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TMI Blog2004 (6) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... rst take up the plea advanced by the learned Advocates for remand of the case back to the adjudicating Commissioner on the ground that he has taken into account only the minority report by two members of the panel of experts ignoring the majority report of four members of the panel of experts. The learned Consultant Shri Mondal opposes the plea of remand on the ground that it would serve no purpose except causing delay. 4.We have given our due consideration to the request for remand. We find it very strange that different members of the panel of experts constituted to examine the machinery under import have given two separate reports on two different dates. We also find it strange that the adjudicating Commissioner has dealt with the minority report but has not mentioned the majority report in his adjudication order. However, we find that there is essentially no difference in both the reports in so far as they relate to physical examination of various machinery items under import. The main difference is in the opinion given in the two reports regarding classification of the imported machinery and eligibility to exemption. It is well settled that the question of classification and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additionally ship 12 Jacquard Control Device Reading System, one Reading System and one Card Pressed System. These goods were imported in several containers and packed separately for which a Bill of Entry was filed describing the goods as used/second-hand computerized embroidery machines in dismantled condition for shipment claiming benefit of exemption under Notification No. 11/97-Cus., dated 1-3-1997. It is also not in dispute that after import, the impugned textile machines have been fitted with the Jacquard Control Devices in the premises of the appellants and are functioning as computerized embroidery machines. The adjudicating Commissioner has determined that at the point of import, the impugned machines were not computerized and that the appellants are not therefore eligible to claim exemption applicable to computerized embroidery machines. It is the claim of the appellants that even at the point of import, the imported machines are to be considered as computerized embroidery machines eligible for the exemption under the said Notification No. 11/97-Cus. In support of their argument, the learned Advocates for the appellants have cited the following case laws :- (1) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, relies on the following decisions :- (1) New India Industries Ltd. v. CC, Bombay - 1994 (73) E.L.T. 723 (Tri.) :- Classification of goods (Customs) - Goods to be assessed in the condition in which they are imported. (2) Rajasthan Spg. and Wvg. Mills Ltd. v. C.C.E., Jaipur - 1995 (77) E.L.T. 474 (S.C.) :- Exemption notification construable strictly - Liberal construction which enlarges the term and scope of the notification not permissible nor extended meaning assignable to exempted item. (3) Paramount Centrispun Castings Ltd. v. C.C.E., Nagpur - 1995 (77) E.L.T. 705 (Tribunal) :- It is well settled that goods have to be assessed on the basis of their form at the time of their clearance. (4) C.C.E., Nagpur v. Paramount Centrispun Castings Ltd. - 1996 (83) E.L.T. A176 (S.C.) :- The Supreme Court Bench comprising of Hon'ble Mr. Justice J.S. Verma, Hon'ble Mrs. Justice Sujata V. Manohar and Hon'ble Justice G.B. Pattanaik on 3-4-1996 has dismissed the Civil Appeal Nos. 8215-16 of 1995 [1996 (83) E.L.T. A176 (S.C.)] filed by Collector of Central Excise, Nagpur against the CEGAT Order No. E/133-34/95-B, dated 24-3-1995 and reported in 1995 (7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Customs (1977) 14 ALR 555. In addition, the authorities make it clear that, in determining what is the essential character of goods, it is the state or condition of the goods at the time of importation that is the determining factor and that it is wrong to classify goods - or to determine their essential character, by reference to the purpose of the importer or of the purchaser. Regard must be had to the characteristics of the goods themselves, as they would present themselves to an informed observer : see Times Consultants Pty. Ltd. v. Collector of Customs (Qld) (1987) 76 ALR 313 at 327." We also re-produce below the General Interpretative Rule (GIR) 2(a) which has been referred to by both sides in the course of their arguments :- "Any reference in a heading to an article shall be taken to include a reference to that article incomplete or unfinished, provided that, as presented, the incomplete or unfinished article has the essential character of the complete or finished article. It shall also be taken to include a reference to that article complete or finished (or falling to be classified as complete or finished by virtue of this rule), presented unassembled or disassembled. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering Co. Ltd. These have been fitted only subsequent to import and clearance from the customs to make the mechanical embroidery machines computerized. It is significant that Shri A. K. Kulkarni, Chief Engineer working with the appellants has in his statement before the customs has categorically stated that he had seen the imported machines prior to import in Korea and that these were mechanical machines and were not re-conditioned. He has also stated that these machines have been imported with 5,000 pieces/rolls of design cards which are used only in mechanical machines, not in computerized machines. 11.At the time of import, the consignment is thus seen to be consisting of the 12 old and used mechanical embroidery machines along with 12 brand new Jacquard Control Devices. At no point of time before the importation, the new Jacquard Control Devices have been installed on the old mechanical embroidery machines. As such, these goods can not be called computerized embroidery machines in dis-assembled condition as declared. A plea has been made on behalf of the appellants in the course of hearing to consider the goods as computerized embroidery machines in unassembled condition. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The General Explanatory Note to Section XVI reads as under :- "For convenience of transport many machines and apparatus are transported in an unassembled state. Although in effect the goods are then a collection of parts, they are classified as being the machine in question and not in any separate heading for parts. The same applies to an incomplete machine having the features of the complete machine, presented unassembled (see also in this connection the General Explanatory Notes to Chapters 84 and 85). However, unassembled components in excess of the number required for a complete machine or for an incomplete machine having the characteristics of a complete machine, are classified in their own appropriate heading." A perusal of GIR 2(a) and the related Explanatory Notes makes it clear that when a complete or finished article is presented unassembled, the same has to be classified in the heading as applicable to the assembled article. It also further indicates that the article must be complete or finished but presentation in unassembled condition is only for reasons such as requirements or convenience of packing, handling or transport. It is also clear that articles present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. are to be separately classified, we are of the view that the break-up of valuation adopted by the Adjudicating Commissioner on the basis of the documents submitted by the appellants themselves requires to be upheld for the purpose of charging duty separately on different goods. We order accordingly. 15.As regards the penalty, we are of the view that in the circumstances of the case including the fact of detailed examination by the panel of experts before allowing provisional clearance, the same is not justified. No doubt, the appellants had not declared the Jacquard Control Devices in the import documents but then, they were of the impression that the entire set of goods merited classification as a single article i.e. computerized embroidery machines. Even the majority of the panel of experts entertained such a view, though incorrectly as held by us. Considering the complexity of the classification issue involved, we think it is a fit case to set aside the penalties, by extending the benefit of doubt to the appellants. 16.The appeals are thus rejected as far as the classification and valuation issues are concerned but are partly allowed by setting aside the penalties. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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