AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (4) TMI 37
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....ead of correctly classifying them under Customs Tariff Heading 8527 and hence, were not discharging appropriate Customs Duties thereon. 2.2 The Department alleged inter alia as under : (i) AVR and HTS imported by appellants are similar to those manufactured by M/s. Onkyo, USA, M/s. Pioneer Electronics, USA, Inc., M/s. LG Electronics, USA, Inc., M/s. Yamaha Corporation of America, etc. (ii) AVRs and HTSs are not sold by M/s. Onkyo to their customers describing them as "amplifiers", but are sold as AVRs/HTSs only. (iii) Advance Rulings given by USA Advance Ruling Authorities for M/s. Onkyo USA, M/s. Pioneer Electronics, USA, Inc., M/s. LG Electronics, USA, Inc., and M/s. Yamaha Corporation of America for confirmation that Audio Video Receivers (AVRs) and Home Theatre Systems (HTSs) are to be classified under 8527.91.6080 of the Harmonized Tariff Schedule of the United States (HTSUS). (iv) CTH 85184000 is specific to audio frequency amplifiers while CTH 85182200 is specific to multiple loudspeakers mounted in the same enclosure. (v) AVRs/HTSs are not mere audio frequency amplifiers or multiple loudspeakers, but have many features including AM/FM receiver, playback of sound throu....
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.... 111(m) of the Customs Act, 1962 for the aforesaid reasons. (e) Penalty should be imposed on them under Section 112 and/or 114A and 114AA of the Customs Act, 1962. 2.3 In adjudication, the Commissioner of Customs vide Order dated 30.06.2014 confirmed the re-classification of the impugned items and demand of differential duty with interest thereon and confiscation of the AVR and HTS as proposed in the Show Cause Notice. The adjudicating authority has also imposed equal penalty of Rs. 4,61,81,449/- under Section 114A ibid and penalty of Rs. 25,00,000/- under Section 114AA ibid on the appellant. Penalties of Rs. 10,00,000/- under Section 112(a) ibid and Rs. 5,00,000/- under Section 114AA ibid were imposed on Shri. M.A. Dhandapani, Managing Director of the appellant. Aggrieved, the appellants have filed this appeals. 3. Today when the matter came up for hearing, on behalf of the appellants, Ld. Senior Advocate Shri. B. Kumar assisted by Ld. Advocates, Shri. S. Krishnanandh, Shri. B. Satish Sundar and Shri. A. Ganesh, made oral and written submissions which can be broadly summarized as under : (i) The earliest Bill-of-Entry mentioned in the Show Cause Notice is dated 22.05.2008. Til....
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....ue Guru Engineers and Valuers Pvt. Ltd., who undertake inspections on behalf of the Customs Department and who clarified that the products in question were primarily 'amplifiers'. The lower authority has not rendered any finding with respect to such a submission and to that extent, the lower authority's order is a non-speaking one. (iv) In responding to the point raised by the importer, vide their reply to the Show Cause Notice dated 11.07.2013 and subsequent submission of the same in the personal hearing of 07.05.2014 that the Department of Electronics had clarified the product to be treated as amplifier, the lower authority shockingly rejected the submission by stating that the clarification was given in the context of applicability of Electronic and Information Technology Goods (Requirements for Compulsory Registration) Order, 2012 and alleged that the clarification was based purely on the information provided by the importer and not based on physical testing and that the importer did not provide any model number. The importer had emailed all relevant catalogues containing the technical specifications and features to the Department of Electronics on this point and it is an esta....
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....s-of-Entry as amplifiers which had been approved in the assessment by the proper officer of the Customs, cannot mean that the declarations made were allegedly false and it is an undisputed fact that product catalogue/literature, which is also submitted, only indicated the imported goods to be 'amplifiers' per se. In this connection, the appellant relies upon the order of this Tribunal in the case of C.C., Chennai Vs. M/s. Sri Krishna Sounds & Lightings vide Final Order No. 41937/2018 dated 03.07.2018. 4. On the other hand, on behalf of the Department, Ld. AR Shri. K. Veerabhadra Reddy appearing on behalf of the respondent made a number of submissions which can be broadly summarized as under : (i) Chapter Heading 8527 covers reception apparatus for radio broadcasting, whether or not combined in the same Heading with sound recording or reproducing apparatus; (ii) The adjudicating authority has found, from the website of M/s. Onkyo (www.onkyo.ca), that the subject goods are having a number of functions which gives the product its value and saleability; (iii) That in fact the appellants themselves have classified the products under "receiver" and not "amplifier". Hence, it is obvio....
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....ion apparatus for radio broadcasting, whether or not combined with sound recording or reproducing apparatus or clock. Therefore, the impugned item requires to be classified only under CTH 8527. (x) The appellants have mis-classified AVR and HTS with an intention to evade payment of appropriate Customs Duty and have suppressed the fact of the Advance Ruling given for M/s. Onkyo, USA. Hence, the invocation of extended period is very much justified. 5. Heard both sides and have gone through the facts of the case. 6. We find that the dispute is in a very narrow compass and limited to the classification of the imported items viz. Audio Visual Receivers (AVR) and Home Theatre Systems (HTS) imported by the appellant, whether required to be classified under Heading 8527 of the Customs Tariff as held in the impugned Order or under Heading 8518 ibid as claimed by the appellants. 7. From the facts on record, it is evident that the appellants had made a number of imports of AVR and HTS. As per the worksheet attached to the Show Cause Notice, these imports are from 22.05.2008 to 05.03.2013. Appellants have pointed out that most of the imports were made earlier to 08.04.2011 before self-asse....
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.... Video Processing, HQV video processing, MultiEQ, etc. From this finding itself, it is discernible that the impugned product has a host of Audio/Video conversion facilities, like audio/video upconversion, Dolby & DTS decoder, MultiEQ, etc. 9.3 The adjudicating authority has, in paragraph 13 of the Order, done research on Qdeo Video Processing and MultiEQ and has found that these are specialized processes for improving and enhancing the quality of video, which deliver "accurate, enveloping and distortion-free sound" or "high-fidelity audio/visual reproduction standard". We are unable to fathom how the adjudicating authority, having taken pains to do all this research, has nonetheless concluded that all these devices are not at all connected with amplification of sound. 9.4 She has further gone on to conclude that the AVRs are not just amplifier, but is having more features which are "technically superior than the function of amplifying sound/audio" since they have the function, hardware and software for processing video, reading the storage unit with USB connection and also have the facility and functionality to receive radio signals of both FM and AM. In our view, the entire exer....
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....s entire body, but by its tail. 11. It is seen that the Show Cause Notice has demanded differential duty in respect of both AVR and HTS imported by the appellants. However, we find that most of the discussions, if not all, in the Show Cause Notice have focussed on AVR and there is no separate ground or reasoning as to why the HTS should also be brought into CTH 8527 other than the common allegation that they too are predominantly AM/FM receivers. 12. Be that as it may, we find that the downloaded copies of technical details in respect of different models of AVR and HTS imported by the appellant form part of Sl. Nos. 24 and 25 of the list of relied upon documents in Annexure-A to the Show Cause Notice. That the specifications of the AVRs are all geared for Dynamic Power, Total Harmonic Distortion Plus Noise, Damping Factor, Input Sensitivity and Impedance, Rated RCA Output and Impedance, Frequency Response, Signal-to-Noise ratio, Speaker Impedance and similar features for video amplification. The tuner section, featuring the built-in FM and AM, is only a small add-on functionality to the AVR. The AVRs also have advanced features like HDMI conversion video formats, Deep Colour, Lip....