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2017 (4) TMI 1002 - CESTAT MUMBAI

2017 (4) TMI 1002 - CESTAT MUMBAI - TMI - Classification of import of external/ portable hard disk drives - concessional rate of duty (CVD) - Exemption Notification Nos. 6/2011 CE and 12/2012-CE - classifiable under declared CTH 8471 70 20 as Hard disk drives or under CTH 8471 7030 as Removable or Exchangeable Disc Drives - Extended period of limitation - Held that:- Revenue has only taken a stand of convenience to anyhow deny the benefit of exemption which is clearly available to the appellant .....

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cessional rate of duty as claimed by the Importer Appellants. - C/85893/15, C/85896/15, C/85898/15, C/85316/16, C/85317/16, C/85318/16 - Dated:- 4-4-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. C.J. Mathew, Member (Technical) Shri Atul Nanda, Sr. Advocate, Shri Ashish Batra, Advocate for appellant Shri V.K. Singh, Spl. Counsel for respondent ORDER Per M. V. Ravindran These appeals are directed against orders-in-original No. CC-RS/08/2014-15 ACC (Adj) (I) dated 28.11.2014, CC-RS/10/2014-1 .....

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t under Exemption Notification Nos. 6/2011 CE dated 01.03.2011 (Sr. No. 17) and 12/2012-CE dated 17th March 2012 (Sr. No. 255), which specified tariff heading as 847170 at six digits level only and described the eligible goods only as hard disk drives? and (c) Thus, whether the demand of duty with interest by invoking extended period, and penal action taken by the Respondent Commissioner of Customs is sustainable in the eyes of law? 3. Both sides were heard at length. We have carefully considere .....

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or is contrary to the undisputed Invoices submitted with the Bills of Entry. 4.3 Vide letters dated 5th December, 2012 (at Page 485 of the Appeal of M/s Fortune Marketing Private Limited) and 8th February, 2013 (at Page 486-487), Seagate Singapore International Headquarters Pte Ltd, Singapore, has clarified that Internal as well as External Hard Disc Drives, are Hard Disk Drives used as storage devices with the help of different interfaces. Even according to them, Seagates external portable hard .....

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t these subject imported drives are machines for reading and transcribing data on to the data media which is hard disk hermetically sealed and inseparable from the drive. Thus, so far as the data media in the subject imported drive is concerned, it can neither be removed from the drive, nor is the same exchangeable. 4.5 It was submitted that other drives mentioned in the CTH 8471.70 such as Floppy disc drives (CTH 8471 70 10), CD Rom Drives (CTH 8471 70 60) and DVD drive (CTH 8471 70 70) can als .....

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te, but what is contended by Revenue is that since the external hard disk drive is admittedly a plug-in device, it is more appropriately classifiable as Removable or Exchangeable Disc Drivesunder CTH 8471 7030, and exemption shall not be available. 4.7 It is also that a sample of such imported external hard disk drive was also shown during the hearing in support of the above undisputed factual position. We have seen that the data media in the subject imported drive is such, which can neither be .....

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vesunder CTH 8471 7030, as correctly pointed out on behalf of the Appellants. 4.9 The subject imported drive as such can be easily disconnected from the CPU. Thus, only the subject drive as whole is removable and exchangeable. Goods described in CTH 8471 70 30 are not removable or exchangeable drives, but Removable or Exchangeable Disc Drives. 4.10 Vide an Office Memorandum dated 5th June 2013, bearing No. 5(6)/2012-IPHW, Department of Electronics and Information Technology, Government of India .....

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******* Electronics Niketan, 6 CGO Complex, Lodi Road, New Delhi. Dated : 5th June, 2013 OFFICE MEMORANDUM Subject: Request for clarification on classification of Eternal or Portable Hard Disk Drives and its eligibility to the exemption from CVD under Notification No.12/2012-Central Excise Dated 17.03.2012 (Sr. No.255-c) Please find enclosed a copy of letter No. MAIT/86 dated December 10, 2012 received from the ManufacturersAssociation for Information Technology (MAIT) on the above subject. Many .....

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CSIR-CEERI, Pilani (ii) Ms. Sunita Verma, Director, DeitY (iii) Dr. S. Chatterji, Additional Director, DeitY (iv) Ms. Asha Nangia, Additional Director, DeitY The comments / technical opinion of the Committee are as under: (i) The Notification No.12/2012 Central Excise dated 17th March, 2012 provides for duty exemption to goods covered under the heading 8471 70 covering hard disk drives along with other items. (ii) The CTH in the notification is at 6 digit level which would mean both the hard dis .....

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. Now, in the present notification separate categorization is not there and the custom duty benefit at 6% is available to all goods covered under 8471 70 or 847330 or 8523. (iv) The External Hard Disc Drives are portable Hard Disc Drives and are not exchangeable Disc drives. Thus, the external hard disk drives shall also be covered under 84717020, if at all, the classification has to be extended to 8 digit HS codes. 3. This has the approval of Dr Ajay Kumar, Joint Secretary, DeitY. O/c Sd/- (S.K .....

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. 4.12 Vide letter dated 12.11.2012, the Centre for Development of Advance Computing (CDAC), a Society of the Ministry of Communications and Information Technology, Government of India, has also clarified that both types of hard disc drives, i.e. internal and external, are magnetic media which stores data on its surface and that the only difference between the two is of interface (SATA, SCSI, USB, SAS, etc.). Neither the authenticity of the said opinion of CDAC is disputed at any point of time b .....

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t one such Order-in-Appeal passed by Commissioner (Appeals), while holding that exemption under the same Exemption Notification 12/2012-CX dated 17.2.2012 (Sr. No. 255) was rightly sought on external hard disk drives. The Principal Bench observed as under- 4. We have heard both sides and perused the appeal records. We have also examined the samples of impugned goods as well as sample of removable or exchangeable disk drive during the course of hearing. We note that the classification of external .....

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ding to six digit only, 847170, which covers specifies tariff heading up both, hard disk drive and removable or exchangeable disk drives. Further, the next column of the table for description explain the goods only as hard disk drive among many other items. On careful consideration of the technical specification furnished, and the sample of imported items along with tariff entries and the exemption notification, we are in agreement with the findings in the impugned order. The terms hard disk dri .....

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used sample of such removal or exchangeable disk drives. They have full drive mechanism in which storage media is inserted and along with such media can be removed and inserted in computer for usage' We have also perused the technical literature of the manufacturer of the impugned goods.Further, the technical opinion given by the Ministry of Communication and Information Technology, is directly on the issue. We find that in the appeal, the Revenue contested the factual findings in the impugn .....

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Order dated 04.10.2016, some of these Customs Appeals namely Appeal Nos. C/85893, 85896 and 85898/2015-MUM filed by M/s Fortune Marketing Private Ltd and its directors were earlier decided by the Tribunal against the said Appellants. However, vide an Order dated 13.12.2016, the ROM Application Nos. C/ROM/93453 to 93455/16 filed by the said Appellants were allowed and the earlier Order dated 04.10.2016 was thus recalled for such mistakes by the Tribunal which were apparent from record. While rec .....

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lassification of the products in question. The said Appellant Importer preferred Civil Appeal before the Hon ble Supreme Court with the following prayers- Prayer 5. In view of the abovementioned facts and circumstances, it is respectfully, prayed that this Hon ble Court may be pleased:- (i) to quash and set aside the impugned miscellaneous order No. 94488/16/CB dated 13.12.2016 passed by the Hon ble Tribunal to the extent it has re-listed the Appellants appeal for denovo consideration, instead o .....

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.2016 by which the earlier Order dated 04.10.2016 in these appeals was recalled and the appeals were directed to be relisted for de-novo consideration. Thus, both sides were again heard by us in the aforesaid appeals, along with other appeals. 7. The impugned Orders hold firstly that CTH 8471 7020 would only cover internal hard disk drive but not external hard disk drive, and secondly that the product is more appropriately classifiable as an exchangeable or removable disc drive under CTH 8471 70 .....

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ons, technical literature of the manufacturers of the imported goods, the CTH headings, the Exemption Notifications and the above undisputed factual position, we are unable to agree with the findings in the impugned Order both on the classification as well as on eligibility for exemption. 8. Customs Tariff Heading 8471 covers broadly the following products- 8471 Automatic data processing machines and units thereof; Magnetic or optical readers, machines for transcribing data on to data media in c .....

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esas follows- CTH Description of goods 8471 70 10 Floppy Disc Drives 8471 70 20 Hard Disc Drives 8471 70 30 Removable or Exchangeable Disc Drives 8471 70 40 Magnetic Tape Drives 8471 70 50 Cartridge Tape Drive 8471 70 60 CD- ROM Drive 8471 70 70 Digital Video Disc Drive 8471 70 90 Others The above sub-classification of drivesshowsthat inthe various entries, the words preceding the worddrives,describe the type of data media suitable / used /to be used in that drive. The different types of drives .....

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drives, i.e. a drive for data media Cartridge tape;CTH 8471 70 60 covers CD- ROM drivei.e. a drive for data media CD-ROM;CTH 8471 70 70 covers Digital video disc drive i.e. a drive for data media DVD; and the CTH 8471 70 90 being a residuary heading would cover all other types of drives with data media not specified above. Vide Circular No. 105/2003-Cus dated 16.12.2003 the Board has clarified that item Storage Disk Arraysis appropriately classifiable under CTH 84717090. 11. This sub-classificat .....

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list of drives, is admitted position in the written submissions tendered by the Revenue in para 2, wherein it is inter alia contended that- All items covered under tariff sub-heading 847170 are storage units in the form of drives and not media. However, in further stand taken by Revenue, there is apparent fallacy in sub-division of classification at 8 digit levels, and it is erroneously contended by Revenue that- There is clear distinction between Hard disc drives (84717020) and Removable or Exc .....

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disk driveis different from external drives / removable drives / exchangeable drives although both are storage devices classifiable under 847170. There is no cogent basis for such unreasonable conclusion, which are also unfounded in the light of undisputed factual position recorded in Para 3 above. In order to classify the imported goods as removable or exchangeable disc drives, it was incumbent upon the Revenue to prove that the data media/disc which goes into the imported drives is a removabl .....

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t rather that of the data media suitable for that drive. The data media ought to be a removable or exchangeable disc in order to classify it as a removable or exchangeable disc drive. This important and most fundamental distinction has been lost sight of by the Department. The sample of removable or exchangeable disc drive was also shown to us, which leaves no scope for any argument for the heading 8471 70 30 being rendered redundant. 14. We have also noticed another very important aspect. Notif .....

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fied under CTH 8471 70 20 in the imports made by the appellants, while paying higher rate of concessional duty at the rate of 4%. Revenue has admittedly not disputed the classification / exemption for the same goods for this period immediately prior to issuance of Exemption Notification 6/2011-CE dated 1.3.2011. 15. As per the ratio laid down by the Hon ble Supreme Court in Union of India vs Garware Nylons Ltd, 1996 (87) ELT 12 (SC), the clarification issued by Seagate, can also be relied upon f .....

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.2013 (reproduced supra) issued in this regard by such Department of Central Government, which is concerned with such imported goods. 17. CTH 8471 70 20 provides the most specific description Hard Disc Drives for the imported External Hard Disc Drives, and hence there is no room for classifying the goods elsewhere. 18. The findings in the impugned Orders on the issue of classification are thus erroneous on facts as well as on law. Thus, first issue as to whether goods imported which are external .....

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d Disk Drive and external Hard Disk Drive for the purpose of concessional rate of duty. However, prior thereto, Notification No.12/2010 CE dated 27.02.2010 and Notification No. 25/2010 CE dated 07.05.2010 prescribed two different rates of exemption from duty i.e. Nil and 4% for Hard Disk Drive depending upon whether they were meant for fitment inside the CPU housing / laptop body or were meant for external use with a computer or laptop as a plug-in device. The sub-division of Hard Disk Drives in .....

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ri-Bang.) in the context of same Exemption Notification 6/2006-CE had observed that- 4. On a careful consideration of the Notification in question, it is clear that from Column 2 that the goods falling under 847170 are entitled for the benefit. There is no bifurcation made to the goods falling under Sub-Headings of 84717020 or 84717090. There is no dispute that the item is Hard disk Drive, therefore, mere fact that the Hard Disk Drive have been imported in array will not disentitle them from cla .....

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rt not only for delay but also on merits. Thereby, the said judgment of this Tribunal merged with the Order passed by the Hon ble Supreme Court. Even in the instant case, the product is a hard disc drive, although external, under heading 847170 at six digits level. There can therefore be no doubt about the eligibility for concessional rate of duty under the subject Exemption Notifications irrespective of its classification at eight digits level. For proving eligibility to any Exemption Notificat .....

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escribed the eligible goods only as hard disk drivesis also decided in their favour. We hold that imported hard disc drive are eligible for concessional rate of duty as claimed by the Importer Appellants. 22. Consequently, the third issue is also decided in favour of the Appellants and the entire demand of duty with interest, and penal action taken by the Respondent Commissioner of Customs is held as illegal, erroneous and not sustainable in the eyes of law. 23. The recent judgment dated 06.01.2 .....

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I concur with the finding of Hon ble Member (Judicial) that the liability to duty determined in the order impugned before us is not sustainable. Normally, appending of signature to the order authored on behalf of the Bench is sufficient to signify such concurrence. Inherent in concurrence is the collegiality of the decision. The judicial decision-making process, unlike that in the other two branches of government, can be described as stylised only in form; the conclusions are determined by indi .....

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e, albeit briefly, on the reasons for doing so by this separate order. 27. Consequent upon the original decision of ours to confirm the order of the adjudicating authority impugned before us, an application was moved by M/s Fortune Marketing Pvt Ltd pointing out errors apparent from the record in having failed to take note of some submissions made on their behalf during the original hearing. The critical ones that were claimed to have been disregarded were the opinion rendered by the Department .....

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tep of recalling our order to hear the matter afresh. 28. These two aspects were highlighted during the fresh hearing and, in addition, the further development in the form of a decision handed down by the Principal Bench of this Tribunal in the interregnum was also brought to our notice. Undoubtedly, the issue for resolution, viz., the inclusion of external hard drives imported by M/s Fortune Marketing Pvt Ltd within the description of hard disk drives in notification no. 6/2011-CE dated 1st Mar .....

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with intent to claim the exemption sans eligibility had been resorted to. On this ground alone, the demand of duty for the period beyond the normal prescribed in section 28 of Customs Act, 1962 would not meet with approval. 29. Hon ble Member (Judicial) has examined the technical inputs provided by experts noted supra and has accorded pre-eminence to that expertise in determining the eligibility of the external hard drive for exemption and to sustain the litmus test of common parlancethat can se .....

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icited expert opinion, formulated in the context set out above, is yet nothing but a viewpoint, though not easily to be disregarded, till its adoption as tax policy by the Department of Revenue. It is tax policy that determines eligibility for exemption. As pointed out by Learned Authorised Representative, that consummation appears to be glaringly absent in the present issue. All too often, consensus on policy formulation follows such protracted correspondence including, but not necessarily refl .....

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Tariff Act, 1975, have to be overwhelmed by the expert opinion. And so too, in appellate proceedings. It must, nevertheless, be conceded that no blemish attaches to being convinced by expert opinion that is not controverted by justifiable counter. Therefore, while holding that the expert opinion is an acceptable criteria, their viewpoint need not necessarily have to prevail over tax policy. 31. Of more consequence to the claim of the importer for exemption is the decision of the Principal Bench .....

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