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Issues Involved:
1. Classification of imported goods under the Customs Tariff Act. 2. Requirement of import licence and no-objection certificate from the Department of Electronics. 3. Confiscation and imposition of penalties under the Customs Act, 1962. Detailed Analysis: 1. Classification of Imported Goods The primary issue was whether the imported "I.D. Card Printing/Production System with Essential Accessories & Spares" should be classified under Heading 8443.50 (other printing machinery) or Heading 84.71 (computers and peripherals) of the Customs Tariff Act. The importer argued that the system's principal function was the production/printing of I.D. cards, thus it should be classified under Heading 8443.50, supported by Note 5(A) and 5(B) to Chapter 84 and Section Notes 3 & 4 (Under Section XVI). The Department, however, found that the imported goods consisted of computers, computer peripherals, cameras, printers, and laminates with spares and accessories, which did not align with the description of printing machinery under Heading 8443.50. The goods were deemed freely programmable computers, classifiable under Heading 84.71. The Department emphasized that there was no separate identity card printing machine, but rather a system where the computer performed data collection, transmission, storage, and printing. The Collector upheld the Department's view, relying on Note 5 to Chapter 84, which defines "Automatic data processing machines" and concluded that the entire system was a computer-based setup. The classification under Heading 84.71 was deemed appropriate, and the camera and other spares/accessories were also to be classified under the same heading as per Note 4 of Section XVI. 2. Requirement of Import Licence and No-Objection Certificate The second issue pertained to the licensing requirements under para 41 of the Import Policy A.M. 1990-93, which mandates a specific import licence and a no-objection certificate from the Department of Electronics for importing computer and computer-based systems. The Collector found that the importer did not possess the required no-objection certificate, thus violating para 41 of the Import Policy. Consequently, the import was not allowed as non-O.G.L. capital goods against EXIM scrips, establishing an offence under Section 111(d) of the Customs Act, 1962. 3. Confiscation and Imposition of Penalties The final issue involved the confiscation of goods and the imposition of penalties. The Collector ordered the confiscation of the goods under Section 111(d) of the Customs Act, 1962, read with Section 3 of the Imports & Exports (Control) Act, 1947, but allowed redemption of the goods upon payment of a fine of Rs. 40 lakhs. Additionally, a personal penalty of Rs. 5 lakhs was imposed under Section 112 of the Customs Act, 1962. Upon appeal, it was argued that the confiscation and penalties were excessive and unjustified, especially given the bona fide nature of the import. The Tribunal found that while the charge of violation under Section 111(d) was sustainable, the personal penalty was excessive and reduced it to Rs. 1 lakh. Similarly, the redemption fine was deemed excessive and reduced to Rs. 5 lakhs, considering the importer's own use and lack of profit motive. Conclusion The Tribunal upheld the classification of the imported goods under Heading 84.71, including the camera and spares/accessories, as per Note 4 of Section XVI. The charge of violation under Section 111(d) was sustained, but the personal penalty was reduced to Rs. 1 lakh, and the redemption fine was reduced to Rs. 5 lakhs. The appeal was disposed of accordingly.
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