TaxTMI 
TaxTMI 
TaxTMI 
1998 (9) TMI 226
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....ms. 3. Briefly, the issue involves import of 2 sets of CAT scan system, allegedly in SKD/CKD condition under two Bills of Entry, each involving a declared value of Rs. 70,96,984/- which was reassessed by the impugned order to Rs. 1,54,05,000/-. Appellants face penalty of Rs. 7 lakhs and Redemption Fine of Rs. 15 lakhs. They claimed exemption under Notification No. 66/88-Cus., dated 1-3-1988 while in its stay order, Hon'ble Tribunal directed deposit of duty @ 40% ad valorem (BED) under Notification No. 65/88-Cus., dated 1-3-1988. 4.  The two issues for consideration are - (i) whether imported goods are a CAT scan system in SKD/CKD condition, or merely parts thereof; and (ii) whether goods are under-valued and have bee....
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....ations, the system is not workable. Exporters also certify that it is not a complete system. 7.  Learned Advocate further argues that in view of following decisions, Interpretative Rule 2A (applied by ld. Collector in impugned orders) cannot be applied to deny benefits under Notification 66/88 (supra) :- 1997 (90) E.L.T. 57 (Tribunal) - Nippon Precesion Bearings 1996 (16) RLT 646 (Tribunal) - Maruti Udyog. 8.  Learned Advocate further argues that even assuming that the said Rule 2(a) is applicable, even then the goods imported are not a complete system in view of facts (a) to (d) above. 9.  On (iii) above (Valuation), Learned Advocate contests revaluation on following grounds : (x) While Transaction Value can be set asi....
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....orted goods are complete units in SKD condition as phase conductor is a mere accessory and the 5 parts of each set imported constitute the essential character of the CAT scanner. 13.  He further submits that intention behind Notification No. 65/88 was to support indigenous manufacture and not to import in SKD condition and assemble by using mere screw-driver technology. Hence the notification does not apply. 14.  Ld. SDR further submits that the socalled 30 operations are mere tests and that the question of payment of excise duty is a fresh point and not agitated earlier. 15.  He further argues that the technical opinion of the association is not binding. It being a private body and exporter's certificate is not independen....
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....erm these to be mere screw-driver technology. (ii) The appellants have designed and fabricated one essential component themselves - phase convertor and power unit. This is not an accessory which enhances the use of the system. Without it the system cannot even be powered on, let alone function. This design is clearly suited to Indian Power supply conditions as also is dedicated to the CAT system. It is, therefore, totally different from an off the shelf standard power supply unit/transformer/stabiliser/UPS etc. (iii) The Central Excise department views these operations as tantamount to manufacture as a new and distinct product emerges from these operations and appellants accordingly pay Central Excise duty for this manufactured ....
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....cases under consideration where 5 out of 6 major components have been imported. Secondly, trained engineers/technicians assembled the product in both these cases. Thirdly, testing, alignments, calibration are involved in both these cases. Fourthly, to do this assembly, a work place with necessary equipments was created. Finally, Central Excise duty was paid on the end product in both cases. Therefore, we find that on facts this decision is similar to the one under consideration here. 21.  In Maruti Udyog (supra) the Tribunal has laid out fresh interpretation of how to use Interpretative Rule 2(a) in such situations. Briefly, it is held that :- (a)  Application of IR 2(a) results in a legal fiction being created and hence since t....
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.... are fully manufactured, as what was imported was merely deemed to be a system though for "practical purposes" were component parts, to which a 6th essential item - phase convertor - of indigenous origin was added by the appellants. 24.  With respect to the question of over-valuation, we find that the benefit of doubt goes to the appellants for the following reasons :- (i) their transaction value has not been challenged by department through contemporaneous imports of similar goods, which is necessary as per Rule 4 of CVR; (ii) that the department's reliance on the exporter's price list for domestic sales in Japan is misconceived as it cannot take the place of contemporaneous imports. That price list is for sale in Japan of a workin....