1990 (3) TMI 192 - AT - Customs

Summary

Issues Involved:
1. Justification for loading the invoice value of goods imported from Kodak Company.
2. Determination of valuation under Section 14(1)(a) or Section 14(1)(b) of the Customs Act, 1962.
3. Consideration of pre-importation charges as part of the assessable value.
4. Proof of mutuality of interest between the importer (IPC) and the foreign supplier (Kodak).
5. Burden of proof for under-valuation by the Department.

Issue-Wise Detailed Analysis:

1. Justification for Loading the Invoice Value:
The Assistant Collector ordered the loading of the invoice value of goods imported from Kodak Company by various percentages (ranging from 3% to 12.5%) based on the services rendered by IPC that were deemed as pre-import services. These services included technical guidance, storage, installation, and calibration, among others. However, the Collector of Customs (Appeals) set aside this order, stating that the Assistant Collector's decision was not sustainable in law.

2. Determination of Valuation:
The primary point of contention was whether the valuation should be determined under Section 14(1)(a) or Section 14(1)(b) of the Customs Act, 1962. The Assistant Collector resorted to Section 14(1)(b), asserting that there was a nexus between IPC and Kodak, and that certain services rendered by IPC should be included in the assessable value. However, the Collector of Customs (Appeals) and the Tribunal found that the Department did not provide sufficient evidence to justify this shift from Section 14(1)(a) to Section 14(1)(b).

3. Consideration of Pre-Importation Charges:
The Assistant Collector included pre-importation charges in the assessable value, arguing that these charges were not reflected in the invoice but should be included. The Tribunal, however, held that the Department failed to prove that the services rendered by IPC constituted pre-importation charges that should be included in the assessable value. The Tribunal emphasized that it is the Department's burden to prove under-valuation with sufficient evidence.

4. Proof of Mutuality of Interest:
The Tribunal noted that for valuation under Section 14(1)(a) to be ruled out, there must be a mutuality of interest between the seller and the buyer. The Assistant Collector admitted that there was no mutuality of interest between IPC and Kodak, as mere equity participation and the appointment of directors by Kodak did not prove mutual interest. The Tribunal agreed with this assessment, stating that the Department failed to establish any mutuality of interest that would justify resorting to Section 14(1)(b).

5. Burden of Proof for Under-Valuation:
The Tribunal reiterated the well-settled principle that the burden of proving under-valuation lies squarely on the Department. In this case, the Department did not discharge this burden. The Tribunal found that the Department's decision to enhance the invoice value was based on inferences rather than concrete evidence. The respondent (IPC) provided sufficient evidence of direct imports by third parties, including a Government of India undertaking, at the same prices charged to IPC. This evidence was not adequately considered by the Assistant Collector.

Conclusion:
The Tribunal upheld the order of the Collector of Customs (Appeals), dismissing the Department's appeal. The Tribunal concluded that the Department was not justified in ordering the loading of the invoice value based on pre-importation charges without sufficient evidence. The price shown in the invoice was deemed the correct value at which the goods were ordinarily sold or offered for sale.