Full Judgment
2. Appeal No. 1324/87 and 1325/87 arise from a common order-in-original No. 14/87 and 15/87 dated 31-1-1987. In this order, the Addl. Collector of Customs has imposed a redemption fine of Rs. 1 lakh in respect of goods namely sub-assemblies described as main drive system valued at Rs. 1,99,646/- covered under Bill of Entry No. 27371 dated 31-5-1986 and another valued at Rs. 63,774.06 covered by Bill of Entry No. 004559 dated 28-1-1987. A penal penalty of Rs. 25.000/- has also been impose d on the importer in respect of both the bills of entry.
In Appeal No. 2813/87, the Addl. Collector has imposed a redemption fine of Rs. 1 lakh in respect of goods described in Bill of Entry as component/assemblies/sub-assemblies units for manufacture of processor based plain copier as against description of goods in the invoice as "20 units main drive system, 20 pieces paper guide, 20 pieces drum units. The importer has also been imposed with personal penalty of Rs. 30,000/-.
4. The appellants in Appeals Nos. 1324 and 1325/87 had imported goods which are described in the Bills of Entry as "components/assemblies/sub-assemblies/unit for manufacture of processor based plain paper copier". The invoice description of the imported items are given as 20 units of each main drive system, paper guide, drum unit. Items described as Main drive system in the invoice consists of the following - (1) Main drive system (2) Switches (3) Paper Weed machnism (4) Motor assemblies (5) Chassis (6) Blower (7) Transformer (8) P. B. C. (9) Optical unit etc.
5. The appellants had waived the issue of show cause notice as well as personal hearing in all these proceedings. The learned Addl. Collector has observed that the main drive system imported by the appellants is nothing but a sub-assembly consisting of main drive system and other components. He has further held that the licence produced by the appellants is not valid to cover the imported items. He has further held that the imported items and described as main drive system by the importer requires an import licence and the importer had contravened the provisions of Import Control Order 1955 read with Sections 11 and 111(d) of the Customs Act. But however, he has held that there is no mis-declaration of the goods in the Bills of Entry. The Addl. Collector has based his findings on the basis of copy of clarification issued by the D. G. T. D. vide their letter No. Inst/5/117/83/1766 dated 18/9 November, 1977 which had been issued after the inspection of the imported goods. According to this letter the main drive system consists of motor, sproket, chain, gears, belts, pulleys, bearings. The Addl.
Collector has observed that the items described as Main drive system consists of a lot of other items apart from those mentioned above. He has held that the importer required licence for importing these items.
6. In Appeal No. 2813/87, the Addl. Collector has held that the licence produced by the importer covered main drive system and other components which did not tally with the goods imported in the Bill of Entry as the goods imported could not be described as Main drive assemblies and held that the importer had imported goods without a valid licence but however, held that there was no misdeclaration of goods as they had been mentioned on the reverse of the bill of entry.
7. Shri A. K. Jain, Advocate appearing for the appellants argued the case and submitted that the Addl. Collector was not justified in relying upon the report of D. G. T. D. without affording an opportunity of hearing to them to explain their case. He submitted that the items described in the Bills of Entry were all sub-assemblies of Main drive system and did not confine only to the items described in the letter of D. G. T. D. He relied upon the definition of the term "system" appearing at page 428 in the McGraw-Hill Dictionary of Electrical and Electronic Engineering - "System - A combination of two or more sets generally physically separated when in operation and such other assemblies, sub-assemblies and parts necessary to perform an operational function or functions".
and also appearing at Page 880 of Chambers Science and Technology Dictionary - "System (Elec Eng) General term used to describe (1) an entire arrangement of equipment e.g. the grid system (2) Collection of standards or definitions e.g. SI system (3) a set or field of technology e.g. digital systems.
System (Genl) Generally, anything formed of parts placed together or adjusted into a regular or connected whole".
He also relied this term System as defined at page 584 in the McGraw-Hill Dictionary of Engineering - "System - (Eng) A combination of several pieces of equipment integrated to perform a specific function; thus a fire control system may include a tracking radar, computer and gun".
8. He further submitted that there is no adverse finding that the import licence did not contain the items imported. He submitted that all the items are covered in the D. G. T. D. licence as per para 35(1) of Import Licence Policy AM 85-86. He further submitted that para 5(10) of Import Policy AM 84-85 defines components to include sub-assemblies.
The licence has been issued under 35(1) of Import Policy and hence it gives right to the importer to import sub-assemblies also. He further submitted that the redemption fine was excessive and the Addl.
Collector was not justified in imposing a collective fine for two Bills of Entry in common order arising in Appeals No. 1324 and 1325/87.East India Commercial Co. Ltd. Calcutta v. C.C. Calcutta [1983 ELT 1342 (SC)] 2. Lokash Chemical Works v. C. C. (Prev) Bombay and Ors. [1981 ELT 235 (Bom.)] 3. Shivshankar Tilakraj v. Union of India and Ors. [1987 (28) ELT 342 (Bom.)Amit Electronics v. Collector of Customs [1989 (42) ELT 640 (Tri.)] 10. Shri R.M. Ramchandani, learned S.D.R. defended the impugned order and reiterated the findings of the learned Collector. He submitted that items like switches, connectors, mounted PCBs and other items are all not subassemblies of Main drive systems. He further submitted that the citations relied upon by the counsel are not relevant for determining the issues in these appeals.
11. We have heard both the sides, carefully perused the documents and considered the submissions. As rightly pointed out by Shri A. K. Jain, the Addl. Collector was not justified in relying upon the report of the D. G. T. D. without affording an opportunity to the appellants to rebut the said inspection report. Although the appellants waived issue of show cause notice and personal hearing, it became incumbent upon the authorities to point out to the importer the materials on which they were proceeding to base their finding. The Addl. Collector appears to have failed to do so in this case resulting in denial of opportunity to rebut the inspection report of D. G. T. D. The definition of the word "System" pointed out by Shri Jain from the dictionaries do not help him to establish that Main drive system comprised of the items as stated in the Bill of Entry. He has not put forth any technical literature in support of his contention. The learned Addl. Collector has not denied this system does not comprise of subassembles but has considered only those items as detailed in the inspection letter of D. G. T. D. The Addl. Collector has not separated the values of other items while imposing the redemption fine and the counsel is justified in making a grievance of the common redemption fine imposed against both the bills of entry in the common order referred in supra. Therefore, viewing from all these aspects and on the facts and circumstances of the caase, the matter requires to be remanded for de novo consideration by setting aside the impugned order. The appellants are entitled to rebut the inspection report of D. G. T. D. and also to place materials to show that the items of subassembles of Main drive system comprises of all the imported items as described in the licence. As the import is of 1986, the Addl. Collector shall endeavour to dispose off the matter expeditiously within four months from the receipt of this order. The appeals are disposed of accordingly.