TMI Blog2008 (10) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... d. - 329/2005-CUS(BR) - C/539/2008(PB) - Dated:- 23-10-2008 - Justice S.N. Jha, President and Shri M. Veeraiyan, Member (T) Shri K. Kant, Advocate, for the Appellant. Ms. A.P. Tiwari, Jt. CDR and Shri Sumit Kumar, DR, for the Respondent. [Order per : M. Veeraiyan, Member (T)].- This is an appeal against the order of the Original Authority No. 1/ Commissioner/05 dated 28-2-2005. 2. Heard both-sides. After the hearing was over, a written submission was filed on behalf of the appellant. 3. The relevant facts, in brief, are as follows:- The appellant imported a consignment as Aircargo, through Delhi and filed Bill of Entry No. 474994 dated 21-4-2003 declaring the description as "Hardware M-380 point of sale terminals with Printer" and declaring the value as 5,50,000/- Euro for thousand pieces and claimed classification under sub heading 8471.3039. The consignment consisted of 114 packages and was despatched from Italy but the invoice for the said consignment was received from Kalo Holdings Corp. L.L.C.(USA) 14, Rutland Court, London. (b) On the basis of an information, a copy of the manufacturers invoice of M/s Technost Systemi (Olivetti Group) No. 502340013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering confiscation of the goods with option to redeem the same on payment of fine of Rs. 25 lakhs; imposing a penalty of Rs.1 crore under Section 112 of the Customs Act. 4. The learned Advocate for the appellant made the following submission:- (a) The Commissioner of Customs (Prev.) has no jurisdiction to adjudicate upon the pending bill of entry and only the Commissioner of Customs (Import and General) is competent as the Bill of Entry has been filed in 'his Custom House'. Further, the adjudicating Authority went beyond its role and involved himself in investigation; he even after conclusion of personal hearing got the evidence collected, issued addendum to fortify the case. Such a conduct throws doubt about the impartiality of the adjudicating authority. (b) The proposal to enhance the value to 17,90,000 Euro is based on an invoice issued to their supplier M/s Kalo Holdings Corp L.L.C(USA), London by their supplier namely Ecnostsistemi (Olivetti Group). Reliance placed on such invoice of transaction between third parties is not proper. (c) The consignment imported at Delhi was only Hardware; the software was cleared subsequently through Chennai for a total value of 16 l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, a sworn affidavit executed before Notary Public, London by the Vice President of M/s Kalo Holding Corporation duly authenticated by the High Commission official has been ignored. The learned Advocate relies on the following decisions:- BBS Pens ( India ) Pvt. Ltd. v. CC, Bangalore - 2002 (142) E.L.T. 435 (Tri.-Bang.). Telebrands (I) Mfg Assembling Indus. v. CC (Import), Mumbai - 2001 (138) E.L.T. 745 (Tri.-Mum). Jindal Strips Ltd. v. CC, New Delhi - 2001 (133) E.L.T. 570 (Tri.-Delhi). Sunray Computers (P) Ltd. v. CCE, Bangalore - 1999 (112) E.L.T. 540 (Trib). PSI Data Systems Ltd. v. CCE - 1997 (89) E.L.T. 3 (S.C.) Jay Kay Exports Industries v CC (Port), Kol - 2004 (163) E.L.T. 359 (Tri.-Kol.). Award Electronics v. CC, Chennai - 2003 (153) E.L.T. 210 (Tri.-Che.). Sarvalakshmi Paper Board v CC, Madras - 2000 (126) E.L.T. 935 (Trib.). 5. The learned DR made the following submissions: (a) The supply agreement dated 27-1-2003 is relating to supply of "On line lottery terminal" and specifies the configurations. It also specifies the shipment schedules. The proforma invoice dated 27-1-2003 refers to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l capacity. There is no formal representation of the case by the departmental representative in a proceeding before the Commissioner, as it is prevailing in respect of any proceeding in the Tribunal or in a Court. As adjudicating authority, he was required to give opportunity to the investigating officer to produce evidence. His role in disclosing the evidence collected by the investigating agency to the noticees and seeking their defence is an accepted method of dispute resolution in quasi-judicial proceeding. Such evidence has to be disclosed to the noticees who are likely to be affected and take their defence submissions into account before passing appropriate orders. Under these circumstances, we do not agree that the adjudicating authority went beyond his role and involved himself in investigation. 6.3 Another submission has been made that addendum to the show cause notice has been issued after the personal hearing was held. It is seen that the appellant has moved the Tribunal against the order of the Commissioner dated 21-10-03 extending time limit for issue of show cause notice and the Tribunal issued orders fixing deadlines for issue of show cause notice, even though th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. 5. Central System (1) Software of the central system for Database and transaction servers (a) Supplier agrees to develop Data processing software that run on the Database and transaction servers. This software of the central system will be provided to purchaser along with functional documentation. (b) Supplier authorises the purchaser to use such software in order to set up the central system to be connected to the terminals. (c) The software of the central system will be provided by supplier to purchaser under an unlimited software licence for use as described in above point (b) (2) Hardware of the central system (a) Supplier agrees to indicate to purchaser the list of equipment necessary to set up a scaleable central system. 6. Shipment plant for software The software for both the terminals and the servers will be shipped within 60 days after supplier receives the LC. 7. Prices This purchase is for 1000 terminals at the unitary special price of Euro 550,00 and software at Euro 400,00 per terminal for the terminal applications. Euro 600,00 per terminal for the Database server, and Euro 600,00 per terminal for the transaction server." 7.2 In pursuance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai were found to be only one CD weighing about 500 gms. said to contain 3 software programmes and each of the software programme useable up to a maximum of thousand machines. It appears that there were also other contracts and what was imported in Chennai was possibly part of such contracts. 7.5 From the above, it is reasonable to conclude that M380 point of sale terminals have come with specially written software for data processing on M 380 model terminal along with ownership rights. Therefore, the value of 400 Euro per terminal relating to specially written software for data processing on M380 model Terminal (including ownership rights) requires to be included in the assessable value. Thus, the deliberate undervaluation of the goods imported at Delhi is evident from the supply agreement and proforma invoice. The document recovered from the Airlines office and overseas investigations corroborate the same. 7.6 However, Hon'ble Supreme Court in the case of P.S. Data Systems Ltd. v. C.C.E. - 1997 (89) E.L.T. 3 (S.C.) has held as under: "11. Learned Counsel for the respondent, fairly, did not dispute that the value of the software that the appellants might sell with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or optical readers, machines for transcribing data on to data media in coded form and machines for processing such data, not elsewhere specified or included." However, Section Note 5(E) which reads as follows: "Machines performing a specific function other than data processing and incorporating or working in conjunction with an automatic data processing machine are to be classified to the headings appropriate to their re spective functions or, failing that, in residual headings." It could be seen that the point of sale terminals are specialised systems for specialised application. This involves selection of random numbers and said selection should be done maintaining secrecy. It is not as if all data processing machines fall under 84.71. Its scope is limited by the exclusion provided by Section Note 5(E). From the above, the same clearly excludes machines having individual specific functions other than data of processing. Therefore, the classification adopted by the Department under heading 8479.9090 is more appropriate than the heading 8471.3039. Therefore, the Commissioner's decision in treating the said lottery terminals which are meant for lottery automation as one having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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