2022 (9) TMI 690 - AT - Customs

Classification of imported goods - Benefit of exemption from duty (BCD) - import of data projectors - classifiable under Customs Tariff Item 8528 61 00/ 8628 62 00 as claimed by the appellant or under CTI 8528 69 00 as claimed by the Department? - levy of penalty u/s 114A of Customs Act - HELD THAT - It is seen that prior to 01.01.2017, CTI 8528 61 00 uses the phrase of a kind solely or principally used in an automatic data processing system of heading 8471 . Post 01.01.2017, CTI 8528 62 00 uses the phrase capable of directly connecting to and designed for use with an automatic data processing machine of heading 8471 . For the period prior to 01.01.2017, goods principally used with ADPS are those goods which are inherently capable of connecting with multiple devices but are designed primarily to be used with ADPS. The data projectors imported by the appellant are used with ADPS and merely because they have the capability of use in both ADPS or non-ADPS cannot be a basis for deciding whether the projectors are principally used with ADPS. The correct test is to find out whether the specification and features are designed in such a way that they are generally or primarily meant for use with ADPS. A Division Bench of the Tribunal in Sony India, after referring to the earlier Division Bench decisions of the Tribunal in ACER INDIA (P) LTD. VERSUS CC 2009 (11) TMI 931 - CESTAT AHMEDABAD , COMMR. OF CUS. C. EX., HYDERABAD-II VERSUS AVECO VISCOMM PRIVATE LTD. 2010 (9) TMI 436 - CESTAT, BANGALORE , COMMISSIONER OF CUSTOMS (I), ACC, MUMBAI VERSUS VARDHAMAN TECHNOLOGY P LTD 2013 (8) TMI 271 - CESTAT MUMBAI , held that the colour data projectors imported by the appellant would be classifiable under CTI 8528 61 00. The addition of multiple ports in the goods will not take away the basic nature of the goods, which is to work in conjunction with ADPS. This would continue to remain the principal function of the goods. The presence of such ports is only to ensure their use with laptops and ADPS. Therefore, even post 01.07.2017, goods would be classifiable under CTI 8528 62 00 and the decisions of the Tribunal rendered for the period prior to 01.07.2017 will continue to apply to projectors imported w.e.f. 01.01.2007 - It is also seen that for the period prior to 01.01.2017, all good falling under CTSH 8528 41, 8528 51 or 8528 61 were unconditionally exempt from payment of BCD under Serial No. 17 of the exemption notification. Post 01.01.2017, Serial. No. 17 of the notification exempts all goods falling under CTSH 8528 42, 8528 52 or 8528 62 if they are of a kind solely or principally used in an automatic data processing machine of heading 8471. The goods imported by the appellant satisfy the description of the goods in the exemption notification for both the periods and are, therefore, eligible for exemption. Penalty under section 114A of the Customs Act - HELD THAT - When there is no mis-declaration, penalty under section 114A of the Customs Act could also not have been imposed - The Department has filed appeals as penalties under section 114AA of the Customs Act have not been imposed. As the appellant has correctly availed the benefit of the exemption notification, the appeals filed by the Department deserve to be dismissed. Appeal allowed.

Summary

Issues Involved:
1. Classification of imported 'data projectors' under the Customs Tariff.
2. Eligibility for exemption from Basic Customs Duty (BCD) under the exemption notification dated 01.03.2005.
3. Validity of the extended period of limitation for demand of differential customs duty.
4. Imposition of penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Classification of Imported 'Data Projectors':
The primary issue was whether the 'data projectors' imported by the appellant should be classified under Customs Tariff Item (CTI) 8528 61 00/8528 62 00 as claimed by the appellant or under CTI 8528 69 00 as claimed by the Department. The appellant argued that the data projectors were designed to be used primarily with an Automated Data Processing System (ADPS) and thus should be classified under CTI 8528 61 00 (pre-01.01.2017) and CTI 8528 62 00 (post-01.01.2017). The Department contended that the projectors were 'multimedia projectors' capable of connecting to multiple devices and should be classified under CTI 8528 69 00.

The Tribunal referred to previous decisions, including Sony India Pvt. Ltd. v/s Commissioner of Customs, which supported the classification under CTI 8528 61 00/8528 62 00 for projectors primarily used with ADPS. The Tribunal concluded that the presence of multiple ports did not change the primary function of the projectors, which was to work with ADPS, thus supporting the appellant's classification.

2. Eligibility for Exemption from BCD:
The appellant claimed exemption from BCD under Serial No. 17 of the exemption notification dated 01.03.2005, which exempted goods under CTI 8528 61 00/8528 62 00. The Tribunal found that the data projectors imported by the appellant met the criteria for exemption for both periods (pre and post-01.01.2017) and thus were eligible for the exemption.

3. Validity of the Extended Period of Limitation:
The Department invoked the extended period of limitation under Section 28(4) of the Customs Act, alleging mis-declaration by the appellant. The Tribunal, however, accepted the appellant's contention that it acted under a bona fide belief supported by judicial precedents. The Tribunal referred to the Supreme Court's decision in Commissioner of Customs (Imports) v/s Reliance Industries Ltd., which stated that a bona fide belief based on prevailing judicial decisions could not constitute mis-declaration, thus invalidating the extended period of limitation.

4. Imposition of Penalties:
The Additional Director had imposed penalties under Section 114A but refrained from imposing penalties under Section 112(a) and 114AA. The Tribunal held that since there was no mis-declaration, penalties under Section 114A were not warranted. Consequently, the Tribunal dismissed the Department's appeals seeking penalties under Section 114AA, as the appellant had correctly availed the exemption.

Conclusion:
The Tribunal allowed the appeals filed by BenQ India Pvt. Ltd. and associated individuals, setting aside the order of the Additional Director. The Tribunal dismissed the appeals filed by the Department, upholding the appellant's classification and exemption claims and ruling out the extended period of limitation and penalties.