Commissioner of Central Excise, Ahmedabad Versus Picasso Exports>2008(09)LCX0087

2008(09)LCX0087

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH, AHMEDABAD

Archana Wadhwa, Member (Judicial) and B.S.V. Murthy, Member (Technical)

Commissioner of Central Excise, Ahmedabad

Versus

Picasso Exports

Order No. A/1995-1996/WZB/AHD/2008 Customs appeal no. C/143/99; c/co/211/99 decided on: 05.09.2008

Advocated By -

M.I.J. Micheal, Jt. CDR For the Appellant A.K. Chatterjee, Adv. For the Respondent

ORDER

Archana Wadhwa, Member (Judicial)

1. Being-aggrieved with the Order passed by Commissioner (Appeals), vide which he has accepted the Respondent's claim of classification of imported goods as also upon the value, the Revenue has filed the present appeal. It may be noted here that the Revenue's appeal was earlier disposed off by the Tribunal vide Order No. CB/A/829-830/WZB/05 dated, 25th May, 2005, accepting their stand on classification but rejecting the same on valuation. Inasmuch as the said Order was passed in the absence of the Respondents, the Hon'ble High Court of Gujarat, while passing an Order on the Tax Appeal filed by the Respondents, has set aside the same and remanded the matter to the Tribunal for de-novo decision, after hearing the Respondents. We have accordingly heard Ms. M.I.J. Micheal, learned. Jt. CDR and Shri A.K. Chaterjee, learned Advocate.

2. As per facts on record, Respondents imported 25,500 pieces of Electronic Organs (Electronic Organ Piano small size) declaring CIF value US $ 10,200 (Rs. 4,39,895) @ US $ 0.40 per piece at ICD, Vadodara, and filed Bill of Entry No. 115 dated, 17th September, 1998. Clearance was claimed under heading 9207.10 without import licence as musical instruments which were freely importable in terms of heading 9207.10 of the ITC (HS) Classifications of Export & Import items notified in the Exim Policy of the years 1997-2002.

3. Inasmuch as the Revenue was of the view that the goods in question cannot be held to be musical instruments, as claimed by the importer but were toy pianos, which were specifically excluded from the scope of Chapter 92, proceedings were initiated against the Respondents. Addl. Commissioner vide his impugned Order held that the goods in question being pianos of small size and hence toy pianos were specifically excluded from the Chapter 92 vide Chapter Note 1 (c). It was also observed in the said Order that the importer had agreed that they did not understand the classification before importing these goods. As such, the goods were held classifiable under Chapter 95, sub-heading 95.03. Inasmuch as the said heading required a import licence, the goods were held liable to confiscation. The Addl. Commissioner also held that the goods were under-invoiced at US $ 0.40 per piece inasmuch as identical goods were imported at Mumbai at US $ 0.80 per piece CIF. Accordingly he enhanced the value to US $ 0.75 per piece and confiscated the goods with an option to the Appellant to redeem the same on payment of redemption fine of Rs. 6, 50,000 and penalty of Rs. 1.50 lakhs was imposed under Section 112A of the Act.

4. On appeal against the above Order, Commissioner (Appeals) accepted the importer's stand that the goods in question were not toy pianos but were musical instruments covered under Chapter 92 and value declared by the Respondents was correct transaction value in terms of Section 14(1) of the Act read with Rule 4 of the Customs Valuation Rules, 1988. He accordingly set aside the Order of the Addl. Commissioner and allowed the appeal. Hence, the present appeal by the Revenue.

5. We find that Chapter 92 of Customs Tariff Act covers 'Musical instruments; parts and accessories of such articles". Under Note 1(c) of Chapter 92, it was, inter alia, clarified that, this Chapter does not cover toy instruments or apparatus (heading No. 95.03). Sub-heading 92.07 specified "Musical instruments, the sound of which is pronounced, or must be amplified, electrically (for examples, organs, guitars, accordions)". Item 92.07.10 falling under that sub-heading specifies, "Keyboard instruments, other than accordions".

5.1 Chapter 95 of the Tariff Act relates to "toys, games and sports requisites; parts and accessories thereof". Sub-heading 95.03 covers, "other toys reduced-size (scale) models and similar recretional models, working or not; puzzles of all kinds", and at 9503.50 appear "Toy musical instruments and apparatus". It is evident from this item that toy musical instruments whether working or not would be included in that item. The items of this sub-heading would also include electrically operated toys, as is clear from item No. 95.03.10 which includes "Electric train toys". In the Harmonized System of Nomenclature (HSN), "Toy musical instruments (pianos, trumpets, drums, gramophones, mouth organs, accordions, xylophones, musical boxes, etc.") which appeared at item No. 11 under heading 95.03, are included in the Tariff Heading item 9503.50. At item 4 of the HSN relatable to sub-heading 95.03 of the Tariff Act, trains (whether or not electrical) are included. In fact, at the outset, while referring to all toys not included in Headings 95.01 and 95.02, it is mentioned in Para (A) that "many of the toys of this heading are mechanically or electrically operated". It is also stated that certain toys including musical instruments may be capable of a limited use or generally distinguishable by their size and limited capacity from the real articles.

5.2 It will be noticed from the ITC (HS) of the classifications of Export and Import items of the year April, 1997 to March, 2002, item 950350 01 that, "Toy musical instruments and apparatus" are shown as restricted items which could not be permitted to be imported except against a licence or in accordance with the public notices issued in this behalf.

5.3 It is evident from the size and number of the articles imported (25,500 pes of Electronic organ "Piano small size") and the price at which they were imported, that they could not be regular musical instruments falling under Heading 9207.10. These were clearly toy instruments, though described as "Piano small size". They were not regular musical instruments of smaller size. If fact, the importer had accepted before the lower Authority that they did not understand the classification before importing them. There was absolutely no valid reason for the appellate Commissioner to upset the finding of the Addl. Commissioner that the goods were not musical instruments, but they were "toy pianos" which were specifically excluded from the scope of Chapter 92, by the Chapter Note 1(c) and that they were covered under item 950350 01 of the ITC (HS) Classification.

6. As regards valuation, we find that enhancement of the value on the basis of another Bill of entry is not correct inasmuch as' the goods stands described in the present bill of entry as Pianos small size, whereas the same was described as toy organs in the relied upon bill of entry. It is also not on record whether the two types of goods were identical in size or not. As such, it cannot be held that the import under the relied upon bill of entry and the present import are contemporaneous. Inasmuch as there is no other evidence on record to doubt the transaction value in the present case, the same is required to be accepted as the correct assessable value in terms of the provisions of Section 14 of the Customs Act read with Rule 4 of the Rules. As such, we find no infirmity in the views adopted by the Commissioner (Appeals) on the issue of valuation.

7. Having held that the disputed goods are properly classifiable under Customs Tariff Heading 95.03.50, which requires a licence for importation, it has to be held that the Appellants have violated the ITC conditions. We accordingly uphold the confiscation. We, however, reduce the redemption fine from Rs. 6.5 lacs to Rs. 3.5 lacs and penalty from Rs. 1.5 lacs to Rs. 75,000. Accordingly, the impugned Order of Commissioner (Appeals) is modified to the extent indicated above and Revenue's appeal is disposed off accordingly. Cross objection also gets disposed off.

(Pronounced in Court)

Equivalent 2008 (134) ECC 0281

Equivalent 2008 (160) ECR 0281 (Tri.-Ahmedabad)

Equivalent 2009 (090) RLT 0039 (CESTAT-Ahmd.)

Equivalent 2009 (233) ELT 0420 (Tri. - Ahmd.)