2002 (7) TMI 368 - AT - Customs

Classification - Re-classification - Import - Misdeclaration as to number of machines imported - Penalty

Issues Involved:
1. Classification of imported goods.
2. Misdeclaration of the number of imported machines.
3. Violation of the actual user condition under ITC Policy.
4. Imposition of penalties on various individuals.

Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported Philips Tomoscan CX Head Scanner should be classified under Heading 9022.14 or 9022.12 of the Customs Tariff Act. The appellant, M/s. Tanya Diagnostic Centre Pvt. Ltd., classified the machine under Heading 9022.14, which attracted a lower duty rate. The customs authorities initially accepted this classification but later issued a show cause notice for reclassification under Heading 9022.12, which does not qualify for the same exemption. The Tribunal found that the original classification was accepted after thorough examination and re-examination by customs authorities. Since there was no misdeclaration regarding the description of the goods, the Tribunal held that reclassification in subsequent proceedings without an appeal against the initial assessment was unjustified.

2. Misdeclaration of the Number of Imported Machines:
The customs authorities alleged that M/s. Tanya had imported two machines but declared only one. The second machine, found at M/s. Manisha Imaging, was incomplete, missing one ADC card, and one ADC card was defective. The Tribunal upheld the finding that the appellants had imported two machines, thus misdeclaring the number of machines. The adjudicating authority was directed to quantify the duty on the second machine after deciding its correct classification.

3. Violation of the Actual User Condition under ITC Policy:
M/s. Tanya imported the machines under the actual user condition as per Para 5.4 of the ITC Policy, which required the machines to be installed at the declared premises in Dhanbad. However, the machines were found installed at Maa Durga and Manisha clinics in Calcutta. The Tribunal found that the explanation provided by M/s. Tanya regarding the lack of a three-phase electricity connection at Dhanbad was not convincing. The Tribunal upheld the confiscation of the machines for violating the actual user condition, with an option to redeem the same on payment of a redemption fine of Rs. 5,00,000/-.

4. Imposition of Penalties on Various Individuals:
- M/s. Tanya Diagnostic Centre Pvt. Ltd.: The Tribunal upheld the imposition of a penalty but remanded the matter to the Commissioner to decide the quantum of penalty afresh after quantifying the duty on the second machine.
- Dr. Kamal Kr. Dutta: The Tribunal found that Dr. Dutta was actively involved in the importation and installation of the machines. However, the Tribunal reduced his penalty from Rs. 5,00,000/- to Rs. 3,00,000/-.
- Shri Arun Saini and Smt. Manjusha Dutta: The Tribunal set aside the penalties imposed on them, finding no direct involvement in the violations.
- Shri Himanshu Bhusan Paul: The Tribunal set aside the penalty, noting that he acted in the routine discharge of his duties as a chartered accountant.
- Shri Pratik Kr. Sen and Shri Pinto Bose: The Tribunal set aside the penalties imposed on them, finding no direct evidence of their involvement in the wrongful importation.

Separate Judgment by Member (T):
Member (T) disagreed with the confiscation of the machines for violation of ITC conditions, arguing that issues relating to alienation of imported second-hand capital goods under actual user condition fell within the purview of the Director General of Foreign Trade (DGFT). He opined that customs jurisdiction ended at the time of clearance of the goods. However, the majority opinion upheld the confiscation.

Final Order:
1. Confiscation of the Philips Tomoscan CX Head Scanner upheld for violation of ITC Policy, with an option to redeem on payment of Rs. 5,00,000/-.
2. Short-levy on account of change in classification set aside.
3. Misdeclaration of the number of machines upheld; duty on the second machine to be quantified by the adjudicating authority.
4. Quantum of penalties on M/s. Tanya Diagnostic Centre and Dr. Kamal Kr. Dutta to be decided afresh by the Commissioner.
5. Appeals of Shri Arun Saini, Smt. Manjusha Dutta, Shri Pratik Kr. Sen, Shri Himanshu Bhusan Paul, and Shri Pinto Bose allowed by setting aside the personal penalties imposed on them.

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