiable under 4901, the demand of duty on the goods cleare .....

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