2003(01)LCX0119

IN THE CEGAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri P.G. Chacko, Member (J) and Jeet Ram Kait, Member (T)

MADHU OVERSEAS CORPORATION

Versus

COMMISSIONER OF CUSTOMS, CHENNAI

Final Order Nos. 17-19/2003 and Stay Order No. 13/2003, dated 21-1-2003 in Appeal Nos. C/274, 324 and 348/2001

Advocated By : S/Shri A.K. Jayaraj, Advocate, for the Appellant.

Shri A. Jayachandran, DR, for the Respondent.

[Order per : P.G. Chacko, Member (J) (Oral)]. - These are three appeals before us. M/s. Madhu Overseas Corporation and M/s. Sujatha Enterprises are the appellants in Appeal No. C/274/01 and C/324/01 respectively. The Revenue is the appellant in Appeal No. C/348/01. M/s. Madhu Overseas Corporation and M/s. Sujatha Enterprises imported what they described as “pocket brick games”, and filed bills of entry on 19-4-2001 for clearing the same. At the time of clearance they paid basic customs duty and additional customs duty (CVD) on the imported goods under Customs Tariff Heading 95.04. The original authority held the classification under CTH 95.04 and confirmed the demand of CVD (Additional Customs Duty) against the importers. As against M/s. Sujatha Enterprises, the authority rejected the transaction value of the imported goods and enhanced the value. The parties preferred appeals to the Commissioner (Appeals). The appellate authority affirmed the decision of the lower authority as regards classification but set aside the enhancement of value. In the case of M/s. Sujatha Enterprises before the Tribunal, the importers are in appeal against the classification of the goods under CTH 95.04. They want the goods to be classified under CTH 95.03 which does not attract CVD. The Revenue appeal is against the decision of the Commissioner (Appeals) on valuation.

2. Heard both sides. The goods to be classified are pocket brick games imported by M/s. Madhu Overseas Corporation and M/s. Sujatha Enterprises. They claim classification of the goods under CTH 95.03. This heading and the sub-heading thereof read as under :

3. The Revenue wants the goods to be classified under CTH 95.04 which entry reads as under :

4. Throughout the proceedings, the importers’ claim regarding classification has been under sub-heading 9503.20, while the department has maintained that the classification should be under sub-heading 9504.90. The former charges ‘NIL’ CVD, while the latter attracts 16% CVD for the relevant period.

5. Ld. Counsel for the importers relies on HSN Notes under Heading 95.03 and also on a circular issued by the DGFT, dated 31-3-1999. HSN Notes cited by the Counsel says that the entry includes models of a kind mainly used for recreational purposes, for example, working or scale models of boats, aircraft, trains, vehicles, etc., other than sets having the character of competitive games of Heading 95.04. The DGFT circular contains an advice on classification of various items including puzzles, battery operated toys - brick games/hand held video games (Item No. 49 in the table annexed to the circular). Ld. Counsel also produces copies of various bills of entry from different Commissionerates of Customs. Pocket brick games were cleared under these bill of entry by the respective importers under CTH 95.03. These are of various dates falling in the year 2001. According to the Counsel, the imported goods will not fall under CTH 95.04 inasmuch as it cannot belong to the category of articles for funfair, table or parlour games. Referring to the valuation aspect involved in the Revenue’s appeal, ld. Counsel submits that the original authority had enhanced the value without any basis whatsoever and that the lower appellate authority has set things right by accepting the transaction value.

6. Ld. DR Shri A. Jayachandran has left the classification dispute to the Bench. On the valuation issue, the DR reiterates the findings of the original and first appellate authorities on classification and the findings of the original authority on valuation.

7. We have examined the submissions. Counsel has shown and demonstrated a specimen of the imported goods to us. The item appears to be a hand-operated toy with an apparently self-contained screen. By pressing the buttons, visual and sound effects can be brought out. But there is nothing to indicate that this can be used for any video game. The sounds produced by pressing the relevant button appears to have nothing to do with the visuals displayed on the screen by pressing the relevant button. According to the department this item should be classified as video games. We cannot subscribe to this view. The rival entries have been extracted earlier in this order. The importers’ claim throughout has been under sub-heading 9503.20. The bills of entry produced by the Counsel showed identical goods under various sub-headings of CTH 95.03. CTH 95.03 attracts no CVD, whatever the sub-heading. Insofar as the claim of the department is concerned, it appears to us that any goods to be classified under CTH 95.04 should be articles for funfair, table or parlour games. A glance through the sub-headings under this heading would reveal that such articles cannot include toys of the kind demonstrated to us today. The various bills of entry produced by the Counsel throw light on the general practice of the department in the matter of classification of pocket brick games. Consistently, various Commissionerates of Customs have classified the goods under CTH 95.03. This face has not been contested before us. In the result, we hold the goods to be classifiable under CTH 95.03 and accordingly hold that no CVD is payable by the importers in respect of the goods.

8. On the valuation issue, we find that the original authority rejected the transaction value and enhanced the value of the goods without stating any valid reason whatsoever. That authority did not cite any contemporaneous import of identical goods at higher value, nor did it cite any other evidence in support of enhancing of the value. The lower appellate authority has rightly detected the infirmity in the order of the original authority on the valuation aspect and accepted the transaction value. We find no reason to interfere with this decision of the lower appellate authority. Accordingly we uphold the decision of the Commissioner (Appeals) on the valuation issue. We set aside the orders of the Commissioner (Appeals) insofar as the classification dispute is concerned, while we uphold his order on valuation. Accordingly, Appeal Nos. C/274 and 324/01 stand allowed and Appeal No. C/348/01 stands dismissed. The Revenue’s application for stay also stands dismissed.

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Equivalent 2003 (154) ELT 255 (Tri. - Chennai)