1999 (11) TMI 288 - AT - Customs

Dutiability - Goods - Import - Courier import - Classification of goods - Valuation - Demand - Limitation

Issues Involved:

1. Classification of imported drawings and designs as "goods" under Customs law.
2. Correct tariff heading for classification of such goods.
3. Valuation of the imported goods.
4. Applicability of the extended period of limitation for demand of duty.
5. Legitimacy of penalties imposed on the appellants.

Detailed Analysis:

1. Classification of Drawings and Designs as "Goods":

The primary issue was whether drawings, designs, etc., related to machinery or industrial technology qualify as "goods" subject to customs duty. The appellants argued that these were intellectual properties and not goods. However, the Tribunal concluded that since the drawings and designs were transferred physically and had a specific value, they should be classified as goods. The Tribunal referenced previous judgments, including the Supreme Court's decision in the Vikas Sales Corporation case, which held that incorporeal rights like a copyright could be regarded as "goods." Thus, the Tribunal held that knowledge in the form of drawings and designs are goods and would attract customs duty.

2. Correct Tariff Heading for Classification:

Initially, the show cause notices classified the goods under Chapter 49. Subsequent corrigenda suggested classification under sub-heading 9803.00, treating the imports as "baggage." The Tribunal examined whether goods imported by couriers could be classified under Heading 98.03. It was concluded that prior to the Courier Imports (Clearance) Regulations, 1995, such imports were treated as baggage, supported by a CBEC circular. Therefore, the Tribunal upheld the classification under Heading 98.03, noting that the goods imported by couriers during the relevant period merited this classification.

3. Valuation of the Imported Goods:

The valuation issue was addressed by examining the values declared by the appellants. In cases where specific values were apportioned in the agreements, these values were accepted. Where no apportionment was provided, the entire contract value was taken for duty calculation. The Tribunal found no merit in the appellants' claims that the apportionments were inappropriate, as the appellants themselves had declared these values. For M/s. Videocon VCR Ltd., the Tribunal adjusted the duty calculation by taking 1/3rd of the contract value as the cost of drawings and designs, based on the appellant's initial suggestion.

4. Applicability of the Extended Period of Limitation:

The Tribunal examined whether the extended period under the proviso to Section 28 of the Customs Act was applicable. The appellants argued that the goods were imported by couriers, not by themselves, and thus they should not be liable for mis-declaration. The Tribunal rejected this argument, stating that the couriers acted as agents for the appellants, who were aware of the value of the goods. The Tribunal also dismissed the appellants' claim of innocence based on RBI documentation, noting that the RBI's instructions pertained only to FERA and not to customs duties. Consequently, the Tribunal upheld the applicability of the extended period for demand.

5. Legitimacy of Penalties:

The Tribunal reviewed the penalties imposed, which ranged from 1% to 2% of the value. Given the findings on the extended period and the appellants' awareness of the goods' value, the Tribunal found the penalties reasonable and declined to interfere with the Commissioner's orders. The Tribunal noted that the appellants' conduct indicated knowledge of the dutiable nature of the drawings and designs, further justifying the penalties.

Conclusion:

The Tribunal upheld the orders of the Commissioner, confirming the differential duty and penalties, with a specific adjustment for M/s. Videocon VCR Ltd. on the valuation issue. The appeals were dismissed, affirming the classification of drawings and designs as goods, their classification under Heading 98.03, the valuation method used, the applicability of the extended period for demand, and the legitimacy of the penalties imposed.

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