AI Drafter 
TaxTMI 
TaxTMI 
2020 (2) TMI 1133
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.....S.A. The appellant have been importing 'Segway' product in CKD condition in the form of very assemblies such as power assembly, transmission assembly, wheel assembly etc. as well as Air Cargo Complex, New Delhi wherein they have filed bills of entry for assessment and clearance of the imported consignment declaring the product as "CKD Parts of electrically operated two wheeler/personal transport/lithium ION battery for captive use". The product has been classified under Customs Tariff Heading 87149990/87144011 etc. They have also claimed benefit of Notification No. 21/2002- Cus. dated 01/02/2002 (Sl. No. 345) and Notification No. 12/2012-Cus. dated 17/03/2012 (Sl. No. 443 and 444). The department working on an intelligence has initiated investigations against the appellant for mis-declaration of the product at the time of import and have entertained a view that the importer/appellant have imported a complete units of the Segway personal transport self-balancing vehicle in CKD condition. However, at the time of the import, they have mis-declared the same as "CKD parts of personal transport/electrically operated two wheelers for captive use and have mis-classified the same under Cus....
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....KD parts of electrically operated two wheeler/of Personal Transport/Lithium ION Battery for captive use as detailed in Serial No. 1, 2 & 7 of Annexure - A to the Show cause Notice, should not be classified under CTH 87119091 and the benefit of Notification No. 12/2012-Cus. (Serial No. 444) dated 17/03/2012, as amended, fraudulently claimed by them towards the import of these goods should not be denied and BCD @ 30% should not be charged in view of Notification No. 12/2012-Cus. (Serial No. 443) (1) (b) dated 17/03/2012, as amended, towards the import of these goods ; (2) The seized goods valued at Rs. 20,43,777/- should not be confiscated under Section 111 (m) of the Customs Act, 1962 ; (3) The imported goods valued at Rs. 2,84,79,194/- other than the seized goods, as mentioned in Sr. No. (i) above should not be held liable for confiscation under Section 111 (m) of the Customs Act, 1962 ; (4) The differential Customs duty amounting to Rs. 73,24,680/- (Rupees Seventy Three Lacs Twenty Four Thousand Six Hundred and Eighty only) evaded/ short paid by them as detailed in Serial No. 1, 2 & 7 to Annexure - A to the show cause notice should not be demanded and re....
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.... confiscation under Section 111 (m) of the Customs Act, 1962 ; (4) The differential Customs duty amounting to Rs. 32,16,660/- (Rupees Thirty Two Lacs Sixteen Thousand Six Hundred and Sixty only) evaded/ short paid by them as detailed in Serial No. 3, 4, 5, 6, 8 & 9 to Annexure - A to the show cause notice should not be demanded and recovered from them by invoking the extended period as per provisions of Section 28 (4) of the Customs Act, 1962 ; (5) Interest should not be demanded and recovered from them on the aforesaid evaded/short paid Customs duty in terms of Section 28AA of the Customs Act, 1962 ; (6) Penalty should not be imposed upon them under Section 114A and 114AA of the Customs Act, 1962, as discussed in paras above ; (B1) Now, therefore, that Shri Ankur Bhatia, Director of M/s Bird Retail Pvt. Ltd., E-9, Connaught House, Connaught Place, New Delhi - 110 001 and Shri Rony Abraham, Manager (Sales) M/s Bird Retail Pvt. Ltd., E-9, Connaught House, Connaught Place, New Delhi - 110 001 are hereby called upon to show cause to the Additional/Joint Commissioner of Customs, Air Cargo (Import), New Custom House, Near I.G.I. Airport, New Delhi - 1....
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....- 110 001 and Shri Rony Abraham, Manager (Sales) M/s Bird Retail Pvt. Ltd., E-9, Connaught House, Connaught Place, New Delhi - 110 001 are hereby called upon to show cause to the Deputy/Assistant Commissioner of Customs, Inland Container Depot Patparganj, Delhi within 30 days of the receipt of this notice, as to why penalty should not be imposed upon them under Section 112 and/or 114AA of the Customs Act, 1962, as discussed in paras above". 4. The matter has been got adjudicated vide order-in-original No. 1/19/Pr. Commr./Import/ICD/TKD dated 28 January 2019. Vide the impugned order dated 28 January 2019 all the charges as leveled in the show cause notice have been confirmed by the Adjudicating Authority. The appellant are before us against the impugned order-in-original. 5. The learned Advocate appearing for the appellant has submitted that the appellant have imported the goods vide finally assessed bills of entry through ICD, TKD Tughlakabad at ICD Airport, New Delhi and ICD, Patparganj, New Delhi at lower rate of the basic customs duty at 10% in terms of Notification No. 21/2002-Cus. dated 01/02/2002 under Sl. No. 345 and thereafter under Notification No. 12/2012-Cus. dated....
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....llant. The learned Advocate submitted that the basic evidence for denying the benefit of this notification to the appellant is Chartered Engineer certificate and Chartered Engineer Shri Vinod Soorma has not been made available for cross-examination to the appellant at the time of adjudication. The report given by him cannot therefore be made basis for arriving at the conclusion that the gear box imported by them were at the pre-assembled form. 7. Regarding opinion of Shri Devesh Pareekh, it is submitted that during cross examination, in reply to question 7, he stated that the parts shown to him were not motorcycle parts and were parts of Segway. The opinion of Shri Pareekh doesn't support the Department's case that others electrically operated motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side-cars classifiable under CTH 87119091 were imported. 8. The appellant further submit that learned Commissioner erred in denying the alternative submission of the appellant claiming benefit of Notification No. 12/2012-Cus. dated 17/03/2012 as per entry 444. Entry 444 of the said notification is extracted below for ready reference. 1 2 3....
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....fiscation of goods or holding goods liable to confiscation u/s 111 or 113 of the Act ibid. It is appellant submissions that once demand of differential duty on disputed goods u/s 28 of the Customs Act has been issued, the penalty under Section 114A can only be imposed. The provisions contained in Sections 111 and 112 cannot be invoked in respect of same goods which are outside the definition of imported goods under Section 2 (25) of the Customs Act, 1962. 11. That the learned Commissioner's impugned order imposing penalty on appellant No. 1 under Section 114A and 114AA are not acceptable. 12. We have also heard the learned Departmental Representative who has vehemently supported the findings as given in the impugned order-in-original. 13. We have heard both the sides and have also perused the record of the appeal. 14. The issue for consideration before us in these proceedings is whether the consignments imported by the appellant vide 10 subject bills of entries were 'Segway electrically operated personal balancing vehicle' in condition of completely knocked down condition classifiable under Chapter Heading 87119091 or whether these were CKD parts and assemblies of parts....
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....ed that Segway were being imported by them in parts and they consisted with the following components : "(i) Power Base : which was the main part of the Segway and was in the form of a platform on which the rider stands and which contains sensons, computer parts etc. ; (ii) Info Key : the remote control which controls the operation of the Segway (all the components required for operations of the Segway were contained in it) ; (iii) Fender frame : which was made of plastic ; (iv) Wheel : used in the Segway for its movement, each wheel consisted of one rim, one tyre and one tube (only in 12 model) ; (v) Gear Box : mentioned as transmission assembly in the Bill of Entry and which controls the speed of the Segway requiring no further assembly ; (vi) Battery : imported in complete ready to use condition, each Segway having two batteries. That all the components required for assembly of a Segway were being imported in a single Bill of Entry or mere including Nuts, screw etc., user manual as received from the manufacturer; that they neither procured nor required any local part/component for assembling a Segway and the same was being ass....
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....o use components for further assembly of 'Segway' product. 20. For deciding the appropriate classification for imported consignments of the Segway in CKD condition it will be appropriate to have look at the relevant Customs Tariff Heading 8711 and 8714. 21. It can be seen that Chapter 8711 covers primarily motorcycles and like products which includes mopeds, side cars, scooters as well as electrically operated bicycles. It is relevant to mention here that Harmonization Committee of the World Customs Organization in its 58th Session of the Committee has further elaborated the scope of classification under Chapter Heading 8711 to cover the products such as self-balancing, electrically power two wheel transportation devices which are known by various names, such as, hover board, smart scooter, drift vehicle. The relevant extract is reproduced here below :- "No. Product Description Classification HS Codes considered Classification rationale 17 Self-balancing, electrically - powered, two-wheeled transportation device (commercially known as "hoverboard", "smart scooter", or "drift vehicle"), designed for use within low speed areas such as pavements (sidewalks),....
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.... sub-Heading 87119091. We have also analyzed the declaration which have been made by the appellant while making import of various complete assemblies of various components of Segway and find that the classification adopted by the appellant was under CTH 87149990, which primarily pertains to parts and accessories of the vehicles of heading classifiable under 8711 to 8713. Since it has already been established with the help of an expert that the components imported by the appellant while put together will form a complete operative Segway product. We, therefore, feel that classification claim by the appellant while getting clearance of the consignment appears to be not correct. Since the technical person has given his categorical finding that what has been imported by the appellant were the Segway product in the CKD condition and the appellant did not have any evidence to contradict the finding of the technical expert, we are inclined to accept the opinion expressed by the technical expert. We also take support of a decision given by Hon'ble Gujarat High Court in the case of Inter Continental (India) versus Union of India - 2003 (154) E.L.T. 37 (Guj.). to rely on the expert opinion. T....
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.... of the product shall not be other than one as regards entry in which the goods admittedly fall at the time of import". 24. Now coming to the question whether the benefit of the Notification No. 12/2012-Cus. dated 17/03/2012 is available to the appellant or not it will be proper to have a glace at the relevant entry of the above notification for sake of convenience:- 443. 8711 Motor Cycles (including mopeds) and cycles fitted with an auxiliary motor, with or without side cars, and side cars, new, which have not been registered anywhere prior to importation, - (1) As a completely knocked down (CKD) kit containing all the necessary components, parts or sub-assemblies, for assembling a complete vehicle, with, - (a) Engine, gearbox and transmission mechanism not in a pre-assembled condition ; 10% -- -- (b) engine or gearbox or transmission mechanism in pre-assembled form, not mounted on a body assembly, 30% -- -- (2) in any other form. 60% -- -- 444. 87149100, 871492, 871493, 87149400, 871495....