1999 (9) TMI 283 - AT - Customs

Summary

Issues Involved:
1. Waiver of pre-deposit and stay of recovery of customs duty and penalty.
2. Classification of imported components under Customs Tariff Act.
3. Applicability of Rule 2(a) of the Interpretative Rules.
4. Violation of EXIM Policy.
5. Applicability of HSN Explanatory Notes.
6. Eligibility for exemption under various Customs Notifications.
7. Invocation of extended period of limitation.
8. Binding nature of CBEC Circulars.
9. Allegation of suppression of facts and imposition of penalty.

Detailed Analysis:

1. Waiver of Pre-deposit and Stay of Recovery:
The appellants sought waiver of pre-deposit and stay of recovery for customs duty of Rs. 42,89,75,196/- and penalty of Rs. 30,19,92,183/- confirmed by the Commissioner of Customs, New Delhi. They argued that the duty was paid based on the assessment of components under various sub-headings, and the Commissioner's demand for differential duty was based on an incorrect classification of the imported goods as complete CTVs in unassembled condition.

2. Classification of Imported Components:
The appellants imported 94 consignments of various CTV components and paid duty accordingly. The Commissioner later held that these were complete CTVs in unassembled condition, invoking Rule 2(a) of the Interpretative Rules, which led to the demand for differential duty. The appellants argued that the Commissioner's decision contradicted his own finding that the imported items were not CKD or SKD kits of CTVs.

3. Applicability of Rule 2(a) of the Interpretative Rules:
The appellants contended that Rule 2(a) should not apply as the components required complex assembly operations, which are not considered simple assembly operations under HSN Explanatory Notes. They cited previous Tribunal decisions and the Apex Court's rulings to support their argument.

4. Violation of EXIM Policy:
The Commissioner upheld the charge of contravention of EXIM Policy for imports from 25-3-1996 to 31-3-1997, based on the Import Licensing Note analogous to Rule 2(a). The appellants argued that since the goods were not in SKD or CKD conditions, the Import Licensing Note should not apply.

5. Applicability of HSN Explanatory Notes:
The appellants argued that HSN Explanatory Notes are binding and that the complexity of assembly operations should be considered. They pointed out that the European Court's judgment relied upon by the Commissioner did not consider the HSN Explanatory Notes and was not applicable retrospectively.

6. Eligibility for Exemption under Various Customs Notifications:
The appellants claimed eligibility for exemptions under Notifications No. 36/96, 91/89-Cus., and 79/95-Cus. They argued that the Commissioner's finding that the imported items were components, not CKD/SKD kits, should entitle them to the exemption benefits.

7. Invocation of Extended Period of Limitation:
The appellants argued that the extended period of limitation under Section 28(1) of the Customs Act should not apply as they had declared the imported items and sought classification under specific headings. They claimed there was no suppression of facts, as the change in assessment was based on a bona fide belief supported by Tribunal decisions and HSN Explanatory Notes.

8. Binding Nature of CBEC Circulars:
The appellants contended that CBEC Circular No. 44/97-Cus., dated 30-9-1997, which outlined the manufacturing operations, should be binding on the Revenue. They cited Apex Court rulings that circulars are binding on the Revenue and cannot be contested.

9. Allegation of Suppression of Facts and Imposition of Penalty:
The Revenue argued that the appellants had suppressed the fact that they were importing complete CTVs in unassembled form. The appellants countered that their import of components from various vendors did not constitute suppression and that no penalty should be imposed.

Conclusion:
The Tribunal observed that the issues were complex and involved multiple interpretations of legal provisions, rules, and circulars. They noted that the appellants had not made a prima facie case for waiver of the entire duty amount and directed them to deposit Rs. 20 crores towards duty within 8 weeks. Compliance with this order would result in a waiver of the remaining duty and penalty, and stay of recovery during the appeal's pendency. Failure to comply would result in dismissal of the appeal.