2020 (2) TMI 1133 - AT - Customs

Classification of imported goods - Segway product in CKD condition - whether classified under Customs Tariff Heading 87149990/87144011 etc? - benefit of N/N. 21/2002- Cus. dated 01/02/2002 (Sl. No. 345) and N/N. 12/2012-Cus. dated 17/03/2012 (Sl. No. 443 and 444). HELD THAT - It categorically emerges from the entire discussions, which have also been not rebutted by the appellant, that under the various bills of entries the appellant have imported all parts including screw, nuts and user manual etc. for assembling Segway in India. The parts and assemblies imported were not subjected to any modification or addition of the local parts or hardware. The imported assemblies, such as, transmission assembly, power base assembly, wheel assembly with tyre, info key assembly and batteries were just put together by following the instructions with the screw driver technology and complete Segway unit came into existence. It also emerges from the entire investigation that gear box mentioned as the transmission assembly were imported in the form of the pre-assembled unit and same were used, as such, while assembling the Segway the final product - It also emerges that no plant, machinery was required for assembling Segway imported by the appellant and the Segway were imported in the CKD condition, which were got assembled with the help simple hand tools like spanner, screw driver etc. and it also emerges from the investigations that sometimes the product were got assembled at the buyer s premises itself. Thus, it emerges that the Segway product was being imported in a CKD condition under various bills of entries and same was got assembled in India for further sale with the simple screw driver technology. It is also matter of fact that the parts such as Power Base, Gear Box were imported in assembled forms and not in CKD condition and thus these crucial parts were assembled/ready to use components for further assembly of Segway product. The correct classification for the product imported in the CKD condition as is the case in this particular appeal, same need to be classified under Chapter sub-Heading 87119091. We have also analyzed the declaration which have been made by the appellant while making import of various complete assemblies of various components of Segway and find that the classification adopted by the appellant was under CTH 87149990, which primarily pertains to parts and accessories of the vehicles of heading classifiable under 8711 to 8713. Since it has already been established with the help of an expert that the components imported by the appellant while put together will form a complete operative Segway product. We, therefore, feel that classification claim by the appellant while getting clearance of the consignment appears to be not correct. Since the technical person has given his categorical finding that what has been imported by the appellant were the Segway product in the CKD condition and the appellant did not have any evidence to contradict the finding of the technical expert, we are inclined to accept the opinion expressed by the technical expert. Benefit of the Notification No. 12/2012-Cus. dated 17/03/2012 - HELD THAT - It can be seen from the entry 443 of the above-mentioned Notification No. 12/2012-Cus. dated 17/03/2012 that the concessional rate of Customs duty @ 10% available under category 1 (a) for engine, gear box and transmission mechanism not in a pre-assembled condition. The benefit under this category has wrongly been claimed and availed by the appellant as from the expert opinion as well as from the facts of the matter it has come out specifically that what has been imported by them were not CKD condition components or parts, such as, engine, gear box, transmission mechanism etc. rather they were in the form of completely assembled components in the form of transmission assembly, power base assembly, wheel assembly with tyre etc. and, therefore, the benefit of the concessional rate of the duty were certainly not available to them. The appellant have mis-declared their import consignment and what they have imported were Segway product classifiable under Customs Tariff Heading 87119091 in completely knocked down condition. The findings of the impugned order-in-original classifying the import consignments under 87119091 is upheld - there is no reason to interfere with the order-in-original with regard to demand of Customs duty under Section 28 (4) of the Customs Act, 1962 by invoking the extended time proviso as the appellant have been fully aware as to what is being imported by them and they have consciously mis-declared their product as CKD parts of electrically operated two wheelers of captive use classifying the same under chapter sub-Heading 87149990. The Adjudicating Authority is right in imposing penalty upon them under provision of Section 114A and Section 114AA of the Customs Act, 1962 and we refrain from interfering the finding and imposition of the penalty upon these two appellants also. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Classification of imported goods.
2. Entitlement to benefit under Notification No. 12/2012-Cus.
3. Alleged mis-declaration of imported goods.
4. Liability to pay differential customs duty.
5. Imposition of penalties under Sections 112, 114A, and 114AA of the Customs Act, 1962.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The primary issue was whether the imported consignments were "Segway electrically operated personal balancing vehicles" in completely knocked down (CKD) condition or CKD parts and assemblies of electrically operated two-wheelers for captive use. The investigation revealed that the appellant imported complete assemblies such as transmission assembly, power base assembly, wheel assembly with tire, and info key, which were ready to use and only needed to be attached to form the final product, Segway. The Chartered Engineer's report confirmed that these units were in assembled form and not in knocked down condition. Based on this, the Tribunal concluded that the correct classification for the product was under Chapter Heading 87119091, not under 87149990 as claimed by the appellant.

2. Entitlement to Benefit under Notification No. 12/2012-Cus:
The appellant claimed a concessional customs duty rate under Notification No. 12/2012-Cus, which provides a 10% duty rate for CKD kits with components not in pre-assembled condition. However, the investigation and expert opinions established that the gear box and power base were imported in pre-assembled form. Consequently, the benefit of the concessional duty rate was not available to the appellant. The Tribunal upheld the denial of the benefit under the notification, as the imported goods did not meet the criteria specified in the notification.

3. Alleged Mis-declaration of Imported Goods:
The Tribunal found that the appellant mis-declared the imported goods as CKD parts of electrically operated two-wheelers to evade customs duty. The investigation showed that the imported assemblies were complete and ready for use, contradicting the appellant's declaration. The Tribunal upheld the findings of the adjudicating authority, confirming that the appellant mis-declared the goods with the intent to evade customs duty.

4. Liability to Pay Differential Customs Duty:
The Tribunal upheld the demand for differential customs duty under Section 28(4) of the Customs Act, 1962, invoking the extended period of limitation. The appellant was found to have been fully aware of the nature of the imported goods and consciously mis-declared them to avail concessional duty rates. The Tribunal confirmed the demand for the differential duty, as the appellant's actions constituted a clear attempt to evade customs duty.

5. Imposition of Penalties under Sections 112, 114A, and 114AA of the Customs Act, 1962:
The Tribunal upheld the imposition of penalties on the appellant under Sections 112, 114A, and 114AA of the Customs Act, 1962. The penalties were imposed for mis-declaration, evasion of customs duty, and fraudulent claims of concessional duty rates. The Tribunal also upheld the penalties on the individuals involved, as they were found to be fully aware of the mis-declaration and actively participated in the import and assembly process. The involvement of the individuals in devising the modus operandi to evade customs duty justified the imposition of penalties on them.

Conclusion:
The appeals were dismissed, and the Tribunal upheld the findings and orders of the adjudicating authority, including the classification of the imported goods, denial of concessional duty benefits, demand for differential customs duty, and imposition of penalties. The Tribunal also disposed of the miscellaneous application filed by the appellant.