TMI Blog1989 (9) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... try as appeal Nos. C/1925/85-A, C/1926/85-A and C/1927/85-A. 2. M/s. Skefko India Bearing Co. Ltd. have also filed the above captioned appeals being aggrieved from the order passed by the Collector of Customs, Bombay. M/s. Skefko India Bearing Co. Ltd. had requested that the issue involved in the four appeals filed by them is similar to the review applications filed by the revenue and as such the same may also be heard along with them. In the interest of justice, we club the above captioned four appeals with the review applications filed by the revenue. The above captioned three review applications emerge from the same order-in-original and the same are being disposed of by this consolidated order. 3. Notices of hearing were sent to the parties. Shri V.M. Doiphode, the learned SDR has appeared on behalf of the revenue. Shri K.M. Desai, Sr. Advocate and Shri B. Parikh and Raj Darak Advocates for M/s. Skefko Bearing Co. Ltd. and Shri V. Lakshmi Kumaran, Advocate for M/s. Mirah Exports Pvt. Ltd. have appeared. Nobody has appeared on behalf of M/s. Punjab Bearing Traders and as such we proceed to decide the same on merits. 4. Appeal Nos. C/1925/85-A, C/1926/85-A and C/1927/85-A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Enforcement Directorate carried out searches at the following premises :- (i) M/s. Skefko India Bearing Co. Ltd., M.G. Memorial Building, Netaji Subhash Road, Bombay-400 002. (ii) M/s. Associated Bearing Co. Ltd., Hoechest House, Nariman Point, Bombay-400 021. (iii) Shri Kishan Chand, 74 Somerset House, Bhulabhai Desai Road, Bombay. During the course of search, certain documents were taken over by the Enforcement Directorate. The said documents were scrutinised by the officers of the Department for possible violation of the provisions of the Customs Act, 1962 and copies of certain documents which were found useful and relevant were obtained from the Enforcement Directorate. On the basis of the scrutiny of those documents, a show cause notice dated 31st May, 1984 was issued. The show cause notice alleged that: (a) That M/s. Skefko India Bearing Co. Ltd., cater to three categories of importer viz. (i) OEM s/AU s (ii) Canvassers and (iii) Skefko s own import. (b) The OEM s/AU s could obtain all types of bearings for their requirement by obtaining indents/booking orders directly with M/s. Skefko India Bearing Co. Ltd. The trade segment (stock and sale) if they are other t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for any price negotiations. (h) At the behest of M/s. Punjab Bearing Traders, M/s. Mirah Exports (P) Ltd., has been issued with indents for bearings Nos. 6201, 6201Z, 6201ZZ, 6202Z, 6203, 6203Z, 6203ZZ in July, 1982 and September, 1982. Out of the above indents a part quantity was import d by M/s. Mirah Exports (P) Ltd., and covered by the said 24 consignments. The remaining quantity which though supposed to be imported by M/s. Mirah Exports were ultimately imported by M/s. Skefko India Bearing Co. Ltd., on their own account. (i) The following OEM/AU importer has also imported similar bearings, the details of which are as under : Importer Bearing Unit Price Period 1. M/s. Laxmi 6201 S$1.70 April 1982 Machine Works Ltd. 6203 S $ 2.01 -do- 6203Z S$2.13 -do- 6203ZZ S $ 2.13/2.24 April/May/June, 1982 2. M/s. H.M.T. 6201 US $ 0.82 October 1982 6202Z US $ 0.95 -do- 6202 ZZ US $ 1.00 -do- 6203 US $ 1.01 -do- 6203Z U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounted against Punjab Bearing Traders (P) Ltd. It is apparent that M/s. Mirah Exports had imported bearing No. 6201, 6202, 6203 included shielded bearings at 48.7% of the price list. (m) The import by M/s. Mirah Exports (P) Ltd. is as per indents dated July 1982 and September 1982. The price list applicable for sale to M/s. Mirah Exports is therefore P/L No. 8102 dated 15-2-1981 valid till October 1982. The unit price of the Bearing No. 6201, 6202, 6203, included shielded bearings indicated in the said P/L 8102 are as under : Bearing No. Unit Price US $ Bearing No. Unit Price US.$ 6201 0.86 6202Z 1.00 6201Z 0.91 6203 1.06 6201ZZ 0.95 6203Z 6203ZZ 1.14 1.20 (n) As against the above said unit price M/s. Mirah Exports have effected imports at unit prices as under : 6201 DM 0.81 6201 Z DM 0.81 6201 D.M. 0.81 US $ 0.34 6203 Z US $ 0.40 DM 1.30 6203 DM 0.98 US $ 0.40 6203ZZ US $ 0.41 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndra and Mahindra and Jay Engg. Works who have been importing quantities from 10,000 to 50,000 pieces have been at similar prices. (d) A discount of 20% of the price list is available at the discretion of the local agents. (e) Even the Government undertakings like BHEL, Hindustan Tele Printers, and other public limited companies have been offered discounts ranging from 50% to 70%. (f) The price level of 48.7% of the price level applicable to Punjab Bearing in Fixation of the price value objective of 1983" has not been appropriately relied by Skefko, the local agents. (g) The invoice prices are favourably comparable with similar bearings from other countries like USSR, Romania, Czechoslavakia and Japan. (h) The invoice price and the landed cost of the bearings favourably compared with the local prices of similar bearings being manufactured locally. In reply to the show cause notice the local agents M/s. Skefko have put forward the following arguments :- (a) The importers M/s. Mirah Exports Pvt. Ltd., are not required to pay any amount over and above the invoice prices. (b) The prices charged in the invoice are in consistence with the pricing policy of the company. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question be assessed on their invoice values. 5A. The revenue being not satisfied with the order passed by the Additional Collector of Customs, Bombay has come in appeal before the Tribunal. 6. Shri V.M. Doiphode, the learned SDR who has appeared on behalf of the revenue, has reiterated the facts. He has pleaded that the last date of hearing before the adjudicating authority was 4th February, 1985 and the adjudication order is dated 19th April, 1985. Shri Doiphode has stated that Skefko India Bearing Co. Ltd. were the indenting agents of M/s. SKF Overseas Bearings Division, Sweden, and Punjab Bearing Traders were their canvassers for M/s. Skefko India Bearing Co. Ltd. vide letter dated 11th May, 1982. The orders were placed by the canvassers M/s. Punjab Bearing Traders in July, 1982, and in turn Skefko India Bearing Co. placed with SKF Bearings Division, Sweden, and at the time of placing of the orders, there was in existence a price list No. 8102 dated 15th February, 1981 and bearing Nos. 6201, 6202 and 6203, 6201Z, 6201ZZ and similar other bearings were operating in the price list. The foreign suppliers after the receipt of the order placed by the indenting agents had duly ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as placed by M/s. Punjab Bearing Traders, the canvassers, the goods have been imported by Mirah Exports and the value of the invoice cannot be different value under Section 14 of the Customs Act, 1962, and the SKF never claimed that for the equivalent price the same price was charged from others. The costing which has been done by the Addl. Collector in his order is not relevant. He has also argued that the realtionship of M/s. Mirah Exports, the importers with others was not important. He has further argued that while passing the adjudicating order, the learned Addl. Collector should have considered all the seized documents. The same has not been done. He has further stated that the presumption under the law is that the seized documents were the correct documents. He has referred to para No. 10 of the Additional Collector s Order which deals with the documents. Shri Doiphode has argued that indenting agent had created a monopoly for its canvassers M/s. Punjab Bearing Traders, and in support of his argument he has referred to the letter written by M/s. Skefko India Bearing Co. Ltd. addressed to Punjab Bearing Traders which appears on page 200 of the paper book. He has referred to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred at length to the pricing policy of the respondent and has argued that the discount given by the respondent is not quantity discount and under Section 14 of the Customs Act, there cannot be multiplicity of the prices. He has further argued that commission and discount are different. 7. Shri Doiphode has argued that the price list of the Skefko India Bearing Co. Ltd. is the exclusive price list. He has referred to internal page 32 of the order-in-original para 18. Shri Doiphode states that it has to be seen whether the quantity discount is admissible or not. He has referred to pages 32 and 35 of the order-in-original. He has argued that it is to be seen whether there was special relationship between the seller and the buyer/indenter (canvasser in this case). He has referred to paras (a), (b) and (c) of internal page 37 of the order-in-original. He has argued that the adjudicating authority has not applied its mind correctly, and there is a special relationship between the supplier and the buyer. He has pleaded that no kind of special discount or quantity discount is admissible under Section 14 of the Customs Act, 1962, and has also referred to Section 30 of the Old Sea Custo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... den of proof lies on the person who denies the genuineness of his signature or any statement contained in the document. Shri Doiphode has argued that full reliance has to be placed on the documents seized. Shri Doiphode in support of his over-all arguments has also referred to the following judgments : - (1) 1987 (28) E.L.T. (Tribunal) - Macneill Magor Ltd., Calcutta v. Collector of Customs, Calcutta. (2) 1984 (18) E.L.T. 203 (Delhi) - Oswal Woollen Mills Ltd. v. Collector of Customs, Bombay and Others. (3) 1983 (14) E.L.T. 2177 (Bombay) - Satellite Engineering Ltd. v. Union of India and Others. (4) 1987 (31) E.L.T. 356 (Bombay) - Satellite Engineering Ltd. v. Union of India and Others. (5) 1987 (27) E.L.T. 344 - General Marketing Manufacturing Co. Ltd. v. Collector of Customs, Madras. (6) 1985 (22) E.L.T. 283 - Automotive Enterprises v. Collector of Customs, Bombay. Shri Doiphode has pleaded for the acceptance of the appeals. 8. Shri K.M. Desai, Senior Advocate, Shri B. Parikh and Shri Darak, Advocates have appeared on behalf of M/s. Skefko India Bearing Co. Ltd. Shri Desai, the learned senior advocate, who has appeared on behalf of the respondent, has stated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble value under Section 4 of Central Excises and Salt Act. He has pleaded that under Section 46(1) of the Customs Act, 1962, the importer has to file a bill of entry in the prescribed form. This section does not use the word value . In the bill of entry column No. 9 means assessable value. Shri Desai has pleaded that the Addl. Collector had accepted the value as real assessable value and the declaration in the bill of entry by the importer was merely to the effect that the bill of entry was in accordance with the invoice and the assessable value is arrived at as invoice value plus rate plus commission etc. Thus invoice price is prima facie the assessable value and under Section 17 of the Customs Act, the department can assess the duty at a different rate. Shri Desai, the learned senior advocate, has pleaded that in some other matter there was importation of goods from Rumania and the department had accepted the value in that case. He has further argued that the price determined on the basis of trade practice has been recognised in various decisions of the Tribunal and two different prices offered under two different circumstances have been accepted. He has referred to the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector of Customs, Bombay) we do not think they support the department s case in any way. They are telex messages exchanged between parties and the quotations contained in the said telex messages have not been correlated with any actual importations made into India at prices mentioned in these messages. Taking the documentary evidence as a whole, we are of the view that the Department has been unable to satisfy us that the appellants resorted to under-valuation. While we are inclined to agree with Shri Sunder Rajan that proving a case of undervaluation is difficult we have to go by the evidence and the same produced by the Department is not sufficient to pin down a serious charge like under-valuation raised against the appellants." (2) 1983 E.L.T. 2380 - Gordon Woodroffe Co. (Madras) Pvt. Ltd., Madras v. Collector of Customs, Madras Where the Tribunal had held that: There was nothing unusual in the supply of some quantity of tungsten ore at a fixed price and some quantity at the formula price. Since the Department has produced no evidence to show that the other Indian importers of tungsten ore, who contracted for the goods at about the same time, had paid any different pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Please note that the lists shall be used only in order to gain such business that cannot be obtained normally - new business. Similar is the position of the circular letter dated 22nd January, 1981 which appears on page 73 of the paper book. Shri Desai has pleaded that there is sufficient circumstantial evidence on record that the invoice price was the correct price. He has pleaded that 20% discount has been given and fairly stated that there is no mention of discount in the price list and in the pricing policy of the company of the respondents, larger discount was to be allowed where the quantity of the importation was much more. In support of his argument, he has referred to a note by Mr. H. Tully, Director on his visit to India which appears on pages 96 and 97 of the paper book. He has referred to the provisions of Section 14 of the Customs Act, 1962 and has also referred to the provisions of Sections 17 and 46(1) of the Customs Act. He has referred to para 17 of the order-in-original. At page 30 of the order-in-original the adjudicating authority has observed that: I, therefore, find that the policy of selling additional volumes at higher discounts is totally within the amb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by the revenue. He has pleaded that the price list and price levels are two different things. He has referred to page 28 of the paper book which deals with the price level order as on 26th March, 1983 and the respondents do not rely on this price level, and this price level calculation is by the Sweden Company, and the respondent cannot explain the same. The revenue has relied on the price level and it is for the department to prove what price level means. Shri Desai has aruged that the exporter and the importer/indenting agent are not related persons and the allegation of the department that canvasser is the monopolist is also not correct. He has referred to the judgment of the Tribunal in the case of Collector of Customs, Bombay v. Maruti Udyog Ltd., Giirgaon reported in 1987 (28) E.L.T. 390, where the Tribunal had held that: Mere holding of 26% equity shares by Suzuki in Maruti and proprotional representation of Suzuki in Board of Directors of Maruti not amounting to mutuality of interest. He has also referred to another judgment of the Tribunal in the case of Albright Morarji and Pandit Ltd., Bombay v. Collector of Central Excise, Bombay reported in 1987 (28) E.L.T. 539 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the judgment of the Hon ble Supreme Court in the case of A.K. Roy and Another v. Voltas Ltd. reported in 1977 E.L.T. J-177. He has referred to pages 126 and 127 of the paper book and states that the price of bearing type 6202Z is DM 0.84 and on page 127 the price of the same in the case of Vora and Vora, Bombay is US $ 0.46 and 1 $ is equal to 0515 Mark (DM). He has pleaded that the price is almost the same. He has referred to the judgment of the Andhra Pradesh High Court in the case of Jay Engineering Works Ltd., Hyderabad v. Government of India and Others reported in 1982 E.L.T. 378 (A.P.). He has also referred to Tribunal Order No. 155/88-A dated 12th February, 1988 in the case of Controller of Stores, Bombay v. Collector of Customs, Bombay where it was held that fair transaction value under Section 14(1) of the Customs Act should be accepted. He has also referred to another judgment in the case of Prembhai Chhibabhai Tangal v. The Union of India and Ors. reported in 1987 (13) ECR 1109 (Bombay). Lastly he has referred to the judgment of the Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa reported in 1978 E.L.T. (J 159). Shri Lakshmi Kumaran further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pradip Lamp case is fully applicable in the case of the revenue. He has also referred to the following judgments :- (1) 1987 (29) E.L.T. 889 - Auto Lamps Ltd., Delhi v. Collector of Central Excise, New Delhi. (2) 1987 (31) E.L.T. 356 (Bombay) - Satellite Engineering Ltd. and Another v. Union of India and Others. He has argued that SKF Sweden is a related person of Skefko India Bearing Co. Ltd. as 39.8% shares are held by the Sweden Company. Shri Doiphode has argued that the appeals filed by the revenue may be allowed and the four appeals filed by M/s. Skefko India Bearing Co. Ltd. may be dismissed. 12. We have heard both the sides and have gone through the facts and circumstances of the case. In the matter before us, Skefko India Bearing Co. Ltd. are the indenting agents of SKF Bearing Division, Sweden and Punjab Bearing Traders are canvassers and Mirah Exports Pvt. Ltd. are the importers. The orders were placed in July, 1982 by Punjab Bearing Traders, the canvassers with Skefko India Bearing Co. Ltd. and SKF further placed order with the exporter, namely, SKF Overseas Bearing Division, Sweden. The orders were for ball bearing type Nos. 6201, 6202, 6203, 6201Z, 6201ZZ, etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or exportation, as the case may be in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale : (Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Sec. 46, or a shipping bill or bill of export, as the case may be, is presented under Sec. 50); (b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1), if the Central Government is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods and where any such taiff values are fixed, the duty shall be chargeable with reference to such tariff value. (3) For the purposes of this section - (a) rate of exchange means the rate of exchange - (i) determined by the Central Government, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milarly placed. He has also laid emphasis on the following points :- (a) Pricing policy of the exporter has to be looked into. (b) Quantity discount is based on commercial consideration. (c) There can be different classes of customers. (d) The mere fact that there is a single buyer for a particular category is not a ground for rejecting the invoice value and for a single buyer two different prices for different consignments are permissible if based on commercial consideration. Negotiated price on commercial considerations should not be rejected. Shri Desai, the learned Senior Advocate, further pleaded that the documents seized by the department are unsigned documents and no reliance should be placed on them. 13. On the other hand, Shri Doiphode, the learned SDR on behalf of the appellant agitated that in custom importation matters the price is governed by provisions of Section 14 of the Customs Act. Shri Doiphode, on the other hand, stated that there is a gross under-valuaton in the price of the bearings even to the extent of 75% which is unheard. He argued that the value as per the price list should be adopted for the purposes of assessment in terms of Section 14 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antum of proof required, if in an abstact case it could be shown that a published list price of the goods was available, that the importers in general were importing the said goods at that listed price and that one particular importer declared on importation a price which was more than 100% lower than the listed price, there would indeed appear to be a very heavy onus shifted to that importer to explain how he got such a low price. While minor variations would not call for imposition of fine and penalty, a difference of more than 100% would appear to show the motive of the importer of which the authorities would be justified in taking a due notice. Under-invoicing and over-invoicing in the course of international trade are, like other present day white collar economic offences, sophisticated jobs. One does not get at direct and positive evidence like bogus invoices or documents relating to extra remittances just for the asking. Such evidence becomes available only rarely and that too when raids and searches are conducted on receipt of specific information. It is neither possible nor desirable to organise raids and searches in every case where the declared price is found to be appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Co. Ltd. v. Collector of Customs, Madras reported in 1987 (27) E.L.T. 344 had held that Where the goods were sold through exclusive dealer and the indents for imports were placed by buyers through exclusive dealer who added their buying commission, lower price charged to said dealer not deemable as the price at which goods ordinarily sold or offered for sale and, hence, not the assessable value. The Tribunal had further held that : Commission paid by buyers to exclusive dealer part and parcel of assessable value, and not post-importation charge. In the case of Consolidated Coffee Ltd., Pollibetta v. Collector of Customs, Bombay, reported in 1986 (24) E.L.T. 429 (Tribunal), the Tribunal had held that; Deemed value of imported goods neither actual value nor invoice price nor price at which goods capable of being sold but price at which such goods, ordinarily sold or offered for sale, i.e., market price, at time and place of importation and in the course of international trade does not signify invoice price. Para No. 5(c) and 5(e) to (k) are reproduced below :- (c) the deemed value of imported goods, where duty is to be levied ad valorem is, in terms of S.14 of the Act, not th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms) and para 7 of our judgment in 1985 (21) E.L.T. 140 (Tribunal) = 1985 ECR 646 (M/s. Rakesh Press v. Collector of Customs, Bombay); (h) to the same effect was the decision of the Calcutta High Court in I.L.R. (1976) 2 Calcutta (Bird Co. v. K.K. Sen Gupta) when it was observed on a construction S. 14(a) that the price at which a particular seller enters into a contract with a particular buyer does not necessarily reflect the price at which such goods are sold at the time and place of exportation in the course of international trade. It was further held that what is to be taken as the basis of valuation is the price at which such goods or like goods are ordinarily sold at the time and place of exportation and not the contract price of sale in question; (i) nor does it follow that the invoice price is the assessable value in terms of S. 14(a), just because the buyer and seller have no mutual interest in the business of each other. The expression where the seller and buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer of sale is more a description of a price at which the goods or like goods are ordinarily sold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds sold." 17. In view of the above discussion we set aside the impugned order and direct the revenue authorities to fix the value as mentioned in price list No. 8102 dated 15th February, 1981 less 20% discount. During the course of arguments, Shri Desai, the learned senior advocate, had argued that no reliance should be placed on unsigned documents. As already discussed above, the genuineness of the price list is not doubted by the respondents. Neither side has placed any material on record as to the margin of profit. We are of the view that there is violation of provisions of Section 111(d) and 111(m) of the Customs Act, 1962. We direct the Collector of Customs to fix the quantum of fine and penalty keeping in view the gravity of the offence and the margin of profit. 18. Appeal Nos. C/1473/87-A, C/2426/87-A, C/2435/87-A and C/2472/87-A. The facts of the above said four appeals filed by M/s. Skefko India Bearing Co. Ltd. are similar to appeal Nos. C/1925/85-A, C/1926/85-A, C/1927/85-A filed by the Collector of Customs, Bombay. In view of our observations in the above paras, we do not find any justification in interfering with the order passed by the Collector of Customs, Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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