2017 (12) TMI 1112 - AT - Customs

Whether the digital still image video cameras imported by the appellant are eligible for the benefit of nil rate of customs duty during the disputed period when the explanation was in place under N/N. 25/2005-Cus? - capability to record video for as long as 30 minutes in a single sequence using the maximum storage (including expanded capacity) - The interpretation of the Revenue is that digital cameras entitled to the benefit should not be capable of recording, a single sequence of more than 30 minutes using the maximum storage (including expanded capacity) - It has been found on examining the digital cameras that keeping in view the equipment memory capacity at the time of import, the cameras are capable of recording the video at resolutions and speed more than what is indicated in the notification, for a period greater than 30 minutes. If the maximum expanded storage capacity is taken into account, the recording time for the video is many times more. As such, Revenue is of the view that the imported cameras will not be entitled to the benefit of the notification. Held that - The imported digital cameras taking into consideration the memory capacity at the time of import, were found to have the capability of recording video in a single sequence of more than 30 minutes. However, during investigation, it was found that such capabilities have been restricted through firmware to a single sequence of less than 30 minutes. Hence, the fact of matter is that the imported digital cameras, can run a single sequence of only less than 30 minutes whereas the cameras have the capability to have a single sequence of much more than 30 minutes - Such an interpretation will make the stipulation in the explanation to the Notification about the maximum storage (including expanded) capacity as redundant. It is obligatory to read and satisfy all the conditions of the notification without rendering any part therein as redundant. Since in the present case, the imported digital cameras are capable of recording video with minimum resolution and minimum recording speed for more than 30 minutes in a single sequence; using maximum storage capacity, such cameras will not be entitled to the benefit of notification. It is well settled that a person who claims exemption or concession, has to establish that he is entitled to that exemption or that concession. In the present case, as discussed above, the impugned goods do not fulfill all the conditions specified in the notification and hence it is an inevitable that the benefit of notification is denied to these goods. Time limitation - Held that - It is clear that the appellants deliberately did not declare the full details of the imported goods and cleared the same by wrongly availing the benefit of notification. The correct facts came to the light only during investigation by DRI - demand cannot be held as time barred - extended period rightly invoked. Exemption from payment of cess - Education and Secondary and Higher Education Cess - Held that - It may be mentioned that Exemption Notification NO. 69/2004-Cus dated 9.7.2004 and 28/2007 dated 01.03.07 exemption from Education Cess and Senior and Higher Secondary Education Cess for Digital Still image video cameras falling under Tariff Item 8525 8020. It is seen that these exemptions were continued even for the period under dispute - same exemption was continued as far as Cess is concerned, for the disputed period. Hence, Education Cess and Senior and Higher Secondary Education Cess cannot be demanded for the disputed period. Appeal dismissed - decided against appellant.

Issues Involved:
1. Eligibility for exemption under Notification No. 25/2005-Cus for digital still image video cameras.
2. Interpretation of the term "single sequence" in the context of video recording capability.
3. Demand of interest and penalty under Sections 28AA, 114A, and 114AA of the Customs Act, 1962.
4. Invocation of the extended period of limitation.
5. Applicability of Education Cess and Secondary and Higher Education Cess exemptions.

Issue-wise Detailed Analysis:

1. Eligibility for Exemption under Notification No. 25/2005-Cus:
The core issue was whether the digital still image video cameras imported by the appellants were eligible for a nil rate of customs duty during the disputed period (March 2012 to March 2014) under Notification No. 25/2005-Cus, as amended. The notification specified that digital cameras not capable of recording video with a minimum resolution of 800 x 600 pixels, at a minimum of 23 frames per second, for at least 30 minutes in a single sequence using maximum storage (including expanded) capacity, were eligible for exemption. The appellants argued that their cameras, due to firmware restrictions, could not record a single sequence for more than 29 minutes and 59 seconds, thus qualifying for the exemption.

2. Interpretation of "Single Sequence":
The Tribunal examined whether the cameras met the third condition of the explanation in the notification, i.e., the capability to record video for at least 30 minutes in a single sequence using maximum storage capacity. The appellants contended that the firmware limited the recording time to less than 30 minutes per sequence. However, the Department argued that despite this restriction, the cameras were capable of recording multiple sequences, effectively exceeding the 30-minute limit when using maximum storage capacity. The Tribunal concluded that the cameras' capability, not the firmware-imposed restriction, determined eligibility for the exemption.

3. Demand of Interest and Penalty:
The appellants contested the demand for interest and penalties under Sections 28AA, 114A, and 114AA of the Customs Act, 1962. They argued that the duty demand was unsustainable and that there was no willful misstatement or suppression of facts. The Tribunal, however, found that the appellants had not declared the full capabilities of the cameras at the time of import and had availed of the exemption incorrectly. Consequently, the demand for interest and penalties was upheld.

4. Invocation of Extended Period of Limitation:
The appellants argued that the demand was time-barred, as the Department was aware of the cameras' specifications and had initially granted the exemption. The Tribunal noted that the appellants had not fully disclosed the cameras' capabilities and that the true nature of the imported goods was revealed only during the investigation by the Directorate of Revenue Intelligence (DRI). Thus, the invocation of the extended period of limitation was justified.

5. Applicability of Education Cess and Secondary and Higher Education Cess Exemptions:
The appellants contended that the denial of exemption from Education Cess and Secondary and Higher Education Cess was incorrect. The Tribunal agreed, noting that the exemptions under Notification Nos. 69/2004-Cus and 28/2007-Cus for Education Cess and Secondary and Higher Education Cess were not amended during the disputed period. Therefore, the demand for these cesses was not sustainable.

Conclusion:
The Tribunal upheld the impugned orders, denying the exemption under Notification No. 25/2005-Cus for the imported digital still image video cameras. The demands for interest and penalties were sustained, and the invocation of the extended period of limitation was justified. However, the Tribunal ruled that Education Cess and Secondary and Higher Education Cess were not payable for the disputed period. All appeals were dismissed.

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