TaxTMI 
TaxTMI 
2015 (2) TMI 126
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.... were recorded and based upon the investigation a demand notice dated 15-10-1990 was issued. The case was adjudicated by the Commissioner of Customs. The appellant/assessee filed an appeal against the said order. The matter came up before this Tribunal and this Tribunal vide Order No. C-I/4013/WZB/2000, dated 9-11-2000 [2001 (138) E.L.T. 1405 (Tribunal)] remanded the matter back to the adjudicating authority with following directions :- "4. It is not possible for us to agree that the questions involved are purely legal. What is, essentially, for consideration is whether the goods in question are classifiable as parts of air conditioners or parts of ventilating goods. Answering these questions it involves facts and law. Substantially the questions involved are those of facts. The refusal for cross-examination on this ground was also not justified. However, we must not be understood as saying that we permit cross-examination of all persons; to cite just one example, it is not clear to us why the apprising officer's cross-examination is required merely to prove that split invoices are issued by M/s. Yamato Industrial Company, the Japanese supplier. This fact can be established....
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.... when it was brought to the notice that imported goods were not parts of ventilating or recycling goods but were merely parts of air conditioners. He further finds that it was possible that V.N. Dhoot (of the appellant) was labouring under a mistaken belief that, by stretching the legal position, the goods could be classified under the category of parts of ventilating and recycling hoods also and thereby he could save substantial amount of duty. If this is the position, and none of it had been challenged by the Department, we are of the view penalty was not imposable at all. The Collector in effect says that the appellant could have believed that the goods were classifiable under a different heading than the one claimed by it for which he finds support from the fact that the appellant promptly paid the differential duty that was demanded. Further, his order does not cite any specific act or misconduct neither his findings. In these circumstances we are of the view that penalty was not imposable on the appellant and set it aside. 8. Accordingly, we set aside the order of the Collector. He shall decide on the classification of the goods, and their liability to confiscation, a....
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....ve a brief of their arguments/contentions which were submitted by appellant/assessee on 11-6-2014 and Revenue on 16-6-2014. The learned Advocate for the appellant/assessee has raised certain preliminary objections, during hearing as also written submissions. 4.1 The first preliminary objection was that during cross-examination the Appraiser Shri R.P. Mishra has stated that he has assessed the bill of entry on certain conditions which may be on other copies of the Bill of Entry with the department. Learned Advocate stated that they have requested the adjudicating authority to furnish copies of such bill of entry. However, the same was refused and the adjudicating authority has failed to furnish the copy of such bill of entry and it is therefore presumed that bill of entry was assessed unconditionally. 4.2 The other objection of the learned Advocate was that the cross-examination of the Assistant Collector of the Group was not allowed. According to the learned Advocate it was essential as Shri Mishra has stated that he has assessed Bill of Entry with the consent of the Assistant Collector of the Group. Learned Advocate also stated that they have requested cross-examin....
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....ed by the appellant/assessee with his initials on each page with date and signature. The assessment was finalized by Shri Mishra with consent of Group Assistant Collector. 4.7 DRI in the show cause notice alleges manipulations and forgeries in classification and documentation solely on the ground that the appellant/assessee never manufactured ventilating and recycling hoods and therefore to evade duties manipulated classification of the goods. Thus, show cause notice inter alia proceeded on end use to determine classification. 4.8 Learned Advocate argued that while determining the classification, the end user of the imported goods is immaterial when no actual user condition is attached on the importation of parts of ventilating and recycling hoods against transferable additional licences. He also argued that the specific classification in the Customs Tariff is a determining factor for classifying the imported goods as the test of end use of a particular item is of no relevance. [Dunlop India Ltd. - AIR 1977 SC 597 (para 42) = 1983 (13) E.L.T. 1566 (S.C.)]. 4.9 Parts of ventilating and recycling hoods are specifically classified under CTH 8414.90. Learned Adv....
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....authority namely Head of the Department of Mechanical Engineering, Government College of Engineering, Rune but no evidence to contradict this evidence is produced by the department. 4.14 He further relied on the certificate dated 23-10-1989 issued by M/s. Matsushita Industrial Co. Ltd., Japan, to support their case. In addition the certificate and report dated 25-9-1990 issued by the Head of Department of Mechanical Engineering, Government College of Engineering, Pune under their letter dated 15-10-1990 was produced. He further submitted that the said certificate elaborately discusses the process of manufacture/assembly of air conditioner certifying that with the prior stage of manufacture/assembly of ventilating and recycling hood with the parts as imported, air conditioner, is manufactured/assembled. They have also confirmed that prior to the final manufacture of air conditioner, the basic function of ventilating and recycling hood is the user thereof as intermediate product to manufacture a room air conditioner. The said certificate elaborately discusses on the extent and nature of the parts to be used and the systems which can be built therefrom, sets out that the air c....
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....f their imagination and does not exist in reality and such conclusion makes the classification of ventilating and recycling hoods under Heading 84.14 redundant. The learned Advocate argued that such a finding and a conclusion drawn by the respondent is not only judiciously improper but exposes the bias or lack of application of mind by the respondent. The learned Advocate further stated that the respondent has given undue importance to the statements of Shri V.N. Dhoot and Shri R.R. Didolkar that there is not even a whisper of the ventilating and recycling hoods as an intermediate product, ignoring the specific classification in the Customs Tariff. Learned Advocate further stated that if the classification done by the Appraiser and the assessment having been finalized with the consent of the Group Asst. Collector is of no significance in determination of the classification by this Tribunal, then the statements of Shri V.N. Dhoot and Shri R.R. Didolkar cannot be relied upon by the department to reject the case of the appellant/assessee. Learned Advocate further submitted that the statements of Production Engineer or of Shri V.N. Dhoot are of no consequence though much stressed upon ....
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....ther law in force. Dispute relates to classification only and therefore not covered by Section 111(d) of the said Act. Hence the goods cannot be confiscated under Section 111(d). 4.22 The learned Advocate further argued that no redemption fine is imposable when dispute relates to classification, particularly when classification adopted by appellant/assessee cannot be said to have been done to evade duties in the facts of the case. Avoiding duties within four corners of law and classifying the goods in good faith, particularly when specific classification is available cannot lead to confiscation of goods. 4.23 The learned Advocate further argued that enhancing redemption fine by adding penalty amount thereto in the impugned order on remand, when the respondent could not impose any penalty in view of earlier finding in the Tribunal's order. The learned Advocate also stated that the earlier order of the Tribunal was never challenged by the department and therefore it attained finality and as such no penalty can be imposed. 5. Learned AR on the other hand, argued that Heading 8414 covers "ventilating or recycling hoods incorporating a fan, whether or not fitted ....
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....cription. Initials of Shri R.P. Mishra on the enclosure to invoice does not in any manner shift the onus of misclassification made by the importer. Assessment document is Bill of Entry and not the invoice or enclosure to invoice. That is an arrangement between Shri Mishra and appellant/assessee and has no legal force. Even otherwise Shri Mishra has only classified the parts based upon the main description (parts of ventilating and recycling hood) given by the appellant/assessee/importer. He further argued that Shri Sambhus was an employee of the appellant/assessee but was sitting in the office of CHA. His statements are important. Denial of cross-examination of Shri Sambhus in no way takes away the content of his statement. At this stage, Shri Sambhus will say anything to save his job. 5.4 Learned AR further submitted that the expert's advice has been obtained in October, 1990 while the importation has taken place, much earlier. Terms of reference to the expert are not disclosed and these certificates have been taken without the knowledge of the Customs authorities. The expert opinion is inconsistent with the understanding of the terms "Ventilating and recycling hood" used ....
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....s discussed in subsequent paras. 7.2 In respect of machinery items, there are various parts which go into manufacture of any machine. Some of the parts may be specific for that machine while other parts may be usable in variety of machines. For example ball bearing is used while manufacturing fan, ball bearing is also find used in electric moter, automobile, machine tools and a variety of appliances etc. Specifications of the ball bearing in different usage may be different. Similar is the position in respect of electronic components like resisters, capacitors, diodes, transistor, etc. which are used while manufacturing any electronic equipment, etc. Generally, parts which are of general usage are appearing in the Customs Tariff by name i.e. specific entry under some or other heading/sub-headings particularly in Chapters 84 and 85. Such parts of machinery which are mentioned in the Customs Tariff by specific names are classified under that specific Heading irrespective of the fact whether such part is used in the manufacturing process as part of machine x or y or z. In the earlier stated example ball bearings would be classifiable under Heading 84.82 irrespective of the fac....
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....n somebody imports part of such television, one has to go through such a list and classify various parts by above mentioned broad principles. We may add that the earlier mentioned principles have to read with various Section notes and Chapter notes. Thus whenever an importer imports a large number of parts of any electronic equipment or household equipment, the importer would be required to group various parts depending upon the classification. Some of the parts may fall under the description "parts of that item" say parts of television while other items which in reality are used in assembling the television but may be classified under specific headings or different headings. So in order to classify the parts, generally from the invoice, various items are grouped by the importer/CHA under different Chapter/Headings/sub-heading. Thereafter, bill of entry is prepared by the importers or his CHA and filed accordingly. Many a times some of the importers/CHA after doing the preliminary exercise may informally consult the Appraiser who has to scrutinize the Bill of Entry whether or not the classification of the part done/grouped by them is correct. 7.6 Ideally while classifying v....
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....and packing list are generally checked by the customs officials to check whether the valuation, quantity, etc. are correctly described in the Bill of Entry. Bills of Entry in the Customs House are first scrutinized/checked by the Appraising Officer. If the Appraising Officer is satisfied, he submits it for formal approval of the Asst. Collector (now Asst. Commissioner). Asst. Collector is the assessing officer as per the law and he approves the assessment. Further Bill of Entry is either assessed (i.e. finally) or provisionally assessed as per law. 7.9 During the course of examination of Shri Mishra, Appraiser has stated that the appellant/assessees has produced a copy of the invoice on which certain classifications were written and he had initialed the said invoice. During cross-examination though he accepted that the signature is his, on classification aspect he was not sure and, therefore, in this context the learned Advocate wants reference should be made to the hand-writing expert. We find in the impugned order, various preliminary objections are discussed in para 58. The adjudicating authority has already accepted that whatever has been scribbled or written on the enc....
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....ot be held liable for any alleged misdeclaration of wrong classification. We are unable to agree with this contention. The fact that the Bill of Entry was assessed by AC does not automatically lead that the appellant/assessee has not done any misdeclaration which lead to the wrong classification. The Appraising Officer or the AC would do the classification based upon the information and documents supplied by the importer. If manipulated documents or manipulated information are submitted to the Appraising Officer and the Asst. Collector, they would do the classification based upon such manipulated documents/information and the importer definitely could be held liable for such misdeclaration. 7.12 The learned Advocate for the appellant/assessee has also asked cross-examination of Shri Sambhus. Shri Sambhus is an employee of the appellant/assessee and was dealing with the clearance work and use to sit in the CHA's office. Reason for declining the request for cross-examination has been given in the impugned order in para 5.8 and we are fully satisfied with the explanation. 7.13 Shri Sambhus is a co-noticee, the matter is more than 19 years old and Shri Sambhus is also a....
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....ecycling hoods incorporating a fan, whether or not fitted with filters 8414.10 Vacuum pumps 50% 8414.20 Hand - or foot-operated air pumps 50% 8414.30 Compressors of a kind used in Refrigerating equipment 110% 8414.40 Air compressors mounted on a wheeled chassis for towing 50% Fans : 8414.51 Table, floor, wall, window, ceiling or roof fans with a self contained Electric motor of an output not exceeding 125 W 110% 8414.59 Other 110% 8414.60 Hoods having a maximum Horizontal side not exceeding 120 W 110% 8414.80 Other 110% 8414.90 Parts 100% 8.2 Before going to the parts, it would be important to understand the scope of term "Ventilating and recycling hood incorporating a fan whether or not fitted with filter", as used in Customs Tariff. Customs Tariff is based upon BTN/H.S.N. system of classification. The HSN Explanatory Notes deals with the scope of various terms used in BTN/H.S.N. For the said term, relevant explanation is reproduced below :- Ventilating or recycling hoo....
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....s that ventilating and recycling hood falling under Heading 84.14 of the Customs Tariff are the ones which are used in home, restaurant, canteen, hospital, etc. There is no concept/general understanding that ventilating and recycling hood are used as parts/sub-assembly of room air conditioners. 8.5 We find the learned Advocate for the appellant/assessee has given lot of emphasis about the report dated 25-9-1990 obtained from Department of Mechanical Engineering, Government College of Engineering, Pune. We have carefully gone through the report. We find that the report starts with need of ventilation and thereafter defines meaning of ventilation, Mechanical Ventilation, Natural Ventilation, positive ventilation, Mechanical Ventilation General, Field of application of Ventilation, Minimum Ventilation for human occupancy, Re-circulated Air, Return Air, The supply and return air Grills, the meaning of hood. These definitions have been extracted from various books mentioned in the report. None of these definitions support the case of appellant. All that these definitions indicate is need of replacing stale/smelled air by fresh air at normal room temperature and how the same is d....
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....d the heading indicates "Assembly of air conditioners". The said certificate in brief tells various items to be assembled. The only sentence in the certificate relevant to the present issue is "Along with filter and grille, this stage of assembly is called "Recycling hood assembly with ventilation function." We note that items like evaporator, condenser, etc. are being considered as part of recycling hood assembly with ventilator function. A reading of the letter dated 21-10-1989, gives us the impression that the sentence has been introduced to suit the requirement of appellant. It does not clarify how and what works as recycling hood and what ventilation function is being carried out. We also note that this certificate dated 23-10-1989 was not found during the search operation in 1990. During the recording the statements including that of Shri V.N. Dhoot, M.D., Shri Rajiv R. Dodolkar and Shri Jayaraman Gopalan who were technical people actually involved in assembling the air conditioners but nobody talked about this letter. On the contrary, had indicated their ignorance about the ventilating and recycling hood and Shri V.N. Dhoot the Managing Director explained in detail how and w....
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....f Entry which were seen by Shri Mishra, there is no reason why the appellant/assessees are not able to produce now the so called literature and catalogue produced before Shri Mishra. They have not produced the same in reply to show cause notice, during the adjudication proceedings or even before this Tribunal. The obvious conclusion is that either no catalogue literature was produced or manipulated catalogue/literature/printout was produced which they found difficult to produce during investigation or adjudication proceeding. We may add that it is a usual practice in the Customs, that if any literature or catalogue is seen by the Appraising Officer or the Asst. Collector, they do initial such catalogue or literature as has been done in this case in respect of enclosure to invoice T002. In the absence of any catalogue/literature, or manipulated catalogue/literature Appraising Officer and the Asst. Collector will have to classify the parts assuming the description of the machine viz. "Ventilating and recycling hood" written as correct description and that is what appears to have been done in this case. The appellant/assessee have misled the Assessing Officer by indicating incorrect/f....
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....manipulated in order to evade duty. Shri V.N. Dhoot, Managing Director of the appellant Company has explained and admitted in detail in his statements recorded under Section 108 of the Customs Act, 1962. 8.11 Another contention taken by the learned Advocate for the appellant/assessee that the allegation of fraud, manipulation, etc. are of no relevance as the penalty earlier imposed has been set aside by this Tribunal by Order dated 9-11-2000. We have gone through the judgment of Tribunal and we also note that the Revenue has not appealed against the said order of the Tribunal relating to setting aside the penalty. With great respect to the said bench when the matter relating to confiscation and duty liability itself was remanded and adjudicating authority was to allow cross-examination, etc. it would have been more appropriate for the Tribunal to wait for the outcome rather than setting aside the penalty based upon certain observations (for lesser penalty) made by the earlier adjudicating authority. In our view imposing lesser penalty and not imposing penalty are two different things. In our view this is a clear cut case of manipulation, fraud to evade the duty. 8.12&ems....
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....le, who was General Manager of the District Industries at the relevant time and we also note that the adjudicating authority's observation how Shri Gale was confused by learned Advocate by not showing the provisional registration certificate of Aurangabad. There were specific restrictions in the SSI certificate at Aurangabad that the import of components will not be allowed and the unit at the relevant time was only at Aurangabad. In view of the said factual position, confiscation under Section 111(d) is correct and accordingly we uphold the same. We also uphold the mis-declaration in the description and confiscation under Section 111(m) of the Customs Act, 1962. 9. The learned Advocate has also quoted few case laws. We have gone through these case laws. These are in different context. Keeping in view our conclusion that the description was manipulated in the assessment and related documents and it is based upon the said manipulated documents that the initial consignment was released, the case laws cited are not applicable. 9.1 In the case of Dunlop India Ltd. (supra) the Hon'ble Supreme Court has held that meaning as understood by people in trade and commerce is to....