INDIA AGENCIES Vs. COMMISSIONER OF CUSTOMS, BANGALORE

JUDGEMENT

(1.) THE appellant had imported certain industrial sewing machines of different models and brands during the period May, 2000. The Bills of Entries filed were assessed to duty by allowing them exemption under Sl. No. 221 of Notification No. 6/2000 -CS, dated 1 -3 -2000 and duty accordingly has been calculated and collected. However, it was noticed that the said machines were imported alongwith motors, dismantled and packed separately, such motors were inbuilt parts of the industrial sewing machines. As the Notification of Central Excise i.e. 6/2000 excluded sewing machines with common head motors from the purview of the exemption of duty. The exemption granted was not applicable. The appellants were, therefore, issued a Show Cause Notice demanding duty under Section 28 of the Customs Act, 1962 with interest as applicable by denying the benefits of the Notification.

(2.) THE Commissioner of Customs, Bangalore, after examining the catalogues especially of machine LK 1900 series and LK 1903 series, found that the same show that the motor is fitted on the rear side of the sewing machine (opposite to the side where needle is fixed) and it was admitted that the transmission of the motor was through the main shaft of the machine and it was a fact that 11 machines, all of this model, were having motors fitted at the time of the import. He found, that since the machines in question function by the motion of the shaft coupled to the motor and the catalogue states that the machines have direct driven machine head directly coupled back AC Servo motor, these sewing machines, become functional only when such movement is transmitted through the shaft head there being no other means to make them functional. He concluded, therefore that the motor forms an integral part of these machines and have to be construed as inbuilt not withstanding the fact that they are detachable and replaceable and the benefit of notification was not eligible. He examined the Chartered Engineers report relied by the appellant herein. This certificate reported that for the subject machines, the motor was more compact and fitted to the machine with a shaft employing a servo control motor manufactured by Panasonic and even though when such motor is principally fitted when sewing machine was imported. The motor being external to the machine had a protective cover to save the same from damage. He noted that the motor was not proprietary in nature and could be substituted by other motors. He thereafter concluded that sewing machines with separate motors based on this Chartered Engineers certificate could not be classified as inbuilt and it was not correct. He found the notification could not be confined to internally fitted motors, which were detachable as in the case of tape recorder, music system or a washing machine. He concluded that as long as a provision is made for fitting the motor to any part to constitute an integral part of that machine, it has to be treated as inbuilt and relied upon the minutes of a meeting of Commissioners Conference held at Bangalore on 29th and 30th June 2000. He thereafter, relying upon various decisions, upheld the denial of the benefit of the notification. As regards declarations made of three needle machine, as a single machine, he found it to be a bona fide error, which did not amend mis -declaration under the provisions of Customs Act, 1962. He also did not accept the proposal to confiscate 97 sets of sewing machines alleged to have been used for concealment of the other 13 machines mis -declared, since they were not alleged to be sealed within the other machines. Relevant documents were submitted and therefore, he did not hold the other 97 sewing machines liable for confiscation. He however, found the partner of the importer company to be a regular and known importer of sewing machines and being in the business was expected to know the description between sewing machine with inbuilt motor and others and production and manuals does not absolve him from the penalty under Section 112(b)(ii) of the Customs Act, 1962.

(3.) WE have heard both sides and consider the submissions and find that : -