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TMI Blog2015 (9) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... (iii) It was held that the rate of duty from 01.03.2006 to 28.02.2007 was @ 8.16% and not 8.24% and consequently the differential demand on account of higher rate of duty amounting to Rs. 52,05,030/- was also dropped. (iv) Forty nine consignments seized vide panchnama dated 15.01.2006 at NCT, IGI Airport Complex, New Delhi valued at Rs. 17,78,90,832/- (Rs.17,21,44,516 + Rs. 57,46,316/-) were confiscated under Section 111(m) of the Customs Act, 1962 for mis-declaration of value and allowed to be redeemed on payment of redemption fine of Rs. 17,78,90,832/-. The bond and bank guarantee filed for release thereof were ordered to be appropriated for that purpose. (v) Differential customs duty amounting to Rs. 88,05,384/- (Rs.79,43,437 + Rs. 8,61,947) was ordered to be recovered on account of licence fee paid/payable to M/s. Oracle Corporation on the confiscated goods. (vi) Under Section 28 ibid, customs duty amounting to Rs. 1,27,35,26,395/-, out of the total demand of Rs. 1,34,70,14,053/- on the clearance of goods made during the period March, 2006 to December, 2007 was ordered to be recovered. All such goods cleared involving the said evasion were confiscated for mis-declaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udication order demanding the duty and imposing fines and penalties as above. 3. The ld. advocate for OIPL made the following submissions:- 3.1 Oracle, USA develops software and entered into a Software Duplication and Distribution Agreement dated 01.06.2003 (hereinafter referred to as the SDDA ) with OIPL whereby the latter was granted the right to duplicate and distribute Oracle software in India. 3.2 OIPL provides software licences to customers in India on payment of a licence fee for granting right to use the software. During the relevant period, out of the actual receipt of licence fee from the customers in India, OIPL remitted 56% thereof to Oracle Corp., USA. 3.3 OIPL also provides Annual Technical Support (hereinafter referred to as ATS ) services in India wherein OIPL provides version updates and technical assistance to the customers. OIPL charged 22% of the license fee (15% for version updates and 7% for technical assistance respectively) for providing the ATS services. The demand in the present case pertains to the basic license fee and the version update fee (i.e. 15% of license fee), whether actually payable or notional. There is no demand on technical support/ assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... +; (ii) EPD; (iii) Existing customers seeking to increase the number of authorised users/licences. Oracle Ireland used to print the licence certificates (Dox) and supply the same to OIPL for ultimate delivery to the customers in India. The present demand on Dox relates to category (ii) & (iii). Differential duty under category (i) imports is demanded under media pack category. 56% of the royalty/license fee collected from customers was remitted to Oracle Corp., USA. Version Updates Version Updates are part of the ATS offered by OIPL. Version updates assisted the customer with bug fixes, patches, version and other technical support. Physical import of media pack occurred only when a customer opted for the same. 56% of the royalty/license fee collected from customers was remitted to Oracle Corp., USA. Global Deals These transactions are part of global contracts between overseas Oracle entities and multi-national companies. OIPL received a share of the global deal based on the amount of users in India. 56% of this amount was remitted to Oracle Corp., USA. No physical imports were made under this model unless the Indian counterpart booked an order electronically for a version upd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categorized into three buckets. The first bucket consists of shipments for which there was a physical import and there was a royalty paid (e.g., license sales and version updates with media pack shipments). Although there was a royalty actually paid with respect to this category, it was not a condition of the sale of the media packs. Instead, the license is a condition of the use of the software. In this bucket, the differential duty demand confirmed by the Ld. Commissioner amounts to Rs. 18,58,24,382/- out of a total demand of Rs. 128,23,31,779/-. The second bucket consists of shipments for which no royalties were due (e.g., replacement media packs for defective/damaged shipments and media packs provided to increase awareness of Oracle products in certain sectors). Given that there is no royalty paid or payable with respect to these transactions, there is nothing to be added to the dutiable value but Revenue has added notional licence fee payable to Oracle USA. This bucket accounts for Rs. 87,69,94,155/- out of the total demand of Rs. 128,23,31,779/-. The third bucket consists of shipments for which there was no physical imports (e.g., global deals and license certificate tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is given). As a result, there are no media pack imports. Even then OIPL continues to charge licence fee from the customers and in turn remit licence fee to Oracle Corp., USA. Even in EPD + mode of supply, wherein the customer opts for media pack, the order confirmation categorically provides that licence fee is payable by the customer to OIPL even if the media pack is not delivered. OIPL is free to distribute the media pack imported from Oracle Ireland to either a commercial or non-commercial customer. If the media pack is distributed to a non-commercial customer after importation, OIPL will not pay any licence fee to Oracle Corp., USA. Even if the media pack is distributed to a commercial customer after importation and OIPL defaults in remitting licence fee (56%) to Oracle Corp. USA, the contract of sale of media pack between OIPL and Oracle Ireland will not get repudiated. In fact, Oracle Ireland would continue to sell the media pack to OIPL as long as it receives the price charged for such media pack. Advisory opinions from the Customs Co-operation Council support the view that royalty cannot be added to value of imported media pack if it is not a condition of sale of import ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the media pack provided to the non-commercial users) to arrive at a license value for the non-commercial transactions. Such notional licence value worked out for non-commercial transactions is exponentially higher than the actual licence fee charged for any commercial transaction. The amount arrived at with respect to the Free of Charge External shipments double counts the notional license fee as these notional royalties are already taken into account with respect to the original media pack shipment. The license provided to the commercial users is a perpetual license but the license provided to the non-commercial users is yearly. Thus, these two transactions are not comparable and value of one cannot be adopted for another. Reliance is placed on the case of Selected Creations vs. CC, 2001 (135) ELT 333 (Tri.-Delhi). 3.12 Customs duty cannot be levied on electronic download of software [Refer Digital Equipments India Limited vs. CC Bangalore, 2001 (135) ELT 962 (T) and the Geneva Ministerial Declaration of Global Electronic commission Document WT/MIN(98)DEC/2 dated 25th May, 1998 (98-2148)]. 3.13 In the case of import of Dox, the software was electronically downloaded and only t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of royalty/licence fee that should have been paid. The Ld. Commissioner has on its own volition, rejected the transaction value of USD 500 charged by OIPL under OPN WDP and OAI programme as annual registration fee . OIPL never declared the said value as the transaction value. At the time of importation, the price charged by Oracle Ireland for supply of media pack was declared as the transaction value . The Ld. Commissioner has not given any reasons whatsoever to discard the same. The Ld. Commissioner has not bothered to factually determine the software actually supplied in non-commercial transactions. The value has been re-determined on the basis of value of single user licence (global list price without any discounts) for all the software which could have been provided by OIPL. FOC supplies: In the case of commercial transactions, the Ld. Commissioner has taken the list price and not the discounted price for the purposes of determining the duty liability. In the case of non-commercial supplies, OIPL supplied free replacement media packs under OPN and WDP. However, as no payment towards royalty/ licence fee was made to Oracle Corp., USA, duty cannot be demanded. SERVICE TAX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o royalty remittance is totally misconceived and factually incorrect. Therefore, extended period of limitation under proviso to Section 28 of the Customs Act cannot be invoked in the present case. PENALTY NOT IMPOSABLE AND INTEREST NOT RECOVERABLE FOR SHORT-PAYMENT OF CVD. 3.18 The entire demand pertains to non-payment/short-payment of CVD levied under Section 3(1) of the Customs Tariff Act, 1975 whereas the provisions for levy of penalty and interest are prescribed under the Customs Act, 1962. Therefore, penalty and interest cannot be levied for non-payment of CVD unless the penalty and interest provisions prescribed under the Customs Act, 1962 are borrowed under Section 3 of the Customs Tariff Act, 1975. Reliance is placed on the case of Tonira Pharma Ltd. vs. CCE, Surat, 2007 (208) ELT 38. (Page 152, Compilation of Cases and Materials) The principle that penalty cannot be levied in the absence of penalty provisions being borrowed in a particular enactment has already been upheld by the Hon'ble Supreme Court of India and High Court in the following cases: (i) Khemka and Co. (Agencies) Pvt. Ltd. vs. State of Maharashtra 1975 (2) SCC 22; (Page 100, Appeal Memorandum) and (ii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... With respect to the goods that were not seized, the confiscation and the redemption fine imposed is not sustainable. Confiscation cannot be done if the goods are not available as has been held in the following cases:- (i) CCE vs. Raja Impex, 2008 (209) ELT 185 (P&H); and (ii) Shiv Kripa Ispat Pvt. Ltd. vs. Commissioner of Central Excise, 2009 (235) E.L.T. 623 (Tri. - LB). Order for confiscation of the goods is beyond the scope of the Show Cause Notice as the Show Cause Notice did not propose to confiscate the goods imported during the relevant period (other than the seized goods). Departmental s Submissions 4. Ld. Departmental Representative, on the other hand made the following submissions during the hearing and also in the Written Submissions given on 02.06.2015:- (i) It is an admitted fact that OIPL, M/s. Oracle EMEA, Dublin, Ireland and M/s. Oracle International Corporation, USA (also referred to as Oracle Corp USA or Oracle USA or OIC) are related persons. (ii) The Master Service Agreement covers all the three entities. (iii) Thus, the transactions between Oracle USA, Oracle Ireland and OIPL were related party transactions and hence, the transaction value cannot be ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... software is moveable property . (x) Software being goods was exigible to Excise duty on being developed or manufactured in India. Rule 4 of the Customs Valuation Rules, 2007 stipulates that the value of imported goods shall be the transaction value, i.e. the price actually paid or payable for the imported goods. The Rule further states that the transaction value declared by the importer at the place of importation would be acceptable if the buyer or seller are not related or where the buyer and seller are related, the transaction value is not influenced by their relationship. (xi) In the present case, OIPL and Oracle, Ireland are related. OIPL is a wholly owned subsidiary of OIC, USA (owner of the software) and similarly, Oracle, Ireland is also a subsidiary of the OIC, USA. The Master Services Agreement governs the business relationship among members of the Oracle Group. OIPL and Oracle Ireland are members of the Oracle Group. (xii) Under the terms of the Master Services Agreement , OIPL was required to pay 56% of the licence fee (royalty amount) collected by it from its Indian buyers. (xiii) The transactions for the import and sale of the Oracle software were designed in a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. Being part of the Oracle Group and governed by the Master Services Agreement , Oracle Ireland was indirectly controlling the operations undertaken in India by M/s OIPL by issuing documents from Ireland which ordinarily were to be issued from OIPL s office in India. Investigations further revealed that OIPL did not declare that the goods were being imported from a related seller so that the declared transaction values are accepted and not rejected by Indian Customs authorities. The importer did not tell anything about the Master Services Agreement. M/s OIPL also did not declare that 56% of the royalty fees negotiated with Indian Customers in advance of the actual import into India was to be paid to OIC, U.S.A (the parent company). Being a condition of import of the software agreed in advance of its actual import, the licence fee was a part of the transaction value of the imported media packs. (xvi) All these show clearly that the Indian Customer had no choice but to agree to the payments of royalty at the time of entering into the contract in advance of actual shipment and much before the actual import of the software from Ireland. Such a condition in the contract can only be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Accounts Receivable data for the OIPL s Indian customer would be updated in real time when the media packs were actually shipped from Ireland. (xxi) OIPL knowingly suppressed the information relating to true value of goods in question. (xxii) OIPL at the initial stages of the investigation took a plea that the imported software (media pack) were imported for stock and sale and their sale price was not available with them. However, later it was gathered by the department that the importer i.e. OIPL switched the invoices at DHL s Distribution Centre in Gurgaon and attached the invoice (along with the consignments) to be sent to OIPL s Indian Customer with the true and correct value (including licence fee) before delivery to the ultimate Indian customers. (xxiii) OIPL, knowingly suppressed the information relating to the actual valuation of the goods by never disclosing to the department (Customs) the information regarding remittance of 56% of the licensee fee to M/s. Oracle USA in accordance with the Master Services Agreement. This fact was neither disclosed by OIPL to the department at the time when OIPL requested for provisional release of the seized goods under PD Bond / B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r software is supplied to non-commercial customer under Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007 assessable value for imported goods is to be determined on the basis of identical goods under Rule 4 of the 2007 Rules. In the present case, the identical goods for determining value are the commercial supply of the same software (identical goods) imported from outside India by OIPL. (v) OIPL did not disclose its true relationship with Oracle Ireland as members of the Oracle group until the department undertook its investigations against OIPL. Penalty was therefore rightly imposable as proposed in the Show Cause Notice. 6. The appellants made the following further submissions in response to the contentions put-forth by the Revenue:- (i) Royalty payments are for the right to distribute or use the copy right software in India and thus, such payments are not linked to pre-importation activity and therefore, advisory opinion and commentaries of the US cross rulings referred to by the Departmental Representative are not really applicable. As regards Hasbro-II ruling, US customs stated that the licence fee for the use is not a condition of sale. OIPL is fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the (notional) licence fee can be included in the assessable value on the ground that same should have been paid and whether the licence fee neither paid nor required to be paid by OIPL to Oracle USA can be held to be payable in the given circumstances. (iv) Whether the extended period of limitation is invokable in the given facts and circumstances of the case and whether the whole or part of the demand is hit by time bar. (v) Whether provisions of Customs Act, 1962 with regard to confiscation, interest and penalties are applicable in relation to the impugned CVD. (vi) Whether the value of software on which service tax has been charged can be included in the assessable value of media packs imported for the purpose of assessment under Customs Act, 1962. (vii) Whether redemption fine can be imposed in respect of goods which were released without any bond and are not available for confiscation. (viii) Whether, in the given facts and circumstances, confiscation and penalties are warranted in respect of seized goods. 9. As the entire issue is predominantly based on the interpretation of Rule 9 (1) (c)/10 (1) (C) of the Customs Valuation Rules,1988/2007 the said sub-Rules ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lace of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules Made in this behalf" Thus, it is evident that the provisions for adding licence fee/loyalty, transportation charges, loading/loading charges, insurance charges, etc. to the price actually paid or payable, are in the proviso which provides for their addition to such price in accordance with the Customs Valuation Rules even when the buyers and sellers are not related. In the present case, the price paid by OIPL to Oracle Ireland has not been found to have been in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company or the subsidiary company would certainly collect the licence fee from the customers (which are not related) in case such licence fee was indeed required to be paid by them (i.e., customers) in respect of such transactions. It thus clearly comes out that the licence fee in respect of non-commercial transactions , i.e., the transactions in respect of which the customers were not required to pay directly or indirectly, any licence fee and where it (i.e., licence fee) was neither collected nor was it due from the customers can be categorised as payable for the purpose of adding to the assessable value. Indeed , it is clearly stated in para 5 of the Software Duplication and Distribution Licence Agreement between Oracle USA and OPIL that Royalty/sub-licence fee shall not accrue on licences put to internal use or issued to clients/partner as trial/ demonstration licences . All the judgements/ opinions cited by the appellants/Revenue essentially hold that licence fee actually paid/payable as a condition of sale is includible in the assessable value. That is a settled legal position with which both sides are in agreement and therefore we are not discussing/ analysing those judgemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pies are made and marketed, it becomes goods, which are susceptible to sales tax. Even intellectual property, once it is put on to a media, whether it be in the form of books or canvas (in case of painting) or computer discs or cassettes, and marketed would become goods . We see no difference between a sale of a software programme on a CD/floppy disc from a sale of music on a cassette/CD or a sale of a film on a video cassette/CD. In all such cases, the intellectual property has been incorporated on a media for purposes of transfer. Sale is not just of the media which by itself has very little value. The software and the media cannot be split up. What the buyer purchases and pays for is not the disc or the CD. As in the case of paintings or books or music or films the buyer is purchasing the intellectual property and not the media i.e. the paper or cassette or disc or CD. Thus a transaction sale of computer software is clearly a sale of goods within the meaning of the term as defined in the said Act. The term all materials, articles and commodities includes both tangible and intangible/incorporeal property which is capable of abstraction, consumption and use and which can be transm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of rate of duty and tariff valuation of imported goods, Section 15 provides that in case of goods entered for home consumption under Section 46, it will the date on which Bill of Entry for such goods is presented. As per Section 7, CBEC appoints ports and airports which alone shall be customs ports and airports for loading and unloading of goods. Section 8 provides for approval of proper places in any customs ports, airports for loading or unloading of goods and for specifying the limits of any customs area. Section 31 provides that imported goods are not to be unloaded from any vessel unless entry inward is granted. Section 32 provides that no imported goods can be unloaded unless they are mentioned in the import manifest or import report. Section 33 provides for loading and unloading of goods at approved places only and Section 34 provides that goods are not to be unloaded or loaded except under supervision of customs officer. Section 36 puts restrictions for loading and unloading of goods on holidays, etc. From the above (illustrative) provisions of Customs Act, 1962, it is evident that the entire Customs Act in the present form provides mechanism/procedure for levy and collec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuation only somewhat similar, U.S. Customs in its Ruling HQ W548692 of March 2, 2007, inter alia observed as under:- "For example, if the buyer pays a third party for the right to use, in the United States, a trademark or copyright relating to the imported merchandise, and such payment was not a condition of the sale of the merchandise for exportation to the United States, such payment will not be added to the price actually paid or payable. However, if such payment was made by the buyer as a condition of sale of the merchandise for exportation to the United States, an addition will be made. As a further example, an addition will be made for any royalty or licence fee paid by the buyer to the seller, unless the buyer can establish that such payment is distinct from the price actually paid or payable for the imported merchandise, and was not a condition of the sale of the imported merchandise for exportation to the United States." "CBP has established a three-part test for determining the dutiability of royalty payments. This test appears in the General Notice, Dutiability of Royalty Payments, Vol. 27, No.6 Cust. B & Dec. At 1 (February 10, 1993) ( Hasbro II ruling ). The test ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able for the production of the software in the country of importation for countrywide use. The Supreme Court held that the licence fee charged towards countrywide use of the same software was includible in the assessable value of the imported software. Revenue s contention in the present case is that for media packs imported under commercial imports (where licence fee was collected from the customers and 56% of that was remitted by OIPL to Oracle USA as per the Software Duplication and Distribution Licence Agreement) as the licence fee was a condition of sale. It is seen that as per the prescribed procedure followed by OIPL, the pre-sale and sales teams of OIPL met and negotiated with perspective Indian customers offering them necessary information and demonstration prior to import. The negotiations of the sales teams were submitted for approval of OIPL. Once the terms and conditions were agreed between the sales team and the Indian customers, the customers were required to sign a contract for purchase of software prior to the actual import of it. The contract so signed was scanned into Oracle Order Management System (common system for Oracle group). On the basis of the order so up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Master Service Agreement. In the case of CCE, New Delhi Vs. Living Media India Ltd. [2011 (271) ELT 3 (SC], it was held by Supreme Court that royalty became payable as soon as cassettes/CDs were distributed/sold and hence being condition of sale, such royalty was includible in assessable value. This judgement was followed in the case of Star Entertainment Pvt. Ltd. Vs. CC, Mumbai [2014-TIOL-583-CESTAT-Mum] to hold that royalties/licence fees paid for the import of beta/digibeta tapes containing films are includible in assessable value. We must again mention here that none of the judgements referred to in regard to includibility of royalty in assessable value involve identical facts and circumstances and therefore we have laid primary emphasis (and essentially relied) upon the first principles to determine whether in the given set of facts and circumstances, the licence fee remitted by OIPL to Oracle USA was paid/required to be paid as a condition of sale. The opinion of Israeli authorised cited by the appellants is just an opinion of a particular nation s administration. Even the opinions of international bodies like World Customs Organisation (WCO), though of greater persuasive v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xiomatic that the same transaction may inhere distinct taxable events, exigible to different taxes. The only question is whether demand of tax is sustainable under the particular statute, as claimed by Revenue. The licence fee being a condition of sale is includible in the assessable value of the media packs in terms of the Customs Act, 1962 and the Rules made thereunder and there is no provision warranting exclusion from the assessable value for customs purposes, on the ground that service tax has become chargeable on such licence fee under a different statute. 15. Coming to OIPL s contention that no redemption fine can be imposed when the goods have been cleared without any bond and are not available for confiscation, we find force in this contention. On the first principles, redemption fine this imposed in lieu of confiscation. In other words, the assessee is given an option to redeem the goods confiscated on payment of redemption fine. Thus even when the goods are available and are confiscated, redemption on payment of redemption fine is an option and not an obligation, of the assessee. Thus imposition of redemption fine in lieu of confiscation when the goods cannot be confisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same principle is applicable with regard to leviability of interest (India Carbon Ltd. (supra) and V.V.S. Sugar (supra). We have perused these judgements. Many of them dealt with Anti-dumping duty/Special Additional Duty (SAD) leviable under various sections (but not Section 3) of Customs Tariff Act, 1975 and in those sections of the Customs Tariff Act, 1975 or in the said Act itself, during the relevant period, there was no provision to apply to the Anti-dumping duty/SAD the provisions of Customs Act, 1962 and the rules and regulations made thereunder including those relating to to interest, penalty, confiscation. In the case of Pioneer Silk Mills (supra), the duty involved was the one levied under the Additional Duties of Customs (Goods of Special Importance) Act, 1957 and its Section 3(3) only borrowed the provisions relating to levy an collection from the Central Excise Act, 1944 and in view of that it was held that the provisions relating to confiscation and penalty could not be applied with regard to the duties collected under the said act of 1957. None of these judgements actually deal with the CVD levied under Section 3 of the Customs Tariff Act, 1975. The impugned coun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fee will be remedied to Oracle USA. (v) They had been following the same system even prior to 01.03.2006 when no countervailing duty was leviable and at that time there was no reason for them to indulge in wilful misstatement or suppression of facts. (vi) The issue involves interpretation of law and therefore allegation of suppression and imposition of penalties cannot be sustained; several judgements (mentioned earlier) were cited to that effect. The Ld. Departmental Representative on the other hand strenuously argued that (i) OIPL did not declare while filing the Bills of Entry that the goods were coming from a related person and also did not disclose the payment of licence fee to Oracle USA. (ii) When investigation started, OIPL s officials stated that the import was on the basis of the stock on sale meaning thereby that they could import the software, stock it, and then give it to any user commercial or non-commercial and that this contention was misleading in as much as all the imports where in accordance with unique order numbers which related to specific customers. (iii) The very fact that OIPL was issuing another invoice while delivering the software to the customers sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces, it sounds incredible that a professional organisation like Indian Customs should claim that it did not / could not realise that the imports by OIPL from Oracle Ireland were from a related person. Further, the fact that the appellant had followed the same system, procedure and practice of declaring assessable value even during the period prior to 01.03.2006 when there was no duty to be evaded at all, goes a long way in support of the contention of the appellants that there was no intention on their part to wilfully mis-state or suppress any facts. In any case, there is evidence on record that in September, 2005 and January, 2007 they submitted the details about OIPL s relationship with Oracle Ireland and Oracle USA to Customs and so the allegation that OIPL suppressed the fact of it being related to Oracle Ireland stands pretty much negated by this evidence alone. It is also more than evident from the analysis above that the issue is purely and undoubtedly interpretational. Thus, the claimed bona fide belief on the part of the appellants that the licence fee remitted to Oracle USA was not includible in the assessable value cannot be called unreasonable or hallucinatory. The Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of duty but a case of mere possible short payment of duty in respect of commercial imports of media packs involving a purely interpretational issue where OIPL has made an arguable case that there was no short payment as the licence fee was not includible in the assessable value notwithstanding our finding that such licence fee remitted by OIPL to Oracle USA is includible in the assessable value. Such cases devoid of mens rea are simple demand cases involving bona fide interpretational difference of opinion. Non-desirability of imposing of penalty in such cases can be inferred from the case laws discussed/analysed earlier and when penalty is not justified, then as a corollary nor is confiscation. We may observe in passing that the Customs tendency, often noticed, to raise a pure interpretational disagreement regarding valuation to the status of an offence case of evasion alleging suppression, etc. does not augur well for the image of taxation department and negatively impacts the ease-of-doing-business environment of the country and therefore even in public interest such tendencies need to be discouraged. 20. In view of the discussion above, we pass the following Order:- (i) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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