2002 (4) TMI 785 - AT - Customs

Issues Involved:
1. Classification of imported goods.
2. Applicability of Exemption Notification No. 83/94.
3. Alleged misdeclaration and undervaluation of imported goods.
4. Confiscation and penalties under Sections 111(m) and 112(a) of the Customs Act.
5. Assessment of the assessable value of the goods.

Detailed Analysis:

1. Classification of Imported Goods:
The company imported two consignments of CT Scanner components from Japan. The Customs authorities alleged that the company had imported a complete CT Scanner, or an incomplete CT Scanner having the essential character of a complete one, classifiable under Customs Tariff sub-heading 9022.11. The company claimed the goods were components of a CT Scanner classifiable under Tariff sub-heading 9022.90 to avail concessional duty. The adjudicating authority relied on Rule 2(a) of the General Rules for the Interpretation of the First Schedule to the Customs Tariff Act and held that the components constituted an incomplete CT Scanner with the essential character of a complete one.

2. Applicability of Exemption Notification No. 83/94:
The company sought concessional assessment of the components under Notification No. 83/94, which exempted parts required for the manufacture of specified medical equipment. The Customs authorities initially allowed the benefit for the first consignment but later treated both consignments together as a complete CT Scanner, thus denying the exemption for the second consignment.

3. Alleged Misdeclaration and Undervaluation:
The department alleged that the company misdeclared the goods as components of CT Scanner to evade customs duty and suppressed the cost of software and manuals required for the manufacture of the CT Scanner. The company waived the show cause notice and paid the differential duty. The Director of the company admitted in his statements that a whole body scanner was imported by misdeclaring it as "parts of whole body scanner" and acknowledged the liability to pay duty at higher rates.

4. Confiscation and Penalties under Sections 111(m) and 112(a) of the Customs Act:
The Commissioner confiscated the goods under Section 111(m) for misdeclaration and imposed penalties under Section 112(a) on the company and its Director. The company contested the confiscation and penalties, arguing there was no mala fide intent and that they had paid the differential duty.

5. Assessment of the Assessable Value of the Goods:
The Commissioner ordered that an amount of Rs. 1,80,000/- be added to the invoice value for software and manuals, along with unspecified "usual additions as per law." The company challenged this addition, arguing that there was no evidence of software and manuals being part of the consignments.

Judgment:

Classification of Imported Goods:
The Tribunal upheld the classification of the goods as a CT Scanner under Tariff sub-heading 9022.11 based on the clear admission by the Director of the company and the facts that the components together constituted an incomplete CT Scanner with the essential character of a complete one.

Applicability of Exemption Notification No. 83/94:
The Tribunal did not find it necessary to examine the applicability of the Exemption Notification or the cited case law, as the company's admission of the department's case was clear and unqualified.

Alleged Misdeclaration and Undervaluation:
The Tribunal found that the company's Director had admitted the misdeclaration and there was no retraction of this admission. The payment of differential duty was not found to be involuntary or under protest.

Confiscation and Penalties:
The Tribunal held that the goods were liable to confiscation under Section 111(m) and the company liable to penalty under Section 112(a). However, the redemption fine was reduced from Rs. 2,00,000/- to Rs. 1,00,000/-, and the penalty on the company was reduced from Rs. 4,00,000/- to Rs. 1,00,000/-. The penalty on the Director was set aside as there was no evidence of mens rea against him.

Assessment of the Assessable Value:
The Tribunal found no justification for loading Rs. 1,80,000/- to the assessable value for software and manuals without clear evidence. The goods were ordered to be assessed based on the declared invoice value.

Conclusion:
Appeal No. C/419/96 was allowed, and Appeal No. C/420/96 was disposed of with the specified terms. The Tribunal reduced the penalties and fines imposed on the company and set aside the penalty on the Director.

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