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2013 (11) TMI 1299 - AT - CustomsDemand of aggregate customs differential duty - Penalty under Section 114A - Confiscation under Section 111 (d) and (m) - Re determination of value on account of alleged under invoicing - Held that - unless the goods as presented having the essential character of a complete or finished article, the same cannot be assessed or classified as a complete article - Duty has been demanded in respect of 108 consignments which have been imported by 8 different entities at different times and ports, of which 27 consignments relate to indoor units and 50 consignments relate to outdoor units and the balance 31 being parts of window air-conditioners. It is also urged that the total quantities of different models of air-conditioners do not match as per the chart attached to the written submissions filed on 3.9.2013. It is stated that 6007 units of indoor units and 6786 units of outdoor units have been imported and therefore, it cannot be alleged that what are imported are complete air-conditioners and that the same is also the case with different parts of window air-conditioners. As we have held that there is no import of complete air-conditioners, we reject the adoption of value in respect of one model based on import of a complete air-conditioner by ETA General which in any event, is a distributor to the supplier. Commissioner has ordered the classification of the goods imported under sub-Heading 8415 90 00 which relates to parts of air-conditioner. The classification has not been disputed. The Commissioner, at the same time, has described the modus operandi as import of air-conditioners from Thailand, disassembled at Singapore and imported then into India - there is no evidence that complete air-conditioners were imported from Thailand to Singapore and were disassembled at Singapore before shipment to India. KCM has also not admitted this in his statements to which we shall refer in greater detail hereafter. None of the documents either seized or recovered from the computers during search also support this modus operandi. The report from the High Commission of India, Singapore vide letter dated 22.8.2007 is also silent on this aspect. The enquiry with ETA General Pvt. Ltd which apparently revealed that O General does not sell parts is belied by large number of imports of parts into India by independent third parties before and after the period covered by these appeals, which is April 2004 to May, 2007, a fact which has not been denied by the Revenue. There is no explanation from the Department how thousands of consignments of parts of air-conditioners of O General brand are allowed imports, if the enquiry with ETA General is correct. The Commissioner has also held that goods (outdoor units) are liable for confiscation under Section 111(d) on the ground that import of compressors containing R22 Gas requires a license. It is no doubt true that at the time when the goods landed into India, the importers did not have a license. It is only subsequently that the importers applied for and obtained licenses which were issued post facto, to cover goods which had already been shipped/landed/cleared. We therefore, set aside the confiscation under Section 111(d) subject to verification of the fact that the import licenses cover the total quantity of consignments of outdoor units with compressors containing R22 Gas. though statements of Savaram and Vela Ram were recorded on 23.5.2007, KCM was never confronted with them. KCM does not corroborate the statements of Savaram and Vela Ram. None of the documents also support corroborate the statements of Savaram and Vela Ram - apart from being unreliable the statements do not disclose any offence for penalty under Section 112 since these two persons have no relation to import of goods. There is absolutely no evidence against Joit Kumar Chaudhary. Penalty under Section 112 cannot be imposed for not responding to summons. We therefore set aside the penalties of these three Appellants. Statements must however be read with the evidence in cross examination of Mehul Shah and Jitendra Manek. However, in view of our finding that there is no warrant or justification in rejecting the transaction or the declared value and the case of import of complete air-conditioners being based on assumptions, this issue would not result in either the imports of parts being prohibited or restricted or the declared value incorrect. As a matter of law, parts and complete air-conditioners are freely permissible for import under the Foreign Trade Policy - Following decision of Collector of Customs vs. Sony International 2008 (9) TMI 19 - SUPREME COURT and Sunil Gulati vs Commissioner 2002 (8) TMI 787 - CEGAT, NEW DELHI - Decided in favour of assessees.
Issues Involved:
1. Whether the transaction value of parts of air-conditioners can be rejected and re-determined on the basis of the price of complete air-conditioners. 2. Whether the appellants had imported complete air-conditioners split/disassembled in Singapore before shipment to India. 3. Whether duty can be demanded from KCM as an individual or ought to have been demanded from the different importing entities. 4. Whether KCM managed and controlled Subh Electromech, Vinayak Enterprises, and Jaidev Enterprises in addition to the five entities to import complete air-conditioners. 5. Whether fines and penalties as imposed are justified under Section 111(d) and (m) and Section 112 of the Customs Act, 1962. Issue-Wise Detailed Analysis: 1. Re-determination of Transaction Value: The main issue relates to the re-determination of value due to alleged under-invoicing. The Commissioner adopted the price of a complete air-conditioner based on the price quotation faxed to KCM. However, the appellants argued that there is no evidence of importing complete air-conditioners that were disassembled in Singapore before shipment to India. The Tribunal found no evidence to support the Commissioner's findings. The classification of goods under sub-Heading 8415 90 00 as parts of air-conditioners was not disputed. The Tribunal held that different consignments of parts imported at different times cannot be assessed together as a complete article, applying the ratio of the judgment in Collector of Customs vs. Sony International 2008 (231) ELT 385. 2. Import of Complete Air-Conditioners: The Tribunal found no evidence that complete air-conditioners were imported from Thailand to Singapore and disassembled before being shipped to India. KCM did not admit to this in his statements, and none of the seized documents supported this modus operandi. The Tribunal applied the ratio of Sony International (supra) and held that there is no evidence of import of complete air-conditioners disassembled into parts. 3. Duty Demand from KCM: The Tribunal agreed with the appellants that KCM, as an individual, cannot be held liable for duty under Section 28 or penalty under Section 114A of the Customs Act, 1962, as he is not the importer. The Tribunal cited the legal principle laid down in Gujarat Adani Ports Ltd. Vs. Commissioner 2013 (287) ELT 330 and other cases. 4. Control of Importing Entities: The Tribunal noted that the Commissioner's findings on KCM managing and controlling various entities were based on statements of Mehul Shah and Jitendra Manek. However, in view of the Tribunal's finding that there is no evidence of importing complete air-conditioners, this issue did not result in any prohibition or restriction on the import of parts. 5. Fines and Penalties: The Tribunal set aside the penalties imposed on Savaram Patel, Vela Ram Choudhary, and Joet Kumar Chaudhary. The statements of Savaram and Vela Ram were retracted, and there was no corroborative evidence. The Tribunal relied on Sunil Gulati vs. Commissioner (2003 (161) ELT 283) and found no basis for penalties under Section 112. The Tribunal also set aside the confiscation under Section 111(d) subject to verification of import licenses covering the total quantity of consignments of outdoor units with compressors containing R22 Gas. Conclusion: The Tribunal allowed the appeals, setting aside the Order-in-Original, and remanded the case to the original adjudicating authority for verification of valid import authorizations for compressors containing R-22 gas. The transaction value was upheld based on evidence of contemporaneous imports, and the statements of KCM were found uncorroborated. The penalties imposed were also set aside.
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