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TMI Blog2018 (9) TMI 1151X X X X Extracts X X X X X X X X Extracts X X X X ..... bly/Gear Box" were in a pre-assembled form, the appellant was not eligible to avail the concessional rates provided in the said Notifications. 2. Accordingly, a Show Cause Notice dt. 26.08.2013 was issued to the appellants inter alia demanding differential customs duty in respect of CKD kits for motor cars imported during the period 24.03.2011 to 11.04.2013 and imports of motor cars in a form other than CKD for the period 01.03.2011 to 23.03.2011. The Show Cause Notice inter alia proposed demand of differential duty amounting to Rs. 757,61,37,381/- with interest thereon and imposition of penalties under Sections 112(a) and 114A of the Customs Act, 1962. 3. In adjudication, the adjudicating authority vide the impugned Order dt. 13.02.2015, inter alia concluded as follows : (a) The subject 'engine assembly' and 'transmission assembly' in its imported form constitutes a complete and functional pre-assembled engine. (b) The term 'sub-assembly' used in the phrase 'transmission sub-assembly' is a misnomer by the importer (appellant) to suppress the fact that the imported item actually constitutes a complete automatic transmission/gearbox. (c) The 'transmission sub-assembly' goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (AAR), the question framed for consideration was as follows : "Whether the import of car parts, listed at Annexure III would be considered as import of completely knocked down ("CKD") unit, eligible to the concessional rate of customs duty of 15% being covered by Entry 344 of CTH No.8703 (1) of Notification No.21/2002-Cus., dated March 1,2002 as amended by Notification No.11/2005-Cus., dated 1.3.2005?" After considering the Report provided by the ARAI on the referred issues, the Authority for Advance Rulings ("AAR") was pleased to hold as follows : 44. [ ] From the perusal of these reports, the position that emerges is that parts listed in Annexure-III to the application represent the CKD Unit and with the assembly of seats, which will be procured locally, the parts would constitute a complete car. There are some parts, which could be taken as component form while there are other parts which could be termed as SKD form. It is true that there are no definitions of the terms "CKD" and "SKD" in the Customs Act or Rules framed thereunder. But from the material furnished by the applicant for comparison of CKD and SKD, it appears that the components for the CKD vehicle are proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.7.2010 confirming that the benefit of the Customs Exemption Notification can be extended to the X1 and X3 Series, subject to first check examination. vii) Thereafter, Harley-Davidson Motor Company, made an application before the AAR seeking to claim CKD benefits even if the engine and gearbox were mated / inter-connected in a single unit, in a motor cycle (here, it must be noted that the language of the exemption entries and the amendments thereto have always been identical for motor cars and motor cycles). The AAR vide its Ruling [In Re: H-D Motor Company India Pvt. Ltd., 2011 (270) ELT 432 (AAR)] ("H-D AAR") ruled that the CKD benefits are available even to an engine and gearbox which were mated / inter-connected together in a motor cycle. The Government raised serious objection to H-D's position qua a mated engine-transmission being eligible for the CKD rate. The objections of the Government were overruled by the AAR and the benefit of the CKD was extended even to an import containing mated engine and transmission sub-assembly. The terms "assembly" and "sub-assembly" appear to be used interchangeably throughout the ruling of the AAR. viii) Post the H-D AAR ruling, while t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as standalone subassemblies and not interconnected to each other, the same should qualify for clearance as parts. xii) The CBEC clarified as follows vide Instruction F.No.354/38/2011-TUR, dated 11.3.2011 : 4. In view of the above, it is to inform you that while point nos.1 and 3 of the interpretation of the new definition, as mentioned in your letter dated 4th March, 2011 are correct, the interpretation at point no.2 is not correct. xiii) In view of the above, it was categorically stated that the understanding set out at point no.3 was accurate, viz. that standalone sub-assemblies would qualify for clearance as parts (i.e. under the main clause of the CKD definition - "components, parts or sub-assemblies for assembling a complete vehicle"). It is further submitted that point no.3 could not conceivably refer to non-CKD imports, as such imports were separately dealt with at point no.1. xiv) Further to the aforesaid developments, a further amendment was made to the Customs Exemption Notification to alter the language in relation to the CKD definition, and to introduce a threetier-rate slab. xv) Simultaneously, TRU Circular bearing no.B-1/3/2011-TRU dated 25-Mar-2011 was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and interpreted in light of the same. Therefore, the finding in the impugned order, that the argument that the said amendment dated 24.03.2011 was also to overcome the effect of the Advance Ruling in the case of M/s.H-D Motor Co. Pvt. Ltd. is without any iota of documentary evidence, is without any sustainable basis in fact or in law and is contrary to well settled principles of statutory interpretation. (iv) The term 'and' has been specifically inserted in the Exemption Notification as a 'conjunctive' and full effect should be given to the same whilst the 1st March, 2011 amendment used the expression "(a) a kit containing a pre-assembled engine or gearbox or transmission mechanism" the 24th March, 2011 amendment specifically uses the words "engine, gearbox and transmission mechanism not in a preassembled condition". The word 'and' is used in the 24th March, 2011 Notification instead of the word 'or' in clause (a) of the customs exemption notification. Full effect therefore needs to be given to the 24th March, 2011 amendment and the use of the word 'and' in such amendment, which term has been sued as a 'conjunctive' . The introduction of the word 'and' was meant to address the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ory interpretation, the proper and correct construction of Exemption Notifications is that : a. Imports of engine sub-assembly or transmission sub-assembly which are not mated / assembled together will qualify as CKD imports entitled for the concessional rate of BCD at 10%. b. Imports of engine and transmission assembly mated / assembled together as a single assembly, but which is not mounted on a chassis or a body assembly, will qualify as CKD imports but be subject to a higher rate of BCD at 30%. c. Imports of mated engine and transmission assembly which is mounted on a chassis or a body assembly or a CBU will be taxed at the highest rate of BCD at 60%. (ix) Imports made by the appellant are not of engine or transmission in pre-assembled form for inter-alia the reasons that : a) Various parts as listed and detailed herein, are added onto the imported 'engine assembly' and transmission subassembly' in the Chennai plant of the appellant including various essential parts to make the engine and transmission - complete and functional. b) Towards making the imported 'engine assembly' and transmission sub-assembly' complete and functional, various processes in the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant. It is well settled law that when cross examination of the expert is not afforded, then no reliance can be placed on such expert report. (xiii) Submissions on Extended period of limitation (a) Invocation of the "extended period of limitation" in the OIO is erroneous and unsustainable inasmuch as there is no wilful or deliberate non disclosure of correct information by the appellant. The appellant has always kept the Department in the know-how of the legal position followed by them. The Department has also during the relevant period physically inspected various consignments of imports declared to be in CKD form and approved of the availment of the Exemption Notification by the appellant. This position is evident from the following. (b) The appellant on June 17, 2005 while filing the Applicaton for Advance Ruling with the AAR submitted the complete list of parts used in assembling the cars at the Chennai plant for 3 Series model of cars in Annexure III (containing list of parts imported for assembling the card model E 90 at their Chennai plant) of the application. The department was party to the application and was well represented before the AAR. (c) The OIO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interpretation of the provisions of the exemption notification, it is well settled law that no penalty can be imposed in such a case. (c) As the duty demand on the appellant is itself not sustainable in light of the submissions set out hereinabove, there can be no question of payment of any interest by the appellant under section 28AB of the Act. (d) It is well settled law that provisions relating to confiscation will only stand when misdeclaration is proved and if there is no case of misdeclaration, confiscation cannot be made. (e) It is well settled law that penalty can be levied in terms of Section 112 (a) of the Act only when there are grounds for confiscation of the goods in terms of Section 111 of the Act. In terms of the submissions set out hereinabove, as there exists no grounds for confiscation under Section 111 of the Act, no penalty under section 112 (a) of the Act can be levied on goods which have been assessed and provisionally cleared. 8. On behalf of the Revenue, Ld. Special Counsel Shri. P.R.V. Ramanan also made oral and written submissions which are summarized as under : (i) It is settled law that a Notification has to be interpreted in accordance with the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment in HD case. (vi) If appellant's interpretation of notification is to be adopted it would mean that mere fastening by four bolts to hold together the pre-assembled engine and pre-assembled gearbox or pre-assembled transmission should result in 20% rate difference. (vii) The ordinary meaning of the expression 'not pre-assembled' means 'not already assembled' if adopted would clearly show that the goods imported would qualify to be regarded as a preassembled engine or transmission. (viii) Ld. Special Counsel relied upon the ratio of the case laws in: (a) Sodra Devi's case [AIR-57-SC-382] (b) Excon Bldg. Material Mfg. Co. Pvt. Ltd. Vs. C.C.E, Bombay [2005 (186) E.C.T. 263 (S.C.)] (c) Aeon's Construction Products Ltd. Vs. C.C.E., Chennai *2005 (180) E.L.T. 209 (Tri. - Chennai)] He submitted that applying the ratio of the above decisions, the wording "not in a pre-assembled condition" as given in the subject Notification dated 24.03.2011 has to be read with each of the items, viz., Engine, Gear Box and Transmission Mechanism. There is no warrant to interpret the word 'and' to mean "Engine, Gear Box and Transmission Mechanism as mated or integrated or interconnected" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, it was observed that among the parts listed therein were parts of description 'ASSY ENGINE N46 E90 B20 OL LHD A' (under heading : Engine, Compressor and Generator) and 'LU AUTO TRANSM 6HP 19 CODE MB N46 OL'(under heading : Gearbox/Transmission Wiring Harness). The importer has declared the disputed engine part of the CKD kit as engine assembly and not as a sub-assembly of an engine. Further, under the heading 'Engine, Compressor and Generator' appearing in the annexure parts of description like cylinders, connecting-rods, crankshaft, flywheel, camshaft, piston, etc., which are essential elements for assembling an engine, were not found listed. (xiv) Moreover, it is pertinent to note that no part by description 'Transmission sub-assembly' is found among the parts listed in the Annexure III. It is also accepted by BMW vide the statement of Ms. Payal Tuli given on 06.05.2013 that from 2005 till date there has been no change in the level of dis-assembly with respect to the imported engines and transmissions. (xv) In the case of engines, the imported article contains in assembled form all the essential parts of an engine such as, cylinder head, flywheel, engine block, connecting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the submission made by BMW India in their letter dt. 30.03.2011 that they imported their engines and gearboxes in sub-assembly form appears to be a clear misdeclaration aimed at misleading the Customs Authority. (d) BMW have also never declared in any of their Bills of Entry or import documents, the description/nomenclature/the level of assembly or disassembly of the imported parts, viz., engines and gearboxes and establishes suppression of facts and deliberate default to claim ineligible notification benefit. (e) Very few Bills of Entry filed by BMW [i.e., 20 out of 712 consignments] were taken up (on random selection by system) for assessment and examination. Most of the Bills of Entry filed by BMW during the disputed period were cleared under their own Self-assessment without any examination by Customs based on their status as an Accredited Client under the Accredited Client Programme. Out of 20 examination reports only two mentioned about the pre-assembled nature of engine and transmission. On this basis, generalization cannot be made. (f) From the above discussion of internal correspondence of BMW, it appeared that the importer had taken a conscious decision not to exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission sub-assembly"/"ASSY Auto Gearbox" and was of the opinion that the above representative samples of engines were "pre-assembled engines which could be readily integrated to build the motor car" and that the samples described as "transmission sub-assembly" and "ASSY Auto Gearbox" respectively were "automatic transmission units, which were otherwise known as automatic gearboxes,. ...." (b) The report brought out the pre-assembled nature of the imported engines and gearboxes. The Expert had also gone through the "List of Add-on Parts" and concluded that the same "merely comprised nuts, screws, clips, brackets, washers, plugs, hoses, pipes, temperature and pressure sensors and wires, apart from A/C compressor and starter motors" (in respect of the engines) and "screws, nuts, brackets and metal tubes, except the driveshaft assembly, which actually was a separate and independent item" (in respect of the gearboxes). (c) The above report of the expert thus corroborated/validated the Department's position discussed hereinabove that the "ASSY Engine" and "transmission subassembly"/"ASSY Auto Gearbox" units imported by M/s. BMW India in their CKD kits of motor cars are pre-assembled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by Entry 344 of CTH No. 8703 (1) of Notification No. 21/2002-Cus., dated March 1, 2002 as amended by Notification No. 11/2005-Cus., dated 1-3-2005?" 11.3 In their Ruling dt. 28.10.2005, as reported in 2006 (193) ELT 138 (AAR), the majority ruling of the Three-Member Authority ruled that the import of parts assembly in Annexure-III to the application would be considered as import of motor car in CKD, eligible to concessional rate of duty under Notification No.21/2002Cus. as amended by notification No.11/2005-Cus. The relevant portion of the majority ruling, namely para-44 thereof is excerpted as under : "44. It may be noted from the clarification report that (1) there are no specific guidelines prescribed for defining CKD and SKD kits; (2) there are some parts in the Annexure which could be taken as component form while there are other parts which could be termed as SKD form. (3) on the basis of the analysis carried out by ARAI and the discussions held with BMW, it was learnt that seats would be manufactured locally and then installed in the vehicle; (4) inasmuch as without seats the vehicle could not be treated as complete, the words "by and large" have been used. From the peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age of words "by and large" in the report of the Automotive Research Association of India, Pune (ARAI) and noted that "inasmuch as without seats the vehicle could not be treated as complete, the words "by and large" have been used. 11.5 However, in the said AAR Ruling, one of the dissenting Members held that the goods proposed to be imported by BMW are not covered by the main text of the description of goods specified in Column (3) against Sl.No.344 of the Notification No.21/2002-Cus., as amended by Notification No.11/2005-Cus; that the description of the goods in the said Sl.No.344, cannot be interpreted in a manner so as to include incomplete or unfinished 'motor car' or 'other motor vehicle' within its ambit, hence the benefit of exemption under notification is not available to the goods in question. 11.6 The moot point that should be kept in mind is that for obvious reasons, the application by the appellant to the Authority for Advance Ruling was made before any actual imports had taken place. In consequence, the Advance Ruling Authority and for that matter, the ARAI, had gone only by the list of car parts submitted by the appellants in Annexure III to their application. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be eligible for concessional rate of import duty if they are imported in the form of identifiable basic sub-assemblies or components as per the illustrative list of components, parts and sub assemblies. The authority also ruled that benefit of exemption would however be applicable only in case the engine and transmission assembly imported as a single part is designed to be housed and is so assembled, in a single housing. 11.8 As discussed with respect to the BMW Advance Ruling, the ruling in the H-D case was also made before any definition of what constituted CKD was brought about in the exemption notification, In the case of motor cycles, this came about vide amendment caused in Notification No.21/2011 dt.1.3.2011 by inserting an Explanation for the meaning of "Completely Knock Down Unit" for the purposes of Sl.No.345. 11.9 The objection filed by the Revenue for reconsideration of its decision, the Authority for Advance Ruling vide an Order dt. 18.2.2011, reported in 2012 (277) ELT 113 (A.A.R) rejected the petition and upheld its Order. 12. From the submissions of the Ld. Advocate, it appears that pursuant to the decision given by the AAR in their case, the appellant commenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which any of the component or sub-assembly viz., engine or gearbox or transmission mechanism is installed;" Evidently, the actual definition of CKD as brought about vide Notification 21/2011 dt. 01.03.2011 was different from that apparently suggested by SIAM. 14. Immediately, on the same day of the date of issue of Notification dt. 01.03.2011, SIAM sent a communication to the Revenue Secretary, Ministry of Finance, conveying that the definition of CKD was highly restrictive and sought urgent clarification and also suggested alternative options. It also emerges that on 04.03.2011, M/s. Volkswagen India also sent a communication to the Revenue Secretary seeking confirmation as to their following interpretations of the new definition : 1. That all operations not running as a kit basis are not affected by this change. 2. Reading the Explanation and the memorandum together gives us an impression that one is eligible to import all critical components including a pre-assembled engine, gearbox, transmission mechanism as a CKD as long as these are not installed on the chassis or body assembly. 3. If only the three critical components namely engine, gearbox, transmission mechanism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing reduced from 60% to30%. Such imports of vehicles in completely built form or in any other form including in a form where any of the three viz. engine, gear box or transmission assembly are imported fixed to a chassis will attract 60% BCD. The imports in form of CKD kits where all the parts and components including engine, gearbox and transmission assembly are present in completely knocked down condition will attract 10% BCD." 16. Discernibly, the changes brought about by Notification No. 31/2011-Cus. not only created an additional slab of concessional duty, but also further clarified what exactly would be considered as CKD. Notification 31/2011-Cus. in fact expanded the types of imports which could be considered as CKD unit. In the Notification 31/2011 if the engine, gearbox and transmission mechanism was not in a pre-assembled condition, this would be considered as a CKD kit, meriting the lowest rate of 10% BCD. At the same time, even if the engine, gearbox and transmission mechanism was in a pre-assembled form, however not mounted on the chassis or a body assembly, even if such imported kit may well be considered as a CKD kit for the purposes of the notification, that will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has been at pains to emphasise that various representations were made by SIAM, Volkswagen, etc., to the Ministry after Notification No.21/2011- dt. 1.3.2011 was issued, wherein for the first time, the definition of "Completely Knocked Down" was defined. Possibly, due to all these representations and the discussions between the stakeholders, the definition of CKD which was introduced by Notification No.21/2011-Cus. was enlarged in scope. Whereas Notification No.21/2011-Cus. excluded from the scope of CKD automobile kit containing even a preassembled engine or gearbox or transmission mechanism, such preassemblies were considered as a CKD unit in the subsequent Notification No.31/2011-Cus. though, required to suffer a higher BCD of 30%. The decision in the case of Sunil Kumar Rana Vs State of Haryana & Others (2003) 2 SCC 628 was relied by the Ld. counsel for appellant to argue that purposive construction has to be applied to interpret the notification. That the legislative intent was to get over the mischief shooted from the AAR Ruling in Harley Davidson case. As already discussed we do not agree with the submission that the notification under consideration was a consequence of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9090 and claiming benefit of Notification No.12/2012-Cus. Entry 431 (1) (a) namely claiming BCD @ 10%. The related corresponding Invoice No.GCO 7402 dt. 23.07.2012 describes the consignment as "BMW CKD Cars - BMW CKD automobile parts". It is also mentioned in the invoice that "for description of quantity and nature of goods supplied, please refer to packing list or as alternatively invoice attachment". The detailed packing list found in page 51 onwards of the said compilation gives description, part number and quantity consigned, however there is no indication in the detailed packing list that the engine or gearbox or transmission mechanism are mated to each other or otherwise. 24. Ld. Advocate has argued that introduction of the words "and" would only refer to a situation where both engine and transmission are in a mated condition prior to the importation. Ld. Advocate has also relied upon the judgment of the Hon'ble Apex Court in Hyderabad Asbestos Cement Products Vs UOI - 2000 (115) ELT 20 (SC) to argue that since the words "gearbox and transmission" are separated by a conjunction 'and' they have to be read conjointly. However we note that the Hon'ble Apex Court in that judgem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EMPHASIS ADDED] Hence any attempt to give a different spin or meaning to the wording of the notification, as the Ld. Advocate has attempted to do, will only lead to interpretations which were never intended by the legislature. 26. In the circumstances, the effect of notification No.31/2011-Cus. and also Notification No.12/2012-Cus.is that 10% BCD will be available only when the CKD kit imported contains engine / gearbox / transmission assembly in completely knocked down condition, i.e. not in preassembled condition. 27. So also, in respect of another Bill of Entry 9190798 dt. 01.02.2013, the description of the imported goods is given as "BMW Cars in CKD". The Custom Tariff Heading declared was 87039090 claiming concessional rate of 10% BCD available as per Sl. No. 437(1)(a) of Notification 12/2012-Cus. The corresponding invoice GCQ 8426 dt. 07.01.2013 describes the goods as "CKD Cars - BMW CKD Automotive Parts". Here also, the invoice advises to refer to packing list or alternatively, the invoice attachment, "for description of quantity and nature of goods supplied". 28. From the detailed packing list, it is seen that the assemblies and sub-assemblies imported have been listed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 12.8 of the impugned Order, the adjudicating authority has alluded to the statement of BMW India dt. 22.03.2013 wherein it is admitted that the Chennai plant does not assemble essential components like engine, cram shaft, cylinder heads, crank cases, cylinder head, flywheels, pistons, exhaust, etc; that the imported engine assembly incorporates all these essential components; that the assembly mating of engine with transmission mechanism, done by aligning the Torque converter end of the "transmission sub-assembly" with the flywheel end of the "engine sub-assembly" is done seamlessly at the appellant's Chennai plant, which only proves that both the transmission mechanism and engine imported are complete assemblies, ready to be mated. 33. The following evidences analysed by the adjudicating authority also support the view that the CKD kits imported by the appellants contain engine/transmission mechanism/gearbox which were in pre-assembled and hence not eligible for the 10% BCD rate. On scrutiny of the "Detailed Packing List" furnished by the importer during investigation in respect of the above six consignments, it is observed that the engine and the individual part pertaining to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and we are unable to find any infirmity with the same. The conclusions arrived at by the adjudicating authority make for interesting reading : "Thus, though the importer describes the parts locally assembled on to the 'transmission sub-assemblies' (gearboxes) in abstract technical terms as "mechanical, hydraulic, electronic parts", it can be noted/observed from the "list of add-on parts" that they are merely in the nature of fasteners (nuts, screws, brackets, etc. which merely provide the linkage for other parts of the car with the imported gearbox, drive shaft, gear shift lever, etc.), wiring harness (which is described by the importer as "electronic part" but which actually consists of insulated wires with connector pins at the ends), hose/pipe/tube (which is described by M/s.BMW India as "hydraulic part" for the simple reason that fluids pass through them), transmission control parts like gear shift lever and fixtures like brackets for fitment of the gearbox, other transmission parts like drive shaft, output shafts and other items to the body of the car. Thus, it appears that all the other parts like drive shafts and many of the nuts and bolts are merely required for making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been imported in preassembled form. Like in the case of transmission mechanism list of 'add on parts' claimed to be crucial and integral constituent parts of engine are seen in the nature of fasteners like nuts, clips, screws, parts like wiring harnesses and parts like braidings etc. Like in the case of transmission assemblies, the 'add-on parts' in respect of these 'assemblies' only serve the purpose of connecting /mounting/ integrating the engine with the other assemblies or rest of the car. 40. The Ld. Advocate has vigorously argued that no reliance can be placed by the department on the report of Shri Ramesh Babu on the grounds that it has been issued on incomplete facts and without fully understanding or analyzing the assembly operations undertaken by the appellant and without even visiting the Chennai plant of the appellants and physically observing the assembly operations undertaken. Persuasive as it may be, we are nonetheless unable to appreciate this argument of the Ld. Advocate. The levy of Customs duty on imported goods is always on the goods in the condition they are imported. Hence the examination of goods at the point of port alone would be able to determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een an ambiguity in the Notifications No.31/2011-Cus. and No.12/2012-Cus. as claimed by appellant, in our view, that will not have bearing effect in the case on hand. The benefit of such ambiguity even if it existed, cannot be claimed by the appellant-importer BMW and as laid down by the Hon'ble Apex Court, the same must be interpreted in favour of the Revenue. There are number of judgments and the higher courts of the land which have consistently reiterated that exemption notifications should be interpreted strictly. In a very recent judgment in the case of Commissioner of Customs (Import) Mumbai Vs Dilip Kumar and Company & Ors. in Civil Appeal No.3327 of 2007, a five Judge Bench of the Hon'ble Apex Court held that when there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The relevant portion of the Hon'ble Apex Court judgement is reproduced as under : "52.To sum up, we answer the reference holding as under - (1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification 12/2012 to become eligible for concessional rate of BCD @10%. Once the goods have been cleared with such examination reports, it is but obvious that the Department cannot now rake up an argument that the engine/gearbox/transmission mechanism were in fact pre-assembled and/or were brought mated to each other at the time of import. 45. True, that the Revenue would also argue that since many of the consignments would have been cleared by the Risk Management System (RMS) Module electronically without human interface or intervention, only a few random examination orders may only have been an aberration and not the rule. But, at the same time, it is pertinent to note that the appellant had written to the Commissioner of Customs, Chennai vide a letter dt. 05.07.2010, referring to a meeting and requesting that the CKD import duty rate being given to their 3-series CKD Kits may also be extended to their X1 and X3 models as well. 46. In response, the appellants were informed vide a letter dt. 23.07.2010 that "import of BMW X1 and X3 series car in CKD condition can be extended the benefit of Notification 21/2002-Cus., Sl. No. 344(1)". 47. Even after the issue of Notificatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." So also, the Hon'ble High Court of Punjab and Haryana in the case of CC Amritsar Vs Jyoti Industries - 2007 (209) ELT 180 (P&H) has upheld the following findings of the Tribunal that mistake committed on the part of Customs officer in proper assessment of goods cannot be held as suppression / misrepresentation of goods to justify invocation of extended period of limitation : "We have seen the photocopy of the Bill of Entry No. 82 dated 26-594, which is in dispute and found that the Assessing Officer has himself assessed the goods under Heading 9017.30 by changing the classification adopted by the importer. The examination report of the Customs Officer as recorded on Bill of Entry clearly shows that they had found the goods as per description in Bill of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, we reduce the redemption fine to Rs. 1,00,00,000/- (Rupees One Crore only) imposed under Section 125 of the Customs Act, 1962. 54. So also, while upholding the imposability of penalty under Section 112 (a) ibid, we find that the penalty of Rs. 3,00,00,000/- imposed is on the higher side and in our view penalty of Rs. 1,00,00,000/- (Rupees One Crore only) would merit the interest of justice in this case. So ordered. Issue No.III is answered as held in paras 52 to 54. To sum up - (1) The demand is upheld, however restricted to the normal period of limitation. Only for the purpose of re-quantification of the demand for the normal period with interest liability as applicable, the matter is being remanded to the adjudicating authority. (2) Penalty imposed under Section 114A of the Act is set aside. (3) Confiscation of goods under Section 111 (m) and (o) of the Act is upheld. Imposability of Redemption fine under Section 125 (1) ibid is upheld. However, the redemption fine imposed is reduced to Rs. 1,00,00,000/- (Rupees One Crore only). (4) Imposability of penalty under Section 112(a) of the Act is upheld. However, penalty imposed is reduced to Rs. 1,00,00,000/- (Rupees One ..... X X X X Extracts X X X X X X X X Extracts X X X X
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