2003 (5) TMI 279 - AT - Customs

Issues Involved:
1. Classification of imported goods.
2. Eligibility for concessional customs duty.
3. Alleged mis-declaration and intent to evade customs duty.
4. Confiscation and penalty under the Customs Act.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The appellants imported a consignment described in the Bill of Entry as "PARTS OF VIDEO GAMES AS PER INVOICE" under Customs Tariff Heading 9504.90. The Customs authorities, upon examination, classified the goods under sub-heading 9504.10 as "Video games of a kind used with T.V. receiver." The adjudicating authority's decision was based on the observation that the goods were complete video games, not just parts, and were packed in a manner indicating they were ready for use with minimal assembly.

2. Eligibility for Concessional Customs Duty:
The appellants claimed the benefit of a concessional rate of customs duty under Notification No. 17/2001-Cus., which applied to parts of video games under sub-heading 9504.90. The Customs authorities denied this benefit, asserting that the goods were complete video games under sub-heading 9504.10, which did not qualify for the concessional rate. The Tribunal upheld this classification, noting that the sets were complete video games and not parts intended for further manufacture.

3. Alleged Mis-declaration and Intent to Evade Customs Duty:
The department issued a show cause notice alleging mis-declaration and mis-classification with intent to evade customs duty, contravening Section 46 of the Customs Act. The Commissioner of Customs confirmed the mis-declaration, stating that the goods were declared as parts to avail the concessional duty rate, whereas they were complete video games. The Tribunal concurred, finding clear intent to evade duty as the goods were not parts for manufacturing but complete video games.

4. Confiscation and Penalty under the Customs Act:
The Commissioner ordered the confiscation of the goods under Section 111(m) of the Customs Act, with an option for redemption on payment of a fine of Rs. 10 lakhs, and imposed a penalty of Rs. 2 lakhs under Section 112(a). The Tribunal upheld the confiscation and penalty but reduced the amounts to Rs. 5 lakhs and Rs. 1 lakh, respectively, considering them disproportionately high.

Summary:
The Tribunal upheld the Customs authorities' classification of the imported goods as complete video games under sub-heading 9504.10, denying the benefit of concessional duty under Notification No. 17/2001-Cus. It confirmed the mis-declaration by the appellants with intent to evade duty, leading to the goods' confiscation and the imposition of penalties, though the amounts were reduced. The Tribunal's decision was based on a detailed examination of the goods' description, packaging, and accompanying literature, affirming that they were complete video games ready for use with minimal assembly.

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