2017 (9) TMI 1206 - AT - Customs

Misdeclaration of value imported goods - software - The appellant has claimed that they cannot be considered as the importer, since they have made payment to SAP India in INR for procurement of software which is only a domestic transaction. They have also claimed that they did not file the bill of entry nor did they authorised M/S DHL to file bill of entry - Held that - It is evident that the software was directly supplied by SAP Germany to the appellant and DHL has filed the bill of entry on behalf of the appellant. Though no authorization was given by the appellant to DHL, it is an undisputed position that the software has, in fact, been ordered by the appellant and have been delivered to them by DHL. These actions clearly establish that the appellant is to be considered as the importer under Customs Act and, therefore, liable to the payment of customs duty. The portion of the license fee, which was paid by the importer of software which was repatriated to the foreign supplier of software, needs to be included in the assessable value of imported goods. Time limitation - Held that - there is no evidence which implicates the appellants - There were also very much aware that such software was to be supplied by SAP Germany and is an import transaction. But for the detailed investigations carried out by DRI, the evasion of custom duty would have gone unnoticed. Hence, we find no merit in the argument that there was no willful suppression of facts by the appellant. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Mis-declaration of value of imported software
2. Appellant's status as importer
3. Jurisdiction plea
4. Limitation period for show cause notice
5. Double payment of customs duty
6. Penalty imposition

Issue 1: Mis-declaration of value of imported software
The appellant imported SAP Software from SAP Germany through DHL Courier. Investigations revealed that the declared assessable value was nominal, whereas the actual transaction value was significantly higher. The appellant paid ?2,14,75,660 to SAP India, but only ?5987 was declared for customs clearance. The department concluded that the actual value should be considered as ?2,14,75,660, leading to a demand for differential customs duty and imposition of penalties.

Issue 2: Appellant's status as importer
The appellant argued that they should not be considered the importer as the software was directly supplied by SAP Germany and the bill of entry was filed by DHL without their authorization. However, the Tribunal found that the actions of ordering and receiving the software established the appellant as the importer under the Customs Act, making them liable for customs duty payment.

Issue 3: Jurisdiction plea
The appellant did not raise a jurisdiction plea despite the investigation being conducted by the Directorate of Revenue Intelligence. The matter was argued on merit, emphasizing that the show cause notice was issued by the Additional Commissioner Customs, not the DRI.

Issue 4: Limitation period for show cause notice
The appellant claimed the show cause notice was issued beyond the normal time limit, but the Tribunal found that the appellant had entered into an agreement with SAP India, knowingly participating in the import transaction. The investigations revealed the evasion of customs duty, justifying the notice issuance.

Issue 5: Double payment of customs duty
The appellant contended that the duty had already been paid by SAP India, and demanding payment again would lead to unjust enrichment for the department. However, the Tribunal noted that SAP had paid some customs duty during the investigation, and the appellant had also paid a portion. The Tribunal cited a previous case where the license fee paid by the importer was included in the assessable value of imported goods, upholding the demand for customs duty from the appellant.

Issue 6: Penalty imposition
Penalties were imposed on the appellant for mis-declaration and under-valuation of the software imports. The Tribunal upheld the penalties, citing previous decisions and the appellant's active participation in the import transaction. The appeal was dismissed, affirming the impugned order.

This detailed analysis of the judgment highlights the key issues involved, arguments presented by the parties, and the Tribunal's findings and conclusions on each aspect of the case.