TMI Blog1986 (12) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... es showed that the price charged varied according to the size of the material and there was in all 24 different sizes. The invoices further showed that shippers had shown separate unit price for each size. The total declared CIF value for the five consignments was Rs. 4,49,011/- The appellants had also filed five separate certificates of origin in respect of the five consignments issued by the Indian Chamber of Commerce, Hong Kong. These certificates showed that the goods were of Japanese origin manufactured by M/s. Yoshida Kogyo K.K., Japan and not of Hong Kong origin as declared in the respective bills of entry. The Revenue authorities had inspected these Zip Fasteners and on inspection it was found that the same were of types Vislon-VFO-56" which, as per the index of M/s. YKK, Japan, stands for No. 5 Vislon Plastic injected Zippers open and automatic lock slider. The Central Intelligence -Unit of the Bombay Customs conducted certain enquiries in respect of the value declared for the goods and searched the premises of M/s. Janta Traders, Bombay and seized certain documents relating to import of Zip Fastners as per Panchanama dated 25-1-1982. During the course of interrogation st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs to be Rs. 8,91,842.65 as against the total declared CIF value of Rs. 4,49,010.92. (iii) The goods, therefore, appear to have been mis-declared in respect of the value to the extent of Rs. 4,42,831.73 GIF, which would have resulted in a loss of revenue to the extent of Rs. 8,21,200.36. (iv) There appears to have been an attempt to conceal the correct types of Zip Fasteners imposed by merely declaring them as Plastic Zip Fasteners without mentioning the types in the invoices. (v) The licences produced are valid for the import of Zip Fasteners to the extent of Rs. 4,49,011.00 only, whereas the imported goods comprising the five consignments are of a value of Rs. 8,91,843.00 resulting in the import of goods valued at Rs. 4,42,832.00 without the cover of a valid import licence. In the Show Cause Notice appellants were asked to explain why the goods should not be confiscated under the provisions of clauses (d) and (m) of Section 111 of the Customs Act, 1962 and why a penalty should not be imposed on them under Section 112 of the said Act. The appellant had filed a reply to the Show Cause Notice vide their letter dated 9th March, 1982, and had requested for a personal hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted by the appellants which was inclusive of the indenting commission. Shri Adarsh Veer Jain s statement contained a correct and factual position and the department had not brought any evidence to controvert the same. Regarding paragraph 4 of the show cause notice, the appellant had contended that he had approached various suppliers including M/s. Japan Trading Company, Hong Kong, who sent the price list dated 1-9-1981 in which the goods were described as YKK Brand Plastic Zippers -Size No. 5". Subsequently, they sent confirmation Notes Nos. 1928 to 1932, dated 7-9-1981 to them. Regarding the telex, the appellant had contended that since octroi duty was leviable on the goods according to the material of which the Zip Fasteners were made, the instructions were issued to show the material as plastic/aluminium". In any case the description in no way helps in the evasion of any duty. Regarding the discrepancy between the dates of sale confirmation notes of Japan Trading Company, and proforma invoices of M/s. Hing Kwok Industrial Co. Ltd., the appellant submitted that an uncalled for and wrong inference had been sought to be drawn by the department. It was further contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and calling it a negotiated price would not carry much conviction unless evidence is produced to show what were the conditions in and basis for such negotiations which led to the reduction in prices and there was no reason why YKK Japan should have followed the price list in October, 1981 in effecting supplies to M/s. Rajankumar and Brothers, Bombay, but give a considerable reduction in price for another importer in October, 1980 and March, I 981. In any case, if the Custom House had accepted these invoices without questioning it would not constitute sufficient evidence to show that prices could be negotiated. The learned Collector (Appeals) was of the view that there was under valuation and the price lists issued by the manufacturers in Japan had not been controverted by the importers. There is no evidence as to the negotiated prices and there was no correspondence to this effect too. The learned Collector was of the view that a negotiated price cannot be 50% of the basic price quoted by the suppliers in the price list. Even in the proforma invoices produced by the importers, the appellants, the price variation was not as wide, and could lead to a reduction of 5 to 10%. The quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asteners were concerned, the effective price at which they were ordinarily sold for importation into India was the price shown in the price list of the manufacturers, viz., M/s. YKK Japan. The learned Collector was of the view that in terms of Section 14. of the. Customs Act the value of imported goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place of importation, 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 the sale. The price list issued by the manufacturer is one which is of general application to all importers and when the goods have been imported at the same prices as those shown in the price list, then that is the price at which such goods are ordinarily sold or offered for sale at the time and place of importation. The learned Collector had come to the conclusion that it was correct for the department to base the assessment on an authentic price list issued by the original manufacturer and on the basis of which an Indenting Agent who represents such man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thousand only); and (v) B/E No. 1629/111, dated 16-11-1981 from Rs. 75,360/- to Rs. 40,000/- (Rupees forty thousand only). The Board had also reduced the personal penalty of Rs. 10,000/- imposed on each of the consignments to Rs. 2,500/- (Rupees two thousand five hundred only), in respect of each consignment. Being aggrieved from the aforesaid order the appellant has come in appeal before the Tribunal. 3. Shri S.D. Nankani, the learned advocate has appeared on behalf of the appellant. He has reiterated the contentions made in the appeal memo Shri Nankani, the learned advocate has pleaded that the goods are still under detention. He has pleaded that the appellant had filed written submissions dated 9th October, 1985 and the revenue authorities had also filed written reply which was presented in the registry on 26th November, 1985 and in response to the same the appellant had filed a rejoinder dated 16th December, 1985 which was received in the registry on the 18th November, 1985. Shri Nankani, the learned advocate has pleaded that his appeal may be decided on the basis of the appeal memo, written submissions and the rejoinder. Shri Nankani had laid great emphasis on the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . He has referred to his grounds of appeal and has laid special emphasis on page 33 of the Paper Book. He has pleaded that the revenue has shown discrimination to the appellants and revenue s case is based on two price lists produced by M/s. S.B. Vijay Laxmi Corporation, Bombay and M/s. Crispin Agencies, Bombay. On the other hand the appellants had produced documentary evidence of YKK Zip Fasteners having been allowed clearance by the Bombay Custom House itself on the prices lower than those indicated in the said 2 price lists. The prices shown in the price lists filed by the Department were negotiable and the prices in the said price lists were the basis for such negotiations and the fact of imports at lower prices has not been denied by any of the revenue authorities and the representatives of such agents in their statements and correspondence had clearly admitted that their prices in the price lists were negotiable. Shri Nankani has referred to para No. 11 of the appeal petition wherein the appellant has duly mentioned that on or about 17-9-1982 the appellants had filed written submissions enclosing therewith a chart showing the comparison exchange fluctuations as per the Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Shri Doiphode has referred to para No. 11 of the adjudication order. In the said para the Collector has accepted the fact that the value in both the invoices was at a lower price than that contained in the YKK Japan price lists relied upon by the Department. He had further observed that the appellant cannot have the benefit of the same in view of the department s Invoice Nos. ID/252/81, dated 28-9-1981 and ID/291/81, dated 17-11-1981 both issued to M/s. Babson and Company, for imports from Singapore and another invoice No. JM-394, dated 1st August,1981 for imports direct from M/s. YKK Japan by M/s. Rajankumar and Brothers, Bombay. He has also referred to the Show Cause Notice dated 12th February, 1982. Shri Doiphode has referred to the invoice dated 28th September, 1981 which appears on page 25 of the respondents Paper Book in favour of M/s. Babson and Company and has also referred to the invoice dated 7th November, 1981 which appear on page 259 of the appellants Paper Book. He has referred to the invoice dated 1st August, 1981 in favour of M/s. Rajankumar and Brothers appearing on page 18 of the Paper Book. He has stated that M/s. Babson and Company had imported consignments b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of M/s. Automotive Enterprises v. Collector of Customs, Bombay, reported in 1985 (22) E.L.T. 283 where the Tribunal had held that the deemed value is to be the value for assessment even if invoice price prove to be true price. He has also referred to a judgment of the Hon ble Bombay High Court in the Case of M/s. Satellite Engineering Ltd. v. Union of India reported in 1983 E.L.T. 2177 where in the Hon ble High Court had hold that in terms of the provisions of Section 14 of the Customs Act, 1962 and Rule 3(d) of the Customs Valuation Rules, 1963 the value of the goods for the purposes of levying duty shall be fixed with reference to the price at which such goods are sold or offered for sale in the course of international trade and where the seller and the buyer hand no interest in the business of each other and the price is the sole consideration. He has referred to para 6 of the said judgment. Shri Doiphode has referred to another judgment of the Tribunal in the case of Consolidated Coffee Ltd., Pollibetta v. Collector of Customs, Bombay [1986 (24) E.L.T. 429 (Tri.)], wherein the Tribunal had held that the deemed value of imported goods, where duty is to be levied ad valorem i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v. Collector of Customs, Bombay [1985 ECR 1307 (CEGAT) = 1984 (20) E.L.T. 335 (Tri.)]. He has also referred to a judgment of the Hon ble Bombay High Court in the case of Union of India and Others v. Glaxo Laboratories (India) Ltd. reported in 1984 (17) E.L.T. 284 (Bom.) wherein the Hon ble High Court had held that the value by which import licence is to be debited by Customs authorities is actual c.i.f. value and not the international price of the imported goods which is relevant and material only for calculating import duty thereon under Section 14(1) of the Customs Act, 1962. Therefore, to equate c.i.f. value consisting of. price of goods paid, commission allowed, freight and insurance with value as defined in clause 2(e) of the Import Control Order is erroneous . Shri Nankani states that in view of the judgments cited by him, the value declared by the appellant was perfectly in order and there was no occasion for raising the same. Shri Nankani has referred to another judgment of the Tribunal in the case of M/s. Orient Enterprises, New Delhi v. Collector of Customs, Cochin reported in 1985 ECR 2158 (CEGAT) = 1986 (23) E.L.T. 507 (Tri.), wherein the Tribunal had held that fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he price list is of Japan Trading Co. and the factum of this seized price list duly finds place in panchnama. Shri Nankani has referred to the letter dated 7th August 1982 written by Mr. Pinto of Crispin Agencies which appear on page 185 of the appellant s Paper Book and this letter was duly filed before the CBEC. In the said letter there is a mention that The reason for not booking orders for YKK Item VFO-56 is because the customers found the prices listed in Price List dated May 1, 1980 to be not suitable . Shri Nankani has stated that the value declared by the appellant is very reasonable. Shri Nankani also states that during the course of arguments Shri Doiphode, the learned SDR had referred to the appellant s letter which appears on page 11 of the respondent s Paper Book wherein it was mentioned that the appellant was interested to become an agent of YKK Japan in India. Shri Nankani says that in the adjudication proceedings no reliance was placed on that letter. Shri Nankani also states that the judgment cited by the learned SDR in the case of Automotive Enterprises v. Collector of Customs, Bombay reported in 1985 (22) E.L.T. 283 (Tribunal) is not applicable in the case of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e invoices and even after adding freight and insurance they still made a profit of about 6%. The appellant had also filed 2. photocopies of proforma invoices issued to M/s. Parjan Brothers, Delhi and an invoice dated 11th March, 1981 of M/s. Taj Mahal Exports, New Delhi as evidence to show that even YKK, the manufacturers have been supplying goods at a lower price being a negotiated price. The revenue has relied on the two price lists dated 1st May, 1980 and 1st June, 1980 which appear on respondents Paper Book s pages 3, 5 and 6. In both the price lists there is a note that The above prices are subject to market fluctuations . Both the price lists are per 100 pcs. in Japanese Yen. The Revenue has supported its claim of undervaluation on the basis of two invoices dated 1st August, 1981 issued by YKK in the name of M/s. Rajankumar and Brothers. The said invoice is in Japanese Yen. The invoice in the case of M/s. Rajankumar and Brothers appear on page 18 of the respondent s Paper Book and the invoice of M/s. Babson and Company, pertaining to 1,800 pcs. appears on page 25 of the respondent s Paper Book. On the bottom of the said invoice there is a mention We hereby certify that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -valuation must be proved by proper evidence. There is a lot of force in the argument advanced by Shri Nankani that it is extremely unfair to the appellants to appraise their price for National Cassette Tapes E-180, with reference to the value charged for a consignment of 100 pieces as against the consignment of the appellants where 4500 units of the same article have been imported. With regard to the National Tapes E-120 we find that some enquiries seem to have been made with parties in Bombay, but there is no firm offer, not to speak of an actual importation, at a price other than the one shown in the appellant s invoice. We also agree with Shri Nankani that comparison of prices indicated in the invoice dated 25-6-1981 is unrealistic because the appellants have imported goods directly from Japan whereas the invoice dated 25-6-1981 covers goods which were first imported in Hong Kong and thereafter imported into India . The Tribunal in the case of M/s. Weston Electronics Ltd., New Delhi v. Collector of Customs, Bombay [Order Nos. 165 166/84-A, in Appeal No. CD(SB) A. No. 1999/83-A 2323/83-A] has held that the onus to prove the charge of undervaluation was on the revenue and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her judgments the list of which has already been reproduced on page number 23 of this order. Shri Doiphode, the learned Departmental Representative had relied on the judgment of the Hon ble Delhi High Court in the case of Oswal Woollen Mills Ltd., Ludhiana v. Assistant Collector of Customs, Bombay and others reported in 1984 (18) E.L.T. 203 (Delhi). In that case the Hon ble High Court had come to the conclusion on the ground that special discount was not admissible under the Customs Valuation Rules 1963. In the present matter before us there is no special discount. It is the negotiated price with the suppliers. The other judgment relied upon by Shri Doiphode was in the case of M/s. Automotive Enterprises v. Collector of Customs. Bombay reported in 1985 (22) E.L.T. 283 where the Tribunal had held that the value for assessment is to be the deemed value even if the invoice price prove co be true price. Under Section 14(l)(a) of the Customs Act, 1962 the value for the purposes of assessment of duty would be the deemed value as provided for under the said Section, even if the invoice price is provided to be true price as agreed between the parties, for it is the international market pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the seller and the buyer have no interest in the business of each other and the price is the sole consideration. In the case of Consolidated Coffee Ltd. Pollibetta v. Collector of Customs, Bombay reported in 1986 (24) E.L.T. 429 the Tribunal had held that the deemed value of imported goods, where duty is to be levied ad valorem is, in terms of Section 14 of the Customs Act, 1962, not their actual value, the invoice value or the price at which they are capable of being sold. It is, on the contrary, the price at which such goods are ordinarily sold or offered for sale at the time and place of importation, i.e. the market price at the time and place of importation. Both the judgments do not help the respondent in any way as there is no evidence on record that the seller or the buyer had any interest in the business of each other. In the present matter before us the transaction was at arms length. There is also no evidence of any clandestine remittance over and above the contract price. The facts and circumstances of the cases cited by the learned Departmental Representative are different, and do not help them. The appellant has filed a Comparative Exchange Rate Fluctuation Statemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pees thirty five thousand only) (3) B/E No. 1629/109, dated 16-11-1981 Rs. 35,000 (Rupees thirty five thousand only) (4) B/E No. 1629/110, dated 16-11-1981 Rs. 35,000 (Rupees thirty five thousand only) (5) B/E No. 1629/111, dated 16-11-1981 Rs. 40,000 (Rupees forty thousand only) Before we part with this issue we would further like to observe that even if the valuation declared by the appellant is not acceptable to the Customs Authorities, the Customs authorities were not justified in taking the value so adopted under Import Trade Control Regulations. We very respectfully agree with the observation of the Hon ble Bombay High Court in the case of Union of India and Others v. Glaxo Laboratories (India) Ltd. reported in 1984 (17) E.L.T. 284 (Bombay) which was followed by the Tribunal in the case of Virchem Corporation v. Collector of Customs, Bombay reported in 1985 (19) E.L.T. 257. The Hon ble Bombay High Court in the case of Union of India and Others v. Glaxo Laboratories (India) Ltd. had held that The value by which import licence is to be debited by Customs authorities is actual, c.i.f. value and not the international price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been held by the Hon ble High Court of Bombay that value of the goods for the purposes of levying duty shall be fixed with reference to the price at which such goods are sold or offered for sale in the course of international trade and where the seller and the buyer have no interest in the business of each other and the price is the sole consideration. In other words, the transaction must be at arms length and not entered for other considerations. In M/s. Automotive Enterprises v. Collector of Customs, Bombay, reported in 1985 (22) E.L.T. 283, this Tribunal has held that under Section 14(l)(a) of the Customs Act, 1962, the value for the purpose of assessment of duty would be the deemed value as provided for under the said Section even if the invoice price is proved to be true price as agreed between the parties, for it is the International market price which is the value for the purpose of customs duty. Similar view was held by this Tribunal in the case of Consolidated Coffee Ltd., Pollibetta v. Collector of Customs, Bombay, reported in 1986 (24) E.L.T. 249. It was held therein that the deemed value in terms of Section 14 of the Customs Act, 1962 is the price at which such g ..... X X X X Extracts X X X X X X X X Extracts X X X X
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