9911796707
TMI Blog2000 (12) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... EC) Scheme were in possession of quantity based advance licence for import of parts of footwear. They imported vide two bills of entries, both dated 16-2-1996, 5251 pairs of footwear uppers. At the same time, 5251 pairs of unit soles, insoles and insocks (sock liner) - parts of footwear, were imported in the name of PID. PID was a 100% owned subsidiary of PIL. 3.It was alleged in the show cause notice dated 7-5-1996 that the parts of footwear imported in the name of PIL and PID were nothing but three models of footwear of Reebock brand, in semi-knocked down (SKD) condition. Footwear were considered to be consumer items whose import required a specific import licence. Footwear were liable to a higher rate of customs duty, higher than the parts of footwear. Certain discrepancies were found in the relevant documents filed for customs clearance. It was alleged that the parts of footwear imported by PIL and PID were complete shoes imported in SKD condition, and were classifiable under sub-heading No. 6404.19 of the Customs Tariff, and that the complete footwear had been imported in contravention of the provisions in the relevant Import Policy. It was also mentioned that the unit soles ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 1-7-1996 the noticees were called upon to show cause as to (i) why the benefit of Notification No. 45/94 Cus. dated 1-3-1994 should not be disallowed in respect of the bills of entry mentioned in Col. 13 of Annexure J of the notice, in connection with the import of outer soles and insoles (ii) why the consignments of PIL and PID should not be clubbed together in respect of the said bills of entries for the purposes of assessment both under the Export Import Policy 1992-97 and the Customs Act, (iii) why the CIF value of Reebock footwear in SKD condition should not be taken as indicated in Col. 8 of the table of para - 31 of the notice, (iv) why the footwear uppers, soles, insoles and insocks imported under the aforesaid bills of entry and having total CIF value of Rs. 919,88,080/- should not be confiscated under Sections 111(d), (l), (m) and (o) of the said Act. Since those goods were no longer available for confiscation having been already sold by the noticees, why fine in lieu of confiscation should not be imposed, (v) why the footwear uppers, soles, insoles and insocks imported under the aforesaid bills of entries should not be assessed to duty under sub-heading No. 6406.19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability." The impugned order was set aside on the ground that the additional duty liability of Rs. 2,16,47,301/- made under the corrigendum could not be sustained, for violation of the principles of natural justice. The appeal of PIL was allowed by way of remand. 6.On re-adjudication, the Commissioner of Customs under the impugned Order-in-Original dated 12-4-1999 with regard to valuation observed that as the Department had not filed any appeal before the Tribunal against the order of the Commissioner on the valuation aspect "the findings of the ld. Commissioner in the order dated 30-9-1997 on the aspect of valuation of the imported components have attained finality and the same cannot be re-adjudicated again in the de novo proceedings". (refer para-20 of the impugned order at page 460 of the paper book). With regard to the relationship between PIL and PID, he came to a conclusion that PID was a dummy unit of PIL. (refer para-50 of the impugned order at page 492 of the paper book). PIL and PID had described their process of manufacture in detail describing how the parts imported by them were subjected in different ways, with different type of machines, to manufacture an acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix Industries would attract duty at the rate applicable to the fully finished footwear." With regard to the show cause notice dated 7-5-1996, however, he held that the exemption of customs duty under advance licences would not be applicable to the footwear uppers imported by PIL in as much as the nexus between imports and exports had not been established. Rejecting the plea of limitation, he confirmed the differential duty of Rs. 45,93,824/-. A penalty of Rs. 10,00,000/- was imposed on PIL. In readjudication order, no penalty was imposed on any other noticees. 7.No appeal had been filed by the Revenue against the first order-in-original dated 30-9-1997 read with corrigendum dated 4-12-1997 passed by the Commissioner of Customs, ICD. Against the re-adjudication order, which had been passed by the Commissioner of Customs after the first order dated 30-9-1997 had been remanded for re-adjudication, the Revenue had filed 10 appeals, the respondents being as PIL, PID and 8 other Directors and Company Officials. In the grounds of appeal, the Revenue has pleaded as under :- (1) After clubbing all the components it was not correct for the Commissioner to hold that the goods c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that order got merged with the Tribunal's remand order. As regards the valuation, the ld. Advocate submitted that the matter is already settled by the Tribunal's decision in the case of Wipro G.E. Medical Systems Ltd. v. Commissioner of Customs, Bangalore - 1999 (106) E.L.T. 169 (Tribunal), wherein the Tribunal had held that when only 5 out of 6 essential components of CAT Scan System were imported in CKD (completely knocked down)/SKD packs, the transaction value as declared was acceptable, in absence of evidence of contemporaneous import of similar goods or of extra remittance. He also submitted that Rule 2(a) of the Interpretative Rules was not applicable to valuation. It was only for classification. The basis adopted for determining the customs prices after taking the prices in the international market was not correct. The process of manufacture of the footwear was very elaborate and complicated. The parts imported were not SKD packs. This concept was for machinery, mechanical and electronic items and not for the goods like shoes. On manufacture of the footwear, out of the parts imported or indigenously procured, the assessees were paying the appropriate central excise duty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was called for in the facts and circumstances of the case and that penalty was also imposable on the Directors/Company's Officials for their acts of commission and omission, leading to evasion of customs duty. 9.We have carefully considered the matter. Issues being common, the appeal filed by M/s. Phoenix International Ltd. and the other appeals filed by the Revenue are taken up together and issues discussed jointly. M/s. Phoenix International Ltd. (PIL) had imported during 21-6-1995 to 4-11-1995, shoe uppers in 20 consignments. For the clearance of these shoe uppers, they produced quantity based advance licence, issued in terms of the Export and Import Policy April, 1992 to March, 1997, under the quantity based Duty Exemption Entitlement Certificate (DEEC). They claimed the benefit of exemption under Notification No. 204/92 Cus. dated 19-5-1992 (as amended). Under this exemption notification, materials imported into India against an advance licence and covered by a quantity based DEEC, enjoyed full exemption from the payment of customs duty, subject to the conditions as named therein. During the same period 21-6-1995 to 4-11-1995, M/s. Phoenix Industries Ltd. (PID), a 100% owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (S.C.). 12.The footwear are not the type of goods that could not be transported without being knocked down or without being taken apart. In the present case, what were imported were the parts of footwear. The importers/manufacturers have submitted that a very elaborate process of assembly, manufacture and finishing is involved in obtaining the fully finished footwear having consumer appeal. Reference has been made to 18 components that were required for manufacturing complete shoe through the help of 37 machines and machinery items. (refer para-53 of the impugned order-in-original dated 12-4-1999). In reply to Question No. 5, Shri Bhupendra Nagpal, General Manager (Tech.) in his statement recorded on 20-3-1996 had replied as under :- "Question 5 : Whether complete shoe uppers, unit sole, insole, insock (sock liner), for a particular model of Reebock shoe imported by you can constitute a complete shoe in ready to assemble form ? Ans. 5 : Using shoe uppers, unit sole, insole and insock (sock liner), one can manufacture a complete shoe, yet it needs following materials and processes. (a)Materials : Latex, lasting clips, last, laces, primer, adhesive, hardner, size label, mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... :- "10.1 With respect to pruchaae of Trim bearing the trade marks, manufacturer shall comply with the following conditions unless otherwise agreed by RIL US or its designated representative. (i) Manufacturer shall forward to purchaser the names and addresses of the proposed Trim manufacturer and (if different) the proposed seller of the Trim and copies of all contract documents concerning manufacturer's purchase of the Trim. (ii) Any order for Trim by manufacturer shall be authorised by purchaser before it becomes effective. Manufacturer agrees to obtain such authorisation from purchaser prior to despatching any orders for Trim to the Trim manufacturer. (iii) Manufacturer shall be responsible for entering into Trim manufacturing agreements with RIL US . RIL UK and each of its Trim manufacturers substantially in the form of the draft annexed hereto as Exhibit A." The Trim has been defined at page 42 of the paper book as under :- "Trim" shall mean accessory and related items, including without limitation, thread, closures, snaps, rivets, soles, midsoles, linings, laces, boxes, packaging materials, tags and labels used in the manufacture of the produc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
