INDUSIND MEDIA & COMMUNICATIONS LTD versus COMMISSIONER OF CUSTOMS, NEW DELHI

Citation: [2019] 12 S.C.R. 1046 · Decided: 27-09-2019 · Supreme Court of India · Bench: UDAY UMESH LALIT · Disposal: Dismissed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2019] 12 S.C.R.
 INDUSIND MEDIA & COMMUNICATIONS LTD.
v.
  COMMISSIONER OF CUSTOMS, NEW DELHI
(Civil Appeal No.2498 of 2018)
SEPTEMBER 27, 2019
[UDAY UMESH LALIT AND VINEET SARAN, JJ.]
Customs Act, 1962 – ss.111,  130E – Customs Tariff Act, 1975
– s.XVI of the First Schedule – Appellant imported certain goods –
It was alleged that appellant had intentionally not declared the true
and correct value and correct classification of imported equipments
which were meant to be interconnected to perform a function of
‘Head End’ – A show cause notice was issued to the appellant –
The Principal Commissioner of Customs (Import) held that
declaration made by the appellant was false in material particular
and redetermined the value of all the goods imported – Aggrieved,
the appellant filed customs appeal before the Tribunal – Appellant
contended that there was no undervaluation of the goods and Note
4 to s.XVI of the First Schedule to the Act, 1975 had no application
in the matter – Appellant also submitted that classification of the
imported goods was to be under 8525 and not under 8543 –
Tribunal held goods would be covered by heading 8525 and not
heading 8543 and further held that there was mis-declaration
established in respect of valuation, therefore, appellant was liable
for the penalty – On appeal before the Supreme Court, the
appellant contended that certain activities like engaging the
services for appropriate software etc. were post-import activities
and could not be taken into account for the purposes of valuation
– Held: The facts disclose that out of 19 items indicated in the Bill
of Entry, only 8 items were physically presented while the rest were
already embedded in the main unit – These facts reflected that
individual components were intended to contribute together and
attain clearly defined functions as dealt with in Note 4 of s.XVI and
also indicated that software that was embedded through cards in
the main unit was not any post-importation activity – Therefore, the
value of the software was rightly included – The Department was
right in invoking principle under said Note 4 and considering the
imported items as part of one apparatus to be classifiable under
[2019] 12  S.C.R. 1046
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the heading appropriate to the function – Thus, the view taken by
Tribunal affirmed.
Dismissing the appeal, the Court
HELD: 1.  It must be stated that the finding of the Tribunal
that the imported goods would be classifiable under Tariff Item
8525 and not under 8543, has not been challenged by the
respondent.  Thus, insofar as the issue of classification is
concerned, the question is whether the items imported ought to
be considered individually or whether the treatment given by
the Department, with the aid of Note 4 to Section XVI was
correct.  Note 4 appears in Section XVI of the First Schedule to
the Customs Tariff Act, 1975. [Para 11] [1057-D-F]
2. It is a matter of record that after considering the
purchase order in the instant case, the Tribunal found that apart
from supply of equipment, necessary software had to be
embedded in the equipment before the supply was effected.  The
facts also disclose that out of 19 items indicated in the Bill of
Entry, only 8 items were physically presented while the rest were
already embedded in the main unit.  These facts are not only
reflective that the individual components were intended to
contribute together and attain a clearly defined function as dealt
with in Note 4 of Section XVI as stated above, but also indicate
that software that was embedded through cards in the main unit,
was not any post-importation activity.  The value of the software
and the concerned services were therefore rightly included and
taken as part of the importation. [Para 14] [1062-E-G]
3. The facts on record as stated above further disclose that
the Department was therefore right in invoking principle under
said Note 4 and considering the imported items as part of one
apparatus or machine to be classifiable under the heading
appropriate to the function.  The submission advanced by the
Appellant in that behalf therefore has to be rejected.
[Para 15] [1063-A]
4. Rule 9(1)(b) of Customs Valuation (Determination of
Price of Imported Goods) Rules, 1988 as quoted in the decision
in Toyota Kirloskar case shows that the value in respect of
“materials, components, parts and similar items incorporated in
 INDUSIND MEDIA & COMMUNICATIONS LTD.v.   COMMR.
OF

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