Full Judgment
2. The Appellants have also filed an application for production of Additional documents, in the form of photographs of MTS system, technical literature of the system and the items imported by them, purchase order, Bill of Lading, and copy of letter dated 20-12-1999 from their overseas supplier.
3. Shri R. Sudhinder, Ld. Advocate, submitted that these documents are necessary for the decision in the appeal filed by them and they may be allowed to be taken on record in the interest of justice. Shri Ashok Kumar, Ld. DR, has no objection in taking these documents on record.
Accordingly we allow the Misc. Application and the additional documents are taken on record.
4. The Ld. Advocate submitted that the appellants manufacture Tractors and other Automotive Parts; that they were using an MTS system for the purpose of carrying out various checking processes on shock absorbers and Telescopic Front Forks; that to make the system Y2K compliant they placed a purchase order for MTS Test Star Us Test Control System and MTS Dumper Testing Software with M/s. MTS Systems Corporation, USA; that on receipt of the goods, Bill of Entry was filed on 27-11-1999 for clearance of goods by declaring the same as "Software for making our MTS System Y2K Compliant", claiming Nil rate of duty under Notification No. 20/99-Cus., dated 28.02.1999; that the description of the goods was mentioned in the Bill of Entry on the basis of the invoice sent by the supplier; that the said invoice unfortunately did not contain full details of the consignment that was imported; that consequently on examination of the goods by the Customs officer, these were found to be different them those declared by them; that they had waived the requirement of the show cause notice and the Commissioner, after hearing them, passed the impugned Order.
5. The Ld. Counsel, further, submitted that there was no mala fide intention on the parts of the Appellants to make any mis-declaration in the Bill of Entry; that the description of the goods was given in the Bill of entry by the Customs House agent on the basis of invoice without referring to the purchase order; that in his statements, Shri Rakesh Darbani, Chief Manager, Process Engineering ASP recorded on 08.12.1999, has nowhere mentioned that wrong declaration was made by them deliberately; that there was no intention on the part of the Appellants to evade payment of Customs duty; had that there been any intention to evade payment of duty, the packing list would not have given the detailed description of all the goods imported by them; that this was a case where the supplier has erred in giving the proper description of the products; that the detailed description of the items that were imported was given in the purchase order indicating the real character and function of the product, that accordingly penalty under Section 114A of the Customs Act is not warranted as there was neither any suppression of facts nor wilful misdeclaration and collusion. He referred to the impugned Order in which no such allegation has also been mentioned by the Commissioner. He also mentioned that the redemption fine of Rs. 5 lakhs in respect of goods valued at Rs. 13.53 lakhs is on very high side as they are not earning any profit because the impugned goods were used by them captively to make their system Y2K Compliant. The ld. Advocate also mentioned that the classification of the product imported by them has been done by the Commissioner without issuing any show cause notice under Section 28 of the Customs Act and the goods are rightly classifiable under Sub-Heading 9024.80 of the First Schedule to the Customs Tariff Act.
6. Countering the arguments, Shri Ashok Kumar, ld. DR, submitted that the Appellants had waived the requirement of show cause notice vide their letter dated 09.12.99 and the matter was adjudicated by the Commissioner after affording personal hearing to the Chief Manager and Manager of the Appellants and Customs House Agent; that they had admitted their offence and submitted it was a mistake and they had prayed for a lenient view; that they had not brought any evidence on record to show that they had challenged the classification before the Commissioner; that as per para 6 of the MEMORANDUM OF APPEAL the Customs Authorities had mentioned to them that the goods attracted duty. The ld. DR., further, submitted that the Appellants imported Hardware Interface and Software and they had made a misdeclaration on the Bill of Entry with a view to avail Nil rate of duty and as such the penalty under Section 114A of the Customs Act is imposable; that in addition as the Customs House agent was working as their agent and the wrongful acts done by agent will make them vicariously liable for penalty. He also submitted that the redemption fine of Rs. 5 lakhs is not on the higher side as the impugned goods were valued at Rs. 13.53 lakhs.
7. We have considered the submissions of both the sides. As the Appellants have waived the requirement of show cause notice and the 'impugned Order has been passed after hearing their representatives and Customs House Agent, the Appellants at this stage cannot challenge the classification of impugned goods ordered by the Commissioner. They have not brought on record any affidavit of their representatives, who appeared before the Commissioner, to the effect that they had disputed the classification of the goods at all. In fact there is no mention to this effect in the grounds of appeal also nor the challan under which duty was paid indicates that the duty was discharged under protest. It is apparent from the purchase order dated 06.07.99 that they had placed orders for both Hardware and Software for Y2K compliant and the goods have been supplied accordingly by the supplier. The description of the goods was mentioned in the bill of entry on the basis of the description given in the invoice received from the foreign supplier. In the light of these facts which have not been disputed, it cannot be claimed that the Appellants have made any wilful mis-statement. In absence of any of the ingredients mentioned in Section 114A of the Customs Act. Penalty under that section cannot be imposed on the Appellants. Accordingly, we set aside the penalty imposed on the Appellants under Section 114A of the Act as there was no mala fide intention on the part of the Appellants in describing the goods in the bill of entry. A lenient view is also called for in the matter of redemption fine and while upholding the order of confiscation of the goods, we reduce the amount of redemption fine from Rs. 5 lakhs to Rs. 1 lakh.