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2019 (11) TMI 129

..... d “Headend” for Cable TV operations - classification of the item - whether classifiable under heading 85438999 or not - inclusion of freight and insurance charges in assessable value - HELD THAT:- The issue is squarely covered by the decision of CESTAT Delhi bench in the appellants own case BRIGADIER R DESHPANDE, M/S. INDUSIND MEDIA & COMMUNICATION. LTD. VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI [2017 (11) TMI 1343 - CESTAT NEW DELHI] where it was held that the imported goods are rightly classifiable under 8525. It is evident that exactly identical imports were affected by the appellants from Delhi and Mumbai. Even the quantities, unit value and FOB value as per the six invoices filed in respect of the imports made at Delhi and Mumbai was identical. Hence the issue as decided by the tribunal in case of Delhi imports will squarely cover the imports made at Mumbai. Since we find that the issue is squarely covered by the said decision in case of appellant themselves we follow the said decision and remand the matter back to adjudicating authority for re-computation of differential duty and penalties to be imposed in light of re-computed duty liabilities - appeal allowed .....

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..... (₹ 39,64,911?-), fine (₹ 10,00,000/-) and penalty under Section 112(a) of the Customs Act (to the extent of ₹ 4,54,564) payable by IMCL. Balance amounts may be recovered by enforcing the bank guarantee executed at the time of provisional release of goods. 2.1 Based on specific intelligence that the appellant would be filing the documents for import of multiplexers, satellite receivers, test and measurement equipments, computers, software and rack wherein the value would be mis-declared to evade payment of customs duty by suppressing the value of software and integration charge, a watch was kept by the SIIB section on the B/E being filed in the name of the appellants. 2.2 Appellants filed a Bill of Entry No 643559 on 24.06.03 submitting six different invoices having No 271105509, 271105510, 271105511, 271105512, 271105513 and 271105514 all dated 20.06.2003 for nineteen items covered the Bill of Entry. Classification of the nineteen items was claimed separately and the total declared CIF value was US$ 2,04,339(₹ 96,24,367/- approx) and the declared assessable value was ₹ 1,02,91,463/-. Duty amount of ₹ 33,19,771/- was paid vide challan No. 98657879 .....

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..... and certainly not in the sub heading 85438999; Show Cause notice or the impugned order fail to specify the clearly defined or individual function that the imported equipment fulfils. Heading 85438999 does not refer to clearly defined function but deals with electrical machines having individual functions. Thus the findings recorded in the para 24.2.2 are erroneous. Heading 85438999 is residuary entry and it is against the settled principle that if the article is classifiable under specific entry the same could not have been classified in residuary entry. [Dunlop India Ltd 1983 (13) ELT 1566 (SC)] Heading 85438999 is referring to only electrical machines not specified or included elsewhere in chapter 85. It cannot be applied to the goods classifiable under Chapter 84. In the present case these machines which are electronic and not electrical are specified or included in various headings of chapter 84 and 85. Electronic Machines are different from electrical machines and hence the entire basis of classification is wrong; Though Show Cause notice proposed to classify all the entire consignment of imported goods on the basis of Chapter Note 5(E) read with Section Note 4 to Section XVI, .....

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..... tionately against all the imported items including the software, which has not been done by show cause notice. Thus he held that discount of 33% should be allowed in the total value inclusive of software. Thus when this correction is made in the proposal to the show cause notice, the undervaluation on account of software amounts to US$ 17,513. However after holding so he did not reduced the demand in respect of software from US$ 45,725 to US$ 17,513 but held that the value of software suppressed in the final invoice has been added to the cost of services in the final invoice and since the cost of services is getting added to the assessable value there was no scope for adding the differential price of software separately; The conclusion in the impugned order that the design and product management services and testing and factory acceptance test has to be added to the assessable value as such services were performed abroad is manifestly baseless and without any basis. Supplier had sent an offer on 04.04.2003 giving the list of items together with the price of each item. The total price for two sets comprising of Tandberg equipment as also the brought out equipment and services was US .....

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..... prior to 2007, Customs Valuation Rules, 2007 are not applicable. Merely for the reason that Shri Deshpande was functioning as Vice President Technical looking after the technical matters cannot be reason for concluding that he was liable to penalty. 3.3 Arguing for the revenue learned Authorized Representative while reiterating the findings in order submitted that10 Appellants had simultaneously imported similar consignments at Air Cargo Complex Delhi and Mumbai; The on the basis of investigations undertaken at Mumbai show cause notice was issued on identical grounds at Mumbai and Delhi. The show cause notice issued in Delhi was adjudicated by the Commissioner Air Cargo Complex New Delhi vide his order in original Number 19/2015 dated 29.12.2015. Tribunal has vide its order reported as Brigadier R Deshpande [2018 (363) ELT 572 (T-Del)] confirmed the order of Commissioner on all counts holding the classification of goods under 85438999 and also held that service charges are includible in the assessable value. Since matter in respect of the same imports made by the same party at Delhi has been adjudicated by the CESTAT Delhi Bench vide the above order the issue in the present case a .....

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..... of the system prior to shipment and provide complete commission and installation services at the customers premises. Further, it was noticed that the purchase order placed by the importer was revised to show as CIF instead of FOB. 3. In the light of investigation carried out at Mumbai, Customs authorities at Delhi issued Show Cause Notice which resulted in impugned order as follows : (i) The classification of all imported components were taken together and made under CTH 8543 89 99 of the Customs Tariff Act. (ii) The value of imported goods was redetermined and finally provisional assessment was finalised resulting in demand of differential duty of ₹ 54,19,475/- along with interest and penalty imposed under various sections of Customs Act on the importer as well as Brigadier Deshpande. Aggrieved by the impugned order, present appeals have been filed. ………. 5. The Learned Counsel for the appellant argued as follows : (i) The impugned order has been passed without giving opportunity to the importer to file written reply and without personal hearing. (ii) There is no application for Rule 4 to section XVI in the present case. The terms Head End has been used .....

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..... document by partially suppressing the value of goods with the intention of evading the customs duty. In this regard, the Shri Srinivas Palakodeti, CEO and Brig Deshpande are on record and are liable to penalty. He prayed that impugned order be sustained. 8. After hearing both sides and perusal of record, we find that there are two major issues to be decided. 1. First is the classification of the imported goods -whether 8543 as ordered by the adjudicated authority or 8525 as claimed by the appellant. 2 Second issue is of valuation - whether the value of software already embedded in the equipment as well as service charges are required to be included in the assessable value . 9. First we take the issue of classification. In the relevant bill of entry filed by the appellant, goods covered under six invoices were declared under 19 serial numbers. Individual classification of these equipments were also indicated but during examination of the goods, it was found that only 8 number of goods were found as several cards were already assembled and embedded into the main unit. The investigation by the department revealed that the order placed by the appellant on M/s. Tandbarg, UK supplier is .....

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..... graphy, such goods as portable radio-telephones, usually battery operated, of the walkie-talkie as well as transmitters/receivers of telemetric signals and separately presented cordless handsets for line telephone sets. Each of these three items transmit as well as receive wireless signals. Applying the arguments of the departmental representative, these goods must rightly be classified in Heading 85.27 which covers only reception apparatus for radio-telephony, radiotelegraphy or radio-broadcasting. It would be reasonable to say that an apparatus which is capable of receiving and transmitting such signals could equally have been included in a heading either for the reception or for transmission and the fact that such apparatus have been specified in apparatus for transmission, and not apparatus for reception, is hence not of significance. 9. The explanatory notes included in Heading 85.25 television transmitters for industrial use explaining that with these apparatus, the transmission is often by line. They include in Heading 85.28 television receivers for industrial use explaining also with the apparatus, the transmission is often by line. It is not possible to conclude from this .....

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..... mported goods, to the extent that such value has not been included in the price actually paid or payable, namely :- (i) materials, components, parts and similar items incorporated in the imported goods; (ii) tools, dies, moulds and similar items used in the production of the imported goods; (iii) Materials consumed in the production of the imported goods; (iv) Engineering, development, art work, design work and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; (c) ………… (d) ………… (e) ………… Explanation. - Where the royalty, license fee or any other payment for a process, whether patented or otherwise, is includible referred to in clauses (c) and (e), such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods may be subjected to the said process after importation of such goods. 16. Since the software is already incorporated in the imported goods the value of same is required to be added to the transaction value. Likewise the purchase order also includes the process of instal .....

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..... HP LP 200 1 9608 9608 1 9608 9608 Total 15251 15251 Invoice No/ date 271105519/20.06. 03 271105513/20.06. 03 17 TDC Redundancy Option License/ TT 6000 & Routers License/ TDCS 6 1299.3 7796 6 1299.3 7796 Invoice No/ date 271105520/20.06. 03 271105514/20.06. 03 18 Peripheral & Racks 14 462.6 6477 14 462.6 6477 19 3rd Party Racks 1 2500 2500 1 2500 2500 Total 8977 8977 Grand Total 204339 204339 From the table as above it is evident that exactly identical imports were affected by the appellants from Delhi and Mumbai. Even the quantities, unit value and FOB value as per the six invoices filed in respect of the imports made at Delhi and Mumbai was identical. Hence the issue as decided by the tribunal in case of Delhi imports will squarely cover the imports made at Mumbai. 4.5 Since we find that the issue is squarely covered by the said decision in case of appellant themselves we follow the said decision and remand the matter back to adjudicating authority for re-computation of differential duty and penalties to be imposed in light of re-computed duty liabilities. 5.1 In light of the discussions as above, the impugned order is modified and appeals allowed by way of remand for re- .....

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