ORIENTAL HOTELS LTD. Vs. CC

JUDGEMENT

(1.) This appeal arises from Order -in -Original No. S8/118/98 dated 22.4.98 passed by the Commissioner of Customs (Airport) Chennai. It is alleged that appellant had entered into an agreement with a foreign designer and that the company under the said agreement had received drawings and designs against remittance made to the designer and the customs duty, leviable thereon, had not been paid. Pursuance to the intelligence, a copy of the interior Design Agreement entered into by M/s. Taj Coromandel Hotel of Oriental Hotels Ltd. with M/s. Graham Salano Ltd., USA was collected. It was found that the agreement provided for:

(2.) The statement of one Shri R. Shriram Srivatsa, Financial Controller of the company was recorded under Section 108 of the Customs Act, 1962 on 20.10.97 wherein he, interalia, stated that the Agreement envisaged 6 phases; that only Phase IV provided for supply of drawings and designs; that other phases included provision of services like inspection, identification of suppliers, supervision and tender negotiation; that the drawings as per Phase IV had been received for the various periods indicated in the impugned order wherein the value of drawings in US has been shown totalling to US 36,000. Shri R. Shriram Srivatsa further stated that drawings were being received through courier services in Chennai; that the drawings received were original hand drawn drawings; that when the drawings were imported through courier they were declared as "blue prints" and "documents", that no value was declared at the time of clearance through Customs; that it was mentioned that the goods were not for sale or resale; that no customs duty was paid no import of the drawings either after receipt of the drawings or customs authorities were approached for re -assessment and payment of appropriate of customs duty. The appellant company vide their letter dated 21.10.97 deposited a sum of Rs. 1,50,000 towards duty payable on the drawings imported by courier. On the basis of these details, the Revenue initiated proceedings calling upon the appellant to explain as to why customs duty should not be levied on the value of these goods by invoking proviso to Section 28 (1) of the Customs duty in view of mis -statement and suppression which was wilful on the part of the appellant company. It was also stated that assessable value of the imported drawings and designs was Rs. 11,70,300 and duty leviable thereon was Rs. 1,45,425. They were also called upon to explain as to why penalty should not be imposed in terms of provisions of Section 114A of the Customs Act.

(3.) Appellant took the stand that the item cannot be levied with customs duty as the said items cannot be considered as "designs and drawings". They denied the allegation of mis -statement, suppression and also contended that they did not have any intention to evade payment of customs duty. They contended that they deposited an amount of Rs. 1.50 lakhs solely to co -operate with the department and exhibit their bona fides and prayed for dripping the proceedings.