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TMI Blog2019 (9) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... The Bill of Entry was assessed as per declaration and applicable customs duty was paid. Subsequently, information was received from SIIB Air Cargo Complex Mumbai, that investigations had been commenced against the appellant for import of similar goods at Mumbai. Accordingly, Provisional Assessment was been ordered under Section 18 of the Customs Act. 2. The investigation undertaken at Mumbai revealed as follows:- The importer had placed the order at UK for purchase of equipments - one set for Mumbai and another set for Delhi. Each set of equipment, taken together constituted 'Head End' for cable TV operations. The 'Head End' was an equipment at a local TV office that originates the cable TV services and cable TV modem services to subscriber though Conditional Access System (CAS). All imported equipments taken together contributes towards a clearly refined function i.e. 'Head End' for cable TV operations. The complete set of equipment together merits classification under Customs Tariff Heading (CTH) 8543 8999, in the light of Note 4 to Section XVI. Thus, it appeared that individual classification indicated for 19 imported items amounts to mis-declaration. The search operation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported Goods) Rules, 1988 and the provisional assessment made under Section 18 of Customs Act, 1962 should not be finalised accordingly. 4. According to the record, the appellant was given several opportunities but no written submissions, in response to the Show Cause Notice, were filed. The facts on record also disclose that the opportunity of personal hearing was also extended and the matter was adjourned from time to time but the appellant did not avail the opportunity of personal hearing Paras 16 and 17 of the Order dated 29.12.2015. After considering the facts on record, the Principal Commissioner of Customs (Import) by his order dated 29.12.2015 rejected the declaration by the appellant vide Bill of Entry No. 260085 dated 26.06.2003. It was observed that the appellant had intentionally not declared the true and correct value and correct classification of imported goods. The conclusion was drawn as under:- "26. ... ...I find that in the instant case, the Noticee(s) made a declaration at the time of filing of Bill of Entry that goods imported by them vide Bill of Entry No. 260085 dated 26.06.2003 were different parts classifiable under different CTHs whereas the goods unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 125 of the Customs Act, 1962 in lieu of confiscation thereof." The Order dated 29.12.2015 proceeded to impose penalty as under:- "(e) I impose a penalty of Rs. 15,00,000/- (Rupees Fifteen Lakhs only) on M/s. Indusind Media & Communication Ltd., Mumbai under Section 112(a) of the Customs Act, 1962. (f) I impose penalty of Rs. 15,00,000/- (Rupees Fifteen Lakhs only) on M/s. Indusind Media & Communication Ltd., Mumbai under Section 114AA of the Customs Act, 1962. (g) I impose a penalty of Rs. 3,00,000/- (Rupees Three Lakhs only) on Brigadier R. Deshpande (Retd.), Vice President, Technical of M/s. Indusind Media & Communication Ltd., Mumbai under Section 112(a) of the Customs Act, 1962. (h) I impose a penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) on Brigadier R. Deshpande (Retd.), Vice President, Technical of M/s. Indusind Media & Communication Ltd., Mumbai under Section 114AA of the Customs Act, 1962. (i) The redemption fine and penalties may be recovered by enforcing the Bank Guarantee executed at the time of provisional release of goods." 5. The appellant, being aggrieved, filed Customs Appeal Nos. 51769- 51770 of 2016 before the Tribunal. It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elying on Sub-Rule (iii) of Rule 10 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (for short, 'the 2007 Rules') it was observed that since the software was already incorporated in the imported goods, the value of the same was required to be added to the transaction value. It was concluded:- "19. In view of the mis-declaration established in respect of valuation, the imported goods will be liable for confiscation under section 111 of the Customs Act and the appellant will also be liable for penalty." In the premises, by Order under appeal, the matter was remanded to the adjudicating authority only for the purpose of re-computing the differential duty in the light of its conclusion that the classification of imported goods was to be under heading 8525 and not under heading 8543. 8. In this appeal, it has principally been submitted:- "A. The Imported Goods have been correctly classified by the Appellant. a. The following major components were imported by the Appellant from Tandberg: 1. Multiplexers 2. Satellite receivers 3. Test and measurement b. The following are the major components imported from other supplier by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the year 2003 and 2007 Rules would not apply. b) Certain activities like engaging the services for appropriate software etc. as a result of which cards were embedded in items of import, were essentially post import activities and could not be taken into account for the purposes of valuation. 10. Mr. Aman Lekhi, learned Additional Solicitor General appearing for the respondent refuted all the contentions of the appellant and submitted that:- a) Though the invoices in the case did mention individual items, the dominant intent had to be seen whether the intended user was of individual items or they were supposed to be used collectively as part of one apparatus, in which event Note 4 to Section XVI would provide guidance. b) Rule 9 of the Customs Valuation (Determination of Price of Imported Goods) Rule, 1988 ("the 1988 Rules", for short) being almost identical to Rule 10 of 2007 Rules, the reliance was not misplaced. c) In any case, Rule 10 of 2007 Rules which seeks to explain certain matters is clarificatory in nature and the meaning would be consistent with Rule 9 of 1988 Rules. d) The submission that there were post import charges which were getting included in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustoms Valuation (Determination of Price of Imported Goods) Rules, 1988". Rule 3 provides for determination of the method of valuation, stating: "3. Determination of the method of valuation.- For the purpose of these Rules,- (i) the value of imported goods shall be the transaction value; (ii) if the value cannot be determined under the provisions of clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these Rules." 26. How the transaction value would be determined has been laid down in Rule 4 of the Rules, stating that the same shall be the price actually paid or payable for the goods when sold for export to India adjusted in accordance with the provisions of Rule 9 of the said Rules. Rule 9 of the Rules provides for determination of transaction value, stating: "9. Cost and services.-(1) In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods,- (a) the following cost and services, to the extent they are incurred by the buyer but are not included in the price actually paid or payable for the imported goods, namely- (i) commissions and brokerage, except b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f licence or technical know-how for the purpose of setting up of a plant from the machinery imported or running thereof, the same would not be computed for the said purpose. Any amount paid for post-importation service or activity, would not, therefore, come within the purview of determination of assessable value of the imported goods so as to enable the authorities to levy customs duty or otherwise. The Rules have been framed for the purpose of carrying out the provisions of the Act. The wordings of Sections 14 and 14(1-A) are clear and explicit. The Rules and the Act, therefore, must be construed, having regard to the basic principles of interpretation in mind." 28. Reliance, as noticed hereinbefore, however, has been placed by the learned Additional Solicitor General on Essar Gujarat Ltd." Thereafter, the decision of this Court in Essar Gujarat Limited (1997) 9 SCC 738 was considered and it was observed: "36. Therefore, law laid down in Essar Gujarat Ltd. and J.K. Corpn. Ltd. is absolutely clear and explicit. Apart from the fact that Essar Gujarat Ltd. was determined on the peculiar facts obtaining therein and furthermore having regard to the fact that the entire plant o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is willing to develop especially for the licensee, and which shall be furnished through such documents and assistance as designated at the discretion of the licensor from among those stipulated in Appendix D attached hereto and any other documents and assistance from time to time designated by the licensor. (b) In the event of the preceding para (a), the licensee shall pay the licensor all fees, and all costs and expenses incurred by the licensor in developing and furnishing such know-how, information, documents and/or assistance. (c) If the assistance rendered under para (a) hereof is technical assistance or engineering assistance concerning the licensed products, such assistance will be provided in accordance with the procedures and conditions set forth in Appendix E attached hereto." The subsequent decisions of this Court in Commissioner of Customs, Ahmedabad vs. Essar Steel Ltd. 2015 (319) ELT 202 = (2015) 8 SCC 175, and in Commissioner of Customs (Import), Mumbai vs. Hindalco Industries Ltd. (2015) 320 ELT 42 (SC) = (2015) 14 SCC 750 have followed the same principle that technical agreements involved in said cases pertained to post-importation activity. To similar ef ..... X X X X Extracts X X X X X X X X Extracts X X X X
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