ORDER
J.H. Joglekar, Member (T)
1. The appellants operate a hotel. They imported laundry machine spare parts and filed a Bill of Entry classifying the goods under Heading 98.06. The value declared was US Dollars 23,826,42, in support of which an invoice was presented which was a copy attested by a Bank. While the goods were under examination, the importers voluntarily revised the duty assessed from Rs. 2,96,617.70 to Rs. 3,11,822.54. One the grounds for doing this was that some of the spare parts were assessable on merits under different tariff headings. The invoice presented to the Customs was a consolidated one which did not show the value of individual parts. The packing list later supplied also did not evaluate individual parts. Investigations conducted at the premises of the importers as also of the CHA resulted in the recovery of an original invoice containing 13 pages. A similar document was found from CHA’s premises. The bank confirmed that this was the invoice available with them. On these documents, details of each part and individual valuation was available. The signatures on these sets of invoice were found to be different. Later, 100 per cent examination of the consignment was done during which one more packing list was found the details given in which did not match with the packing list earlier produced by the importers. On the basis of these documents, the duty was re-worked at Rs. 4,92,523.05. Show cause notice dated 10-8-1987 was issued alleging liability of the goods to confiscation and imposition of penalty upon the appellants. After hearing the importers, the Additional Collector confiscated the offending goods permitting their redemption on payment of fine and imposed penalties on the appellants and CHA.
2. The case for the appellants was argued by Shri V. Sridharan, ld. Advocate assisted by Shri R. Subramaniam, ld. Advocate. Shri Satnam Singh, ld. S.D.R. represented the Department.
3. Shri Sridharan claimed that the orders of confiscation under the various provisions were not sustainable. He stated that the appellants had earlier imported laundry machines. Para 3(a) read with Para 3(d) of the conditions attached to Appendix 6 of the Import Policy 1985-88 permitted spare parts upto 10 per cent of the value of the main equipment to be imported either along with main equipment or subsequently. Para 114(4) of the said Policy also provided for grant of an import licence for 10 per cent of the foreign exchange earnings by an exporter. The foreign exchange earnings by the appellants during the relevant period were Rs. 13 crores and they could easily get a licence on these grounds. He urged that the orders of confiscation under Section 111(d) could not sustain. Arguing on the liability to confiscation under Section 111 (m), the ld. Advocate submitted that when the value was correctly declared, this Section could not apply. The goods were correctly described as spares. The charge of misdeclaration, therefore, cannot be levelled. Since the total quantity of the goods was, as was declared, the orders of confiscation under Section 111(1) also could not sustain. In support of his submissions, he cited the Tribunal’s order reproduced in 1994 (74) E.L.T. 964. He further, stated that by seeking to classify all the spares under Heading 98.06, the assessees had not made any misdeclaration. The heading was of a complex nature. It did not have any parentage from the international nomenclature and was finally removed from the tariff. In the belief that all the goods fell under Heading 98.06, they had produced consolidated invoice which was attested by the bank and was a genuine one. He stated that his clients were respectable members of the catering profession and the orders of penalty be set aside.
4. Shri Satnam Singh stated that two invoices were entirely different from each other. The second invoice was recovered in a search. This is how the case was made against the appellants. The appellants were attempting to shift the blame to the CHA by stating that they had received wrong advice. He stated that the Collector had brought out in his order very clearly that the parts imported were not under OGL, but required a licence. During rejoinder, Shri Sridharan was specifically asked to produce the second invoice. He undertook to do so but after a few days, made a mention in the Court that he was unable to do so.
5. We have considered the rival submissions.
6. Shri Sridharan has contested the confiscation of the imported goods under several provisions. His first claim is that having earlier imported the main machinery, the appellants were entitled to import spares upto 10 per cent of the value thereof. This claim would have sustained. If it was established, then this option of importing spares had not been earlier availed of by the importers at the time of import of the main machinery. In spite of our query and his assurance, Shri Sridharan was not able to produce before us documents witnessing clearance of the main machinery. This undermines his entire logic. Even otherwise the relevant provision permitted import only of those spares, which were not included in Appendix 2(b), 3(a), 8 and 10. The Collector in his order has referred to gear box imported as spares which squarely fell under Appendix 10. Drawing a distinction between spares and components, the Collector has held that goods enumerated in Appendix 6 Para 1 List 8 which included several of these spares imported in the present goods would not be covered under the provisions for import of spares under OGL. He has made a remark that other spares also fell in the lists included in the exclusion clause. Beyond making claims that the goods were permissible goods, Shri Sridharan has not taken us through the list of their spares establishing their importablility under OGL. However, a list placed on record as part of the proceedings shows a number of these spares to be falling under Appendix 3A. His last claim that the licence to import such spares was available to the importers, but for the asking, has little merit or relevance to determine the status of the goods involved in this case. On this analysis, we hold that the Collector was correct in adjudging the confiscation of the goods under Section 111(d) of the Act.
7. Arguing against the order of confiscation under Section 111(m), Shri Sridharan had urged that in both the invoices, the value shown was the same and thus as regards value, there was no mis-declaration. We find that initially all the goods were claimed to classfiable under Heading 98.06. At the material time, this residuary entry covered parts of machinery falling under various chapters. The chapter note, however, prescribed certain exemptions. Under the Notification 69/87, parts of general use were excluded from the coverage thereof. By claiming coverage of entry for all the parts imported, it would appear that to some extent, the provisions of this section were breached. However, it must be stated that show cause notice does not bring out very clearly the basis of the allegation. The Additional Collector’s order also does not state how confiscation had been adjudged under Section 111(m) and 111(1). Although the show cause notice refers to Section 111(o), the order is silent in this aspect. The orders of confiscation under Section 111(1) and (o) do not sustain whereas only part of the goods could be covered as falling under Section 111(m). For lack of substantiation, these orders do not survive.
8. On the aspect of penalty, the claim of Shri Sridharan was two-fold, firstly, that the orders of confiscation were not legal and secondly, that his clients were respectable hotliers. We have upheld the liability of the goods to confiscation under Section 111(d) of the Act. This alone would justify the imposition of penalty. The proceedings contain narration of certain acts by the appellants which were taken into account for imposition of penalty. The invoice produced along with the Bill of Entry did not contain details of valuation of the spare parts. It was also not in original, but was merely an attested copy. Lateron, on a visit to the appellants’ office and also on searching the CHA’s permises, detailed invoice of 13 pages was found. Enquiries with the bank revealed that they had the detailed invoice in that possession. The Collector has observed that what was presented to the Customs was not a genuine invoice. Although this was refuted by the ld. Advocate, he failed to produce before us a copy of the detailed invoice which would have enabled us to verify the charges established against them. In view of the findings made on this count by the Collector, it is to be held that the appellants had failed to produce proper invoices, when detailed separate valuation was required, since some of the items were not classifiable under Heading 98.06. Although we find justification for imposition of fines and penalties, we find that the quantum of fine is very high. Since the goods were for the use of the appellants, we deem it proper to reduce the quantum to Rs. one lakh. There is, however, no warrant for redemption of penalty.
9. Subject to this modification, this appeal fails and is dismissed.