2001 (1) TMI 1027 - SC - Indian Laws

Summary

Issues Involved:

1. Whether drawings, diskettes, manuals, etc., imported are goods on which excise duty could be levied.
2. Valuation of the goods for the purpose of customs duty.
3. Limitation for issuing a notice seeking to realize the difference in the duty levied and imposable.
4. Applicability of heading No. 98.03 of the Customs Tariff Act.

Summary:

1. Whether drawings, diskettes, manuals, etc., imported are goods on which excise duty could be levied:

The Supreme Court held that any media whether in the form of books or computer disks or cassettes which contain information technology or ideas would necessarily be regarded as goods under Section 2(22) of the Customs Act. These items are moveable goods and would be covered by Section 2(22)(e) of the Customs Act. The Court emphasized that the final product at the time of import is either the magazine or the encyclopaedia or the engineering drawings as the case may be. Thus, the drawings, designs, manuals, etc., imported through couriers were 'goods' on which customs duty could be levied.

2. Valuation of the goods for the purpose of customs duty:

The Court stated that the value of the goods imported is deemed to be the price at which they are ordinarily sold. The transaction value of imported goods, subject to adjustment under Rule 9, is to be the price actually paid or payable for the goods when sold for export to India. Rule 9 (1) (b) (iv) indicates that engineering, development, artwork, design work, and plans and sketches would form part of the price of goods for the purpose of determining its value for levy of duty. The Court held that the value of the goods imported would depend upon the quality of the same and would be represented by the transaction value in respect thereof.

3. Limitation for issuing a notice seeking to realize the difference in the duty levied and imposable:

The Court noted that the proviso to Section 28(1) of the Customs Act can be invoked when any duty has not been levied or has been short-levied by reason of collusion or any wilful mis-statement or suppression of facts by the importer or his agent or employee. The Court held that there was a wilful suppression or mis-statement of the value of the goods imported and, therefore, the respondents were entitled to invoke the provisions of the proviso to Section 28(1) of the Customs Act and issue show-cause notice even if the period of six months importation had expired but before the expiry of five years thereof.

4. Applicability of heading No. 98.03 of the Customs Tariff Act:

The Court agreed with the conclusion of the Tribunal and the Commissioner that the provisions of Chapter 98 were rightly applied on the facts of these cases. Heading No. 98.03 provides that "all dutiable articles, imported by a passenger or a member of a crew in his baggage" was taxable at the standard rate of 150 per cent. The Court held that the imports were made by the appellants and the courier or any other passenger may be the mode or the manner of physical importation of the goods. The word 'importer' in Section 2(26) of the Customs Act includes the owner, and as the appellants were the owners of the goods, they alone could be made liable in case of non-levy or short-levy of customs duty.

Separate Judgments:

Civil Appeal No. 3632 of 2000 (M/s. Videocon VCR Ltd. vs. Commissioner of Customs):

The Court found that the drawings and designs imported by the appellant were correctly classifiable under heading No. 49.06, and the tariff itself providing that the import of the same is free, the said drawings and designs were not dutiable articles, and therefore, no customs duty was leviable thereon even as a part of the passenger baggage.

Civil Appeal No. 1493 of 2000 (M/s H & K Rolling Mill Engineers Pvt. Ltd. vs. The Commissioner of Customs):

The Court held that the nominal value disclosed by the courier, on the facts and circumstances of this case, could not be said to be incorrect. The order passed against the appellant levying the customs duty and penalty was set aside.

Conclusion:

Civil Appeal No. 1493 of 2000 of M/s H & K Rolling Mill Engineers Pvt. Ltd. and Civil Appeal No. 3632 of 2000 of M/s Videocon VCR Ltd. are allowed, and the orders of the Commissioner and Customs, Excise-Gold (control) Appellate Tribunal in their cases are set aside. The other appeals are dismissed, but in the case of Leela Ventures, the Commissioner will determine the transaction value of the drawings, designs, etc., imported through the courier and then impose the levy thereon.