2005 (98) ECC 173 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

Southern Regional Bench -- Chennai

Shri P.G. Chacko, Member (J) and Shri Jeet Ram Kait, Member (T)

Thomson Consumer Electronics India P. Ltd.

Versus

Commissioner of Customs, Chennai

Appeal No. C/c-625/98/MAS

[Arising out of Order-in-Original No. 90/98-CAU dt. 6.4.98 passed by the Commissioner of Customs, Chennai]

Final Order No. 566/2004, dt. 29.6.2004, Certified on 22.7.2004

Confiscation & Penalty (Customs)

Import -- Digital Video Camera parts presented under two different Bills of Entry were not to be treated as complete Digital Video Cameras but only as components/ parts thereof as declared by the party. There is no misdeclaration of the goods, nor is there any unauthorized importation inasmuch as components/parts of VCRs/VCPs were freely importable during the material period -- Sections 111(d), 112(a) of Customs Act.

Appeal allowed

PRESENT :

Shri C. Raja Simha, Adv. for the appellant.

Shri A. Jayachandran, JDR for the respondent.

Cases Cited :

1. Award Electroncis v. CC, Chennai, 2003 (85) ECC 737 (T)......................... [Paras 2 & 3]

2. Sony India Ltd. v. CC, Delhi, 2002 (82) ECC 436 (T-LB)............................. [Paras 2 & 3]

Per : P.G. Chacko

The appellants filed eight Bills of Entry during December 1997 and January 1998 for clearance of various imported goods declared therein as parts/components of VCPs and VCRs. The relevant particulars of the Bills of Entry are as follows:

Sl. No. | Bill of Entry & date | Items declared | Chapter Heading | Declared C&F Value (US$) | Assessable value Rs.
1. | 1246 |  |  |  |
dt. 7.1.98 | 2000 pcs. of 31 types of populated pcbs for VCP VIP - T8K | 8522.90 | 57,000.00 | 2,295,895.00 |
2. | 2860 |  |  |  |
dt. 19.1.98 | 2000 sets of parts & components for VCP VIP - T8K | 8522.90 8544.19 7318.50 4016.90 8533.29 | 105,000.00 | 4,308,911.00 |
3. | 3504 |  |  |  |
dt. 20.1.98 | 1000 pcs. electronic tuner for VCP VIP-T8K | 8522.90 | 4,000.00 | 164,162.00 |
4. | 3197 |  |  |  |
dt. 19.1.98 | 1000 pcs. electronic tuner for VCP VIP-T8K | 8522.90 | 4,000.00 | 164,139.00 |
5. | 71132 |  |  |  |
dt. 30.12.97 | 399 pcs. of 3 types of populated pcs for VCR VRA-388 | 8522.90 | 20,748.00 | 835,792.00 |
6. | 1146 |  |  |  |
dt. 7.1.98 | 399 sets of parts & components for VCR VRA-388 | 8522.90 8544.19 7318.50 4016.90 8533.29 | 31,122.00 | 1,253,588.00 |
7. | 71296 |  |  |  |
dt. 31.12.97 | 496 pcs. of 3 types of populated pcbs for VCR VRA 333 | 8522.90 | 20.088.00 | 809.206.00 |
8. | 1396 |  |  |  |
dt. 8.1.98 | 496 set of parts & components for VCP VRA 333 | 8522.90 8544.19 7318.50 4016.90 8533.20 | 27.032.00 | 1,088,817.00 |

--The declared value of the goods in each consignment was as per the relevant invoice issued by the foreign supplier; namely, M/s. Thomson Consumer Electronics Marketing Asia Pvt. Ltd., Singapore. The Bill of Entry mentioned in Sl. No. 5 above was assessed to duty and the goods covered thereunder were cleared for home consumption. The Bill of Entry mentioned in Sl. No. 7 was also assessed but the goods were bonded and warehoused under Section 59 of the Customs Act. At that stage, it appeared to the Customs authorities that all the goods (covered by all the eight Bills of Entry), if put together, would form VCRs or VCPs, as the case may be, in SKD condition. The authorities, therefore, proceeded to assess the goods as VCRs or VCPs, as the case may be, with a view to recovering duty of customs at higher rates applicable to VCRs/VCPs. They collected documents such as statement of imported components, technical write-up indicating process of assembling, price lists etc. from the party and scrutinised the same. It appeared from the assembly process furnished by the party in respect of VCRs & VCPs that the process did not involve `manufacture' and that the goods were only VCRs & VCPs in SKD condition. They relied on Rule 2(a) of the "General Rules for Interpretation of the Customs Tariff Act, 1975" for this purpose. The department took the view that the appellants had misdeclared the goods as components/parts of VCRs/VCPs to circumvent the restriction of import of VCRs/VCPs as also to evade customs duty. Import of VCRs & VCPs required specific licence, which the appellants did not have. Therefore, the authorities held the imports to be unauthorised and the goods to be liable for confiscation under Section 111(d) of the Customs Act. On the basis of alleged misdeclaration of goods, they also held the party to be liable for penalty under Section 112(a) of the Act. The appellants waived show-cause notice and requested for early adjudication of the case. Before the Commissioner of Customs (adjudicating authority), the principal issue was whether the imported goods were to be assessed as complete equipment (VCP/VCR) or as only components thereof. The Commissioner invoked Rule 2(a) ibid and held that the goods were to be assessed as VCRs/VCPs, as the case may be. Accordingly, the goods covered by the eight Bills of Entry were treated as 2000 sets of VCPs and 895 sets of VCRs for the purpose of assessment of customs duty. The charges of unauthorised importation and misdeclaration of description of the goods were also upheld and, consequently, the goods were confiscated under Section 111(d), but with an option for redemption thereof against payment of fine of Rs. 25 lakhs. The Commissioner also imposed a penalty of Rs. 5 lakhs on the party under Section 112 (a) of the Act. Hence, the present appeal.

2. Heard both sides. Ld. Counsel argued that, as the Bills of Entry had been presented on different dates, Rules 2(a) of the Interpretative Rules was not applicable and, therefore, the goods were not to be treated as complete VCRs/VCPs in CKD/SKD condition. In this connection, reliance was placed on the Tribunal's Larger Bench decision in the case of Sony India Ltd. v. CC, Delhi, 2002 (82) ECC 436 (T-LB) : 2002 (143) ELT 411 (T-LB). It was also submitted by the Counsel that the components/parts covered under the earliest Bill of Entry (vide Sl. No. 5 of the Table given hereinbefore) had been cleared for home consumption, which indicated that the appellants' intention was to use the goods as such for manufacture of VCRs. Ld. Counsel also relied on the Tribunal's decision in Award Electroncis v. CC, Chennai, 2003 (85) ECC 737 (T) : 2003 (153) ELT 210 (T), wherein digital Video Camera parts imported and cleared under different Bills of Entry were held not liable to be treated as complete equipment but only as parts of Digital Video Camera. The DR reiterated the findings of the adjudicating authority. He also pointed out that the Larger Bench decision in Sony India (supra) had been appealed against by the department.

3. We have considered the submissions. There is no dispute of the fact that the items in each consignment covered by a Bill of Entry were parts of either VCR or VCP. The department has no case that the parts/components in a given consignment could be assembled into complete VCR or VCR. The case of the department is that, if all the parts/components covered under the eight Bills of Entry were put together, if was possible to get assembled 2000 VCPs and 895 VCRs and, therefore, the imported goods were liable to be assessed to duty as complete VCPs/VCRs. As similar case of the department was rejected by the Larger Bench of this Tribunal in Sony India (supra). The Larger Bench decision was followed by this Bench in the case of Award Electronics (supra), the facts of which are similar to those of the instant case. In the case of Award Electronics, Digital Video Camera parts were imported at different times and presented to the Customs under different Bills of Entry. The authorities had treated them as complete video camera in terms of Rule 2(a) of the Interpretative Rules for the purpose of levy of customs duty. The adjudicating authority and the first appellate authority held that the goods were liable for confiscation and the importer liable for penalty. This Bench set aside that view and held that the Digital Video Camera parts presented under two different Bills of Entry were not to be treated as complete Digital Video Cameras and consequently there was no misdeclaration or other offence in the case. Ld. DR has pointed out that the department has appealed to the Supreme Court against the Tribunal's Larger Bench decision in Sony India (supra), but he has not claimed that the Supreme Court has stayed the operation of the said decision. In the circumstances, the view taken in Sony India (supra) continues to have precedent value and consequently the decision of this Bench in Award Electronics (supra) is fit to be followed. We do follow this case law and hold that the goods covered by the eight Bills of Entry are not to be assessed to duty as complete VCRs/VCPs but only as components/parts thereof as declared by the party. There is no misdeclaration of the goods, nor is there any unauthorised importation inasmuch as components/parts of VCRs/VCPs were freely importable during the material period.

4. The order of the Commissioner is set aside and the appeal is allowed.

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