Per Justice U.L. Bhat :

These appeals are directed against order No.48-49/94CAC dated 12.4.94 passed by the Collector of Customs-II, Bombay. The appellants are:-

1. M/s Bakemans Home Products Pvt. Ltd. -Appeal C/539/94-A (for short, BHPL)

2. Sri Rajiv Kumar, Jt.M.D. - ditto - Appeal C/538/94-A

3. M/s. Farm House Biscuits Co. Ltd. - Appeal C/540/94-A

4. Sri I.M.Kapoor. V.P. ditto - Appeal C/537/94-A

5. Sri Pankaj Agarwal, V.P. ditto.- Appeal C/536/94-A

2. Each of the two concerns, FBCL and BHPL imported a consignment of certain machines etc. of USA origin through supplier M/s. Peters Machinery Coy USA (for short, PMC). The particulars of the imports are as follows:-

3. On receipt of information that invoices in the two cases had been manipulated so as to reduce the value of Cream Sandwiching Machine attracting higher rate of duty under tariff sub-heading 8438.80 and proportionately increasing the value of wrapping machine attracting lower rate of duty under tariff sub-heading 8422.40 with intent to evade duty, DRI investigated the cases. Statements of various persons connected with the two importers were recorded. Enquiry was made with the persons connected with PMC through USA Customs and copies of original invoices of PMC were obtained from PMC through USA Customs. It was found that the correct value in US $ of various goods imported were as follows:-

It was seen that there was deliberate shifting of a considerable part of the value of higher duty paying Sandwiching Machine to lower duty pang Wrapping Machine. Since these consignments were cleared on the basis of declared classification and value, there was substantial evasion of duty. It was also found that there was clandestine remittance of US $ 8000 by each importer towards the price. The goods in the possession of the importers were seized. Show cause notices dated 17.5.93 were issued by Assistant Director, DRI to the respective importers and the connected persons alleging deliberate misdeclaration of value and proposing demand of differential duty, confiscation of the goods and imposition of penalty.

4. The contentions raised by the importers and others can be summarised as follows:

They had acted bonafide and had no intention to evade duty. Importers, engaged in the manufacture of Biscuits imported the machines for modernisation of their plants. The machines were necessary for fast wrapping or packing. Sandwiching machine can be used also for creaming biscuits by using cream bite, pump and stencil. Feeder and Accumulator are basically part of Wrapping Machine and not of Sandwiching Machine. Creaming was only a supplementary function. The entire consignment merited classification under sub-heading 8438.80 with lower duty liability and excess duty had been paid by wrong declaration of classification. Wrapping Machine could be imported under OGL. By declaring "Creaming Machine", they were obliged to produce specific licence which they did. Value of one machine was not shifted to another. There was no evasion of duty; on the other hand, excess duty was paid erroneously. There was no payment of extra-consideration as alleged. Statements were recorded without making avail