2001 (1) TMI 248 - SC - Customs

Drawing and Design - information put on the media - import through courier - baggage - 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 the aforesaid provisions of the Customs Act. These items are movable goods and would be covered by Section 2(22)(e) of the Customs Act. - whenever any goods or movables or tangible articles are imported into this country customs duty is payable. For the purpose of attracting levy it would be immaterial as to what are the types of goods imported or what is contained in them or recorded thereon. The contents will be relevant for the purpose of valuation - Any movable articles, irrespective of what they may be or may contain would be goods as defined in Section 2(22) of the Customs Act - The action of the Reserve Bank cannot result in negating the statutory provisions of the Customs Act and the Tariff Act applicable in the instant cases. The belief of the appellants that what was imported were not goods , as the Reserve Bank had also regarded the payment was being made for services and not goods, was clearly erroneous and misplaced. . As per Rules 3 and 4 the transaction value of the 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) is important for that shows 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 subject-matter of the tax is not the person importing or exporting but the subject-matter of the tax is the goods imported. If such goods are imported as a part of the baggage then by virtue of Heading No. 98.03 rate of duty prescribed therein has to be paid. - The parties took a chance in importing the articles through the courier. Initially they were successful in having the goods cleared by declaring a nominal value in respect thereof. They may not have been able to do this if the technical material and goods had been imported, not as a part of passengers baggage, but in the ordinary course of import either through post or by filing bill of entry. - the provisions of Chapter 98 were rightly applied on the facts of these cases.

Issues Involved:
1. Whether drawings, diskettes, manuals, etc., imported are goods on which excise duty could be levied.
2. Valuation of the goods for customs duty.
3. Limitation for issuing show cause notices for non-levy or short-levy of duty.
4. Applicability of Heading No. 98.03 of the Customs Tariff Act for goods imported by couriers.

Detailed Analysis:

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

The court examined whether the imported items, such as drawings and diskettes, qualify as "goods" under the Customs Act. The definition of "goods" under Section 2(22) includes "any other kind of movable property." The court held that any media containing information or technology, such as books, computer disks, or cassettes, are considered goods. Thus, the drawings, designs, and manuals imported by the appellants are goods subject to customs duty. The court rejected the appellants' argument that these items were intangible intellectual property and not goods.

2. Valuation of the goods for customs duty:

The court addressed the appropriate valuation method for the imported goods. According to Section 14 of the Customs Act and the Customs Valuation Rules, the transaction value of the imported goods is the price actually paid or payable for the goods when sold for export to India. Rule 9(1)(b)(iv) includes the value of engineering, development, artwork, design work, and plans and sketches in the transaction value. The court emphasized that the value of the goods includes both the tangible media and the intellectual content. The court found that the entire contract value should not be taken as the value of the imported goods. Instead, the Commissioner must determine the transaction value based on the terms of the agreements.

3. Limitation for issuing show cause notices for non-levy or short-levy of duty:

The court examined whether the extended period of limitation of five years under Section 28(1) of the Customs Act could be invoked. The proviso to Section 28(1) allows for an extended period if the non-levy or short-levy is due to collusion, wilful mis-statement, or suppression of facts by the importer. The court found that the appellants had made wilful mis-statements or suppressed facts by declaring a nominal value for the imported goods. Therefore, the extended period of limitation was applicable in these cases.

4. Applicability of Heading No. 98.03 of the Customs Tariff Act for goods imported by couriers:

The court addressed whether Heading No. 98.03, which applies to "all dutiable articles, imported by a passenger or a member of a crew in his baggage," was applicable to goods imported by couriers. The court held that the provisions of Chapter 98 were rightly applied, as the goods were imported as part of passenger baggage. The court rejected the appellants' argument that the provisions were inapplicable to corporate entities and that proceedings should have been initiated against the courier.

Separate Judgments:

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

The court found that the imported drawings and designs were classifiable under Heading No. 49.06, which specified a rate of duty as "free." Therefore, these items were not dutiable articles, and no customs duty was leviable. The appeal was allowed, and the orders of the Commissioner and Tribunal were set aside.

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

The court found that the drawings imported were prepared by the Indian company and merely approved by the German company. The value of these drawings was nominal, and the nominal value disclosed by the courier was not incorrect. The appeal was allowed, and the orders of the Commissioner and Tribunal were set aside.

Conclusion:

Civil Appeal No. 1493 of 2000 and Civil Appeal No. 3632 of 2000 were allowed, setting aside the orders of the Commissioner and Tribunal. The other appeals were dismissed, but the Commissioner was directed to determine the transaction value of the drawings, designs, etc., imported by Leela Ventures and impose the levy accordingly. There was no order as to costs.

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