Per V.K. Agrawal :

Inthese three appeals, arising out of a Common Order passed by the Commissioner of Customs, the issue involved is whether M/s. SAB Electronics Ltd. have imported complete EPABX and Telephone system in CKD/SKD condition under 37 Bills of Entry or Parts and components of EPABX.

2. Briefly stated the facts are that the Appellants entered into an agreement with M/s. Kyushu Matsushita Electric Co., Japan (KME) for receiving certain technical assistance and technical information and know how for manufacturing EPABX Proprietary Telephone for EPABX; that investigation was carried out on the basis of an information to the effect that they had imported 21,06,10 components in CKD/SKD condition from M/s. B.N. Nagano Co., Tokyo which required Special Import Licence and attracted rate of duty applicable to complete items. The Commissioner of Customs, under the impugned Order confirmed the demand of Customs duty amounting to Rs. 95,91,819/-, imposed penalty of Rs. 5 lakhs on the Appellant Co., Rs. 2 lakhs on Shri G.K. Jiwarjka, Director and Rs. 1 lakh on Shri C.S. Bhalla, Production Manager and held that the goods valued at Rs. 5.54 crores were liable for confiscation under Section 111 (d) and 111 (m) of the Customs Act but refrained from confiscating the same since the goods had already been cleared, holding that the Appellants had imported complete sets of EPABX system and telephone sets in SKD form in the guise of parts/components; that the imports tallied with the production and planning chart which depicted in respect of each model, the time of shipment from foreign supplier, the receipt and production by the importer and supply to the ultimate buyer. He also relied upon the decision in Sharp Business Machines Pvt. Ltd. Vs. CC, 1990 (49) ELT 640 (SC).

3. Shri A.N. Haksar, learned Sr. Advocate, submitted that the Appellants had imported various components of the EPABX during 1995-96 and 1996-97 at three import stations namely, Air Cargo unit, LCD. Tughlakabad and I.C.D., Patparganj; that the exact description of component imported along with respective Heading was mentioned on each of 37 Bills of Entry filed by them and the rate of duty application was assed and paid by them; that all these components were assembled at their manufacturing unit into EPABX Systems; that the packaging material procured indigenously was used for packing the same; that the whole case of the Department is based on the Provisions of Rule 2 (a) of the Rules For Interpretation of Customs Tariff as the components so imported were alleged to be complete articles; that the imports were spread over a period and each consignment consisted of different parts and components which in itself can never by construed to be complete kit. He, further, submitted that the B/Es are required to be filed at the time of each import giving the details of the items imported at that particular time; that the Department cannot expect them to file B/Es in respect of those items which do not constitute part of the consignment or which are yet to be imported; that the case against them is not that each consignment consisted of complete kits but it is that in total the goods imported against 37 B/Es over a period of about 20 months are in the nature of complete sets in CKD/SKD form; that Rule 2 (a) is not applicable as it provides that complete or finished article presented unassembled or disassembled are to be classified in the same heading as the assembled article; that the Explanatory Notes to Rule 2 (a) says that when goods are so presented, it is usually for reasons such as requirements of convenience of packing, handling or transport; that the Explanatory Notes further lays down that "Articles presented unassembled or disassembled means the article the components of which are to be assembled by means of simple fixing devices (screws, nuts, bolts etc.) or by riveting or welding provided only simple assembly operations are involved. He continued to submit that the