Commissioner of Customs Vs Cadensworth (Redington) India P Limited (CESTAT Chennai)
CESTAT Chennai held that extended period of limitation not invocable as department was duly aware about what was being imported and the purpose thereof.
Facts- The appellant imported and cleared storage hardwares such as EMC VMAX All Flash, Unity All Flash, EMC Xtremio All Flash array, Isilon All Flash, EMC VNM hybrid flash storage platform from the supplier namely, M/s. EMC Information Systems International, falling under CTH 8471 7090 and also claimed exemption from payment of 4% Special Additional Duty (SAD) vide Notification No. 21/2012- Customs dated 17.03.2012. (Sl. No. 2).
1.2 The Revenue entertained a doubt that the above goods imported by the assessee-respondent, appearing to be a storage platform intended for mainframe computing and storage of data, common in large business storage systems for data storage and processing, like banks, insurance companies, large media houses, IT institutions, etc., did not appear to be meant for retail sale.
It was assumed by the Revenue that, by the above, the respondent had conveniently suppressed that the goods were not intended for retail sale, thereby misleading the proper officer at the time of clearance, for availing the benefit of 4% SAD.
Conclusion- Held that the Bills-of-Entry apparently declared what was being imported and there is also no dispute that the pre-packaged goods have been inspected / physically examined by the proper officer of Customs; there is also no dispute that wherever MRP labels were required, the same were affixed after obtaining prior permission from the Department in the Customs notified area. Thus, it is clear that the Department was aware as to what was being imported and the purpose and hence, there was nothing that was “suppressed”, more so, to evade payment of duty.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief undisputed facts of the case, as could be gathered from the impugned order and upon hearing the rival contentions, are that the appellant appears to have imported and cleared storage hardwares such as EMC VMAX All Flash, Unity All Flash, EMC Xtremio All Flash array, Isilon All Flash, EMC VNM hybrid flash storage platform from the supplier namely, M/s. EMC Information Systems International, falling under CTH 8471 7090 and also claimed exemption from payment of 4% Special Additional Duty (SAD) vide Notification No. 21/2012- Customs dated 17.03.2012. (Sl. No. 2).
1.2 The Revenue entertained a doubt that the above goods imported by the assessee-respondent, appearing to be a storage platform intended for mainframe computing and storage of data, common in large business storage systems for data storage and processing, like banks, insurance companies, large media houses, IT institutions, etc., did not appear to be meant for retail sale, and consequently, the matter was taken up for investigation by the Directorate of Revenue Intelligence (DRI), Mumbai.
1.3 It appeared to the DRI during investigation that there was a contract titled as “Channel Partner Distribution Contract (India)” between M/s. EMC Information Systems International (hereinafter referred to as ‘EMC’), which is the manufacturer and supplier, and the appellant, in the capacity of a channel partner, for remarketing products and services of M/s. EMC, belonging to product families such as Symmetrix, Application Software, Backup and Recovery Solutions, VNX, VNXe, etc., in India, Bhutan, Bangladesh, Sri Lanka and Nepal. The respondent, as a channel partner, was authorized to appoint re-sellers after obtaining prior permission of M/s. EMC, but however, such re-sellers were not authorized to remarket the products, for which even the respondent-assessee did not have authorization.
1.4 It appears that the DRI recorded statements from various persons of the respondent-company and it appears that there was also a search in the business premises of the respondent, wherein apparently, laptops of key persons and e-mails were recovered.
1.5 As an offshoot of the above investigation, search and statements recorded, it further appeared to the Revenue that the goods imported by the respondent were not considered to be a “pre-packaged commodity” in terms of the provisions of the Legal Metrology Act (‘LMA’ for short), 2009, the goods could not be considered to be meant for retail sale and hence, it was doubted by the Revenue that the respondent did not satisfy the essential conditions of Notification No. 21/2012-Cus. ibid.; the Bills-of-Entry were filed by claiming the above goods to be intended for retail sale, under self-assessment, though it was obligatory for them to declare all particulars.
1.6 It was further assumed by the Revenue that, by the above, the respondent had conveniently suppressed that the goods were not intended for retail sale, thereby misleading the proper officer at the time of clearance, for availing the benefit of 4% SAD.
1.7 It also appeared to the Revenue that the modus operandi of the respondent i.e., the imported goods were sold to their ultimate customer through e-auction or tender process wherein the ultimate consumer / end user and the re-sellers negotiated and re-negotiated the prices and ultimately, the product with their desired specifications would be purchased by them; if the MRP was known to the ultimate user at the time of floating the tender the same would have been mentioned, which would have been the benchmark for the re-sellers, was also improper. The MRP, if at all displayed on the boxes by the importer-respondent, appeared to the Revenue to be irrelevant and fictitious, to falsely portray the sale as a retail sale devised only to wrongly avail the benefit of the exemption Notification.
2. In view of the above, the DRI, Mumbai appears to have issued a Show Cause Notice dated 09.10.2018 whereby it was inter alia proposed that: –
(i) The benefit of the Notification, should not be held as having been wrongly claimed and should not be denied;
(ii) Customs duties of Rs.23,09,82,797/- should not be demanded under Section 28(4) along with interest under Section 28AA of the Customs Act, 1962.
(iii) The imported impugned goods with a total assessable value of Rs.513,39,63,465/- in respect of the Bills-of-Entry under dispute should not be held liable for confiscation under Section 111(m) ibid.
(iv) Liability to penalties under Section 112(a) or 114A; and 114AA
3. It appears from the documents placed on record that the respondent filed a very detailed reply vide reply dated 21.12.2018 wherein they appear to have contended as under: –
