SONY INDIA LTD. Vs. CC, ICD

JUDGEMENT

(1.) IN this appeal at the instance of M/s. Sony India Ltd. the challenge is against the order -in -original No. KK/CC/ICD/TKD/6/99 dated 30.1.1999 (issued on 1.2.1999) passed by the Commissioner of Customs, Inland Container Depot, Tughlakabad, New Delhi. Under the above order the Commissioner has confirmed differential duty demand of Rs. 42,89,75,196/ - under proviso to Section 28(1) of the Customs Act, 1962, imposed a penalty of Rs. 30,19,92,183/ - under Section 112(a) read with Section 114(a) and levied interest under Section 28AB of the Customs Act. The import of several parts of Colour Television made by the appellant for the period from April 1995 to 1997 were treated as import of complete Colour Television Set for the purpose of assessment by the Commissioner.

(2.) WHEN the appeal filed by the assessee came up for hearing before a two Member Bench difference of opinion arose between the Members on the application of Rule 2(a) of General Rules for interpretation under first Schedule of Import Tariff to the imports made by the appellant. Learned Member Judicial took the view that the parts imported cannot be treated as complete colour television set (CTV) and, therefore the duty demand, confiscation penalty etc. were held unsustainable. On the other hand, the learned Member Technical took the view that Rule 2(a) should be applied in the present case but felt that the matter should be heard by a Larger Bench in the light of the different views taken by different Benches and also considering the importance of the issue involved. Learned Member Technical was also of the view that the issue whether the assessee is entitled to the benefit of exemption from duty in terms of Notification No. 91/89 dated 1.3.1989 as amended by Notification No. 79/95 -Cus. dated 31.5.1995 and 36/96 dated 23.7.1996 in case it is held that by applying Rule 2(a) the imported parts are considered as complete or finished CTVs is also to be considered by the Larger Bench. Learned Member was of further view that the Larger Bench should consider the question whether the amendment brought in HSN Explanatory Notes to interpretative Rule 2(a) in March 1997 will have retrospective effect. Thus, the following points of difference are referred for consideration of the Larger Bench:

(3.) APPELLANT thereafter placed purchase orders on the foreign supplier, namely, Sony International (Singapore) Ltd. Singapore for supply of various components required for the manufacture of CTVs. It is the case of the appellant that Sony International (Singapore) Ltd. in its turn would place purchase orders for these components with their different approved vendors situated at Thailand, Taiwan, Japan, Malaysia, United Kingdom, China, Singapore etc. The part number of a particular component would indicate the vendor from whom the component has to be purchased. The components thus procured by Sony International (Singapore) Ltd. were sent to Sony India in container loads to save freight. A perusal of the copies of Bills of Entry and corresponding invoices would show that the countries of origin are different for different components. During the period from April 1995 to January 1997 appellants imported 94 consignments of various components of CTV. Two of the components, viz., CRT and PCB were imported under the import licence granted by the DGFT. Some of the imports were effected against the advance licence granted to the appellants and the balance items were imported without any licence as it was not required. Components imported under 94 Bills of Entry were assessed by the Customs authorities under appropriate individual sub -headings of customs tariff and the appellant cleared the same on payment of duty. These components were used by the appellant in the manufacture of CTVs. They paid excise duty on clearance of CTV from their factory. They also availed Modvat Credit of CVD paid on the imported goods.