TMI Blog1992 (6) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... e 302 complete with accessories for pharmaceutical industry . The value of the imported machine and accessories was declared as Rs. 1,25,13,177/-. In respect of Invoice No. 8406 dated 28-6-1990 against which the goods were imported, the appellants produced Proforma Invoices, dated 5-8-1987, 10-11-1989 and 10-1-1990, each one of which showed the CIF value of the machine and accessories at S. Fr. 9,93,730/-. They also produced a letter dated 20-8-1990 in which the supplier while confirming the price of the goods quoted in Proforma Invoice dated 5-8-1987 had stated that after conclusion of the negotiations the importers had accepted the Proforma Invoice dated 5-8-1987. The customs authorities held the view that the goods having been imported in June, 1990, the Invoice price based on the price quoted by the supplier in 1987 could not be deemed as the value of the goods under Section 14(1) of the Customs Act, 1962. From the declared CIF price of S. Fr. 14,50,000/- of an identical Type 302 Form Fill and Seal Machine imported by M/s. Gujarat Injects Limited against Invoice No. 8452 dated 14-7-1990 and Bill of Entry No. 5369 dated 16-7-1990 the department after deducting the values of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962. He, however, gave the appellants the option to redeem it on payment of a fine of Rs. 10,00,000/-. He also imposed a penalty of Rs. 2,50,000/- on the appellants. 3. On behalf of the appellants the learned Senior Advocate Shri Kapil Sibal with Advocate, Shri S.H. Sanjanwala appeared before us. Shri Kapil Sibal stated that in 1987 the appellant had entered into a contract with the Swiss manufacturer for the import of an Asceptic Form Fill and Seal Machine - Type 302" alongwith essential attachments at a price of S. Fr. 9,93,730/-. C F equivalent to Rs. 1,25,13,177/-. He added that on the basis of the order placed by the appellant, the supplier had undertaken the manufacture of the machine but due to certain reasons the appellant could not open the Letter of Credit before November, 1989. He stated that for the clearance of the machine and the attachments which were imported in June, 1990 a Bill of Entry No. P/M 3763/39 dated 1-7-1990 was filed. However, having regard to the import of an identical machine though with different attachments by M/s. Gujarat Injects Ltd. at the declared price of S. Fr. 14,59,000/- equivalent to Indian Rs. 1,64,70,639/- a show cause notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Rs. 1,25,13,177/- and holding that the goods were liable for confiscation under Section 111(m) of the Customs Act was bad in law and without jurisdiction inasmuch as Section 14(1) of the Customs Act, 1962 provides for levy of Custom duty on the price at which such or like goods are ordinarily sold or offered for sale when there being no other consideration for sale. He argued that in absence of any mutuality of interest between the importer and the supplier and the transaction between the appellants and the supplier being on principal to principal basis and the price being the sole consideration for the sale, the contracted price should have been taken as the assessable value under Section 14 of the Act. 4. Continuing his submissions the learned Counsel stated that Rule 3 of the Customs Valuation Rules, 1988 provides that the value of any imported goods shall be the transaction value and the transaction value has been defined in Rule 4 to mean the price actually paid or payable for the goods when sold for export to India. He contended that a combined reading of Rules 3 and 4 makes it clear that except in situations enumerated in sub-rule (2) of Rule 4 the price actually paid or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant against Bill of Entry No. T.K. 3803 dated 11-7-1990 was identical to the machine covered by Invoice No. 8452 dated 14-7-1990 which was imported by M/s. Gujarat Injects Ltd. against Bill of Entry No. 5369 dated 16-7-1990. He added that the Collector had pointed out in his order that the machines were of the same model, type, design and except for 3 attachments listed in the Collector s order, all other attachments and accessories imported by M/s. Gujarat Injects Ltd. had been imported along with the machine received by the appellants. He stated that the appellants contention that the machines imported by M/s. Gujarat Injects Ltd. had different features and specifications had been dealt with by the Collector who had pointed out that in terms of Operation Manual the machines were of the same model, design and capacity. He contended that the machines imported by the appellants and M/s. Gujarat Injects Ltd. being identical and both imports being contemporaneous, in view of the large difference in the transaction values of the two machines, it was permissible to determine the value of the machine imported by the appellants on the basis of the price to the machine impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve to be read along with the Section 14(1). In support of his arguments he cited the following case law :- 1991 (53) E.L.T. 122 - M/s. Peak Craft v. Collector of Customs 1992 (58) E.L.T. 126 (Tri.) - Tribunal s Order No. 293/91A in the case of M/s. Narayan International v. Collector of Customs, Delhi. 1988 (38) E.L.T. 471 - M/s. Globe Engg. Works v. Collector of Customs . 1987 (29) E.L.T. 155 - Basant Inds. Another v. Collector of Customs. 1988 (34) E.L.T. 388 - Nav Bharat Enterprises Pvt. Ltd. v. Collector of Customs 1985 (22) E.L.T. 283 - Automotive Enterprises v. Collector of Customs, Bombay. 1987 (28) E.L.T. 318 - Macneill Magor Ltd. v. Collector of Customs, Calcutta. 8. After conclusion of the arguments by both sides, Shri Kapil Sibal, Senior Advocate filed a note in which the following submissions were made on the case law cited by the learned JDR :- (1) The decision in the case of M/s. Peak Craft v. Collector of Customs, reported in 1991 (53) E.L.T. 122 (Tribunal) is not relevant to the points involved in the appellant case since it relates to CIF value of imported goods and not transaction value; (2) The decision in the case of M/s. Globe Engineering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deemed price was available the highest price could not be taken as the deemed value; (6) In the case of M/s. Macneill Magor Ltd. Calcutta v. Collector of Customs, Calcutta, reported in 1987 (28) E.L.T. 318 (Tribunal), it was held that the price at which the goods were imported was about 100% lower than the list price at which the goods had been imported by other independent importers. The goods were, therefore, held to have been under-valued and penalty was imposed on the importer. However, in the instant case, there is no list price and the facts of the case reveal that the same machine was sold to different importers at different prices and difference between the appellants price and the highest price was less than 15%. Hence, the invoice price in the appellants case represents the assessable value. Further in view of the judgment of the Supreme Court in the case of Hindustan Steel Ltd., reported in 1978 (2) E.L.T. (J 159) there was no case for imposition of penalty. (7) The decision in the case of M/s. Aarkeyness Imports Corporation, New Delhi v. CC, New Delhi, reported in 1988 (37) E.L.T. 118 (Tri.) = 1988 (12) ETR 112, is not relevant since in the appellants case the depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acceptable as assessable value since the suppliers had agreed to supply the goods without any escalation of price in terms of the original contract entered into in Aug., 1987. It has also been contended that provision of Rule 5 can be invoked for the determination of the value only when the transaction value cannot be determined under Rule 4 and in the appellants case even if it is assumed that the value of the imported machine and attachments was determinable under Rule 5, then on account of the availability of different value for identical goods imported at or about the same time by M/s. Core Parenterals Ltd. in terms of sub-rule (3) of Rule 5 the value of the appellants goods would be determinable on the basis of the lowest of the different available prices. According to the appellants the price of their goods was not determinable on the basis of the price of the machine imported by M/s. Gujarat Injects Ltd. since that machine was manufactured in the year 1990 and was not identical to the machine imported by them which was manufactured in the year 1987 and also for the reason that for the purpose of Section 14(1) the price at which such or like goods are originally sold cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery at the time and place of importation 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 Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50. (1-A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf." 13. Since the provisions of the Act have overriding effect the value of any imported goods or their transaction value determined under any of the provisions of the Customs Valuation Rules, 1988 has necessarily to conform to the provisions of Section 14(1). Prior to the amendment of Section 14 in 1988 the provisions of Section 14(1) and the deleted sub-section (b) were mutually independent and in the event of the value not being found to be determinable under Section 14(1) it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction value under Rule 4 of the said rules, if it is widely at variance with the price at which such or like goods are sold or offered for sale at the time and place of importation in the course of international trade, when the buyer and seller are not related. 15. It is seen that in the impugned order the Collector arrived at the finding that the price declared on the basis of the supplier s invoice in respect of the machine imported by the appellants in June, 1990 did not represent the transaction value in terms of Rule 4 of the Customs Valuation Rules, 1988. He also held that the value of the imported machine and attachments was determinable on the basis of the price of another identical machine which was also imported in June, 1990 by M/s. Gujarat Injects Ltd. In this regard the appellants case was that a solitary import of a Form Fill and Seal Machine - Type 302" by M/s. Gujarat Injects Ltd. could not form the basis for determining the price at which the machines in question were being sold at the relevant time in the course of international trade. It was also contended by the appellants that there could not be any uniformity in the price of the machines impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at even though the original Bill of Entry bearing the examination report and the attached manufacturers invoice were a part of the Customs records, the Collector made no efforts to refer to these vital documents and the operational manual issued by the manufacturer in order to examine the appellants claim that the system imported by them was identical to the system imported by M/s. Core Parenterals. 17. We find that the only consideration which weighed with the Collector while rejecting the appellants claim that the transaction value in respect of the machine imported by them could not be rejected since it was higher than the value accepted by the Department in respect of an identical machine imported by M/s. Core Parenterals was that the net weights of the two consignments being different they could not have been identical. We are of the view that on this point the Collector ought to have given a reasoned finding after examination of the relevant documents such as the original Bill of Entry, supplier s invoice, and operational manual as he had done while comparing the appellants machine with the machine imported by M/s. Gujarat Injects Ltd. It is seen that he made no effort ..... X X X X Extracts X X X X X X X X Extracts X X X X
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