1993 (1) TMI 194 - AT - Customs

Issues Involved:
1. Classification of imported goods.
2. Validity of import licenses.
3. Allegations of mis-declaration.
4. Applicability of concessional duty under Notification No. 59/88.
5. Imposition of penalties on the importing parties.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The core issue was whether the imported goods were parts of cordless telephones or electronic push-button telephones. The adjudicating authority, supported by the examination report and samples, concluded that the goods were parts of cordless telephones. The imported items lacked provisions for connecting wires, essential for electronic push-button telephones, but included antennas required for cordless telephones. Thus, it was held that the goods were parts of cordless telephones and not electronic push-button telephones.

2. Validity of Import Licenses:
The import licenses held by the appellants were for parts of electronic push-button telephones, not cordless telephones. The Department of Electronics clarified that electronic push-button telephones do not cover cordless telephones, and the importers were not licensed to manufacture cordless telephones. Therefore, the import licenses did not cover the imported goods, rendering the import invalid.

3. Allegations of Mis-declaration:
The adjudicating authority found that the goods were misdeclared as parts of electronic push-button telephones when they were actually parts of cordless telephones. This misdeclaration was intended to evade higher duties applicable to cordless telephone parts. Consequently, the charge of misdeclaration under Sections 111(d), (m), and (l) of the Customs Act, 1962, was upheld.

4. Applicability of Concessional Duty under Notification No. 59/88:
The appellants claimed concessional duty under Notification No. 59/88, which applied to complete telephone instruments and cordless telephones, not parts thereof. Since the imported goods were parts of cordless telephones, they did not qualify for the concessional rate of duty. Therefore, the benefit of Notification No. 59/88 was denied.

5. Imposition of Penalties on the Importing Parties:
The adjudicating authority imposed penalties on Suneel Communications and J & K Bank. Suneel Communications was penalized for misdeclaration and unauthorized import. However, the penalty on J & K Bank was contested. The bank argued that it acted merely as a financier and filed the Bill of Entry due to hypothecation of goods. The tribunal agreed, finding no conscious act of commission or omission by the bank, and set aside the penalty imposed on J & K Bank.

Judgment Summary:
- The imported goods were confirmed as parts of cordless telephones, not electronic push-button telephones.
- The import licenses did not cover the imported goods, making the import unauthorized.
- The charge of misdeclaration was upheld.
- The benefit of Notification No. 59/88 was not applicable to the imported goods.
- The goods were confiscated with an option to redeem on payment of a fine of Rs. 5 lakhs.
- The personal penalty on Suneel Communications was reduced to Rs. 75,000.
- The penalty of Rs. 50,000 imposed on J & K Bank was set aside.

The appeals were disposed of in these terms.

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