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TMI Blog2019 (11) TMI 129X X X X Extracts X X X X X X X X Extracts X X X X ..... le value is determined at Rs. 1,43,39,925/- for the purpose of section 14 of the Customs Act, 1962. (b) The classification of all the components imported under the BE No 643559 dated 24.06.03 taken together is determined under Customs Tariff Item 85438999. (c) The provisional assessment made in respect of BE No 643559 dated 24.06.03 is finalized under Section 18 of the Customs Act, on the basis of revised assessable value and classification as ordered above. Consequently demand for differential duty amounting to Rs. 39,64,911/- is confirmed. (d) The goods imported under BE No 643559 dated 24.06.03, which were seized and released on the basis of Provisional release bond is confiscated under section 111(m) of the Customs Act, 1962. Since the goods are already released to the party they are ordered to pay an amount of Rs. 10,00,000/- redemption fine in terms of the bond executed by them. (e) I impose a penalty of Rs. 9,91,228/- on M/s IMCL, under section 112(a) of the Customs Act. (f) I impose a penalty of Rs. 9,91,228/- on M/s IMCL, under section 114AA of the Customs Act. (g) I impose a penalty of Rs. 2,00,000/- on Shri R Deshpande, Vice President Technical, under section 112(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of freight and insurance charges and US$ 45275 on account of differential price for software. After adding the above to the declared CIF value and 1% towards landing and handling charges the assessable value appeared to be around US$ 365249 equivalent to Rs. 1,72,03,243/-leviable to duty under CTH 85438999 at rate BCD 25% + CVD 16% + SAD 4%, and thus total duty payable was assessed at Rs. 87,39,248/- and differential duty to be paid was worked out to be Rs. 54,19,477/- 2.5 The goods were on request of Appellants assessed provisionally on execution of P D Bond for Rs. 1,72,03,242/- supported by Bank Guarantee of Rs. 86,01,625/-. The goods were released provisionally on filing post bill of entry manually on payment of differential duty of Rs. 54,19,475/-. 2.6 After completion of investigations a Show Cause Notice dated 09.11.2009 was issued to the appellants by Commissioner Customs (Import) Air Cargo Complex. 2.7 The show cause notice has been adjudicated by the Commissioner as per the impugned order. Aggrieved by the order appellants have filed this appeal. 3.1 We have heard Shri D B Shroff, Advocate for the Appellant and Shri A P Kothari, Additional Commissioner, Authorized ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d cable modem services through CAS. * The goods imported in the consignment cannot alone fulfil the objective as specified by CAS, i.e. of giving customers all possible viewing opportunities, and they had imported certain items from elsewhere; * There suppliers namely Tandberg are leading manufacturers of Headend equipments and this term is loosely used like office equipment. Items imported are headend equipments. * Even if the imported consignment gets the essential character of headend by application of Section Note 4 and Rule 2(a) of Rules of interpretation, still it cannot be classified under Heading 85438999. * The impugned order has proposed to make additions to the declared value as follows: * Imported software US$ 45,275; on the basis of LOI dated 26.04.2003 and unsigned purchase order dated 29.04.2003 ignoring the subsequent revised offer dated 25.04.2003 as per which the value of software was shown as US$ 7,796. * Services US$ 199,019, ignoring the fact that the cost of such services was not to be added. * Freight and insurance US$ 12,000, ignoring the fact that the amended purchase order included this amount of freight and insurance. * Certain discounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ergs officials stayed in India for 15 days and carried out the detailed design and layout of the appellants Headend premises and carried out product management services whilst setting up the equipment in the head end. The testing and factory acceptance test had to be carried out in India. It is only when all the equipments are put together then only the same can be tested. Thus the findings that the charges towards these two services need to beaded to the assessable value is contrary to show cause and is without any substance or evidence. The finding in impugned order para 25.2.1 is manifestly incorrect. A perusal of Revised offer and also the signed purchase order shows that there has been reduction in quantities as also increase in the prices of some items and not just the service charges. * Both show cause notice and impugned order record that original purchase order was amended to add freight and insurance charges. Despite recording so impugned order has added the freight and insurance to the assessable value, when they had actually added the same and paid the customs duty. * Findings in the para 26.2.5 are beyond the scope of show cause notice. * There has been no m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 Bombay. Accordingly, Provisional Assessment was been ordered under section 18 of the Customs Act. 2. The investigation undertaken at the Mumbai revealed as follows : m) 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 89 99, in the light of section 4 to section XVI. Thus, it appeared that individual classification indicated for 19 imported items amounts to misdeclaration. The search operation carried ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22) E.L.T. 421 (S.C.)], SET India Pvt. Ltd. [2003 (152) E.L.T. 190 (Tri-Mum)], and Essar Steel Ltd. [2004 (178) E.L.T. 713 (Tri-Bang.)]. 7. The Learned DR justified the impugned order. In his written note dated 11-9-2017, DR emphasised the following : 1. The goods imported were classified under different headings but were found to be complete equipment (i.e. Head End) classified under 8543 89 99. Out of 19 items indicated in the Bill of Entry, physically only 8 items were presented since several cards were already assembled in the main unit. 2. The investigation lead to the recovery of several incriminating documents, which revealed that the importer had not given proper description in the bill of entry, but the goods imported were complete 'Head End' and not parts. 3. 'Service charges' covered by Invoice No. 27110, dated 17-6-2003 amounting to USD 1,00,019 was includible in the assessable value since it pertains to the service charges. Further Brigadier Deshpande, Vice President in his letter dated 26-6-2003 has submitted that the software covered by invoice dated 26-6-2003 was already embedded in the equipment. However, the importer failed to declare the value of the software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... classified in the heading appropriate to that function." 11. From the relevant purchase order, we note that different equipments have been ordered which are meant to be interconnected in such a way as to perform a common clearly defined function. This is the function of 'Head End'. Department has taken a view that this function is to be classified under 8543. But this heading is a residual heading only for machines not included elsewhere. The function performed by 'Head End' is that of transmission of TV channels over cable TV. Such a function will be clearly covered by the Heading 8525 which is reproduced below : "Transmission apparatus for radio telephony, radiotelegraphy, radio-broadcasting or television, whether or not incorporating reception apparatus or sound recording or reproducing apparatus; television, cameras; still image video cameras and other video camera recorders; digital cameras." 12. We find similar equipments were held to be classified under 8525 in the case of SET India Pvt. Ltd. v. CC (supra) wherein the Tribunal has observed that "8. These goods therefore should equally be described as transmission incorporating reception apparatus. It is significant to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we are of the view that the imported goods are rightly classifiable under 8525. The differential duty payable is required to be requantified and for this purpose the case is required to be remanded. 14. Next we consider the question of valuation. During the course of investigation, the department has recovered the purchase order which was placed by the appellant on the supplier. From this, it is evident that the supply included, apart from supply of equipment, also the necessary software which is to be embedded in the equipment before supply of the same. The PO further includes setting up of equipments in India after receipt thereof in this country. The adjudicating authority has included both the above values for purposes of charging customs duty. 15. The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 provide the methodology for determination of assessable value in cases where transaction value does not reflect the true value of import transaction. Rule 10 provides for addition of certain cost and services under certain conditions. What is relevant in the present case is Rule 10 which is as under : (1) In determining the transaction value, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... various sections in the light of the differential duty which will arise as above, after hearing the appellants." 4.4 The details of items imported at Mumbai and Delhi are detailed in the table below: Unit and Total FOB Value in US$ Place of Import Delhi Mumbai Bill of Entry No/ Date 260085/ 26.06.03 643559 / 24.06.03 S N o Description Qty Unit Total Qty Unit Total Invoice No/ date 271105515/20.06. 03 271105509/20.06. 03 1 Multiplexer MUX 2C MX 5640 3 11742 35226 3 11742 35226 2 Multiplexer MUX MX 5640 ASI IN PUT Card 15 3203 48045 15 3203 48045 3 MUX MX 5640 DVBCA Card 3 5338 16014 3 5338 16014 Total 99285 99582 Invoice No/ date 271105516/20.06. 03 271105510/20.06. 03 4 TT1220 IRD CLQPSK /PASIG/P2 28 1000 28000 28 1000 28000 5 AUDTT5010/ BAS 2 5156 10312 2 5156 10312 6 1RDETO Descrambler 2 755 1510 2 755 1510 7 QPSK Fullband ..... X X X X Extracts X X X X X X X X Extracts X X X X
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