1993 (5) TMI 83 - AT - Customs

Summary

Issues Involved:
1. Applicability of the new valuation rules.
2. Effect of the amended show-cause notice on the original notice.
3. Validity and relevance of the quotations used for revaluation.

Issue-wise Detailed Analysis:

1. Applicability of the New Valuation Rules:
The appellant contended that the revaluation was based on incorrect rules and that the new rules effective from 16th August 1988 should have been applied. However, the Court found this contention unsubstantial, implying that the rules applied by the department were appropriate.

2. Effect of the Amended Show-Cause Notice:
The appellant argued that the amendment of the show-cause notice replaced the earlier notice, thereby nullifying the proposals for confiscation and penalty in the first notice. The Court also found this contention unsubstantial, indicating that the amended notice did not invalidate the original proposals.

3. Validity and Relevance of the Quotations Used for Revaluation:
The primary surviving issue was the relevance of the quotations from M/s. Europa Wall Coverings Ltd. for revaluation purposes. The appellant argued that the quotations pertained to 1988, a year after the import took place in 1987. The revenue claimed that the quotations referred to the 1987 transaction, but failed to produce documents to establish this correlation. The Court remitted this issue back to the Tribunal for reconsideration, allowing both parties to present material supporting their contentions.

The Tribunal's earlier decision had relied on quotations from the same supplier showing higher prices than those declared by the appellant. The Tribunal upheld the department's valuation based on these quotations, drawing support from previous judgments, including the Supreme Court's decision in Sharp Business Machines v. Collector of Customs.

Scope of the Supreme Court's Remand:
The remand by the Supreme Court was to determine whether the quotations relied upon by the department pertained to the 1987 import. The appellant argued that the burden was on the department to prove this correlation. The department contended that the entire valuation issue was open and could be argued without new material.

Tribunal's Findings:
The Tribunal found that the department failed to provide material proving that the 1988 quotation related to the 1987 import. The appellant presented a letter from M/s. Europa Wall Coverings Ltd. stating no such export quotation was issued during the relevant period. The Tribunal concluded that the quotation was not reliable for valuing the goods, and in the absence of evidence of undervaluation, the invoice value should be accepted.

Mis-Description of Goods:
The Tribunal noted that the mis-description of goods did not substantially change their character. The goods described as "decorative papers for laminates" were found to be "decorative wallpaper," but both descriptions referred to decorative paper. Therefore, the invoice value was accepted, and the department's claim of undervaluation was dismissed.

Quantum of Fine:
The Tribunal reduced the fine from Rs. 4.5 lakhs to Rs. 1.3 lakhs, considering the circumstances and the lack of substantial evidence for higher valuation.

Conclusion:
The Tribunal concluded that the department failed to prove undervaluation based on the 1988 quotation. The invoice value was accepted, and the fine was reduced, resolving the issues in favor of the appellant.