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2005 (7) TMI 250
Smuggling of the silver - confiscation - Penalty - Adjudication - No opportunity for cross-examination to the witnesses - Violation of principles of natural justice - Proof regarding letting out of the premises - HELD THAT:- As noted, all the noticees including the appellants were informed about all the material which was sought to be relied on against them along with the relevant documents and statements as stated in the detailed show cause notices issued to them, and they sent their replies to the show cause notices. Some of the appellants were represented by consultants. The appellants remained absent on various dates resulting delay in the proceedings. Statements of the two drivers of the vehicles from which contraband silver was recovered, the employee of the appellant Ashish Kumar Chaurasia and the statements of the persons who were travelling in the vehicles for taking the contraband silver to Delhi as also the statements of Ram Avatar Singhal, and the statements of independent persons before whom seizures were made clearly establish that all the appellants were persons concerned with prohibited silver and were liable to imposition of penalty u/s 112 of the said Act. In such a situation insistence for cross-examining one of them can be purely strategic with a view to raise a contention of violation of principles of natural justice.
If cross-examination is to be allowed as a matter of right then in all cases of conspiracy and joint dealings between the co-noticees in the commission of the offences in connection with the contraband goods, they can bring about a situation of failure of natural justice by a joint strategic effort such co-noticees by each one refusing to be cross-examined by resorting to Article 20(3) of the Constitution and simultaneously claiming cross-examination of the other co-noticees.
We, therefore, hold that the appellants, including the appellant Ashish Kumar Chaurasia were not entitled to claim cross-examination as a matter of right. The appellant Ashish Kumar Chaurasia had, in fact, cross-examined two official witnesses and at the end, he had only sought for time for further hearing. The cross-examination made by the appellant, Ashish Kumar Chaurasia of two officers, A.K. Chaturvedi and Simon has been set out in the impugned order and it is recorded that, "various dates of personal hearing was given one after the other but neither Ashish Kumar Chaurasia nor his advocate turned up". It is clear from the record that the appellants had been given adequate opportunity of being heard in the matter pursuant to the show cause notice issued under Section 124 of the said Act, and there has not been any violation of the principles of natural justice.
It is clear to us from the statements of Ram Avatar Singhal, Ram Kishore Mishra, Ram Bilas Mandal and Ram Kumar Kashyap that the appellant Ashish Kumar Chaurasia, alias Pappu doodhwala was involved in concealing the silver ingots of foreign origin in his dairy premises and he used to give such ingots to Ram Avatar Singhal for getting them melted and sold for which he used to pay the agreed amount to Ram Avatar Singhal. The appellant Ram Avatar Singhal used to send the converted contraband silver to Delhi in the vehicles in which concealed cavities were made for the safe transport of the contraband goods. The appellant Ram Avatar Singhal used to depute Jagdish Shanker Trivedi, alias 'Jijaji' who was a lawyer along with his driver for transporting the contraband silver to Delhi for its disposal. He also used to send his friend Ram Kishore Mishra for transporting the silver to Delhi. Both the drivers were engaged for trips to Delhi for the said purpose. Ram Avatar Singhal was melting the ingots in his refinery, from where also, 14 ingots and one lump of silver were recovered on 18-12-1992 itself when both the vehicles in which the contraband silver was being carried were intercepted at Kanpur and at Ghaziabad near Delhi.
Thus, we are fully satisfied that the learned Commissioner of Central Excise was right in confiscating the seized goods and imposing the penalties on the appellants under the impugned order. The contentions raised on behalf of the appellants do not warrant any interference with the impugned order.
All the appeals are, therefore, dismissed. Interim relief, if any, stands vacated.
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2005 (7) TMI 249
Manufacturers of the goods Or Not - P or P medicaments manufactured on loan licence basis - Job worker - valuation of goods - demand differential duty - HELD THAT:- We have gone through the records of the case carefully. M/s. USV Ltd., Mumbai hold loan licence under the Cosmetics and Drugs Control Act. They supplied raw materials to the appellants. The appellants manufacture the required goods as per the specification of M/s. USV and supplied to them for the above work. They get processing charges. There is an agreement between the appellants and M/s. USV, Bombay.
On going through the agreement, we are convinced that the appellant is a job worker who carries out the entire manufacturing process in their factory after receiving raw materials from M/s. USV. The agreement has got a termination clause also. According to Clause 13.2 cited, each party may terminate the agreement at any time by giving to either party three months notice in writing. The adjudicating authority has mainly relied on the Indica decision [1989 (5) TMI 72 - HIGH COURT OF GUJARAT AT AHMEDABAD] of the Gujarat High Court and held that M/s. USV are the manufacturers of the goods manufactured in the appellants premises. The Indica case, has been elaborately gone through in the Lupin Lab case [1996 (9) TMI 559 - CEGAT, NEW DELHI].
In any case, if Revenue holds that M/s. USV are the real manufacturers, they should have demanded duty from them which they have not. On going through the contract, between the appellants and M/s. USV, we find that there is no evidence to show that M/s. USV the loan licensee had hired shifts in the premises of the appellants. Under these circumstances, the reliance of the Commissioner in the case of Indica is misplaced. Hence the OIO has no merits.
Therefore, we allow the appeal with consequential relief.
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2005 (7) TMI 248
Appellate order - Demand duty - Non-accountal of goods - manufacture of Compact Discs such as Compact Discs (Audio), Compact Discs (Video) and Compact discs (ROM) also known as Computer Software - Confiscation - HELD THAT:- The seizure made by the officers of 44,661 nos. of CD was totally illegal and improper. The seizure consisted of 33,607 nos. of CD Audio and 11,054 nos. of CD Rom. While the CD Audio were taken from the stocks of 54,076 nos. of CD Audio which have already been accounted for at page 2 of the RG -1 Register, the CD ROM were taken from the stocks of 35,930 nos. of CD ROM which have already been accounted for at page 72 of the RG-1 Register. Thus the seizure of the CDs already accounted for in the records, on the ground that these have not been accounted for, is arbitary and illegal action on the part of the seizing officers. Besides, the seizure of 11,054 nos. of CD ROMs, which are non-dutiable, is totally uncalled for. On this ground alone, the Order passed by the ld. Commissioner, who upheld the Order of the lower authority, justifying the seizure made by his officers deserves to be set aside.
Whereas the allegation in the Show Cause Notice, is about the non-accountal of the excess stock of goods, the ld. Commissioner, has held his Order that the assessee had cleared the goods without payment of duty as if the allegation was about shortage of goods, At more than one place, particularly in his Order, the ld. Commissioner had mentioned about the shortage of goods. This only shows total non-application of mind on the part of the ld. Commissioner, in passing his Order and on this ground alone, his Order-in-Appeal, deserves to be quashed.
It is very clear that mere non-entry of the productions in the RG-1 will not bring in the liability to confiscation under provision of the Central Excise Rules if there is no corresponding material of clandestine clearance also available. Unaccounted production goes in tandem with clandestine removal and evidence of both has to be present in a given case to avoid the charge to be determined on an assumption/presumption. Applying the tab for liability to confiscation in this case under Rule 173Q(1), we find the test to be not positive. The confiscation arrived is to be not upheld & is to be set aside.
In this view, when the order as regards the confiscation liability goods in question is not being upheld on merits & in law, then there in no reason to visit the other appellants with penalty under Rule 209A.
Consequently, the orders are set aside & appeals allowed.
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2005 (7) TMI 247
Issues: Classification and assessment of software imported along with printer under different headings.
The judgment by the Appellate Tribunal CESTAT, New Delhi addressed the issue raised by the appellant regarding the classification and assessment of software imported along with a printer. The appellant claimed the software should be classified under Heading 85.24 and the printer under Heading 84.71. However, the impugned order classified both the software and printer under Heading 84.71, leading to the present appeal challenging that decision.
The appellant's claim was based on Note 6 to Chapter 85, which states that media presented with the apparatus for which they are intended should remain classified in those headings. The appellant argued that the software was intended for the printer. The impugned order rejected this claim, stating that the CD ROM containing the software is intended for the computer to which the printer is attached, not the printer itself. The tribunal found that the CD ROM and software would be classifiable along with the printer as they form a package for retail sale, based on General Interpretative Rule 3(b.
The appellant contended that the software in question was specifically for the printer, as it enables compatibility between the printer and the computer, resulting in the printer printing materials as instructed by the computer. The counsel argued that the relevant factor is whether the software is for the printer, not whether it can be loaded directly onto the printer. The appellant also referenced Circular No. 51/02-Cus., dated 12-8-2002, to support their position, emphasizing that the software should be classified under Heading 85.24.
After reviewing the records and hearing the learned DR, the tribunal concluded that the media (software) imported along with the printers should be assessed under Heading 85.24. It was noted that the media was separately entered in the invoices and priced separately, indicating that it should be classified and assessed independently from the printer. The tribunal held that the order classifying the media under Heading 84.71 was not sustainable and allowed the appeal, setting aside the impugned order and providing consequential relief to the appellants.
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2005 (7) TMI 246
Issues: Challenge to imposition of interest in absence of determination of duty.
Analysis: The appellant contested the imposition of interest without the determination of duty by the Revenue. The Commissioner (Appeals) did not agree with the appellant's argument that interest should not be levied without determining duty in the impugned Order-in-Appeal No. 91/2004. The appellant was coerced to pay the duty. Subsequently, proceedings were initiated without determining duty, only confirming interest, which the appellant challenged. The appellant's representative cited cases where the Tribunal set aside interest confirmation in similar situations. The learned SDR noted that the issue was settled, and the appeal should be disposed of.
Upon careful consideration, the Tribunal found that demands were not determined under Section 11A(2) of the Central Excise Act, 1944. Therefore, the imposition of interest under Section 11AB was unwarranted. The Order-in-Original only confirmed interest, which was upheld by the Commissioner (Appeals). Since duty was not determined under Section 11A, confirming interest under Section 11AB was inappropriate, as per the Tribunal's precedent in similar cases. Consequently, the impugned order was set aside, and the appeal was allowed, with any necessary consequential relief to follow.
The judgment was pronounced in open court upon completion of the hearing.
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2005 (7) TMI 245
Issues: 1. Customs and Excise Duties evasion by the company. 2. Demand and recovery of duties under various sections of the Customs Act. 3. Imposition of penalties on the company and its Jt. Managing Director. 4. Separate show cause notices issued to the Domestic Tariff Unit and the Jt. Managing Director.
Issue 1: Customs and Excise Duties Evasion The company, engaged in manufacturing and exporting drilling equipment, faced allegations of evading Customs and Excise Duties. Specific intelligence led to a notice being issued, demanding payment of various duties amounting to significant sums. The company was required to show cause regarding the duty amounts demanded and the utilization of duty-free spares and tools. The impugned order confirmed the duty amounts along with penalties and interest, leading to the company's appeal.
Issue 2: Demand and Recovery of Duties After hearing both sides, the Tribunal found discrepancies in the duty demands. The demand on machinery imported duty-free for the EOU was contested, citing lack of provision requiring exclusive use for EOU production. The Tribunal referenced relevant case law and highlighted the separate operations of the EOU and DSU, questioning the denial of exemption based on job work permissions. Demands on machinery procured indigenously and goods cleared under Exim Policy provisions were also challenged, with the Tribunal ruling against upholding the demands based on legal precedents and interpretations of relevant policies.
Issue 3: Imposition of Penalties The impugned order imposed a penalty on the Jt. Managing Director under Rule 209A. However, the Tribunal, upon revisiting the duty demands, decided to remand the matter for redetermination, keeping the issue of penalties open for reconsideration post redetermination. This decision was made to ensure a fair assessment of penalties in light of the revised duty determinations.
Issue 4: Separate Show Cause Notices The show cause notices issued to the Domestic Tariff Unit and the Jt. Managing Director raised specific issues regarding penalties for abetting duty evasion and contraventions. The Tribunal's decision to remand the matter for redetermination on certain duty demands also impacted the consideration of penalties, emphasizing the need for a comprehensive review of all aspects before imposing penalties.
In conclusion, the Tribunal partly allowed the appeals by setting aside demands on certain duty amounts while remanding the matter for redetermination on other aspects. The decision to keep the issue of penalties open for redetermination post revised duty assessments reflects a balanced approach to ensuring a fair and thorough adjudication process.
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2005 (7) TMI 244
Issues: 1. Refund claim for Customs Duty on imported Ethylene Oxide Sterilizer Unit. 2. Entitlement for exemption under Notification 23/98-Cus. 3. Unjust enrichment in refund claim.
Refund Claim for Customs Duty: The appellants imported an Ethylene Oxide Sterilizer Unit and paid duty on it. Later, they discovered that the item was exempted from Customs Duty under Notification 23/98-Cus. They filed a refund claim for the amount paid. The Deputy Commissioner (Refunds) found the claim timely and not hit by unjust enrichment but concluded that the goods were not covered by the exemption. The appellants appealed to the Commissioner (Appeals), who extensively analyzed the equipment's function and determined that it was entitled to the exemption, allowing the refund. However, the refund was credited to the Consumer Welfare Fund due to unjust enrichment, which the appellants contested.
Entitlement for Exemption under Notification: The Commissioner (Appeals) based the decision on the equipment's function and technical literature references, concluding that the imported equipment qualified for exemption under the Notification. The appellants challenged the decision, emphasizing their entitlement to the refund. The Tribunal noted that the original authority's finding on unjust enrichment was not appealed by the Revenue. The Commissioner (Appeals) failed to provide detailed reasoning on how the refund claim was hit by unjust enrichment. The Tribunal observed discrepancies in the Commissioner (Appeals)'s reasoning and held that the refund claim was not hit by unjust enrichment, allowing the appeal with consequential relief.
Unjust Enrichment in Refund Claim: The original authority, supported by a Certificate from a Chartered Accountant, determined that the refund claim was not hit by unjust enrichment. The Certificate stated that the expenditure, including Customs duty, was borne by the company without passing it on to any other party. The Commissioner (Appeals) disregarded the original authority's findings, leading to the Tribunal's conclusion that the refund claim was not affected by unjust enrichment. The Tribunal emphasized the need for proper justification and reasoning if disputing the original authority's findings on unjust enrichment, ultimately allowing the appeal and providing consequential relief.
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2005 (7) TMI 243
Issues: Classification of the product "Johnson Buds" under Central Excise Tariff Act.
Detailed Analysis: The appeal revolves around the classification of the product "Johnson Buds" manufactured by M/s. Johnson & Johnson Ltd. The Department asserts the classification under Chapter Sub-Heading 3926.90, contrary to the previous classification under 5601.10. The Adjudicating Authority emphasizes that both the wadding of cotton and P.P. Sticks determine the essential character of the product, leading to its classification under Heading 3926.20 based on the material that predominates by weight, which is polypropylene in this case.
The assessee argues that the product is primarily used for cleaning the outer portion of the ear but is also utilized for the inside. The cotton used is of IP Grade, meeting Indian Pharmacopoeia Standards. The Department's claim that the weight of PP Sticks predominates for classification under 3926.90 is refuted, citing the end-use and a Supreme Court judgment (M/s. Geep Flashlight Industries v. Union of India) emphasizing trade understanding for classification.
The Commissioner (Appeals) notes that the product's essential character is dependent on the cotton swabs, leading to classification under Sub-Heading 5601.10. Referring to Rule 3(c) of the General Rules of Interpretation, the product is classified under 5601.10 as it occurs later than 3926.90. The Tribunal, considering the essential character derived from wadding and the functional use of the product, rules in favor of classification under Chapter Heading No. 5601.00, setting aside the Order-in-Original.
The Department contends that the product's essential character is determined by both the wadding and the PP Stick equally, justifying classification under 3926.90. However, the Tribunal, after thorough consideration and referencing the Supreme Court's interpretation of articles of plastics, dismisses the appeal, affirming the classification under 5601.00 due to the product being known, advertised, sold, and offered as an ear bud, not as an article of plastic.
In conclusion, the Tribunal dismisses the Revenue's appeal, upholding the classification of the product "Johnson Buds" under Chapter Heading No. 5601.00, emphasizing the trade understanding and the essential character derived from the wadding of cotton.
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2005 (7) TMI 242
Flanges - Exemption - Demand - Limitation - Suppression of facts - Non-conventional energy devices/systems - HELD THAT:- Once tower is accepted and found and held to be part of Wind Operational Electric Generator (WOEG for short) it is to be held that part i.e. flange of this part i.e. tower will be part of the whole i.e. Wind Generated Mill producing electricity from unconventional services. Every devices/systems part in this case having been specifically designed for that purpose in mind. We find the 'flanges' to be a part of WOEG.
Classification declarations were filed by the appellant the goods M.S. Forged Flanges (Machined) with the exemption claim under Sr. No. 251 last 5 & Remark column having an Entry 'Wind Mills' spares & parts (for wind operated electricity generators). We find when "the Board has cast an obligation on the department vide Circular No. 124/35/95-CX. to scrutinize the declaration, therefore the finding on suppression as arrived by the Ld. Adjudicator is this order, para 10, of deliberate omission of Sr. No. to involve the Proviso clause & lift the bar of limitation cannot be upheld. As the order does not indicate any other objection of the verification if any, done by the officers.
Since the appellants belief of the product being covered on different Sr. No. was well founded & there was no stipulation of reporting the same. Surely if claim is entitled under alternate Sr. No. the same have to be granted. Suppression of fact cannot be arrived. Same has to be of a fact which would disentitle the claim of exemption, if revealed. No such fact is brought out in the order or pleaded before us. The bona fide belief & in view of Boards circular that part of Tower & Tower being part of Wind Operated Electricity Generators would favour the appellant with the bar of limitation to be available in his favour in this case.
When our findings on merits about eligibility to Notification & bar of limitation to be in favour of the appellants, we cannot find any reason to uphold any demands of duty or penalty or interest in this case. The same are set aside.
Thus, this appeal is allowed setting aside the impugned order.
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2005 (7) TMI 241
SSI Exemption - Clubbing and clandestine removal - Duty Demand - Bar of Limitation - Confiscation - Liability under Rule 173Q(1) - Penalty - HELD THAT:- It is an admitted position that the show cause notice has a reference to all the four units required to be termed as one unit and their values of clearances were required to be clubbed together and eligibility to SSI exemption notification was to be determined afresh, yet the notice demands duty separately from each of the units. The demands in the notice are in conflict with the charge. Such notices are required to be set aside. The order impugned is demanding duty of Rs. 1,45,29,754/- from M/s. Sotex, the proprietary firm of Shri M.M. Majithia. The demand cannot be upheld, since the demand in the Show Cause Notice proposed to be recovered from M/s. Sotex was not a figure of Rs. 1,45,29,754/- but much less, the present proposal to confirm the duty demand beyond which was proposed in the Show Cause Notice at Rs. 35,806/- & Rs. 2,884/- cannot be upheld.
The finding that the three units are just dummy units cannot be upheld when the department is recognizing separate clearances and duty demands on these other units.
The matter of existence of these units and the activity were within the knowledge of the department vide proceedings initiated by Preventive Officers by Show Cause Notice dated 8-3-1994 issued to each unit and which culminated in order-in-appeal by Commissioner dated 3-7-1996.
Since the ld. Commissioner has found that SS coil were removed for slitting and not have been found to be diverted for any other purpose, the non-following of procedure of Modvat rules will not call for the heavy penalty of Rs. 1.00 lakh under Rule 173Q on Sotex. The same is required to be set aside.
Since no duty demands and/or confiscation liability under Rule 173Q(1) are being upheld, the confiscation ordered on M/s. Sotex under Rule 173Q(2) is not upheld. The same is set aside.
Since duty demands on M/s. Sotex are not being upheld, the penalty of Rs. 1,45,29,754/- u/s 11AC as imposed is to be set aside.
The duty demand of Rs. 18,900/- on 8,400 kgs of scrap found short at M/s. Unity along with Rs. 34,000/- demand of duty on watch straps found short at premises of M/s. Unity under Section 11A determined on M/s. Sotex when M/s. Unity is an independent registered assessee under Central Excise Act, 1944 & a partnership firm, the same is misdirected demand and penalty. The same cannot be upheld as imposed on M/s. Sotex. The duty demands are also set aside for same reasons.
When no demands on shortages found at M/s. Unity are being found & held, there is no cause to visit M/s. Sotex with a penalty of 100% under Section 11AC cannot be upheld for the same. That penalty is to be set aside.
Since no demands of M/s. Sotex are being upheld, the interest demand will abate.
When no confiscation as arrived in this order is being upheld, the penalty under Rule 209A on Shri M.M. Majithia or Shri V.V. Rajani cannot be upheld.
Thus, order is set aside and appeals allowed.
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2005 (7) TMI 240
Issues Involved: 1. Duty demand and penalties imposed on various appellants for improper utilization of imported goods under the DEEC scheme. 2. Violation of principles of natural justice due to non-receipt of show cause notices and personal hearing notices. 3. Entitlement to reshipment and claim of auction proceeds of imported goods. 4. Cross-examination of witnesses in the context of penalties imposed. 5. Ownership and re-export claim of goods by a foreign entity. 6. Allegations of undervaluation of imported consignments and associated penalties.
Detailed Analysis:
Issue 1: Duty Demand and Penalties Imposed - The first group of appeals involves a duty demand of Rs. 1,59,40,455/- confirmed against two individuals, holding them as de facto importers of copper ingots/wire bars and brass scrap cleared against advance license and DEEC books, which were disposed of in the local market instead of being utilized for manufacturing final products for export. Penalties were imposed under Section 112 of the Customs Act on multiple individuals and entities. - The second group of appeals involves a duty demand of Rs. 99,76,671/- against M/s. Vinob Exports for disposing of imported goods in the local market contrary to the conditions of notification 203/92-Cus. Penalties of Rs. 1,00,00,000/- each were imposed on two individuals. - In the third order, a penalty of Rs. 25,00,000/- was imposed on an individual in connection with the import of 400 MT of HDPE by M/s. Equipment Produce.
Issue 2: Violation of Principles of Natural Justice - The Didwania duo claimed they did not receive the show cause notice or the notice of personal hearing, making the order ex parte and violative of the principles of natural justice. The Tribunal found merit in this grievance, noting the lack of proof of actual receipt of notices. Consequently, the impugned order was set aside, and the case was remanded for fresh adjudication with instructions to provide a reasonable opportunity for hearing.
Issue 3: Entitlement to Reshipment and Claim of Auction Proceeds - M/s. G. Mckenzie & Co. appealed against the rejection of their request for reshipment of goods and claimed the auction proceeds. The Commissioner had vacated the seizure of 140 MT copper ingots and directed their auction. The Tribunal upheld the Commissioner's decision, noting the lack of credible evidence supporting the claim of ownership and the suspicious circumstances surrounding the import and subsequent claim.
Issue 4: Cross-Examination of Witnesses - The Didwania duo contended that the case against them was based on statements from certain individuals, and their request for cross-examination was not considered. The Tribunal found this argument persuasive and remanded the case for fresh adjudication, instructing the Commissioner to consider the request for cross-examination and provide a reasonable opportunity for the appellants to be heard.
Issue 5: Ownership and Re-Export Claim of Goods by a Foreign Entity - The appeal by Lornath Agarwala of M/s. G. Mckenzie & Co. Ltd. challenged the Commissioner's finding that he was not the exporter of the goods and thus not entitled to receive them back. The Commissioner's decision was based on several grounds, including Agarwala's inconsistent statements and lack of documentary evidence. The Tribunal upheld the Commissioner's decision, emphasizing the need for strict proof of ownership and the suspicious nature of the claim.
Issue 6: Allegations of Undervaluation and Associated Penalties - The third case involved allegations of undervaluation of HDPE consignments imported by M/s. Equipment Produce, with penalties imposed on the CHA and individuals involved. The Tribunal noted the previous remand by the Tribunal for violation of natural justice and the subsequent re-imposition of penalties by the Commissioner. The Tribunal set aside the impugned order and remanded the case for fresh adjudication, ensuring a reasonable opportunity for the appellant to be heard.
Conclusion: The Tribunal addressed each issue comprehensively, emphasizing the principles of natural justice, the need for credible evidence, and the importance of providing a fair hearing to the appellants. The cases were remanded for fresh adjudication with specific instructions to ensure compliance with legal procedures and fair treatment of all parties involved.
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2005 (7) TMI 239
Issues Involved: 1. Classification of imported equipment. 2. Eligibility for exemption under Notification No. 11/97-Cus., as amended by Notification No. 55/97-Cus. 3. Valuation of imported equipment. 4. Jurisdiction and authority of the Commissioner (Appeals) to entertain the appeal.
Detailed Analysis:
1. Classification of Imported Equipment: The primary issue was whether the imported "Heavy Duty Platform Ringer Crane" and "8 nos. SPMTs with 5 power packs" should be classified under Chapter 8426.19 (cranes) or under Chapter 8704.90 (trailers) of the Customs Tariff. The Revenue argued that the crane was a standalone unit that required separate trailers for mobility and thus should not be classified as a mobile crane. However, the Commissioner (Appeals) and the Tribunal found that the crane and the SPMTs were imported together and functioned as an integral unit, used for lifting and handling at different refinery sites. The Tribunal concluded that the crane, along with the SPMTs, should be classified under Heading 84.26 as a mobile crane, based on the HSN notes and the purpose of the import.
2. Eligibility for Exemption under Notification No. 11/97-Cus., as Amended by Notification No. 55/97-Cus: The Revenue contended that the crane was not a mobile crane and thus not eligible for the exemption. However, the Tribunal found that since the crane was classified as a mobile crane under Heading 84.26, it was eligible for the exemption under Notification No. 11/97-Cus. The Tribunal also rejected the distinction made by the Revenue between erection equipment and material handling equipment, noting that the imported crane was used for handling and erecting heavy materials at the refinery site.
3. Valuation of Imported Equipment: The Revenue challenged the valuation declared by the importer, arguing that the declared value was not genuine and inadequate. They relied on a machinery expert's report comparing the crane with a similar model, the Crawler Crane CC-12600, and suggested a higher valuation. The Tribunal, however, found that the comparison was not appropriate as it was based solely on lifting capacity without considering other factors such as model differences and usage. The Tribunal upheld the Commissioner (Appeals)'s findings on valuation, which were based on the declared invoice value and found no evidence of extra payments or undervaluation.
4. Jurisdiction and Authority of the Commissioner (Appeals) to Entertain the Appeal: The Revenue argued that the Commissioner (Appeals) should not have entertained the appeal against the final assessment of the Bill of Entry. The Tribunal rejected this argument, citing the Larger Bench decision in CC v. Arvind Export and the Supreme Court decision in Priya Blue Industries Ltd. v. CC (Preventive), which upheld the right to appeal against an order of assessment on a Bill of Entry. The Tribunal found no reason to uphold the Revenue's grievance regarding the jurisdiction of the Commissioner (Appeals).
Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s order on all counts, including the classification of the crane and SPMTs under Heading 84.26, the eligibility for exemption under Notification No. 11/97-Cus., and the declared valuation of the imported equipment. The Tribunal found no infirmity in the Commissioner (Appeals)'s order and rejected the Revenue's grounds for appeal.
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2005 (7) TMI 238
Issues involved: Import of used photocopier machines, whether they are considered capital goods and require a license under the Exim policy.
Analysis: 1. The appeals involved the issue of whether the import of used photocopier machines should be treated as capital goods and if a license is required for their import. The lower authorities had denied the benefit of Open General License (OGL) and confiscated the goods, granting redemption on fine and penalty based on the requirement of a license for import.
2. The matter was referred to a Larger Bench in a previous case, where it was held that second-hand photocopier machines should be treated as capital goods and do not require a license for import under OGL. Following this decision, the appeals in question were allowed by the Larger Bench and subsequently by the current Bench in another related case.
3. The learned Counsel did not challenge the valuation but argued that the appeals should be allowed on the grounds that the import does not require a license, leading to the setting aside of the confiscation, fine, and penalty.
4. The Senior Departmental Representative (SDR) acknowledged that the issue was covered by the previous judgments but expressed the departmental view regardless.
5. After careful consideration, the Bench agreed with the Counsel's submissions, noting that the issue in all four appeals pertained to the import of second-hand photocopier machines. The authorities had confiscated the goods based on the requirement of a license under the Exim policy, but the appellants' argument that the machines were capital goods and did not require a license was accepted by the Larger Bench and subsequently by the current Bench. Therefore, the confiscation orders and penalties were set aside in all four appeals, allowing them accordingly with any consequential relief.
This comprehensive analysis of the judgment highlights the key issues, arguments presented, legal interpretations, and the final decision reached by the Appellate Tribunal CESTAT, Bangalore.
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2005 (7) TMI 237
Issues Involved:
1. Entitlement of antennae imported for concessional rate of duty under Notification No. 21/2002-Cus. 2. Classification of installation materials as Microwave Communication Equipment under Customs Tariff Heading 8525.20. 3. Valuation of installation materials and antennae.
Issue-Wise Detailed Analysis:
1. Entitlement of Antennae for Concessional Rate of Duty:
The appellants imported Base Transreceiver Station (BTS) and claimed the benefit of a concessional rate of duty under Sl. No. 239 of Notification No. 21/2002-Cus., dated 1-3-2002. The Revenue later contended that the installation materials and antennae were not parts of BTS and hence were not entitled to the benefit of the notification. The appellants argued that BTS includes all items necessary for its function, including antennae and cables, which are essential for sending and receiving signals. The Tribunal concluded that antennae and installation materials are indeed parts of BTS and thus entitled to the concessional rate under Sl. No. 239 of the notification.
2. Classification of Installation Materials as Microwave Communication Equipment:
The appellants imported various components of Microwave Communication Equipment, including outdoor and indoor units, radio cables, and antennae. The Revenue argued that installation materials and antennae are not part of Microwave Communication Equipment. The appellants countered that these items are integral to the functioning of the equipment, as supported by technical literature and user manuals. The Tribunal agreed with the appellants, stating that the installation materials and antennae are parts of Microwave Communication Equipment classifiable under Heading 8525.20 and are entitled to the benefit of Notification No. 21/2002-Cus., Sl. No. 239, List 22, Item Sl. No. 3.
3. Valuation of Installation Materials and Antennae:
The appellants contested the valuation of the installation materials and antennae based on invoices from other importers, arguing that the goods imported by them were not identical to those imported by M/s. Bharati Cellular. The Tribunal held that the transaction value for the impugned goods cannot be rejected unless any of the situations mentioned in Rule 4 (2) of the Customs (Valuation) Rules applies. Therefore, the Tribunal allowed the appeals with consequential relief, indicating that the valuation based on the appellants' transaction value should be accepted.
Conclusion:
The Tribunal concluded that the antennae and installation materials imported by the appellants are entitled to the concessional rate of duty under Notification No. 21/2002-Cus., as they are integral parts of BTS and Microwave Communication Equipment. The valuation of these goods should be based on the transaction value unless specific conditions for rejection are met. The appeals were allowed with consequential relief.
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2005 (7) TMI 236
Issues Involved: Contesting duty and penalty confirmation under compounded levy scheme, legality of issuing multiple notices for the same period u/s Rule 96ZP, relevance of non-adjudicated show cause notice, applicability of Apex Court judgment on manufacturer's choice in a financial year.
In this appeal, the appellants challenged the correctness of the impugned order confirming duty and penalty against them under a compounded levy scheme. The appellants argued that a show cause notice demanding duty for a specific period was issued but not adjudicated upon, and another notice for the same period could not be legally issued and confirmed. The Department, however, supported the impugned order citing a judgment of the Apex Court regarding a manufacturer's choice in a financial year.
Upon review, the Tribunal found merit in the appellants' contention. It was observed that the duty for the disputed period was raised under one sub-rule of Rule 96ZP, but the initial show cause notice had not been adjudicated upon. The subsequent notice for the same period was deemed inappropriate, especially after a significant lapse of time, and the Commissioner's response did not impact the necessity of adjudication. The Tribunal emphasized that the Apex Court's judgment on a manufacturer's choice did not apply to the current case.
Consequently, the Tribunal ruled that the impugned order could not be upheld and was set aside. The appeal of the appellants was allowed with consequential relief as per the law. The decision was dictated and pronounced in open court.
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2005 (7) TMI 235
Issues: - Inclusion of technical know-how fee in the assessable value of imported goods under Rule 9(1)(c) read with Rule 4(1) of the Customs Valuation Rules.
Analysis: The case involved an appeal against an Order-in-Appeal passed by the Commissioner of Customs (Appeals) following a remand order by CEGAT. The dispute centered around whether the technical know-how fee paid by the appellants to a foreign supplier should be included in the assessable value of imported goods. The appellants, a joint venture, had entered into a technical license agreement with a foreign entity for the production of air-conditioners and radiators. The Commissioner held that the fee is includible in the assessable value, a decision challenged by the appellants.
The appellants argued that the fee should not be added to the transaction value of the imported goods as it was not related to the imported goods nor a condition for their sale. They relied on various decisions to support their stance. The technical assistance fee was paid for the supply of technical information related to the manufacture of contract products, specifically air-conditioners and radiators. The Tribunal noted that the technical information was solely related to the contract products and not the imported goods themselves. Therefore, the lump sum payment could not be added to the assessable value under Rule 9(1)(c) of the Customs Valuation Rules as the necessary conditions were not met.
In conclusion, the Tribunal found that the payment of the technical license fee was not a condition for the sale of the imported goods and was not related to them. As per the contract terms, the fee was specifically for technical information related to the contract products, i.e., air-conditioners and radiators. Therefore, the Tribunal allowed the appeal, setting aside the Order-in-Appeal and providing consequential relief to the appellants.
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2005 (7) TMI 234
Demand - Limitation - Suppression of facts - EOU - Whether the Wax used for grazing the yarn is to be considered as a 'Raw material' or as 'Consumable? - HELD THAT:- In view of the enormous evidence on record, the appellants contention that wax is Consumable is required to be accepted. In terms of the Board's Circular No. 389/22/98-CX and Circular No. 631/22/02-CX clarifying that Consumables are not raw materials and its use will not disentitle the benefit of the Notification in question, the appellants prayer for setting aside the impugned order is required to be upheld. Even on time-bar, the appellants have made out a strong case in their favour. The appellants were using imported wax and its use was within the knowledge of the department as is clearly borne out from the records. The Superintendent, by his letter dated 16-2-1999 had asked the appellants as to whether they were using any imported material. The appellants had clarified about the use and the department was aware of the use of this Wax in terms of the declarations and various correspondences they had with the department.
The appellants' industry was also under control of the department. In the circumstance, it cannot be said that there are suppressions in the matter and the department was unaware of the use of Wax. Therefore, the demands are required to be held as time- barred. The appellants succeed both on merits as well as on time-bar.
The appeal is allowed with consequential relief if any.
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2005 (7) TMI 233
Issues: - Duty liability on High Speed Diesel (H.S.D.) used for flushing out Superior Kerosene Oil (SKO) from the pipeline during export process.
Analysis: The case involved a dispute regarding the duty liability on H.S.D. used for flushing out SKO from the pipeline during the export process. The Appellants, who were manufacturers and exporters of H.S.D., cleared the diesel for home consumption and export through a pipeline from the refinery to the jetty. The pipeline needed to be kept filled to prevent bursting due to pressure, so when not pumping H.S.D., it was filled with SKO. Before exporting H.S.D., a small quantity was pumped into the pipeline to flush out the SKO, creating a mixture stored separately for distillation. The Department demanded duty on the H.S.D. used for flushing out SKO, arguing it was not exported, thus duty was due. The Adjudicating Authority upheld the demand, leading to this appeal.
The Appellants argued that the process was a technical requirement to ensure only pure H.S.D. was exported, and the mixture always remained within the bonded warehouse, so no removal of goods occurred. They also contended that even if duty was due, Rule 16 of Central Excise Rules, 2002 allowed bringing back duty-paid goods for further processing, refining, or reconditioning, with Cenvat credit available. They cited a precedent to support their position. The Department reiterated the Adjudicating Authority's findings, stating the current rules did not permit bringing back cleared goods or provide Modvat credit for H.S.D. They mentioned a now-defunct notification allowing bringing back petroleum product mixtures for reprocessing.
The Tribunal noted that the Appellants had been operating under the old Central Excise Rules, 1944, with provisions for bringing back mixtures of SKO and H.S.D. for refining and reprocessing under Rule 143A. While the current rules lacked specific provisions for this, Rule 33 included a Transitional Provision deeming old notifications valid if consistent with the new rules. The Tribunal found the demand for duty on the H.S.D. used for flushing out SKO would result in repeat duty payment, as the diesel returned to the refinery for processing and clearance. Considering Rule 143A and the old notification's relevance and consistency with the new rules, the Tribunal deemed the Adjudication Order unsustainable and struck it down, allowing the appeal with any consequential relief.
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2005 (7) TMI 232
Issues: 1. Refund claim of Special Excise Duty (SED) on a motor vehicle registered as a taxi. 2. Interpretation of Notification No. 6/2002-C.E. regarding refund claims by manufacturer vs. ultimate buyer. 3. Applicability of procedural requirements for refund claims under Section 11B of the Central Excise Act.
Analysis: 1. The appellant purchased a taxi from a dealer and paid duty, including SED. The claim for refund of SED was rejected by lower authorities based on procedural grounds. The lower authorities did not assess the refund claim on its merits, leading to the rejection. The appellant appealed against this decision.
2. The Notification No. 6/2002-C.E. granted exemption from SED on taxis and allowed manufacturers to claim refunds within 6 months. However, in this case, the refund claim was filed by the ultimate buyer, not the manufacturer. The tribunal ruled that the procedural requirements specified in the notification were not applicable to the buyer's claim. The buyer's right to claim a refund under Section 11B of the Central Excise Act was emphasized, subject to the condition of unjust enrichment.
3. The tribunal held that the original authority erred in rejecting the refund claim based on the claimant's lack of locus standi. The claimant, as the ultimate buyer, had the right to claim a refund under Section 11B, provided unjust enrichment was not an issue. The tribunal set aside the lower authorities' orders and remanded the case for a fresh adjudication by the original authority in accordance with Section 11B of the Central Excise Act.
In conclusion, the tribunal allowed the appeal, directing the original authority to reconsider the refund claim on its merits, emphasizing the buyer's entitlement to claim a refund under Section 11B of the Central Excise Act.
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2005 (7) TMI 231
Issues involved: The issue involves the refund of duty paid in pursuance of an order of the original authority before filing an appeal against it before the Commissioner (Appeals). The main contention is whether the refund application made after succeeding before CESTAT is time-barred or not.
Summary:
1. The Appellate Tribunal CESTAT, Mumbai heard a Revenue's appeal against the Commissioner of Central Excise (Appeals), Aurangabad's order. The Commissioner (Appeals) had upheld the Order-in-Original and rejected the department's appeal. The issue revolved around a refund claim of duty paid before filing an appeal. The respondent sought a refund of Rs. 58,313/- debited in the PLA Entry No. 1412, dated 29-10-1994, after succeeding before CESTAT in 1999.
2. The Assistant Commissioner sanctioned the refund, which led the department to appeal against this sanction to the Commissioner (Appeals). The Commissioner (Appeals) held that the refund was rightly sanctioned as the bar of limitation for filing a refund application does not apply in such situations. He emphasized that a deposit made under Section 35F is not a payment of duty but a pre-deposit for appeal rights, following the Tribunal's decision in a similar case.
3. The department contended that the refund application made on 11-1-1999 was beyond the six-month period and should be time-barred. However, the Tribunal observed that the refund claim arose from a CESTAT order, and the absence of a formal letter of protest did not affect the time limit. An appeal against an assessment order and demand itself constitutes a protest, making Rule 233B compliance unnecessary.
4. Rejecting the Revenue's argument citing Mafatlal Industries Ltd., the Tribunal emphasized that the bar of unjust enrichment applies even when duty is paid under protest, but a refund from an appellate order is not time-barred. The Tribunal upheld the Commissioner (Appeals)'s decision, stating that an appeal against a demand inherently serves as a protest, and dismissed the Revenue's appeal.
5. In conclusion, the Tribunal found no merit in the Revenue's appeal, upholding the Commissioner (Appeals)'s order and rejecting the appeal.
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