TaxTMI 
TaxTMI 
1998 (10) TMI 195
X X X X Extracts X X X X
X X X X Extracts X X X X
....iod under other Bills of Entry, a similar classification as well as value enhancement has been ordered and a redemption fine of Rs. 2,65,00,000/- has been imposed. In these cases, demand of duty of Rs. 1,54,19,777/- has been confirmed. (c)  A penalty of Rs. 1,54,19,777/- have been imposed under Section 114A in respect of consignments already cleared and Rs. 8,00,000/- towards penalty is further imposed under Section 112(a) of Customs Act, 1962 for the current consignments. (d) A further personal penalty of Rs. 2,00,000/- has been imposed on Shri Ashok Soota, Group President, Rs. 1,00,000/- on S/Shri Sathish Menon, Company Secretary, Ragupathy, General Manager (Materials) and K.C. Harsha, Manager (Procurement). 2. The matter involves two basic issues as follows :- (i)  Whether goods imported under these Bills of Entry under purchase orders commencing from 6-12-1994 and ending on 28-7-1995 are to be treated as components of computers falling under Heading 8473.30/8424.90/8471.92 or complete personal computer systems (as held in the impugned order) falling under 8471.91. (ii)  Whether the values declared in these Bills of Entry are to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orted and also cleared from bonds in different quantities at different times for purchase orders Nos. 6649 and 6650. Therefore, it was erroneous to consider these imports as complete computer systems in SKD/CKD. He submitted that there are 46 purchase orders involved starting from 6-12-1994 to September, 1995 and 75 Bills of Entry involved in the imports being from February, 1995 to September, 1995. (e)He further submitted that the report of the Surveyor available on Page 198 of Volume V of the paper book, clearly shows that the imports were of components and the CPU was not contained in the Mother Board. He submits that this is a good evidence in this connection. (f)The learned Senior Advocate further submits that as is contained in internal Page 33 of the impugned order, the learned Commissioner has recorded therein that since the technical experts were not agreeable to being cross-examined, therefore, all the technical opinions are not considered by him, while passing the impugned order. Therefore, the impugned order is not based on any technical opinion of experts and is a non-speaking order. (g)The learned Senior Advocate submits that when their objection was to the o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th, they were not used to manufacture a full computer system as their content was often even less than 50%. He submitted that this vital evidence has not at all been considered in the impugned order and to this extent, the order is a non-speaking one. (k)The learned Senior Advocate further submitted that the Import Policy involved was making distinction between components which were available for import under OGL, except those which fell under the restricted list like Key-board and Monitor etc. All the key-boards and monitors imported by them were therefore, backed by a valid Special Industrial Licence issued by DGFT and it was their contention that other components legitimately could be imported under OGL. In this connection, he submitted that the ITC Policy as contained in Para 156F is more specific to computers than Para 156A thereof. He further submitted that the policy has to be read in two parts i.e. that prevailing up to 31-3-1995 and that prevailing after 1-4-1995 and referred to Page 302 of Volume V of the paper book, wherein he submitted that after 1-4-1995 the term `parts' has been excluded from the heading `consumer goods'. In this connection, he cited the case Tarac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... impugned order under Section 114A of Customs Act, 1962, the learned Senior Advocate submitted that this was totally due to non-application of mind because, now it is a well settled law that mandatory penalty cannot be imposed with retrospective effect i.e. prior to the coming of the said section into force. To support this contention he cited the following decisions :- (1)  Marcandy Prasad Radhakrishna Prasad Pvt. Ltd. v. C.C.E. as reported in 1998 (102) E.L.T. 705 (Tribunal) = 1998 (25) RLT 919 (CEGAT); (2)  Lakshmi Packaging (P) Ltd. v. C.C.E. as reported in 1998 (98) E.L.T. 91 (Tribunal); (3)  Universal Electrodes P. Ltd. v. C.C.E. as reported in 1998 (99) E.L.T. 134 (Tribunal). In this case, the imports are prior to the introduction of Section 114A of the Customs Act, 1962, which came into force from 28-9-1996, whereas the imports in question ended in September, 1995. He, therefore, submitted that no mandatory penalty under this section was imposable, particularly as there was no allegation also of the offence continuing thereafter. (p)  With regard to the valuation issue, wherein the declared value has been enhanced by 10% under Rule 8,....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., though the purchase order was placed on M/s. ACER, Singapore. In this connection, he referred to Page 5 of the Order-in-Original, wherein it has been observed that even the ACER name plate and packing materials etc. had been imported. Thirdly, he submitted that there exists a relationship between M/s. WIPRO and M/s. ACER i.e. importer and exporter because of the importer being allowed to use the brand name of the exporter, even though no royalty was paid to the exporter. This special relationship is also demonstrated by assertion in the catalogue of M/s. ACER that M/s. WIPRO is the sole operator of M/s. ACER in India. Therefore, there exists a relationship with each other, and the importer-appellants have misdeclared that they were not related to each other, as per Bills of Entry. 6. The learned JDR also submitted with regard to aggregation of the imports concerned in the impugned order, that while it is true that Para 156F of the ITC Policy is more specific to computers, however, the imports made in these Bills of Entry still constitute the computer systems because of the following reasons :- (a) He referred to Page 307 of Volume V of the paper book, wherein a co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Wipro India has to control over it. (d) Not one of the factors enumerated in Rule 2(2) (defining "related") is applicable to facts in this case. Impugned order does not invoke Rule 2(2), but vaguely adjudges a "special relationship" due to the memorandum of understanding (Page 42 Para 2 of order) without explaining in detail how this is established; (e)  Department of Electronics being a Government department, there was no question of "soliciting" any opinion in their favour. Department of Electronics's opinion is relevant for computers; (f)  The case law of Sharp Business Machines (supra) is distinguished on facts as well as law. He drew a distinction between absolute prohibition and a restriction. In present matter there was an alleged restriction but no absolute prohibition. Secondly, on facts, in Sharp Business Machines, 10 machines in CKD was imported under one single Bill of Entry (out of total 14). This was not the case here, so it is distinguishable on facts. He further submitted that ITC Policy should be read plainly. 7. We have carefully considered the arguments on both sides as well as the records of the case. We find that the impugned ord....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uter systems. This evidence needs therefore, to be considered in details, as it would be an illogical position where import of CKD/SKD computer systems are adjudged when more than 50% other components were required for producing the systems. There is no such discussion or findings; (d) It is now well settled law that Interpretative Rule 2(a) of Customs Tariff Act, 1985 cannot be used to interpret either notifications or Import-Export Trade Control Order. The impugned order has held imports violative of the ITC Policy by aggregating imports in terms of the said Rule 2(a). As against this, appellants have all along stressed that Para 156F of ITC Policy supersedes the Para 156A thereof, the former being more specific to computers. The impugned order is silent on this issue; (e) It is also now well settled law that mandatory penalty cannot be imposed with retrospective effect i.e. prior to Section 114A of Customs Act, 1962 coming into force on 28-9-1996. Since subject imports were much prior to this, the impugned order has not discussed how and why this penalty is still imposable; (f) With regard to the valuation matter, the impugned order does not clearly expla....