2004 (8) TMI 521 - AT - Customs

Summary

Issues:
Imports of blank Video Cassettes-Panasonic Brand E180 H.D.A. VHS Palscam of Japanese origin without import license, undervaluation, classification under ITC (HSN), confiscation under Section 111(m) and 111(d), penalty imposition, appropriate valuation, and classification under 85239003.20.

Undervaluation and Confiscation (Section 111(m) and 111(d)):
The imports were found to be undervalued based on quotations and proforma invoices. The Commissioner determined the goods to be under heading 85239003.90 of ITC (HSN) Classification and ordered the values to be loaded, leading to confiscation under Section 111(m) and 111(d). However, it was noted that there was no evidence of payment over the invoiced values for the imported goods. The actual imports were declared at a lower value than the proforma invoice, and no evidence supported the departure from the transaction value. The appellants provided details of actual imports at a lower value, leading to the setting aside of the valuation arrived by the Commissioner and the reasons for confiscation under Section 111(m).

Classification under ITC (HSN) and License Requirement:
Regarding the classification under ITC (HSN), the Commissioner classified the goods under 852390.06.90 - others, instead of 8523903.40. The appellants argued that the cassettes were suitable for use with Digital S type VHS, not just M 11 SVHS VCR. The cassettes imported were physically demonstrated to work with Digital S type VHS, confirming the classification under 8523903.20 as 'free.' The confiscation under Section 111(d) for lack of a license was not upheld, and the classification under 8523903.20 was confirmed, leading to setting aside the confiscation.

Precedent and Demonstration of Functionality:
The decision in a previous case was cited, where the cassettes imported could not be demonstrated to function on a S-VHS VCR. In contrast, in the present case, the importers successfully demonstrated that the cassettes could work with an SVHS VCR. The demonstration provided by the importers supported the classification under 8523903.20 and warranted license-free clearance. The findings indicated that the goods imported were suitable for use in S-VHS VCR Cassette recorder, meeting the prescribed tests and justifying license-free clearance.

Conclusion:
After considering the evidence and arguments, the order was set aside, and the appeal was allowed in favor of the importers. The judgment clarified the valuation, classification, and license requirements for the imported blank Video Cassettes, emphasizing the importance of actual functionality demonstration for classification and clearance purposes.