2004(03)LCX0181

IN THE CESTAT, WEST ZONAL BENCH, MUMBAI

S/Shri S.S. Sekhon, Member (T) and Krishna Kumar, Member (J)

NISHILAND PARK LTD.

Versus

COMMISSIONER OF C. EX. & CUS., MUMBAI

Order Nos. 846-847/2004-WZB/C-II, dated 5-3-2004 in Appeal Nos. C/770-771/99-Mum.

Cases Quoted

Baswant Industries v. Additional Collector — 1995(01)LCX0005 Eq 1996 (081) ELT 0195 (S.C.)  — Referred..... [Para 2]

Northern Plastics Ltd. v. Collector — 1998(07)LCX0097 Eq 1998 (101) ELT 0549 (S.C.) — Relied on................. [Para 2]

Advocated By :        Shri Arun Mehta, Advocate, for the Appellant.

Shri J.M. George, JDR, for the Respondent.

[Order per : S.S. Sekhon, Member (T)]. - These two appeals, filed by the same appellant a company conducting a Water Amusement Park and Attractions, are being decided by this common order. They imported certain goods, declared as Ceramic Articles Water Sculpture (Fountain) for Water Amusement Park as in the Bill of Entry, invoices and other documents and found. The other item imported was “Pedal Boat with accessories” and was declared and found as such. The classification for the “Pedal Boat” was claimed under Heading 9506.11 while that of the fountain was claimed under 6914.00. “SIL” licences were also produced. However, the lower authorities classified the goods under 8903.10 and 6913.90 respectively, of the Customs Tariff Act for the purpose of levy of duty and the ITC regulations. The values declared and arrived at by the authorities were as follows :

Differential duty demands were made in the case of Pedal Boats due to changes in the classification. Values in the case of Ceramic Fountain was raised by US $ 900 based on list price of the supplier. Confiscation under the provisions of Section 111(d) and (m) was ordered and redemption fines of Rs. 1,70,000/- was imposed on Pedal Boat and Rs. 2,25,000/- on Ceramic Fountain by the lower authorities along with penalties as mentioned herein above. The Commissioner (Appeals), after considering the nature of the goods concluded as follows :

(a)        As regards Pedal Boats -

“....The pedal boat imported by the appellants cannot be considered as water sport equipment. They are more in the nature of boats used boats for pleasure or relaxation. While water skis, surf boards, sailboards are used for sport purposes, the pedal boats are not known for use for sporting purposes. In fact in the amusement parks, no sport is involved. The public goes to the amusement parks for enjoyment and pedal boat is one of the sources of enjoyment and pedal boat is one of the sources of enjoyment, which is available in the amusement park on payment. The department’s classification under 8903.10 as inflatable is not correct. However, the goods fall under the category of yacht and other vessels for pleasure or sports, rowing boats and canoes and are classifiable under sub-heading 8903.99. The correct classification, therefore, for Customs Tariff would be under CTH 8903.99 with a corresponding HS (ITC) classification under EXIM Policy under CTH 89039909.10, in terms of which such goods are restricted for import. In the absence of import licence, the import has to be treated as unauthorised. Accordingly, the levy of the fine and penalty are in order and the Order-in-Original does not need any interference.”  (Emphasis Supplied)

(b)        As regards import of Ceramic Water Structure (Fountain) as follows :

“The value sought to be loaded on the basis of the price list from the same supplier. The adjudicating authority alleged misdeclaration of value of the goods by US $ 900 which works out to be above 18% of the declared value. It is observed from the price list with reference to the terms and condition that 10% discount will be offered if order 3x40’ containers in same order, same shipment. Since the manufacturer’s price list is available and the order covered by the present consignment involves no discount as per the terms and conditions, the value loaded is correct and does not need any interference.

Now coming to the ITC angle, the appellant classified the goods under CTH 6914, whereas the department classified the goods under CTH 6913.90. As per HSN, the Heading 6913 covers a wider range of Ceramic articles of types designed specifically for homes, offices, assembly rooms, churches etc. and outdoor ornaments like garden ornaments. These goods are distinguishable from the articles falling under CTH 6914. Since the articles are designed for outdoor ornaments like garden ornaments and are used in amusement parks, the correct classification would be under CTH 6913 and not CTH 6914 as claimed by the appellant. Accordingly, the import needs an import licence being restricted in nature in the EXIM Policy. In the absence of an import licence, the import is held to be unauthorised. Since the allegation of under-valuation and the ITC angle is established, the Order-in-Original passed by the lower authority is maintainable and does not need any interference.”

                         (Emphasis supplied)

2. After hearing both the sides and considering the material on record :

(a)        As regards the “Pedal Boats”, the classification which was claimed by the appellants under 9506.11 and 8903.10 arrived at by the Original Authorities has not been approved by the ld. Commissioner. He has fixed the classification under 8903.96. Since the classification arrived at by the Original Authorities itself has not been upheld, there cannot therefore be a reason for holding the claim of classification made under 9506.11 by the appellants to be considered to be a misdeclaration to call for liability for confiscation under Section 111(m) of the Customs Act, 1962.

(b)        As regards under-valuation of 10% of Ceramic Fountains, as observed from the printed prices of the foreign suppliers, considering that the total under-valuation detected is only about 900 US $ which is almost equivalent to the dealer’s discount as exhibited in the very same price-lists, relied upon by the department, the charge to under valuation cannot be upheld merely because discount is not shown in the invoices. The terms and conditions in the price-lists itself provide that 10% discount will be offered for a single item and it will go up to 15% to 20% depending upon the larger quantities. A perusal of the concerned invoices show that the items are not in bulk quantities. Therefore price reduced by 10% from the printed price would be a normal negotiated price with 10% discount in the present supply. Relying on the decision in the case of Baswant Industries [1995(01)LCX0005 Eq 1996 (081) ELT 0195 (S.C.)], the imports at less than the list price by 10% the normal discount could be accepted as negotiated price. There is no cause for departing from the transaction value as evidenced from the invoice. The under-valuation charge cannot be upheld to call for the confiscation under Section 111(m) of the Customs Act, 1962.

(c)        Relying on the case of Northern Plastics [1998(07)LCX0097 Eq 1998 (101) ELT 0549 (S.C.)] for a mere claim of assessment under a particular tariff item, it has to be held cannot be a reason for calling for confiscation of the goods under Section 111(m) of the Customs Act, 1962 where classifications arrived at by the original authority contrary to claims made are also not upheld.

(d)       As regards the classification of the Pedal Boats a perusal of the Chapter Note 8903 reveals that it covers all vessels for pleasure or sports yachts, water jets and other sail boats and motor boats, kayaks, sculls, skiffs, pedelos (a type of pedal operated float) sports shipping vessels inflatable crafts and boats and the imported Pedal Boats therefore would be are rightly classifiable under 8903.99 and are to be covered by the policy of ITC as held by the ld. Commissioner (Appeals).

(e)        As regards finding of the Commissioner, on classification of Ceramic Water Fountains about the classification under Heading 69.13. The same cannot be upheld. Perusal of the heading notes under 69.13 of HSN reveals to read as -

“This heading covers a wide range of ceramic articles of the type designed essentially for homes, offices, assembly rooms, churches, etc. and outdoor ornaments (e.g. garden ornaments).”

             The notes also provide that articles which have no utility value but are wholly ornamental and articles whose only usefulness is to support or contain other decorative articles are covered under this Heading 69.13. The goods in question are Ceramic Fountains which serve the purpose of spraying and circulating the water in an Amusement Park. They cannot be said to have been designed essentially for homes, offices, assembly rooms, churches, etc. and/or outdoor ornaments (e.g. garden ornaments) and have a predominant utility value and subsiding ornamental value, if any. They would be appropriately classified under 69.14 as claimed by the appellants and not under 69.13 since 69.14 would be last entry applicable following Rule 3 of the General Rules for the Interpretation of the Schedule or/and Rule 4 the entity being akin to a fountain and not ornamental objects alone. The classification arrived at by the ld. Commissioner on the ground -

“Since the articles are designed for outdoor ornaments like garden ornaments and are used in amusement parks, the correct classification would be under CTH 6913 and not CTH 6914 as claimed by the appellant.”

             cannot be upheld, since there is no material on record to show the design to be specific for garden ornamentation.

(f)         In view of the findings herein above, the import of the Ceramic Fountain should be allowed to be assessed and cleared under Heading 6914.00 without any value addition as arrived at. Fines and penalties of Rs. 2,25,000/- and Rs. 25,000/- respectively as imposed are therefore required to be set aside.

(g)        As regards liability of confiscation of “Pedal Boat” only under Section 111(d) of the Customs Act, 1962, is upheld. The classification is upheld under 8903.99 as arrived at by the Commissioner (Appeals). However, keeping in view that the imports are for use as capital goods in Water Amusement Park, the fine as reduced from Rs. 1,75,000/- to Rs. 50,000/- only. The penalty imposed is reduced from Rs. 20,000/- to Rs. 5,000/- only.

3. In view of the findings herein above the appeals are allowed in above terms.

Equivalent 2004 (168) ELT 0389 (Tri. - Mumbai)

Equivalent 2004 (094) ECC 0226 (Tri.-Bom)

Equivalent 2004 (065) RLT 0430 (CESTAT-Mum.)