CC, NHAVA SHEVA Vs. BADSHAH STORES

JUDGEMENT

(1.) THE respondents M/s. Badshah Stores held a Special Import Licence dt. 8.12.1994 issued to them under the EXIM Policy 1992 -97. They imported a consignment of various types of Electronic Toys and 888 Kitchen sets and filed a bill of entry dt. 12.9.1995 at the Jawahar Custom House. Nhava Sheva Port. On scrutiny of the documents and inspection of the imported goods it was observed by the customs authorities that the toys imported by them were not permissible for clearance against the SIL produced by them. Accordingly proceedings were initiated against them and they were issued a show cause notice dt. 18.1.1995 in which it was alleged that the imported goods were in the nature of consumer goods as per the provisions of para 156(1) of the EXIM Policy 1992 -97; that the goods were imported unauthorisedly and the same were liable for confiscation under Section 111(d) of the Customs Act, 1962. It was further alleged that kitchen sets were under valued. The importers replied to the show cause notice and contended that all the items imported by them are electronic toys namely dolls, fish etc; that such toys are battery operated and are covered by the description mentioned at Sr. No. 41 of the list attached to the SIL produced by them. They pleaded that in view of specific nature of electronic toys/games as mentioned at Sr. No. 41 of the list, there was no ground to direct them to produce any other licence. They also challenged the value revision and contended that the value declared by them was correct and no specific reason has been mentioned to enhance the same. The Dy. Commissioner of Customs, Jawahar Custom House, Nhava Sheva, however vide his order dt. 13.5.1996 held that in terms of para 74(a) of the Hand Book of Procedures, the SIL licence is valid for import of the goods covered in Appendix XXXV, as effective from 1.4.1995; that the entry for electronic games/toys in this Appendix is at Sr. No. 41 on the date of shipment 14.8.1995 is - -Electronic games/toys under Customs Tariff Headings 9503.20 and 9504.10. It is observed that a new entry pertaining to electronic games/toys had been incorporated which elaborated the previous entry by specific reference to Customs Tariff Headings 9503.20 and 9504.10 with the same description; that with effect from 1.4.1995 only such electronic games/toys were allowed against SIL which were classifiable under CTH 9503.20 or 9504.10, irrespective of the fact whether such restrictions were initially imposed or not in the licence earlier. He has further observed that the goods shipped from abroad on 14.8.1995 admittedly are not classifiable under heading 9503.20 or 9504.10 of the Customs Tariff. Therefore, he has held that the goods are imported in contravention of the provisions under the EXIM Policy and hence liable to confiscation under Section 111(d) of the Customs Act, 1962. As regard the valuation, he observed that in respect of 888 kitchen sets, the same importer had previously imported 4 dozens of the same goods as against the import of 30 dozens in the present case. He rejected the contention of the noticee party that since there was a large quantity difference between the two imports therefore the value of the earlier imports could not be made applicable to the present ones and ordered the kitchen sets to be assessed at the unit price US$ 23.10 per dozen in terms of the provisions of Rule 11 of the Customs Valuation Rules, 1988, read with Section 14(1) of the Customs Act, 1962. He ordered for the confiscation of the imported toys under Section 111 (d) but however gave an option to the importer to redeem the same on payment of a fine of Rs. 1,30,000/ -. He further imposed a penalty of Rs. 25,000/ - on the party under Section 112(a) of the Customs Act, 1962. The party filed an appeal and the Commissioner (Appeals), Mumbai vide order dt. 25.9.1996 allowed their appeal. The Commissioner in her order has observed that the entry at Sr. No. 75 in the list attached to the SIL reads, "Educational games and Functional/Technical toys/Models/Kits" which are covered by invoice/bill of entry put up by the appellants for clearance. The lower appellate authority has observed that there is an endorsement on the face of the licence that this is valid for import of goods as per the list attached and shall be subject to the condition as laid down in para 217A(a) of Handbook AM 1992 -97; that the entitlement of SIL is determined on the basis of entitlement right on FOB value of exports realised in the preceding licensing year. She has held that this licence is issued on the basis of entitlement during AM -94 and licence was issued earlier during licensing period AM -95; that Appendix XXXV, according to AM -95 Policy was the one according to which the licence was issued with the list attached. The Commissioner (Appeals) has held that there is no discrepancy in the licence and the importers have not violated any provisions of the EXIM Policy and in view of the clear endorsement that the SIL is valid for the import of goods as per the list attached. As regards the valuation of the kitchen sets, it is observed that the customs authorities have not been able to show as to how the price given by the seller should not be accepted under Rule 4 of the Customs Valuation Rules. As for the comparable value adopted by the original authority in respect of the imports made earlier by the same party, it is observed that there is a vast difference in the quantity compared with the earlier import and the goods are also not imported from the same country of origin. Consequently, the Commissioner (Appeals) set aside the order passed by the original authority and allowed the appeal of the party.