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TMI Blog2025 (1) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... transmission or reception of information, image or data. The server may work in conjunction with the automatic data processing machine but a server itself never processes any data automatically like desktop, personal computer or laptop. The servers imported by the appellant are meant for specific application in a network, are entirely different from the "Automatic Data Processing Machine" including personal computers and laptop computers, which are actually stand-alone equipment. It is observed that 'servers' imported by the appellant don't have the keyboard and monitors. Thus, the restrictions in the Exim Policy as per Para 2.31 of the Foreign Trade Policy (FTP) as notified by the DGFT Notification No.05/2015-20, dated 07.05.2019 are applicable only to computers including personal computer and laptop computer and not to 'servers' imported by the appellant. 'Servers' are classifiable under the CTH 8417. This view is supported by the decision in the case of COMMR. OF CUS., BANGALORE VERSUS MICROSOFT CORPN. INDIA PVT. LTD. [2007 (11) TMI 203 - CESTAT, BANGALORE], wherein at paragraph 3, it has been held that 'normally the servers will be the larger machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and accordingly, penalty imposed under section 114AA of the Act on the appellant is not sustainable. Penalty imposed under Section 112(a) of the Customs Act - HELD THAT:- Penalty under Section 112(a) relates to violations in regard to situation where goods are liable for confiscation under Section 111. In the instant case, the imported goods are not 'restricted goods'. These goods are duty free goods and can be imported freely. In the instant case, confiscation of the goods is made on erroneous premises of law, by mis-interpreting the DGFT Notification No.05/2015-20, dated 07.05.2019, as the authority below has mixed up the 'server' with Desktops Computer and Personal Computers / Laptop and considered the same as "Automatic Data Processing Machine" and erroneously confiscated the server. Thus, the confiscation in the impugned order is not sustainable. For the same reason, the penalty imposed on the appellant under Section 112(a) of the Act is not sustainable. Conclusion - i) The confiscation of the imported 'server' falling under CTH 84714190 is not warranted, as the goods imported by the appellant are not 'restricted goods' and there is no violation of DGFT Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actually found during the examination should not be confiscated under Section 111(d), 111(l) and 111 (m) of the Customs Act, 1962; e. Penalty should not be imposed on the appellant under Section 112(a)(i) of the Customs Act, 1962 for act of omission or commission which renders the imported goods liable for confiscation under Section 111(d), 111(1) 111(m); f. Penalty should not be imposed on the appellant under Section 114AA of the Customs Act, 1962 for act of omission or commission which renders the imported, goods liable for confiscation under Section 111(d), 111(1) 111 (m). 2.1. After due process, the Ld. Joint Commissioner of Customs (Port), Appraising Group 5E, Kolkata Customs passed the Order in Original dated 26.12.2023 wherein he has passed the following order: - "I. I reject the declared assessable value of the entire consignment of Rs.1,98,70,080/-(Rupees one crore ninety eight lakh seventy thousand eighty only) imported under the Bill of Entry No. 8902963 dt. 31.05.2022 under provisions of Rule 12 of CVR, 2007 read with Section 14 of Customs Act, 1962 and redetermine the same at Rs.2,23,33,876/- (Rupees two crores twenty three lakh thirty three thousand eight hund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2023. Being aggrieved by the impugned order, the appellant has filed this appeal. 3. The appellant submits that they have imported second hand "Data processing Server" with all standard Accessories namely Output Power Supply, Switching Power Supply, AC-DC converter & Delta Energy system and Switches and filed EDI Bill of Entry No.8902963 dated 31.05.2022. It is submitted that the authorities below have erred in holding that the import of 'server' with parts and accessories are restricted as per Para 2.31 of the Foreign Trade Policy (FTP) as notified by the DGFT Notification No.05/2015-20 dated 07.05.2019. The appellant submits that 'server' is entirely different from a "Automatic Data Processing Machine"; the function of 'server' is to receive and share data to other computer on its network; the server is an apparatus for the transmission or reception of information , image or data; that the server may work in conjunction with the automatic data processing machine but server itself never process any data automatically like desktop, personal computer or laptop; that the servers are computers, which are meant for specific application in a network; they are entirely different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered as violation of Section 114AA of the Act and hence, the penalty imposed under Section 114AA of the Act is not sustainable. 3.4. The appellant relied upon the decision in the case of COMMR. OF CUS., SEA, CHENNAI-II VS. SRI KRISHNA SOUNDS AND LIGHTINGS [2019 (370) E.L.T. 594 (Tri. - Chennai)], wherein it has been held that penalty under section 114AA is imposable mainly for cases of fraudulent exports and the said penalty cannot be invoked in respect of cases of mis-declaration of classification. 3.5. Regarding the penalty imposed under Section 112(a) of the Customs Act, the appellant submits that penalty under Section 112(a) relates to violations in regard to situation where goods are liable for confiscation under Section 111; in the instant case, the imported goods are not 'restricted goods'; these goods are duty free goods and can be imported freely; in the instant case, confiscation of the goods is made on erroneous premises of law, by mis-interpreting the DGFT Notification No.05/2015-20, dated 07.05.2019 , the authority below has mixed up the 'server' with Desktops Computer and Personal Computers / Laptop, considered the same as ' "Automatic Data Processing Machine" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imported goods were examined. The goods were examined 100% basis by shed officers in presence of SIIB officers and Chartered Engineer. Upon examination, the examining officers have accepted that the goods imported are 'servers'. We find that the findings of the examination has been recorded in paragraph 1.11., which when read with paragraph 22.1 of the Order in Original dated 26.12.2023, establishes that the goods imported by the appellant are 'Servers'. We observe that 'Servers' are entirely different from "Automatic Data Processing Machines". The function of a server is to receive and share data to other computer on its network. A server is an apparatus for the transmission or reception of information, image or data. The server may work in conjunction with the automatic data processing machine but a server itself never processes any data automatically like desktop, personal computer or laptop. We find that the servers imported by the appellant are meant for specific application in a network, are entirely different from the "Automatic Data Processing Machine" including personal computers and laptop computers, which are actually stand-alone equipment. We observe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e original order. Hence, we dismiss the Revenue's appeal". 7.2. The same view has been held by the Tribunal, Bangalore in the case of COMMR. OF CUS. & C. EX., HYDERABAD-II VS. DELL INDIA PVT. LTD. [2008 (226) E.L.T. 367 (Tri. - Bang.)], wherein the Tribunal has held as under: "On a very careful consideration of the issue, we find that the server is also a computer which is used in conjunction with other computers in managing a network. In other words, as pointed out in the Board's Circular, Server is the Father Computer. The server performs various functions. It actually receives the inputs from the other computers in the networks and it also sends its output to the other computers. The server per se cannot be considered as networking equipment. The server along with the other computers in conjunction with the networking equipment would form a computer network. We are not impressed with the Revenue's argument that Note 5(E) would refer to a server. The server itself is an Automatic Data Processing Machine (ADP). Further, the case-laws relied on by the Respondents are very relevant. In these case laws, it has been clearly held that servers are classifiable under CTH No. 8471 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessable value has been re-determined at Rs. 2,23,33,876 / under Rule 9 of the CVR, 2007 read with Section 14 of Customs Act, 1962. We observe that the value addition is mainly on account of inclusion of value of undeclared goods such as Output Power Supply, Switching Power Supply, AC-DC converter & Delta Energy system. However, we find that these undeclared items are parts and accessories of 'Server' and their value has already been included in the value of 'servers' and hence no additional value need to be added for the undeclared items. Accordingly, we hold that the assessable value declared by the appellant is correct as there is no under valuation established. Hence, we reject the value enhancement by the lower authorities. 8. Regarding the penalty imposed under Section 114AA of the Customs Act, 1962, we find that the appellant has filed the Bill of Entry with correct information and the allegation of mis declaration is not sustained. The classification of the goods as 'servers' under the CTH 8471 4190 is found to be in order and the respondent has accepted such classification, which is evident from the fact recorded at paragraph 1.11. read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals) has set aside the penalty under Section 114AA. 7. On appreciating the evidence as well as the facts presented and after hearing the submissions made by both sides, I am of the view that the Commissioner (Appeals) has rightly set aside the penalty under Section 114AA since the present case involves importation of goods and is not a situation of paper transaction. I do not find any merit in the appeal filed by the department and the same is dismissed. The cross-objection filed by respondent also stands dismissed." 8.2. Regarding the penalty imposed under Section 112(a) of the Customs Act, we find that penalty under Section 112(a) relates to violations in regard to situation where goods are liable for confiscation under Section 111. In the instant case, the imported goods are not 'restricted goods'. These goods are duty free goods and can be imported freely. In the instant case, confiscation of the goods is made on erroneous premises of law, by mis-interpreting the DGFT Notification No.05/2015-20, dated 07.05.2019, as the authority below has mixed up the 'server' with Desktops Computer and Personal Computers / Laptop and considered the same as "Automatic Data Process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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