Import of Fax - classification under CTH 8443 3260 at Nil rate on ground that machine is capable of connecting to network - however, technical data proves that goods lacked in capability - prima facie there was deliberate misdeclaration: CESTAT by Majority
By TIOL News Service
NEW DELHI, MAR 30, 2014: DURING the period 2007-2010,the appellant imported various information technology goods including Facsimile machines from M/s.Panasonic Asia Pacific Pte.Ltd., Singapore.They declared the said goods as falling under Customs Tariff Heading 8443 32 60, which provides nil rate of duty to machines capable of connecting to an automatic data processing machine or to a network.However, subsequent to the clearance of goods, investigations were initiated and a view was entertained that the goods are properly classifiable under heading 8433 39 70 which attracts duty at the rate of 7.5%.Such view was entertained on the ground that the machines in question were not capable of connecting to automatic data processing machines or network.
The notice was issued by invoking longer period of limitation and stands culminated into an impugned order passed by the Commissioner where he has confirmed duty of Rs.82,71,874/- against the appellant along with imposition of penalty of identical amount.In addition, penalties also stand imposed upon other applicants.
The appellant is before the CESTAT.
The Member (Judicial) observed that the adjudicating authority had not referred to any misstatement or suppression of facts attributable to the appellant with an intent to evade payment of duty but had invoked the longer period of limitation on the simpliciter ground that the appellant is a regular importer and as such, should have been familiar with various aspects of classification of the goods.Holding that it is well settled law that for invoking the longer period of limitation, there should be some positive act on the part of the assessee to suppress the information with an intention to evade payment of duty whereas in the present case while assessing the goods, the Revenue had not raised any objection as regards classification and had allowed the goods to be cleared under the classification claimed by the importer, no malafide can be attributed to the importer.The Member (J) also noted that in the Circular No.5/92-CX.4 dated 13.10.92 it has been observed by the CBEC - when the Department as well as the Trade was not clear about the correct legal position, in such cases, it would ordinarily call for restricting the demands for six months from the relevant date only.
Holding that the prima facie view is that the demand in question is barred by limitation, the Member (J) ordered unconditional stay in the matter and allowed all the stay petitions.
The Member (Technical) differed with the above view and came to the conclusion that the appellant did not have any Prima facie case for total waiver of pre-deposit.Inasmuch as he directed the appellant to make a pre-deposit of 50% of total demand.The reasoning given is - that these facsimile machines were not capable of connecting to an automatic data processing machine or network.During investigation, it was found that Unifax Systems is the subsidiary of Panasonic and they were in the full knowledge of specification of facsimile machines imported by them which were not capable of connecting to an automatic data processing machine or network, [there was clear case of mis-declaration of classification under chapter 8443 32 60 whereas these were classifiable under chapter heading 8443 39 70 which attracts duty @ 7.5%].If the DRI had not undertaken the investigation, this fact of mis-declaration could not have been come out and there could be loss of Revenue.
In view of the difference in opinion, the matter came to be referred to the Third Member (Judicial).
The Member (Judicial) inter alia observed -
"24.Statements recorded from different importers of the same machine imported by the appellant proved that the machine has no inbuilt computer networking facility.Without an external aid the machine cannot be connected to network.This, prima facie , leads to the conclusion that the import made by the appellant was not capable of getting connected to an Automatic Data Processing machine.
25.Revenue supporting the adjudication relied upon the technical literature and the result of physical demonstration as well as oral evidence gathered in the course of investigation to contend that the appellant was not entitled to nil rate of duty with the abetment of the supplier M/s.Panasonic Asia Pacific Pvt.Ltd.making mis-declaration of the goods deliberately to get duty exemption at the cost of Revenue.The product literature gathered by Revenue including price-list proved that the goods imported was not capable of being connected directly to Automatic Data Processing Machine."
Taking a view that prima facie it appeared that there was deliberate misdeclaration with intent to evade payment of customs duty and such action of the appellant calls for direction for pre-deposit since no time bar applies to a fraudulent deal, the third Member (J) held that the quantum of pre-deposit directed by the Technical Member which is 50% of the Customs duty levied is proper.
So, the Majority decision is that the applicant was directed to deposit 50% of the duty confirmed within a period of 8 weeks and report compliance.
(See 2014-TIOL-470-CESTAT-DEL)
