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TMI Blog2006 (9) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... nd a penalty of Rs. 1.00 lakh imposed on Sumanth Paturu, Director of the applicant-firm by the Commissioner in the impugned order. 2. The brief facts of the case are that the applicants had secured a tender for supply of 32 Channel Dense Wavelength Division Multiplexing (DWDM for short) equipment for supply to M/s. BSNL for a value of Rs. 82.32 crores. The applicants were to source the equipment from one M/s. ZTE Corporation, China and an agreement to this effect was signed during May 2001 under which the whole DWDM equipment was to be imposed and supplied to M/s. BSNL. Subsequently, on account budgetary changes, concessional rate of duty was prescribed @5% in respect of parts of DWDM system. The applicants thereafter re-negotiated the co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decreased the value of software component to Rs. 37,22,864/- as against the declared value of Rs. 60,27,01,174/-. The overall value of the contract remained the same and it was only the distribution of the contract value between the hardware and software components that was sought to be changed by the Revenue. Since the value of the hardware component was enhanced, which was dutiable, the Show Cause Notice sought to demand duty amounting to Rs. 28,00,65,375/-. Further, Show Cause Notice also sought to deny concessional rate of duty applicable to parts under Notification No. 21/02-Cus., dated 1-3-2002 and the duty now demanded amounting to Rs. 28,00,65,375/- was the one applicable to DWDM Equipment, as a whole, and not that applicable to pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orate facility and processes of assembly, alignment and testing by highly trained engineers, which process amounts to manufacture and in fact their manufacturing unit was registered with Central Excise and duty was being paid on the final product. Reliance in this regard was placed on the Supreme Court s decision in the case of BPL India Ltd. v. CCE, Cochin, 2002 (143) E.L.T. 3 (S.C.) and Wipro GE Medical Systems Ltd. v. CC, Bangalore, 1999 (106) E.L.T. 169. It was further submitted that when components are imported at different points of time, through different modes, it cannot be said that a complete instrument is imported and in such cases Rule 2(a) of Interpretative Rules to Customs Tariff Act, 1975 is not applicable and the imported go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... component imported by them was not essential for the functioning of the DWDM Equipment, the Commissioner has invoked Rule 8 of the Customs Valuation Rules without going sequentially from Rule 4 to Rule 8 on the ground that Rules 5 and 6 cannot be invoked for want of contemporaneous imports from the same country of origin at the same commercial level and Rules 7 and 7A cannot be invoked for want of sale of like goods in India. The fact however is that other suppliers like ITI Bangalore, have imported identical goods from Korea and China for being supplied to BSNL against the same tender or other tenders floated by BSNL on or around that time. There is no evidence of any flow back and none of the situation mentioned in Rule 4 of the Customs V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as decided to enhance the value of software by reducing the value of hardware component. NIC Japan has issued the invoices on their request and that such invoices were submitted to the Customs Department at the time of clearance of the first two lots of DWDM Equipment and Bank Guarantees were furnished due to the objections raised by Customs authorities. He finally concluded stating that the decision of the apportionment of software and hardware components in the above ratio was taken by their management comprising of Brig. K. Nandan and P. Sumanth and K. Ch. Veerraju. In view of this it was submitted that the order passed by the Commissioner is well founded and the applicants should be required to deposit the entire duty. 7. We have cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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