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TMI Blog2004 (7) TMI 477X X X X Extracts X X X X X X X X Extracts X X X X ..... the period April, 93 to March, 97 under the cover of 122 Bills of Entry (B/Es). The said imports were effected at Ahmedabad Airport. The appellants are the manufacturer of electronic products in their factory located at Vadodara. The appellants use the imported parts for manufacture of finished goods after adding components sourced from the domestic sources and the same cleared on payment of excise duty on such assembled machines. Vide the show cause notice (SCN) dated 1-5-98, the importers were directed to show cause, as to why the imported components should not be treated as machines imported in SKD condition on applying Rule 2 of General Rules for Interpretation (GIR). Besides, the importers were also asked to show cause, in respect of goods covered by 22 B/Es as to why the declared value should not be rejected and the value re-determined by applying the provisions of Customs Valuation Rules, 1988. The Commissioner, on adjudication of the SCN, confirmed the value enhancement as also the grounds that the imported goods are complete machines in SKD form. Consequently, the duty amount of Rs. 1,51,09,480/- was confirmed by invoking extended period of five years under proviso to Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the machines for the purpose of classification. The Commissioner further concluded that since soldering is a type of welding, the act of making Populated Printed Circuit Boards (PCBs) within the factory premises of the importer will not entitle the imported items to be classified as parts. It is also mentioned that, imported PCBs are populated. The populated PCBs are restricted items, which require Special Import Licence (SIL). On going through the Bills of Entry, the Commissioner noted that, the PCBs are classified under CTH 9009 as parts and in every case the importer has produced SIL before clearance. It was also noted that, the importers did not have any facility for populating the PCBs. Even though the importer subsequently produced some documents regarding purchase of solder paste etc., but the same was treated to be an afterthought. The Commissioner also observed that, population of PCBs particularly the fixing/joining of ICs on a PCB is very complex process and requires machinery, which are very expensive and economical only for large volume. There was no such machine found in the importer s factory nor they have claimed that they had such machine. Even if, the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled . 12. From the text extracted above, we note that, mere importation of all parts together cannot lead to automatic application of this Rule. It is also necessary that, the article as presented in an incomplete or unfinished form, has the essential characteristic of a complete or finished article. In this connection, we note that, the appellants have disputed that, one of the critical components viz., PCBs were functionally incomplete and even though as the Commissioner held the same to be populated PCBs and these were indeed populated PCBs, without any doubt, the appellants have claimed that they were required to further populate the PCBs before these could be fixed together with other parts, to make a functional machine. The appellants have disputed the allegation to the effect that they had not merely applied the screwdriver technology but undertook the activity of populating the imported PCB which was complex technical process r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department s case of misclassification. It is for the department to state as to what its case is, and prove the same through facts and evidence. 15. Notwithstanding the above fallacy in the impugned order, the appellants have tried to demonstrate that none of the above grounds are factually correct. It is claimed by the appellants that they have the necessary machinery to undertake the population of the PCBs, which were imported in partly populated condition and the balance components were procured locally and used for completing the process of population. The value of domestic components being 30% to 35% vis-a-vis the price of the assembled machines. The use of local components and the extent of value contribution thereof has been verified by the Central Excise department and the claim was found to be acceptable on such verification. The appellants also have claimed that they have necessary machinery, equipment and parts (procured locally) to assemble photocopiers, contrary to the findings given by the Commissioner. We note that the activity of assembly of machines has been undertaken by the appellants in a factory, which is under the control of Central Excise. The goods on ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at a later date, the departmental authorities felt that a different view was warranted than the view taken by the assessing authorities. There was no additional documentary evidence that was brought on record to make the allegation of import in SKD condition than the documents already in possession of the department. Thus merely on account of change of view on the documents already furnished to the department, the demand cannot be issued by invoking the proviso to Section 28. The appellant s reliance on the judgment of the Tribunal in the case of Gujarat Petrosynthese Ltd. v. CCE, Vadodara reported in 1998 (102) E.L.T. 293 (Tri.) as also the judgment of Tribunal in the case of Tanya Diagnostic Centre v. Commissioner of Customs (Port), Calcutta reported in 2002 (146) E.L.T. 198 (Tri. - Kol.) is well founded. We have therefore no hesitation in holding that the duty demand is time-barred and is required to be set aside. 18. So far as the allegation relating to undervaluation of goods covered by twenty two bills of Entries is concerned, the department has resorted to Rule 5 and Rule 7 of Customs Valuation Rules, 1988 to adopt respectively the valuation on the basis of comparable goo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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