TaxTMI 
TaxTMI 
2014 (10) TMI 800
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..... respectively submit that these two were principal importers of the above goods. 2. The appellants at Sl. Nos. 23 to 29 (Appeal Nos. C/1342-1348/2012) of cause list were all connected with the principal appellant having faced penalties and were represented by Shri Sankara Vadivelu. The appellants at Sl. Nos. 16 to 19 (Appeal Nos. C/1215/2012, C/1252-1254/2012) of cause list are represented by Shri G. Shivadass who submitted that appellants at Sl. No. 17, 18, & 19 were the foreign suppliers of the imported goods which is in question in Appeal No. C/1268/2012 and C/1269/2012 at Sl No. 20 & 21 of the cause list. M/s Punjab Communications Ltd. in appeal No. C/1215/2012 was represented by Shri G. Shivadass. That appellant was the bidder of the tender invited by BSNL. Appeal No. C/1268/2012 3. Moving Appeal No. C/1268/2012 which relates to appellant M/s Prithvi Information Solutions Ltd. Shri Sankara Vadivelu submits that this appellant has imported only 10G specification DWDM in two spells i.e. before investigation and after investigation. There were 15 (fifteen) consignments of the hardware imported before investigation and 3 (three) consignments after investigation. Investigation ....
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....itself is questionable because the testing agency C-DoT was of the opinion that the equipments are loaded with the required software to make them completely functional and the LCD/EMS software which is not supplied will have to be loaded on the PC/server connected with these equipments and through the LCD/EMS software and these equipments can be configured for using the network. He precisely submits that this software which were imported separately were fully loaded software and were not blank because nothing has been tested by the Revenue to come to the conclusion that the CDs imported were blank and there is no evidence also to show that the equipments imported were fully loaded with software. 5.3. On the aforesaid submissions, he points out that the Revenue has no case absolutely in so far as the imports prior to investigation is concerned. He further submits that if there is a case for Revenue, the post-investigation import being subjected to sample testing became also questionable and nothing could be proved against the appellant importer. Therefore, there should not be a direction for pre-deposit since Revenue has been protected to the extent indicated above in both the appe....
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....e value of the hardware by which revenue has been prejudiced and also to claim exemption on the software in the guise of customized software. The e-mail correspondences show what was the modus-operandi followed by importer appellants to get under-stated invoices. 6.3 Learned A.R. relied on Page 72 to page 190 to demonstrate that the statements recorded under Section 108 of the Customs Act 1962 show that there was absolutely no import of customized software but the suppliers were influenced to issue different invoices to gain the benefit of the notification at the cost of Revenue. Blank CDS were containing only a few files which were not at all software. Para 17 at page 67 of the adjudication order read with page 70 proves the modus operandi of the appellant questionable. Even the person dealing with the goods for example Mr. Kiran at page 72 has admitted that the blank CDS were only imported which were mis-declared to Customs with a view to evade the customs duty. Those were not customized software. Even at page 72 Mr. Vimal Sethi also demonstrated to that extent. At page 67, it was stated that incriminating statements were given against the appellant itself which shows that the b....
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....looked into by adjudicating authority to make the case of Revenue well founded. He further invited attention to page 163 to specifically plead that even C-DoT proved the case of revenue to be import of hardware with the software embedded therein. 7. In rejoinder, importer appellant submitted that tender itself intended that financial bid for hardware and software to be quoted separately and the invoice clearly indicated what shall be the content of the CD. Testing has not been done completely to the satisfaction of law. The statements recorded from different persons relied by Revenue are liable to be discarded. 8. In view of paucity of time we were not able to pass the order for which it was reserved. Expected to be pronounced on 30/11/2013. 9. Case of CHA was argued separately and separate order passed. Penalty cases have been heard and order therein is also reserved. 10. We have considered the submissions made by all the parties concerned as well as on behalf of the Revenue and also have gone through the records of the case. 11. The issue involved is whether the main parties namely M/s Prithvi Information Systems Ltd. (PISL) and M/s Vuppalamritha Magnetic Components Lt....
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....ide, photo detectors and optical de-multiplexers using thin film filters or diffractive elements. DWDM equipment is used by all major communication service providers all over the world today. HTCL is one of the leading manufacturers of DWDM equipment/system in different configurations. BSNL had ordered DWDM equipment of two types namely 2.5G, 32 channel and 10G, 40 channel vide tenders called for by them in 2006 & 2007. One of the requirements for BSNL is that the equipment was to be sourced only from domestic manufacturers and because of this, bidders were entirely domestic manufacturers only and bidders in turn entered into agreement with M/s Huawei Telecommunications India Co. Pvt. Ltd. (HTCL) for importation of the equipment which was in turn supplied to BSNL. Two suppliers of equipment namely PISL & VMCL entered into agreements with M/s Sojtiz Corporation (SC) who acted as financial partner to make payment through letters of credit to HTCL after the equipments are dispatched. Needless to say there are several contracts, agreements and tender documents. Before we proceed further, it is necessary to observe that when the software comes along with the equipments embedded in the ....
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....ized person for both PISL and VMCL. He also agreed that he had taken part for making the request to modify the invoices/packing list for imported goods to suit their needs as directed by the management. Shri Vimal Sethi, Senior General Manager agreed that there were 5780 Nos. of blank CDS which did not contain software imported by VMCL and PISL said to have contained software. He also admitted that VMCL & PISL used to receive blank CDs/CDs with data of about 70 KB which was absolutely useless describing them as customized software on CD for DWDM. He also admitted that about 19,000/- CDs were burnt by them containing useless data just to show that they were supplying software in CDs. Shri Vimal Sethi also explained that whatever software was required for running DWDM equipment was already loaded in the hardware and blank CDs were imported only for the purpose of facilitating split up of equipment. In reality the required software for the project work element management system (EMS) software and OptiX iManager T2000, an application software which was officially imported and supplied in laptops to BSNL. Shri P.R. Bansal, Adviser (Telecom) of M/s PISL stated that the EMS software imp....
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....d that equipment supplied by them was in a ready to use condition and there was no need to load any software. Shri Wang Dong, Director of Network Solutions for HTCL stated that EMS and data base server software were only application software and rest of the software mentioned in the purchase order were embedded software for circuit boards and respective cards of the DWDM equipment and they could not function without such board software and the equipments were ready to use equipments. Smt V. Madhavi Anandan Chairperson of PISL also agreed that according to the agreement and definition of software, the software to be supplied was to be embedded software only. Some of the employees of BSNL also admitted that what they received was fully functional equipment and no software was required separately. General Manager (core network planning), BSNL also admitted that even the fact that they had asked for separate cost did not mean that the software was not embedded. In addition there were lot of e-mail exchanges among concerned persons and the relevant e-mails have been extensively considered and quoted in the order. The e-mails clearly show that there was specific request being made as to....
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....andwritten) actually contains just the .PDF files and not the actual LCT/EMS software. Moreover another CD (having 05026969 mentioned as Item on its wrapper) which is part of the 10CDs supplied as samples of the CDs drawn under the panchnama dated 24.12.2008 also doesnt contain LCT software although the same has been mentioned on its wrapper. It, instead, contains one .PGA file, which as per the page 4 of the Software Description document supplied along with the above referenced letter is actually file containing FPGA software. In the absence of LCT/EMS software, it is not possible to test complete adherence to the Factory Acceptance Test report. (b) The two telecom hardware equipments contain embedded software otherwise it is not possible for these equipments to function the way they did. (c) These racks are in ready to use condition. All the internal cabling is already done and just the external cables need to be connected to make them functional at the site. (d) The equipments contained all the software required for functionality which could be tested with LCT/EMS software. In C-DOTs view, only software required is the LCT/EMS software which is required to be loaded on to ....
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.... statements and evidences while recording the proceedings of submissions made by both sides. Another major important evidence that is to be taken into account is the fact that L-1 bidder namely United Telecom Ltd had quoted a single price for hardware and software (according to Revenue) and there was no separation at all including the liability for customs duty, excise duty etc. The United Telecom quote was the lowest and the appellants were only L-2 in respect of 2G equipments. This also shows that but for manipulation, appellants could not have emerged as L-2, leave alone the L-1 bidders for the tender. It also shows that separate quotes for software and hardware was not an essential requirement 16. The next submission for seeking waiver of pre deposit and stay was in relation to financial difficulties. It was submitted that both the appellants are in serious financial difficulties because BSNL has not paid them more than Rs. 900 crores each till now and because of these dues, they are in a serious financial difficulties. We take note of the fact that BSNL was also penalized to the extent of Rs. 75,00,000/- by the original adjudicating authority and we have already directed them....
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....ther VMCL was perpetuating fraudulent activity in the supply of DWDM equipment. He has also observed that PCL had imported DWDM equipment without splitting the value of equipment into hardware and software and handed over the same to BSNL for testing and this is what he relies upon to come to the conclusion that PCL was also a party to the planned evasion of customs duty. He also observed that PCL failed to notice that the subcontractor is involving in fraudulent activities and never took any reasonable steps. There is no clear finding that PCL had a role to play at the time of importation or prior to the importation in planning the evasion of duty by undervaluation during import and got the benefit of split up of software cost and hardware cost. At this stage, in our opinion, the benefit of doubt should go to PCL in view of the fact that it is a public sector undertaking and there is no clear evidence available. In fact PCL had denied all the allegations and stated that they had offloaded the contract to VMCL because they did not have testing facility. Therefore we waive the requirement of pre deposit and grant stay against recovery of dues during the pendency of appeal. 18. The ....