Case Law Details

Case Name : Pathange & Co. Vs Commissioner of Customs (CESTAT Hyderabad)
Appeal Number : Customs Appeal No. 1346 of 2011
Date of Judgement/Order : 20/11/2019
Related Assessment Year :
Courts : All CESTAT (899) CESTAT Hyderabad (21)

Pathange & Co. Vs Commissioner of Customs (CESTAT Hyderabad)

The short point to be decided is whether the consignment MFD copiers imported prior to 05.06.2012 when the restriction was imposed upon them are liable to confiscation under section 111(d) for violation of Foreign Trade Policy. Prior to this date, restrictions were imposed only on photocopiers and not on Multi Functional Digital Copiers explicitly. It is the case of the Revenue that used once copiers are prohibited for import, in the absence of any explicit exclusion for digital copiers, the same should also be held as photocopiers and hence restricted for import. Therefore, the confiscation in the impugned order is correct and needs to be upheld. It is the case of the appellant that the MFD copiers are a separate commodity known to the market whose import was not restricted prior to 05.06.2012 and therefore they were free to import second hand MFD copiers. Therefore, the import of the goods in the present case was not restricted and the confiscation under section 111(d) of the Customs Act, 1962 is not sustainable.

We find that this issue is no longer res-integra and the three Member Bench in the case of Asian Copiers [2015 (2) TMI 1221-CESTAT New Delhi)] has, by a majority decision, decided that import of Multi Functional Digital Copiers prior to 05.06.2012 was not restricted. While deciding this matter, they have also considered the judgment of the Tribunal Chennai in the case of Unitech Enterprises [2012(279)ELT 236 (Tri.-Chennai)], relied upon by the Ld. DR. Respectfully following the ratio of this decision, we hold that the import of the impugned goods is not restricted and their confiscation under section 111(d) is not sustainable and needs to be set aside. We have also considered the argument of Ld. Counsel that confiscation was also on account of under valuation of the goods which has been conceded by the importer. A plain reading of the Order-in-Original shows that confiscation was held under section 111(d) of the Customs Act, 1962 which pertains to import in violation of the restrictions and prohibitions and not under section 111(m) which deals with confiscation for under valuation, etc. We, therefore, find that the confiscation under section 111(d) of the Customs Act 1962 needs to be set aside. Consequently, the redemption fine imposed under section 125 on the appellant also needs to be set aside. The penalty imposed under section 112(a) of the Customs Act, 1962 is consequent to the goods being held liable for confiscation under section 111. As we find that the goods are not liable for confiscation under section 111(d), the penalty imposed under section 112(a) also needs to be set aside and we do so.

FULL TEXT OF THE CESTAT JUDGMENT

1. This appeal is filed against Order-in-Appeal No. 10/2011(H-II)Cus, dated 18.03.2011.

2. Heard both sides and perused the records.

3. The appellant herein has imported used Multi Functional Digital copiers (MFD) from UAE by bill of entry No. 2473317, dated 23.12.2010. After following due process, the original authority has:

(a) enhanced the value of the goods and accordingly charged additional duty which the appellant is not challenging;

(b) held that MFDs imported by them being of second hand in nature are liable for confiscation in terms of para 2.17 of the Foreign Trade Policy read with Section 11 of the Foreign Trade (Development & Regulation Act), 1992. Accordingly, he ordered the confiscation of the imported goods under section 111(d) of the Customs Act, 1962 and allowed their redemption on payment of a fine of Rs. 3,30,000/- under section 125 of the Customs Act, 1962;

(c) Imposed a penalty of Rs. 1,60,000/- upon the importer under section 112(a) of the Customs Act, 1962.

On appeal, the first appellate authority upheld the order of the original authority and rejected the appeal. Hence this appeal.

4. Ld. Counsel for the appellant submits that they have accepted the enhanced valuation of the copiers and have already paid the differential duty. They are only challenging the confiscation of the goods under section 111(d), imposition of redemption fine under section 125 and imposition of penalty under section 112(a). She submits that the goods were imported on 23.12.2010 whereas MFDs became restricted only w.e.f. 05.06.2012 and prior to this date only second hand photocopiers were restricted and not MFD copiers. What they have imported were not photocopiers but were Multi Functional Digital Copiers. She would submit that it has been held by various decisions of the Tribunal that MFD copiers cannot be held to have been restricted even if they were second hand, prior to 05.06.2012. She relies on the following case laws.

(a) Tribunal final order A/30035-30037/2016, dt. 20.01.2016 in the case of Sri Sai Graphics & Others vs. Hyderabad-II.

(b) Tribunal Final Order No. A/30040/2019, dt. 11.01.2019 in the case of Sri Sai Graphics.

(c) Tribunal decision in the case of Commissioner of Customs, New Delhi vs. Asian copiers (2016(344)ELT 942 (Tri.-Del.)]

(d) Balu enterprises vs. CC Chennai [2018(2)TMI 491 (CESTAT-Chennai).

(e) Shubham Construction vs. CC Chennai [2018(2) TMI 584 (CESTAT-Mumbai)

(f) Best Xerox vs. CC Cochin [2017(8) TMI 459 (CESTAT-Bangalore)

(g) CC Tuticorin vs. City Office Equipment [2014(302) ELT 212 (Mad.)]

5. She would submit that in view of the above, the confiscation of MFD copiers may be set aside and the penalty imposed upon them also be set aside.

6. DR on the other hand argues that there is no distinction between MFD copiers and other copiers. Once photocopiers are restricted for import, even MFD copiers should be treated as restricted for import. He relies on the case law of Unitech Enterprises vs. CC Chennai [2012(279) E.L.T. 236 (Tri.-Chennai). He also argues that the confiscation in this case was not only on account of restrictions under the Foreign Trade Policy being violated but also because of the under valuation of the goods. He therefore supports the impugned order and submits that the appeal may be rejected.

7. We have considered the arguments on both sides and perused the records. The short point to be decided is whether the consignment MFD copiers imported prior to 05.06.2012 when the restriction was imposed upon them are liable to confiscation under section 111(d) for violation of Foreign Trade Policy. Prior to this date, restrictions were imposed only on photocopiers and not on Multi Functional Digital Copiers explicitly. It is the case of the Revenue that used once copiers are prohibited for import, in the absence of any explicit exclusion for digital copiers, the same should also be held as photocopiers and hence restricted for import. Therefore, the confiscation in the impugned order is correct and needs to be upheld. It is the case of the appellant that the MFD copiers are a separate commodity known to the market whose import was not restricted prior to 05.06.2012 and therefore they were free to import second hand MFD copiers. Therefore, the import of the goods in the present case was not restricted and the confiscation under section 111(d) of the Customs Act, 1962 is not sustainable.

8. We find that this issue is no longer res-integra and the three Member Bench in the case of Asian Copiers [2015 (2) TMI 1221-CESTAT New Delhi)] has, by a majority decision, decided that import of Multi Functional Digital Copiers prior to 05.06.2012 was not restricted. While deciding this matter, they have also considered the judgment of the Tribunal Chennai in the case of Unitech Enterprises [2012(279)ELT 236 (Tri.-Chennai)], relied upon by the Ld. DR. Respectfully following the ratio of this decision, we hold that the import of the impugned goods is not restricted and their confiscation under section 111(d) is not sustainable and needs to be set aside. We have also considered the argument of Ld. Counsel that confiscation was also on account of under valuation of the goods which has been conceded by the importer. A plain reading of the Order-in-Original shows that confiscation was held under section 111(d) of the Customs Act, 1962 which pertains to import in violation of the restrictions and prohibitions and not under section 111(m) which deals with confiscation for under valuation, etc. We, therefore, find that the confiscation under section 111(d) of the Customs Act 1962 needs to be set aside. Consequently, the redemption fine imposed under section 125 on the appellant also needs to be set aside. The penalty imposed under section 112(a) of the Customs Act, 1962 is consequent to the goods being held liable for confiscation under section 111. As we find that the goods are not liable for confiscation under section 111(d), the penalty imposed under section 112(a) also needs to be set aside and we do so.

9. The appeal is allowed and the impugned order to the extent of confiscation of goods, imposition of redemption fine and imposition of penalty is set aside, with consequential relief.

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