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M/s SI2 Micro Systems Ltd. Etc. Versus Commissioner of Central Excise & Customs, Bangalore

2016 (6) TMI 567 - SUPREME COURT

Import of machines for chip placing - Under-valuation of machines - Demand of duty and confiscation of machines - appellant had made payment of US $ 1,03,000 towards the cost of these machines to M/s 'SMART' in December, 2004 when started earning profita - Held that:- it is clear from the observations of the CESTAT that the point was not urged before the Commissioner is palpably wrong. We may record that though no evidence is produced in these proceedings that payment of US$ 1 lakh 30 towards th .....

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11-4-2016 - A. K. Sikri And Rohinton Fali Nariman , JJ. For the Appellant : Mr. S. Ganesh, Sr.Adv. Ms. Vanita Bhargava, Adv. Mr. Ajay Bhargava, Adv. Mr. Jeevan B. Panda, Adv. Mr. Abhisaar Bairagi, Adv.for M/s. Khaitan & Co For the Respondent : Ms. Sunita Rani Singh, Adv. Mr. Rupesh Kumar, Adv. Mr. B. Krishna Prasad, Adv ORDER The appellant Company herein had imported two machines used for chip placing in the manufacture of memory modules viz. 'Amistar Chip Placer Machine' from M/s S .....

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valued the machines at $ 1,21,875. Detailed investigations were carried out. It was revealed that the appellants are manufacturing Memory Modules with the brand name SMART and Hynix . The technical know how and necessary equipment and training to the appellant was provided by M/s SMART. The capital goods required were also supplied to them free of cost. M/s SMART continued to remain the owners of the capital goods and the appellant is not allowed to sell or lease the same. During investigations .....

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he Department the value of the aforesaid machines were also declared less. On the basis of this investigation the department issued show cause notice as to why the demand of ₹ 22,278,742/- in respect of bill of entry dated 19.07.04 be not made and a proposal was also made for confiscation of these machines. So far as the earlier imports are concerned in the show cause notice re-assessment was proposed demanding the differential duty of ₹ 62,65,657/-. The action for penalty was also p .....

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r of confiscation was also passed and penalty was imposed as well. The appellants challenged this order by filing an appeal before the CESTAT. The CESTAT had affirmed the order and dismissed the appeal vide impugned judgment dated 15.4.2008. It is this judgment the veracity thereof is questioned by the appellant in the instant appeal. Various arguments are raised by the learned senior counsel appearing for the appellant but it is not necessary to deal with all those arguments inasmuch as after h .....

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fore, the Commissioner should have taken recourse to Rule 4 of the Transaction Valuation Rules. In support of this submission, the learned counsel has argued that there was no sale consideration given by the appellants to M/S 'SMART' at the time of import of these machines, there was a fair understanding between the parties that as soon as the appellant starts making profit it will pay the price of the said machines. According to the appellant in the year 2004, the appellant Company star .....

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anted to have an option of returning the machines if the business did not pick up. Further the noticee company was a loss making company and did not have the funds to pay for the machines immediately. The capital goods are not the properties of M/s Smart. However, until the noticee pays for the machines M/s Smart wanted to have the flexibility of asking the noticee to return the same if eventually the noticee was unable to pay for the same. However, the documentary proof of payment made in Decem .....

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