TaxTMI 
TaxTMI 
2012 (8) TMI 215
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....assessable value has been arrived at Rs.34,15,893/-. The duty amount payable on the reassessed value is not recorded in the impugned order passed by the adjudicating Commissioner. The adjudicating Commissioner has recorded in the impugned order that the appellants requested for adjudication of the case without issue of show-cause notice and personal hearing. He has also recorded the request of the appellants that the case should be adjudicated by him taking a lenient view as the appellants had not applied for import licence for the reason that the value of the goods was insignificant. The adjudicating Commissioner has also recorded that the appellants had produced neither the manufacturer's invoice nor a Chartered Engineer's certificate from the load port confirming to Board's Circular No. 4/2008-Cus. dated 12.2.2008, and hence the impugned goods were examined by a local Chartered Engineer and that the value appraised by him was also accepted by the appellants, which is the basis for enhancement of value. The appellants have filed this appeal before the Tribunal challenging the enhancement of value, imposition of redemption fine and imposition of the penalty in respect of the impug....
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....n 16.11.2011 in the Ministry of Environment and Forests, it has been recorded in paragraph 5 as follows:- "It was also informed that in the EXIM Policy, there is no specific mention about multifunction devices. There are separate ITHS codes for multifunction devices and the photocopier machines. While discussing the issue, DIT representative mentioned that the basic function of multifunction devices is for photocopying, as the import of photocopier machines is restricted, therefore import of multifunction devices also need to be placed in the same category in the policy. All the members agreed that DGFT may be requested to include the import of multifunction devices under the restricted list." The above paragraph indicates a need to place import of multifunction devices in the restricted category, the implication being that the import of the same is not restricted at present. (vii) In an affidavit filed before the Madras High Court in Writ Appeal No. 1445/2010, the customs authorities themselves have stated that the impugned goods are different from analog photocopier machines in paragraph 8 thereof. (viii) In the show-cause notice there was no allegation that the impug....
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....rom both sides, the case records, the legal provisions and the cited decisions. The issues for decision by us are the following:- (i) Whether the impugned goods imported by the appellants declaring the same as "old and used digital multifunction print and copying machines" 201 in number, can be considered to be photocopiers and can be held to be subject to import licensing restrictions, and if so, (ii) Whether the fine and penalty imposed are excessive, and (iii) Whether the value determined by the customs authorities for the impugned goods is proper or arbitrary. 7. In this case, earlier in our miscellaneous order dated 7.5.2010 we had taken a prima facie view that the impugned goods were photocopier machines and subject to restriction under DGFT Notification No. 31/2005 dated 19.10.2005. Hence, we had ordered that the appellants were at liberty to clear the impugned goods on payment of duty, fine and penalty, subject to the outcome of the appeal pending before the Tribunal. Against our direction, the appellants had moved a writ petition before the Hon'ble Madras High Court. By its order dated 19.7.2010, the Hon'ble High Court has directed release of the impugned goods....
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....e Notification no. 31 dated 19-10-2005." It is clear from the aforecited decision of the Hon'ble Supreme Court that import of photocopying machines are expressly restricted by Notification No. 31/2005 dated 19.10.2005, that the Central Government has brought in photocopying machines into the category of secondhand goods by the amendatory notification and therefore the import of photocopying machines stand restricted on and after 19.10.2005. 10. It is a fact that the impugned goods are being imported into India in large quantities. This is evident from the large number of appeals decided by different Benches of the Tribunal and number of writ petitions pending in different High Courts. We also find that in each case the number of machines imported is quite high, for example, in this case alone there is import of 201 such machines. So far the disputes were regarding the levels of fines and penalties imposed and in some cases there were disputes regarding declaration of lower values. These cases have been dealt by the authorities below and the Tribunal Benches allowing clearance of such goods on payment of fines and penalties. One of us dealing with a group of 9 such appeals in ....
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....to have referred the matter to a Larger Bench as a matter of judicial discipline. In fact, the Bangalore Bench itself has been imposing fines and penalties in such cases earlier. 11. Further, we find that the Bangalore Bench in the case of Shivam International (supra) has wrongly placed reliance on the Hon'ble Supreme Court's decision in the case of Xerox India (supra) in our respectful view. In the cited case, the Hon'ble Supreme Court has decided the issue of classification of multifunctional machines for the purposes of charging customs duty. This relates to a case of import made during March, September to November 1999. The dispute was as to whether such machines were classifiable under Tariff Heading 8439.89 as claimed by the Department or under Heading 8471.60 a s claimed by the appellants in that case. The Hon'ble Supreme Court held that the impugned multifunctional machines involved in that case (Xerox 5779, Xerox work centre XT 100 and Xerox work centre XD 155 DF) would be classifiable under Heading 8471.60 which was meant for "input or output unit whether or not containing storage units in the same housing". This decision is obviously relevant to the period during whic....
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.... the import of photocopying machines stand restricted on or after 19.10.2005. Neither in the amending Notification No. 31/2005 dated 19.10.2005 nor in the said judgment of the Hon'ble Supreme Court, there is any reference to the import restriction being limited to photocopying machines falling under any particular Tariff item. The language of the amending notification clearly says that import of capital goods shall be allowed freely, however, secondhand personal computers/laptops and photocopier machines etc. will only be allowed against the licence issued in this behalf. It is, therefore, very clear that secondhand photocopier machines of all kinds have been placed under the restricted category. The restriction is not with reference to any particular Tariff item. The learned counsel is correct that when import restrictions are imposed with reference to HSN based Tariff items, the scope of the restriction for the licence purpose will be similar to the scope of the Tariff item for the duty purposes. Unfortunately, this argument is of no help in the present case as the Central Government has chosen to place under the restricted category secondhand photocopier machines in general and ....
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.... its classification. 14. It has been argued on behalf of the appellants that there is a difference between analog photocopiers and digital photocopiers and multifunction printing and copying machines. We do not find any such distinction carved out under the aforecited notification dated 19.10.2005. It, plain and simple, restricts import of secondhand photocopier machines without a licence. It does not refer to any particular kind of photocopier nor it refers to any specific Tariff Heading or any HSITC Heading. Therefore, the intention of the Government seems to be clear to restrict in public interest import of secondhand photocopier machines of all kinds without a licence. When the restriction is for "photocopier machines' it would take within its ambit both analog photocopier machines and digital photocopier machines. In case of both the machines, the input and the output, (that is, the material to be photocopied and the photocopy produced) are the same. Obviously, each machine adopts a different technology for processing, the latter one adopts a newer technology. In the case of analog photocopier machines, the photocopying apparatus incorporates an optical system which project....
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....mmand from the computer to which the machine should be connected. That in no way makes the printing function totally separate from the photocopying function. While the machine would act as an output device (i.e. printer) when connected to the computer (and it would indeed be a very very costly printer compared to very efficient low cost laser printers available in the market), for the purpose of photocopying and particularly high speed photocopying, the printing function is used as a part of the process of photocopying in the sense that without it, the photocopy will not be produced. 16. We have to take judicial notice of the fact that these multifunction machines are known as photocopier machines found almost on every street in a city. Though Xerox is a particular company, earlier photocopiers used to be known as Xerox machines. Similarly, when an office or an establishment today buys a photocopier particularly for large scale high speed use, they buy machines such as the impugned machines. In fact, these multifunction machines are on the Government of India's DGS&D rate contract list of photocopier machines. It may not be out of place to mention that the South Zonal Bench of t....
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.... ITC HS Schedule is free for the new equipment including multifunction equipment. The restriction is only in respect of secondhand photocopier machines. The understanding of the DGFT, is also that the multifunction digital machines in question are used as photocopiers, photocopying being their primary function and further that these are restricted for import as seen from their Writ Appeal No. 1802/2011 filed before the Hon'ble Madras High Court vide Ground (v) thereof which is as follows:- "It is submitted that as per Notification No. 31/2005, the import of second hand photocopier machines are restricted and will be allowed against a licence issued in this behalf. Therefore, digital multifunction machines functioning as photocopier besides other features will be restricted for import. The petitioner had admitted that one of the functions of the multipurpose digital photocopier is photocopy also. The restriction in para 2.17 does not differentiate between photocopier machines in technology, features or single/multiple uses. The multifunction digital machines is used as a photocopier which is one of their primary functions. The second hand multipurpose photocopier is also restrict....
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....cy restriction and hence the expression "photocopier machines" in the policy is to be interpreted as commonly understood to include all those machines which are used for photocopying. As held by the Hon'ble Supreme Court in Atul Commodities (supra), the import restriction on secondhand photocopying machines apply with effect from 19.10.2005 and accordingly, all the cases decided by different Benches of the Tribunal have held photocopying machines similar to the impugned goods as restricted for import and have upheld confiscation and penalty (though there were differences about the level of fine and penalty). The said order of the Bangalore Bench in the case of Shivam International (supra) is a departure from the earlier orders of the Tribunal without making a reference to the Larger Bench apart from the fact that it wrongly relies on the ratio of the Hon'ble Supreme Court's decision in the case of Xerox India (supra) which dealt with classification dispute for the earlier period and has no application for the present when there is no classification dispute. Hence, the said order of the Tribunal in the case of Shivam International (supra) has been clearly rendered per incurium and t....
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....s on such imports, large scale imports of these goods are taking place at ports of Chennai, Tuticorin and Cochin at undervalued prices and without necessary import licences. It is quite obvious that the low levels of fines and penalties determined by the Tribunal earlier have not proved to be effective to stop such illegal imports which are being made repeatedly contrary to the law of the land. 12. I also find that the cited decision of the Bangalore Bench of the Tribunal in the case of Shri Dilip Ghelani (supra) states in paragraph 9 that "the restriction of fine and penalty to 10% and 5% has also been upheld by the Hon'ble High Court of Madras". This order does not give reference to which order of the Hon'ble Madras High Court has upheld restriction of fine and penalty to the level of 10% and 5%, based on which the Bangalore Bench has reduced the fine and penalty to such lower levels. In fact, the learned counsel Shri P. Saravanan who cited this decision of the Bangalore Bench was not able to either refer to or submit any decision of the Hon'ble Madras High Court in this regard. 13. The only decision of the Hon'ble Madras High Court which has been shown is that of the cited....
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....ening the provisions of Import Policy, mis-declaring the value of the goods as found in all these seven cases. As such, it appears that the lower appellate authority was not correct in placing reliance on the aforecited decision of the Hon'ble Madras High Court in arbitrarily reducing the fines and penalties to a lower level without taking note of the fact that he was dealing with cases of repeated offences and habitual offenders. 15. The higher courts have always taken a stricter view in respect of habitual offenders. For example, in the case of Sophisticated Marbles (supra), the Hon'ble Bombay High Court had held as follows:- "The petition is directed against the final order dated 18th December, 2003 incorporated at Exhibit - D to the petition. The challenge is at the instance of the petitioners wherein the fine and penalty is levied upon for importing marbles without the licence. 2. Whenever, petitioners import marble without licence, they pay fine and penalty, as may be levied under the provisions of the Customs Act. 3. In the past similar consignments were imported by the petitioners and in spite of levy of fine and penalty the petitioners continued to import marbl....
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....importing goods without licence and then seek to validate the import by obtaining subsequent licence or licences cannot be allowed to take advantage of their own wrong. The petitioners are one of them. 5. The petition, in the circumstances, is dismissed in limine, with no order as to costs." 16. In the case of Vaibhav Exports (supra), the Bombay High Court noted that the premium on import of imported diamonds in that case was around 3% only and that the importers in that case could have made profit of about 3% by the illegal imports without valid licences. Yet, the Hon'ble Bombay High Court authorized imposition of redemption fine equal to 20% of the value of the imported diamonds with observations that the importers should not find it profitable to make the imports without proper licence. The Hon'ble High Court took into account the fact that if the offender is required to pay only the amount which he has saved by not paying the premium for securing a genuine licence, he will never feel the pinch of being caught. He may commit same wrongs repeatedly and as and when he is caught, he may pay amount equivalent to the premium only. In the considered opinion of the Hon'ble High C....