TaxTMI 
TaxTMI 
2024 (5) TMI 1674
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....nd components stated to be intended for use in that very manufacture - and contrarily enough to confound the direction taken by the other in pursuit of levies peculiar to their respective domains. And, not strangely either, the eddying has complicated the adjudications in 'un-trying' to forestall mutual destruction by resort to any, and whatever, foray to assure survival of their respective remits. M/s J & J Precision Industries had established a manufacturing facility in Goa for production of 'SD memory card' which, according to them, involved import of parts and components on which 'software' would be loaded to render it deployable in 'mobile handsets' manufactured elsewhere. 2. On culmination of proceedings, the imported goods were held to be more aptly conforming to description corresponding to tariff item 8523 5100 of First Schedule to Customs Tariff Act, 1975 with the heading - intended for 'DISCS, TAPES, SOLID-STATE NON-VOLATILE STORAGE DEVICES, "SMART CARDS" AND OTHER MEDIA FOR THE RECORDING OF SOUND OR OTHER PHENOMENA, WHETHER OR NOT RECORDED....' in the First Schedule to Customs Tariff Act, 1975, as also of 'Semi-conductor media' as one of the t....
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....nectivity cables of mobile handsets including cellular phones; (c) sub-parts of (a) and (b) ...' of chapter 85 or any other chapter of First Schedule to Customs Tariff Act, 1975, disentitled them to exemption from duties of central excise that, according to appellant, has been erroneously determined. It is on record that the claim for eligibility for exemption, as reported in ER1s, were found to be intended for 'light emitting diodes (LED)' corresponding to tariff item 8541 4020 of Schedule to Central Excise Tariff Act, 1985 which, upon being brought to the notice of assessee, was clarified as typographical error instead of intended serial no. 272 in the same notification and that summons for list of manufacturers to whom the same were cleared against prescribed 'annexure' and details of other sales were responded to with intimation of the entirety of clearances having been for the open market. 5. All of these were yet not on the horizon when appellant imported 220 consignments, valued at Rs. 3,67,30,70,505 and declaring conformity with description corresponding to tariff item 8523 5290 of First Schedule to Customs Tariff Act, 1975, claiming entitlement to avail exem....
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....om holding, in order [order-in-original no. GOA-EXCUS-000-COM-023-15-16 dated 30th March 2016] at the conclusion of adjudication of show cause notice ibid, that, peripheral work on the imported goods, as emerged from investigations supra notwithstanding, sufficed for coverage of '6. In respect of goods covered by this Section, conversion of an article which is incomplete or unfinished but having the essential character of the complete or finished article (including 'blank', that is, an article not ready for direct use, having the approximate shape or outline of the finished article or part, and which can only be used, other than in exceptional cases, for completion into a finished article or a part into complete or finished article shall amount to 'manufacture.' ' in Notes to Section XVI of Central Excise Tariff Act, 1985 to the activity of assessee not only for conformity with 'manufacture' in section 2(f) of Central Excise Act, 1944 but also for venturing further for disallowing claim for exemption to fasten duty liability of Rs. 5,50,55,5701 under section 11A of Central Excise Act, 1944, along with applicable interest under section 11AA of Central Excise Act, 1944, w....
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....rectly to the most akin description in the relevant heading 8523 in First Schedule to Customs Tariff Act, 1975. He argued that reliance could not be placed on circular no. 12/2012-Cus dated 1st May 2012 which discussed the technology that substituted 'printed circuit board (PCB)' with 'substrate' to hold that the intent of a separate tariff line in 'solid-state non-volatile storage device' is not negated by such substitution and that, in the absence of finding that the impugned goods was such, the conclusion in the impugned order is erroneous. It was further contended that the notion of finished goods having been imported by appellant is patently erroneous as the imported goods do undergo processes as held by the Commissioner of Central Excise. He submitted that it was not open to two authorities to hold, for the purpose of levy, that there was no manufacture and that there was manufacture. He further argued that the common finding of 'no software' in the finished goods was incorrect as the jurisdictional Commissioner of Central Excise has conceded that 'formatting' did occur and that, with 'computers' available in the factory, it certainly could not be held that wherewithal for lo....
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....t attempted compliance. 11. Commissioner of Customs, Mumbai has erected jurisdictional validity for recovery of duty and confiscation, attended upon with penal consequence, upon two pillars - erroneous classification of goods at the time of import and erroneous declaration of intended use of imported goods - and either of these, to the extent acknowledged by law, suffices for affirmation of the consequential detriment. It has been set out in the impugned order that, stemming from lack of conclusive compliance with the either or both of the contingencies spelt out in section 47 of Customs Act, 1962 for permitting clearance of imported goods by 'proper officer', duty liability of past clearances could be re-determined for recovery under section 28 of Customs Act, 1962 and that erroneous declaration of intended use in the claim for exemption from duties of customs on past imports merited revocation of that privilege. On the first, there can be no doubt as admittance of 'tariff line' declared in the bill of entry by the 'proper officer' under section 17 of Customs Act, 1962 does not, owing to the deemed tentativeness of clearance under section 47 of Customs Act, 1962, preclude deman....
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....nterpretative rules' as, in the event of failure prompting search for another, adjudicatory exercise would then traverse the confines of the show cause notice. 12. The proposition in the show cause notice that the impugned goods conformed to tariff item 8523 5100 of First Schedule to Customs Tariff Act, 1975 appears to have had its genesis in the goods comprising the 'live' consignment - and in uncut form - being 'memory cards' presented as sheets of 45 nos. each and, therefore, conforming to '(a) Solid-state non-volatile storage devices (for example, - flash memory cards or flash electronic storage cards) are storage devices with a connecting socket, comprising in the same housing one or more flash memories in the form of integrated circuits mounted on a printed circuit board. They may include a controller in the form of an integrated circuit and discrete passive components, such as capacitors and resistors. ..' in Note 4 of chapter 85 of First Schedule to Customs Tariff Act, 1975. No further elaboration of the characteristics of the impugned goods suggesting conformity with, or approximation to, this description of storage device has been offered as justification i....
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.... and certainly one at variance with the one resorted to for final outcome, that has had the effect of fastening a huge duty liability may yet remain to be recorded. This is certainly not the determination, either for recovery of duty 'not paid' envisaged in section 28 of Customs Act, 1962 insofar as the 'past imports' are concerned or for fastening duty liability by 'proper officer' assessing the 'live' consignment in accordance with section 17 of Customs Act, 1962, obligated under section 12 of Customs Act, 1962. More so as the inference of the goods being 'finished', without need for further processing, does not preclude conformity with the immediately preceding tariff line to nudge resolution of the dispute for comparison in terms of rule 3 of General Rules for Interpretation of the Import Tariff appended to Customs Tariff Act, 1975 and, therefore, requiring evaluation of "smart cards" which the show cause notice omitted to. We cannot but be struck by the 'confusion most confounded' manifest in such finding to suffice for setting aside the revised classification. 14. Notwithstanding the valiant attempts by Learned Authorized Representative to demonstrate the thinking behind t....
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....in notification issued under section 25 of Customs Act, 1962. 15. According to Learned Counsel, even if the declared classification is to be substituted, and on the purported finding of the goods being finished, with the sole description available for recourse thereby, viz., 'memory cards', the consequence, in terms of the benefit of impugned notification, would not vary as far as the jurisdiction of the adjudicating authority is concerned. The appellant had claimed coverage of description corresponding to tariff item 8523 5290 in First Schedule to Customs Tariff Act, 1975 which is required to undergo evaluation for aptness only when, owing to operation of rule 3 of General Rules for Interpretation of the Import Tariff appended to Customs Tariff Act, 1975, goods under dispute are held as conforming to more than one tariff line. Else, it behoved customs authorities to first demonstrate that the proposed tariff line, on its own standing, offers apt description of the goods.. It is common ground that the imported goods are storage device on semiconductor media and, thereby, fences in the subclassification under heading 8523 of First Schedule to Customs Tariff Act, 1975 as the battl....
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....g from fitment against tariff item 8523 5100 of First Schedule to Customs Tariff Act, 1975 in the impugned order. 17. We may, as well, take note here of another aspect, viz., breach of principles of natural justice in the proceedings, which impacts the propriety of recovery in both orders and marks a yawning chasm over which both have leaped to conclusions that stand deprived, thereby, of the 'saving grace' of preponderance of probability. That the 'past imports' were the same as the 'live' consignment and that the only work rendered on them after import was that of disaggregation, printing and packing relies entirely on statements which the Commissioner of Customs found to suffice for revising the classification to revisit assessment for securing jurisdiction and also for discarding the claim of these goods having been subjected to 'manufacture' which, re-classification notwithstanding, may yet have entitled the assessee to be freed from recovery of duty. The goods imported in the past were not available for verification and the charge of 'software loading' not having occurred has its foundation only in the statements relied upon in the impugned orders with the Commissioner of ....
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....hts in de novo proceedings and that the previous track record of the noticee militated against being recipient of such gracious gestures from a Commissioner of Customs. These are sufficiently repugnant to rule of law, as well as judicial admonition to deem each adjudication as limited to the breach intended to be plugged, as to merit further attention of ours. We, therefore, limit ourselves to discard of the statements, to the extent not evidenced by alternative facts, from consideration in disposal of these appeals. 19. Consequent to validation of description as 'unprocessed memory cards', doubting of intention to process the impugned goods for conformity with notification no. 12/2012-Cus dated 17th March 2012 (at serial no. 431) lacks support. The adjudicating authority, however and in response to the reply to notice that referred to determination of 'manufacture' in adjudication proceedings before Commissioner of Central Excise & Service Tax, Goa, did draw sustenance from the finding therein that 'software' was not to be loaded, as well as from search evincing that facility for such uploading did not exist at the premises, to conclude that not only had 'manufacture' not occur....
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....aration to be relevant to assessment. 21. We must necessarily address the reference in adjudication order to decisions of the Tribunal that were said to support the appropriation of authority by customs officers to determine finding on 'manufacture' that impugned goods, cleared under claim for exemption, were subjected to. The two decisions in re APP Enterprises were for disposal of miscellaneous applications and the interim orders arising thereby are bereft of value as precedent. In re NB Footwear, the observation on jurisdictional competence is more in the nature of obiter dicta inasmuch as the dispute over denial of exemption to imported goods at the threshold by customs authorities was upheld by the first appellate authority solely by dismissal on ground of limitation that came to be affirmed by the Tribunal. In re Havells India Ltd, the proposal to vary the assessment, effected under section 17 of Customs Act, 1962 at the time of import, in proceedings under rule 7 of Customs (Import of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 1996 was disapproved of and, furthermore, in the context of recourse merely for by-passing the limitation in sec....
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....2-CE dated 17th March 2012. Inherent to the finding is the premise that the said notification intends, in much the same way as the erstwhile scheme of 'captive consumption' did, for duty to be temporarily deferred till completion of the 'finished goods' on which full liability was to be discharged without having to meander through dispensable duty levy at each stage for adjustment at the next with the caveat that intermediate product would be liable to duties of central excise should the next stage be not so. The manner in which serial no. 272 has been carved out in the impugned notification does not validate such a premise and, entirely, from overt lack either in such design or of such assertion, therein. There is no principle of interpretation that permits such intendment to be assumed after rescinding of the earlier notification. Here the adjudicating authority concluded that the exemption could not be extended to clearances for lack of evidence - either within the design of exemption or in the facts of sale to dealers as admitted by the assessee - of clearances to eligible buyers registered under Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of E....
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....quarrel that the procedure stipulated in Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001 was not conformed with but, in the light of such settled law and the acknowledged end use of the impugned goods, it was incumbent upon the adjudicating authority to establish that the 'SD memory cards' cleared by the appellant herein did not find use in mobile handsets or cellular phones for the trajectory of that logic to be validated in law. Else, the only conclusion is that the impugned goods were used in 'duty paid' mobile handsets or cellular phones with no ground - either from the specifics in the notification or from evinced diversion - to demand duty on the impugned goods. 26. It has been pointed out by Learned Counsel, and to the exclusion of the enumerated reasons for invalidation supra of the demand in the impugned order, that the particular enumeration in the impugned notification also did not envisage responsibility of the manufacturer to ascertain, and subject their clearances to, 'end use' after removal from their factory. In support thereof, he drew our especial attention to the schema of the notification which ove....