ORDER
Jyoti Balasundaram, Member (J)
1. The above appeal arises out of the order of the Commissioner of Customs (Appeals), New Delhi upholding the order of the Additional Commissioner of Customs who has confiscated items described by the importers as “used and reconditioned components of photocopier machines” on the ground that they were actually sub-assemblies of photocopiers requiring a specific import licence, with option to redeem the same on payment of a fine of Rs. 4,25,000/- and imposing a penalty of Rs. 1,50,000/- but dropping the charges relating to undervaluation of the goods and accepting the declared value of Rs. 1,67,270/-.
2. The appellants who are represented by Shri Jitendra Singh, Advocate, submits that the goods were examined and found to be sets of used and reconditioned components/parts of photocopier machines – Canon and that such goods fall under Entry No. 22 of Appendix XXXV of the Handbook of Procedures 1992-97. This Appendix includes list of items permissible for imports against special import licence in terms of paragraphs 217A(d), 226(b) and 202A of the Handbook. He submits that the items imported are not sub-assemblies, that in the invoice they have been described as 28 sets of photocopying machines because of the number of frames and platen glass, but it is not possible to manufacture 28 photocopiers out of the imported components and that various other components were also imported/procured indigenously so as to enable the appellants to manufacture a complete photocopying machine. Some of the components are drum, heater rollers, main clutch, sprocket, pickup rollers, etc. Learned Counsel further contends that the finding that the goods are sub-assemblies is beyond the scope of the proceedings in view of the examination report and in view of the fact that in the proceedings prior to the remand of the matter to the Additional Collector, goods were all along treated as used and reconditioned components of photocopiers; and not as sub-assemblies of photocopiers. He relies upon the Tribunal’s decision in the case of Bhagivan Electro Photocopiers reported in 1999 (106) E.L.T. 66 in support of his contention that import of such items is not in violation of the Import Trade Control Regulations.
3. Opposing the contentions raised by the appellants, learned DR, Shri Arunachalam submits that the description of the goods in the invoice, and the description in the packing list as sets clearly shows that the goods imported were not components or parts as defined in para 7(10)(29) of the Export Import Policy and, therefore, treating the goods as sub-assemblies does not amount to supplementing the findings of the Shed Appraiser. He refers to the definition of “sub-assembly” in the Random House Compact Unabridged Dictionary and in the Websters Third New International Dictionary to draw a distinction between a sub-assembly and a component or part. He submits that since the items were sub-assemblies they are required to be covered by a specific import-licence which the appellants did not hold, thereby resulting in confiscation and imposition of penalty. Regarding the case law cited by the learned Counsel, learned DR pleads that in that decision, there was no dispute that as to what would constitute a component and what would constitute a sub-assembly, and the only dispute was whether the goods imported were components or complete photocopier machines and hence the Tribunal’s Order is distinguishable from the facts of the present case.
4. I have carefully considered the rival submissions. The goods in question had been confiscated on the grounds of having been imported without a valid licence, rejecting the importers’ plea that they were “used and reconditioned components of photocopiers”. In the de novo proceedings, detailed reasons have been recorded for confiscation. Treating the goods as sub-assemblies does not in any way vitiate the order of the authorities below since the order passed prior to remand did not hold them to be other than sub-assemblies and the matter was remanded only for considering whether the old and reconditioned goods imported required a specific import licence for their clearance. Therefore, the issue to be decided is as to whether the goods in question are used and reconditioned components and parts of photo-copier machines, or whether they are sub-assemblies of photocopier machines thereby requiring a specific import licence for their clearance.
5. Para 7(10) of the Import Export Policy defines components as “one of the parts of the sub-assemblies or assembly of which a manufactured product is made up and into which it may be resolved” and component includes an accessory or attachment. A part has been defined in para 7(29) of the Export Import Policy as “an element of a sub-assembly or assembly not normally useful by itself and not amenable to further disassembly for maintenance purposes” and a part may be a component or an accessory. Sub-assembly is “a structural assembly, as of electronic or machine parts, forming part of a larger assembly” as defined by the Random House Compact Unabridged Dictionary (page 1891) and the Webster’s Third New International Dictionary at page 2273 defines a sub-assembly as “a structural unit manufactured or assembled separately but designed to be incorporated with other units in the final assembly of a finished product”. Many of the items mentioned in the packing list are sub-assemblies e.g. main frames, ADF, developing unit, fixing unit, PCBs, etc.
6. Therefore, a specific import licence was required for clearance of the same.
7. The decision in the case of Bhagwan Electro Photocopiers cited supra is distinguishable – in that case, the attention of the Bench does not appear to have been drawn to the clear distinction between components/parts on the one hand, and sub-assemblies on the other. Although various parts/components go into a sub-assembly, and a sub-assembly in turn is used along with other parts/components in the manufacture of photocopier machines, a component/part is different from a sub-assembly, as seen from the definitions set out above.
7A. In the light of the above discussion, I hold that the items imported required a specific import licence for their clearance and in the absence of such licence, the import was unauthorised. Confiscation of the goods is, therefore, upheld. However, the appellants are given the option to redeem the same on payment of a fine of Rs. 2 lakhs. I also uphold the penalty imposed upon the appellants, but reduce it to Rs. 1 lakh, having regard to the facts and circumstances of the case, including the fact that the import took place in 1995.