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TMI Blog2015 (2) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... produced, must be Xerox of some photograph or manipulated document. In fact, if there was detailed catalogue indicating that parts in question are parts of ventilating and recycling hood, there was no need to go for expert opinion, by them. In view of the descriptions given in the tariff, HSN Explanatory Notes relating to ventilating and recycling hood, details available on the Internet in the Google search, report of the Mechanical Engineering Department, Govt. College of Engineering, Pune (as discussed earlier) and the certificate dated 23-10-1989 we have no hesitation in holding that the term “ventilating and recycling hood” as used in tariff does not cover the Ventilating and recycling hood purported to be an intermediate product in manufacturing of room air conditioner but touch items used in home or in restaurants, canteens, hospitals, etc. In view of this conclusion, the parts imported by the appellant/assessees cannot be considered as parts classifiable under heading 8414.90. In fact, in our view the sub-assembly of air conditioners to which the appellant/assessee is claiming to be “ventilating and recycling hood” is incorrect and supported by no catalogue literature or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le for us to agree that the questions involved are purely legal. What is, essentially, for consideration is whether the goods in question are classifiable as parts of air conditioners or parts of ventilating goods. Answering these questions it involves facts and law. Substantially the questions involved are those of facts. The refusal for cross-examination on this ground was also not justified. However, we must not be understood as saying that we permit cross-examination of all persons; to cite just one example, it is not clear to us why the apprising officer s cross-examination is required merely to prove that split invoices are issued by M/s. Yamato Industrial Company, the Japanese supplier. This fact can be established by producing the invoices in question. 5. We are also not able to accept the dismissal of the certificate of the Mechanical Engineering Department of Government College of Engineering, Pune on the ground that those who issued it were academicians who could not understand the customs tariff or the Explanatory Notes. Classification of a commodity requires not only understanding of the customs tariff or Explanatory Notes, but understanding of the mechanical prin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of it had been challenged by the Department, we are of the view penalty was not imposable at all. The Collector in effect says that the appellant could have believed that the goods were classifiable under a different heading than the one claimed by it for which he finds support from the fact that the appellant promptly paid the differential duty that was demanded. Further, his order does not cite any specific act or misconduct neither his findings. In these circumstances we are of the view that penalty was not imposable on the appellant and set it aside. 8. Accordingly, we set aside the order of the Collector. He shall decide on the classification of the goods, and their liability to confiscation, after giving the appellant a reasonable opportunity of being heard, and after considering the request for cross-examination of witnesses and evidence that may be produced before him by the appellant. We make it clear that the Department is at liberty to cite any evidence in support of its contention provided the appellant is given sufficient opportunity to deal with that evidence. In pursuant to the said order of this Tribunal, the impugned order has been passed by the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the department. Learned Advocate stated that they have requested the adjudicating authority to furnish copies of such bill of entry. However, the same was refused and the adjudicating authority has failed to furnish the copy of such bill of entry and it is therefore presumed that bill of entry was assessed unconditionally. 4.2 The other objection of the learned Advocate was that the cross-examination of the Assistant Collector of the Group was not allowed. According to the learned Advocate it was essential as Shri Mishra has stated that he has assessed Bill of Entry with the consent of the Assistant Collector of the Group. Learned Advocate also stated that they have requested cross-examination of Shri Sambhus as Shri Mishra, during the cross-examination has stated that Shri Sambhus insisted on assessment of Bill of Entry without production of literature/catalogue even though endorsement of having produced literature/catalogue was shown to Shri Mishra. Thus, it cannot be alleged that the Bills of Entry were assessed without the reference to literature, catalogue produced by the appellant/assessee. 4.3 Learned Advocate has also submitted that they have requested for cross-exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e classification. 4.8 Learned Advocate argued that while determining the classification, the end user of the imported goods is immaterial when no actual user condition is attached on the importation of parts of ventilating and recycling hoods against transferable additional licences. He also argued that the specific classification in the Customs Tariff is a determining factor for classifying the imported goods as the test of end use of a particular item is of no relevance. [Dunlop India Ltd. - AIR 1977 SC 597 (para 42) = 1983 (13) E.L.T. 1566 (S.C.)]. 4.9 Parts of ventilating and recycling hoods are specifically classified under CTH 8414.90. Learned Advocate further argued that though compressors are parts of air conditioners, Customs department are classifying the same under 8414.80 and this classification continues till date. He further stated that in the show cause notice the department has admitted that compressors are assessable under CTH 8414.80 but peculiarly ventilating and recycling hoods are illogically and illegally directed to be classified under CTH 8415.90. 4.10 The learned Advocate also argued that an assessee has a right to avoid duties within the framework ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said certificate elaborately discusses the process of manufacture/assembly of air conditioner certifying that with the prior stage of manufacture/assembly of ventilating and recycling hood with the parts as imported, air conditioner, is manufactured/assembled. They have also confirmed that prior to the final manufacture of air conditioner, the basic function of ventilating and recycling hood is the user thereof as intermediate product to manufacture a room air conditioner. The said certificate elaborately discusses on the extent and nature of the parts to be used and the systems which can be built therefrom, sets out that the air conditioner is thereafter assembled with reference to temperature, humidity, air-motion and with additions of refrigeration compressor, multipoint positioning switch, thermostat and heater or reversing wall. The said expert body has relied upon several authoritative references on the subject before concluding that ventilating and recycling hood is an intermediate product to manufacture an air conditioner. 4.15 The learned Advocate submitted that against the above evidence produced by the appellant/assessee, the department has not produced any evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n intermediate product, ignoring the specific classification in the Customs Tariff. Learned Advocate further stated that if the classification done by the Appraiser and the assessment having been finalized with the consent of the Group Asst. Collector is of no significance in determination of the classification by this Tribunal, then the statements of Shri V.N. Dhoot and Shri R.R. Didolkar cannot be relied upon by the department to reject the case of the appellant/assessee. Learned Advocate further submitted that the statements of Production Engineer or of Shri V.N. Dhoot are of no consequence though much stressed upon by the Departmental Representative in his oral submissions. 4.18 Regarding the allegations of obtaining revised invoices, the learned Advocate stated that as Customs duty on the imports of parts of ventilating and recycling hoods were less than on the air conditioners under Heading 8415. They got the revised invoices from the foreign suppliers. However, there is nothing wrong in doing such thing. 4.19 The learned Advocate also argued that the classification and Heading 8415.90 was required to be done only when entire air conditioning machine was imported along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgued that enhancing redemption fine by adding penalty amount thereto in the impugned order on remand, when the respondent could not impose any penalty in view of earlier finding in the Tribunal s order. The learned Advocate also stated that the earlier order of the Tribunal was never challenged by the department and therefore it attained finality and as such no penalty can be imposed. 5. Learned AR on the other hand, argued that Heading 8414 covers ventilating or recycling hoods incorporating a fan, whether or not fitted with filters. On perusal of the related HSN Explanatory note, it is clarified This group includes cooker and hoods incorporating a fan, for use in the home or in restaurants, canteen, hospitals, etc. as well as laboratory hoods and industrial hoods incorporating a fan. Thus, the said entry does not cover the sub-assembly of a room air conditioner. 5.1 The learned AR further stated that the appellant/assessee has divided entire air conditioners into just two sub-assemblies, viz. compressor and ventilating/recycling hood. Thus, what the appellant/assessee is trying to say is that everything else other than the compressor becomes part of the ventilating/rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in no way takes away the content of his statement. At this stage, Shri Sambhus will say anything to save his job. 5.4 Learned AR further submitted that the expert s advice has been obtained in October, 1990 while the importation has taken place, much earlier. Terms of reference to the expert are not disclosed and these certificates have been taken without the knowledge of the Customs authorities. The expert opinion is inconsistent with the understanding of the terms Ventilating and recycling hood used in the Tariff and HSN Note. 5.5 The learned AR further submitted that the statement of Shri Venugopal Dhoot, the Managing Director and other officials of the importing Company, changes in the Bill of Lading, changes in the invoice very clearly indicates that there was mala fide intention to evade customs duty. In case they had no such intention, even in the first invoice containing the description parts of room air conditioner they could have explained to the Customs that these are parts of ventilating and recycling hood and got it assessed at the lower rate of duty. The change in the documentation was only to mislead and thereby to evade payment of duty and hence confisca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appearing in the Customs Tariff by name i.e. specific entry under some or other heading/sub-headings particularly in Chapters 84 and 85. Such parts of machinery which are mentioned in the Customs Tariff by specific names are classified under that specific Heading irrespective of the fact whether such part is used in the manufacturing process as part of machine x or y or z. In the earlier stated example ball bearings would be classifiable under Heading 84.82 irrespective of the fact such ball bearing is used as a part in the manufacture of fan or electric motor or automobile machine tools or some other machinery items. Similarly, valves are specifically appearing in 84.81, valve would be classified under Heading 84.81 irrespective of the fact that particular valve is a part of particular machine. Similarly capacitors, resisters, Diodes and transistors would be classifiable under Heading 8532/8533/8541 irrespective of the fact that a particular capacitor, resister, diodes is used in the manufacturing process as part of transmission equipment or receiving equipment or medical equipment or any other electronic equipment or computer or control panel or mechanical equipment. Another ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y from the invoice, various items are grouped by the importer/CHA under different Chapter/Headings/sub-heading. Thereafter, bill of entry is prepared by the importers or his CHA and filed accordingly. Many a times some of the importers/CHA after doing the preliminary exercise may informally consult the Appraiser who has to scrutinize the Bill of Entry whether or not the classification of the part done/grouped by them is correct. 7.6 Ideally while classifying various parts, catalogue literature of main machine detailing all parts is required. For example, in the present case catalogue of Ventilating and Recycling Hood detailing all the parts - their name, composition etc. will be required. However, importers may have practical limitations in producing such detailed catalogue. They may be able to produce zerox/printout of photographs or some other leaflet and based upon such documents and keeping in view the broad principles discussed earlier, parts are classified assessed to duty and consignments are cleared. 7.7 For example if the parts are relating to television set importer would show under the Heading for television set and the relevant heading for the parts and therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd he had initialed the said invoice. During cross-examination though he accepted that the signature is his, on classification aspect he was not sure and, therefore, in this context the learned Advocate wants reference should be made to the hand-writing expert. We find in the impugned order, various preliminary objections are discussed in para 58. The adjudicating authority has already accepted that whatever has been scribbled or written on the enclosure to the invoice is written by Shri Mishra and the adjudicating authority has proceeded on that basis. In view of the said position, we do not find any merit in the objections of the learned Advocate relating to that the reference should be made to hand-writing expert. We also find that the adjudicating authority has correctly taken a view that various headings mentioned in the enclosure to the invoices are that of Shri Mishra but the invoices or the enclosure are not the assessment document. In view of the above position we do not find any merit in this primary objection of the learned Advocate to get the opinion of handwriting expert. 7.10 The other preliminary objection is that the department has not supplied other copy of Bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also asked cross-examination of Shri Sambhus. Shri Sambhus is an employee of the appellant/assessee and was dealing with the clearance work and use to sit in the CHA s office. Reason for declining the request for cross-examination has been given in the impugned order in para 5.8 and we are fully satisfied with the explanation. 7.13 Shri Sambhus is a co-noticee, the matter is more than 19 years old and Shri Sambhus is also an employee of the M/s. Videocon Group. We note that while the appellant/assessee have been able to produce invoice T002 along with the enclosure as also copy of the bill of entry on which assessment were made, the so called literature and catalogue produced by them at the time of clearance has not been produced by them in reply to show cause notice in 1990 or before the adjudicating authority either in 1991 or 2009 or before this Appellate Tribunal in both the rounds of litigation. We are unable to appreciate why the appellant/assessee has not able to produce the literature and catalogue which they claim to have produced to the Appraising Officer at the time of clearance of goods. The obvious conclusion is either no such detailed literature or catalogue was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th a self contained Electric motor of an output not exceeding 125 W 110% 8414.59 Other 110% 8414.60 Hoods having a maximum Horizontal side not exceeding 120 W 110% 8414.80 Other 110% 8414.90 Parts 100% 8.2 Before going to the parts, it would be important to understand the scope of term Ventilating and recycling hood incorporating a fan whether or not fitted with filter , as used in Customs Tariff. Customs Tariff is based upon BTN/H.S.N. system of classification. The HSN Explanatory Notes deals with the scope of various terms used in BTN/H.S.N. For the said term, relevant explanation is reproduced below :- Ventilating or recycling hoods incorporating a fan, whether or not fitted with filters This group includes cooker hoods incorporating a fan, for use in the home or in restaurants, canteens, hospitals, etc. as well as laboratory hoods and industrial hoods incorporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parts/sub-assembly of room air conditioners. 8.5 We find the learned Advocate for the appellant/assessee has given lot of emphasis about the report dated 25-9-1990 obtained from Department of Mechanical Engineering, Government College of Engineering, Pune. We have carefully gone through the report. We find that the report starts with need of ventilation and thereafter defines meaning of ventilation, Mechanical Ventilation, Natural Ventilation, positive ventilation, Mechanical Ventilation General, Field of application of Ventilation, Minimum Ventilation for human occupancy, Re-circulated Air, Return Air, The supply and return air Grills, the meaning of hood. These definitions have been extracted from various books mentioned in the report. None of these definitions support the case of appellant. All that these definitions indicate is need of replacing stale/smelled air by fresh air at normal room temperature and how the same is done. However, in the report thereafter ventilating and recycling hood and equipment required for ventilation are briefly discussed. However, for these there is no reference of any standard book. In the list Equipment required for ventilation , the fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ycling hood assembly with ventilation function. We note that items like evaporator, condenser, etc. are being considered as part of recycling hood assembly with ventilator function. A reading of the letter dated 21-10-1989, gives us the impression that the sentence has been introduced to suit the requirement of appellant. It does not clarify how and what works as recycling hood and what ventilation function is being carried out. We also note that this certificate dated 23-10-1989 was not found during the search operation in 1990. During the recording the statements including that of Shri V.N. Dhoot, M.D., Shri Rajiv R. Dodolkar and Shri Jayaraman Gopalan who were technical people actually involved in assembling the air conditioners but nobody talked about this letter. On the contrary, had indicated their ignorance about the ventilating and recycling hood and Shri V.N. Dhoot the Managing Director explained in detail how and why the term was used in order to save the customs duty. 8.7 In view of the descriptions given in the tariff, HSN Explanatory Notes relating to ventilating and recycling hood, details available on the Internet in the Google search, report of the Mechanical En ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings or even before this Tribunal. The obvious conclusion is that either no catalogue literature was produced or manipulated catalogue/literature/printout was produced which they found difficult to produce during investigation or adjudication proceeding. We may add that it is a usual practice in the Customs, that if any literature or catalogue is seen by the Appraising Officer or the Asst. Collector, they do initial such catalogue or literature as has been done in this case in respect of enclosure to invoice T002. In the absence of any catalogue/literature, or manipulated catalogue/literature Appraising Officer and the Asst. Collector will have to classify the parts assuming the description of the machine viz. Ventilating and recycling hood written as correct description and that is what appears to have been done in this case. The appellant/assessee have misled the Assessing Officer by indicating incorrect/fraudulent description i.e. ventilating and recycling hoods in the invoice, enclosure to the invoice, Bill of Lading and other connected documents. Once the documents produced at the time of assessment are manipulated, the appellant/assessee cannot take the shelter that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that the allegation of fraud, manipulation, etc. are of no relevance as the penalty earlier imposed has been set aside by this Tribunal by Order dated 9-11-2000. We have gone through the judgment of Tribunal and we also note that the Revenue has not appealed against the said order of the Tribunal relating to setting aside the penalty. With great respect to the said bench when the matter relating to confiscation and duty liability itself was remanded and adjudicating authority was to allow cross-examination, etc. it would have been more appropriate for the Tribunal to wait for the outcome rather than setting aside the penalty based upon certain observations (for lesser penalty) made by the earlier adjudicating authority. In our view imposing lesser penalty and not imposing penalty are two different things. In our view this is a clear cut case of manipulation, fraud to evade the duty. 8.12 We also note that Shri V.N. Dhoot, Managing Director has given statements during investigation. It is seen that the appellant/assessees have now produced a copy of affidavit filed before the Additional District and Sessions Judge, Pune indicating that the said statements were taken under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certificate at Aurangabad that the import of components will not be allowed and the unit at the relevant time was only at Aurangabad. In view of the said factual position, confiscation under Section 111(d) is correct and accordingly we uphold the same. We also uphold the mis-declaration in the description and confiscation under Section 111(m) of the Customs Act, 1962. 9. The learned Advocate has also quoted few case laws. We have gone through these case laws. These are in different context. Keeping in view our conclusion that the description was manipulated in the assessment and related documents and it is based upon the said manipulated documents that the initial consignment was released, the case laws cited are not applicable. 9.1 In the case of Dunlop India Ltd. (supra) the Hon ble Supreme Court has held that meaning as understood by people in trade and commerce is to be accepted. It was also held in context to the classification where V.P. Latex would be covered as rubber that end use is not important. In the present case the issue involved is whether certain parts imported were parts of air conditioner or parts of ventilating and recycling hood. As the classification its ..... X X X X Extracts X X X X X X X X Extracts X X X X
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