TaxTMI 
TaxTMI 
2017 (4) TMI 1002
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.... (b) Whether the appellants / importers are eligible for a concessional rate of duty of customs claimed by them for the said product under Exemption Notification Nos.6/2011 CE dated 01.03.2011 (Sr. No.17) and 12/2012-CE dated 17th March 2012 (Sr. No.255), which specified tariff heading as 847170 at six digits level only and described the eligible goods only as hard disk drives? and (c) Thus, whether the demand of duty with interest by invoking extended period, and penal action taken by the Respondent Commissioner of Customs is sustainable in the eyes of law? 3. Both sides were heard at length. We have carefully considered the records, appeal paper-books, written submissions and the judgments relied upon by both the sides. 4. The following factual position is undisputed. 4.1 The imported goods in question were declared in the Bills of Entry under CTH 8471 70 20 which is for "Hard disk drives". The goods imported not for fitment inside the CPU, and is used by connecting it to a CPU externally with a USB or other interface as a plug-in device. 4.2 The declared "description" in the instant case is neither in dispute, nor is contrary to the undisputed Invoices sub....
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....ion. We have seen that the "data media' in the subject imported drive is such, which can neither be removed from the "drive", nor is the same exchangeable. 4.8 It is also that another sample containing one set, comprising of a "data media" in the form of a "Removable Disk" Cartridge and a "drive", was shown on behalf of the importers during the hearing. It was seen that the said "data media" could be easily inserted and removed from the said "drive". The said data media was thus removable and exchangeable. The drive for such removable and exchangeable "data media" was thus "Removable or Exchangeable Disc Drives" under CTH 8471 7030, as correctly pointed out on behalf of the Appellants. 4.9 The subject imported "drive" as such can be easily disconnected from the CPU. Thus, only the subject "drive" as whole is removable and exchangeable. Goods described in CTH 8471 70 30 are not "removable or exchangeable drives", but "Removable or Exchangeable Disc Drives". 4.10 Vide an Office Memorandum dated 5th June 2013, bearing No. 5(6)/2012-IPHW, Department of Electronics and Information Technology, Government of India has clarified the issue with copies marked to the Joint Secret....
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.... body only; and (ii) meant for external use with a computer or laptop as a plug-in device and the custom duty benefit was Nil in the first category and 4% in the second category. Now, in the present notification separate categorization is not there and the custom duty benefit at 6% is available to all goods covered under 8471 70 or 847330 or 8523. (iv) The External Hard Disc Drives are portable Hard Disc Drives and are not exchangeable Disc drives. Thus, the external hard disk drives shall also be covered under 84717020, if at all, the classification has to be extended to 8 digit HS codes. 3. This has the approval of Dr Ajay Kumar, Joint Secretary, DeitY. O/c Sd/- (S.K. Marwaha) Director Tel: 24365940 Encl. As above. Shri P.K. Mohanty Joint Secretary (TRU) Tax Research Unit Department of Revenue Ministry of Finance North Block, New Delhi. Copy to: Shri R.P. Singh, Director (Customs), Central Board of Excise and Customs, Department of Revenue, Ministry of Finance, North Block, New Delhi. Issued by D/R Sd/- 5/6/2013" 4.11 Neither the au....
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....ther items. On careful consideration of the technical specification furnished, and the sample of imported items along with tariff entries and the exemption notification, we are in agreement with the findings in the impugned order. The terms hard disk drive used in the notification has not been amplified either by adding *external" or "internal"' On this simple premise alone, exemption to the said item cannot be denied'. Admittedly, the imported items are hard disk drive and are meant for external use with computer or lap-top as plug-in device' They are portable hard disk drive' The contention of the Revenue that they are only removable or exchangeable disk drive, is not factually or technically correct. We have perused sample of such removal or exchangeable disk drives. They have full drive mechanism in which storage media is inserted and along with such media can be removed and inserted in computer for usage' We have also perused the technical literature of the manufacturer of the impugned goods. Further, the technical opinion given by the Ministry of Communication and Information Technology, is directly on the issue. We find that in the appeal, the Revenue con....
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.... 13.01.2017, after perusing the relevant material and hearing the Counsel for the appellant importer, the Hon'ble Supreme Court was pleased to dismiss the said Civil Appeal D. No.42407 of 2016, without disturbing the Order dated 13.12.2016 by which the earlier Order dated 04.10.2016 in these appeals was recalled and the appeals were directed to be relisted for de-novo consideration. Thus, both sides were again heard by us in the aforesaid appeals, along with other appeals. 7. The impugned Orders hold firstly that CTH 8471 7020 would only cover "internal hard disk drive" but not "external hard disk drive", and secondly that the product is "more appropriately classifiable" as an "exchangeable or removable disc drive" under CTH 8471 7030, rather than as "hard disk drive" under declared CTH 8471 7020. It was held that CVD shall be leviable at 10% ad-valorem by denying exemption under Notification No.06/2006-C.E. till 16.03.2012 and at 12% ad-valorem by denying exemption under Notification No.12/2012-C.E. from 17.03.2012 onwards. Several references from internet and technical literatures and various judgments are referred and relied upon in the impugned Order. After careful considera....
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....for data media DVD; and the CTH 8471 70 90 being a residuary heading would cover all other types of drives with data media not specified above. Vide Circular No.105/2003-Cus dated 16.12.2003 the Board has clarified that item "Storage Disk Arrays" is appropriately classifiable under CTH 84717090. 11. This sub-classification of different drives is evidently not on the basis of whether the drive is external, portable, removable or exchangeable, but on the basis of the data media suitable for that drive. The word 'removable' has to be read with the word disc and not with the word drive. Hence, mere fact whether a drive is for external use as plug-in device or for internal fitting in CPU, would have no impact at 8 digit level in CTH 8471.70. 12. The fact that the Tariff item No. 8471.70 is sub-divided in a list of drives, is admitted position in the written submissions tendered by the Revenue in para 2, wherein it is inter alia contended that- All items covered under tariff sub-heading 847170 are storage units in the form of drives and not media. However, in further stand taken by Revenue, there is apparent fallacy in sub-division of classification at 8 digit levels,....
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.... drive, DVD Drive / DVD writers, and Combo drive, depending upon whether drives were meant for fitment inside the CPU housing / laptop body or were meant for external use with a computer or laptop as a plug-in device. Thus, even external hard disc drives were being classified under CTH 8471 70 20 in the imports made by the appellants, while paying higher rate of concessional duty at the rate of 4%. Revenue has admittedly not disputed the classification / exemption for the same goods for this period immediately prior to issuance of Exemption Notification 6/2011-CE dated 1.3.2011. 15. As per the ratio laid down by the Hon'ble Supreme Court in Union of India vs Garware Nylons Ltd, 1996 (87) ELT 12 (SC), the clarification issued by Seagate, can also be relied upon for construing the meaning of the expressions occurring in the Tariff Schedules in the sense it understands it normally, because it is not in dispute that Seagate not only deals in such goods but is amongst the top manufacturers of the subject goods in the world. 16. It is therefore a case where the Revenue has only taken a stand of convenience to anyhow deny the benefit of exemption which is clearly available to the ap....
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....s no bifurcation made to the goods falling under Sub-Headings of 84717020 or 84717090. There is no dispute that the item is Hard disk Drive, therefore, mere fact that the Hard Disk Drive have been imported in array will not disentitle them from classification under heading 847170 irrespective of its sub-heading. Therefore, the order passed by the Commissioner (A) is legal and proper. There is no merit in this appeal and the same is rejected." Vide Order dated 11.7.2008 reported as Commissioner v. Tata Consultancy Services Ltd.,2016(339)ELTA218 (S.C.), the Civil Appeal Diary No. 15512 of 2008 filed by Commissioner of Customs & Central Excise, Hyderabad-II against the said judgment dated 13.8.2007 was dismissed by the Hon'ble Supreme Court not only for delay but also on merits. Thereby, the said judgment of this Tribunal merged with the Order passed by the Hon'ble Supreme Court. Even in the instant case, the product is a hard disc drive, although external, under heading 847170 at six digits level. There can therefore be no doubt about the eligibility for concessional rate of duty under the subject Exemption Notifications irrespective of its classification at eight digits lev....
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....ecided are such that I would be rendering disservice to the mandate of the Tribunal and the scope of, rectification of mistakes, were I not to elaborate, albeit briefly, on the reasons for doing so by this separate order. 27. Consequent upon the original decision of ours to confirm the order of the adjudicating authority impugned before us, an application was moved by M/s Fortune Marketing Pvt Ltd pointing out errors apparent from the record in having failed to take note of some submissions made on their behalf during the original hearing. The critical ones that were claimed to have been disregarded were the opinion rendered by the Department of Electronics & Information Technology (DEIT) of the Government of India, as well as that of Centre for Development of Advance Computing (C-DAC), that disk drives of every variety should be allowed the benefit of exemption from duty and the submission that the ingredients of suppression, or misrepresentation, could not be presumed to exist in the context of the confusion besetting the different departments of the Government of India. That was sufficient ground for us to resort to the rare step of recalling our order to hear the matter afre....
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....such protracted correspondence including, but not necessarily reflecting, such expert opinion. 30. In the absence of unequivocal communication setting the issue to rest, once and for all, by the Department of Revenue, it devolves upon the proper officer to determine the eligibility for exemption or the lack thereof. In the discharge of this statutory obligation, the proper officer may place reliance upon the clarifications emanating from experts but does not, to the exclusion of the principles governing classification enshrined in Customs Act, 1962 and Customs Tariff Act, 1975, have to be overwhelmed by the expert opinion. And so too, in appellate proceedings. It must, nevertheless, be conceded that no blemish attaches to being convinced by expert opinion that is not controverted by justifiable counter. Therefore, while holding that the expert opinion is an acceptable criteria, their viewpoint need not necessarily have to prevail over tax policy. 31. Of more consequence to the claim of the importer for exemption is the decision of the Principal Bench of the Tribunal in M/s Supertron Electronics Pvt Ltd [final order no.50134/2017-CU(DB) IN APPEAL no. C/54221/2014-CU(DB) dated ....