ORDER
A.C.C. Unni, Member (J)
1. This appeal is against the Order-in-Original dated 27-2-1997 passed by the Commissioner of Customs, New Delhi confirming a duty demand of Rs. 3,21,944/- against the appellants as well as a fine in lieu of confiscation amounting to Rs. 2,50,000/- and a penalty of Rs. 60,000/- imposed on the present appellants.
2. We have heard Shri G. Shiv Das, Advocate for the appellants and Shri Panchatcharam, Departmental Representative appearing for the respondent Commissioner.
3. The dispute relates to import of consignments of software in Diskettes along with Manual in the form of printed books from various suppliers abroad by the appellants who were engaged in the manufacture and sale of Micro Computers and Micro Processor based systems. The dispute relates to the import of consignments covered by 13 Bills of Entry during the period covered by the show cause notice dated 6th August, 1991. The Department alleged that the value shown by the importers against the printed manual was artificial and the splitting of the total price into 60% value towards Diskettes and 40% towards values of manual was done by the foreign supplier at the instance of the appellants. Commissioner of Customs had, by the impugned order, confirmed the demand and confiscated the consignment with option for redemption and imposed a penalty referred to above.
4. Learned Counsel submitted that the importers (appellants) had only followed the established practice of Customs Houses all over the country of indicating the value towards Diskettes at 60% of the total value and the value towards the printed manual as 40% of the total value. He also drew attention to the fact that the impugned order does not dispute this fact and there was also no dispute that the total value of the Diskette and the Manual declared by the appellants was correct and in any case, even if it was assumed that there was misdeclaration in respect of split up of the value between Diskettes and the accompanying Manual, the total value was still available to the Department. He also referred to Paragraphs 26 to 30 of the impugned order in which the Commissioner had accepted the position that during the period 1989 to April, 1991 all the Customs Houses were following the uniform practice of assessing software Diskettes under Heading 85.24 and the accompanying Manual under Heading 49.01. The Commissioner had also accepted the position that the value declared by the importers was on the basis of best judgment assessment by splitting up the ratio of 60 : 40. It was only as a sequel to a decision taken at the conference of Collector in April, 1991 that it was decided to classify the software along with the Manual under Heading 85.24. Learned Counsel submitted that there was also no dispute that the 13 Bills of Entry in dispute were cleared prior to April, 1991. Therefore, the allegation of misdeclaration on the basis of the decision taken after the Collector’s conference in April, 1991 cannot be considered as a mis-declaration and the invoking of the extended period of limitation under Section 28 of the Customs Act was clearly unsustainable. Learned Counsel thereafter referred us to the recent decision of the Tribunal in HCL HP Limited v. CCE, New Delhi [Final Order Nos. 653-654/98-B2, dated 14-8-1998 -1999 (112) E.L.T. 604 (T)] in which the Tribunal, under identical circumstances, had set aside the order passed by the Commissioner confiscating the goods and demanding differential duty and penalty.
5. Learned Departmental Representative, Shri K. Panchatcharam reiterated the findings of the Commissioner in the impugned order and referred to the correspondence exchanged between the Manager of the appellants and the foreign supplier to show that the appellants had requested the foreign supplier to split up the value of software and manuals. The Commissioner had, therefore, held that the splitting up of the value of software and manuals was a clear attempt by the appellants to artificially manipulate the value.
6. Submissions of both sides have been considered. We find that there is no dispute that there was a practice of splitting up the value of Diskettes and manual separately and the same had been accepted at the ratio of 60 : 40. The said practice was discontinued only after April, 1991 when it was decided to classify the software along with the manual under Heading 85.24. There is no dispute that the 13 Bills of Entry covering the consignments in dispute were cleared prior to April, 1991. We therefore, find force in the appellants’ contention that no allegation of misdeclaration could have been made against the appellants when the accepted practice followed in all the Collectorates in the country was followed by appellants as well. We, therefore, uphold the appellants’ contention that the extended period under Section 28 could not have been invoked in the facts of the appellants’ case. We have also taken note of the ratio of the Tribunal’s Final Order in HCL HP Limited v. CCE, New Delhi (supra) wherein it was held that having regard to the practice followed by the Collectorates throughout the country of allowing clearance on the ratio of 60 : 40 between Diskettes and accompanying manual there was no justification for confiscating the goods on the ground of misdeclaration or for imposing penalty. There was also no scope for demanding the differential duty.
7. As a result we set aside the impugned order with consequential benefits to the appellants under law.