By TIOL News Service

NEW DELHI, SEPT 04, 2015: THE appellant company had been importing various models of diagnostic equipment classified the goods as "auto analysers" under Entry 9030.89 of the Customs Tariff Act. The goods were seized by the custom authorities. During the course of investigation, statements of six persons were recorded under Section 108 of the Customs Act. On 2nd November, 1999 the Directorate of Revenue Intelligence, Chennai issued a show cause notice stating that the goods in question are "photometers" and not "auto analysers".

The Commissioner agreed with the importer. By the impugned order, the CESTAT allowed revenue's appeal. It found fault with the book quoted by the assessee which found favour with the learned Commissioner, and stated "Instead of appreciating the evidence unearthed by the investigating officer with reference to the goods imported, the adjudicating authority has embarked himself on a detour deviating from the main issue".

The Supreme Court did not understand this statement.

The Court observed,

Without any analysis of whether the imported equipments were, in fact, auto analysers or were only photometers, the CESTAT went on to conclude that one can never come to a conclusion that a photometer is the same as an auto analyser. The learned Commissioner had held that a photometer is a generic expression and auto analysers are photometers with software installed in them which could then perform various operations. The CESTAT in finding this logic faulty has not given any reason for disregarding the same. It then goes on to say that the whole of paragraph 46 of the Commissioner's order is irrelevant. In this paragraph the learned Commissioner referred to the Commissioners' Conference to arrive at the conclusion that since the process of analysis is automatic, though mixing of samples may be done manually, yet since analysis has to be done automatically, an analyser would fall under the expression "auto analysers " for enzymes, drug levels and biochemical investigations. This finding of the learned Commissioner was important in that the model BTS 370 which mixed both samples automatically and did the analysis automatically, was found by the customs authorities to fit the description of auto analyser . In holding that this paragraph is not at all relevant, the CESTAT does not seem to have come to grips with the real issue at all.

This is a peculiar case in which it is clear that what has, in fact, been imported is an equipment which is to be used in a pathological lab for the automatic analysis of blood samples. It is an admitted fact that models BTS 310 and BTS 320 were imported with inbuilt software that contained programmes for analysis and interpretation. It is equally an admitted fact that an importer can change such programmes to suit its own convenience. From this it does not follow that what has been imported is only a photometer. Learned senior advocate appearing for the revenue had to admit that a photometer is an instrument which measures intensity of light. There is no necessity for any inbuilt software in such photometer unless such instrument is, in fact, to be used for the automatic analysis of blood samples. This being the case, it is clear that oral statements made by persons affiliated to the assessee to the effect that the description of the imported goods was changed from photometers to auto analysers to avail the benefit of the exemption under notification No. 20/1999, and that the foreign supplier was requested to alter the description of the goods from photometer to auto analysers in order so to do, would not change the position in law. As correctly held by the learned Commissioner, these statements would be material in deciding whether Section 111(m) of the Customs Act read with Section 125 are attracted as to amount to mis -declaration of description of goods resulting in confiscation of the said goods, fine, and penalty under Section 112(a) of the Customs Act.

Commissioner's order upheld; CESTAT order set aside.

(See 2015-TIOL-197-SC-CUS)