TMI Blog1996 (9) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... oolrajani, in the names of the above-mentioned firms. Enquiries by the department at the declared address of M/s Sigma Electronics and M/s. Sagar Electronics had revealed that no company existed at the given addresses. Therefore, on receipt of intelligence that few shipments consigned to the firms had landed at Air Cargo Complex, Delhi, officers of the DRI intercepted the same on 6-11-1992 and 7-11-1992. The goods declared as components of Alarm clocks on examination, were found to be DC Micro motors of Mabuchi make of different volts. Similar consignment of DC Micro motors had been transhipped to Jaipur prior to the arrival of the above consignment. Further enquiries by the DRI revealed that Vasudev Moolrajani had no firm by the name of Vikas Watch Manufacturing Company at Jaipur. On a visit to this premises, Shri Vasudev Moolrajani was found to be available there and his statement under Section 108 of the Customs Act, 1962 was recorded on 7-11-1992 in which he stated inter alia that he owned nine companies in the name and style of : 1. M/s. Sagar Electronics, Jaipur. 2. M/s. Sigma Electronics, Jaipur. 3. M/s. Vikas Watch Mfg. Co., Jaipur. 4. M/s. Swiss India Electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit price declared by impor- ter/supp- lier Unit price ascertained by the depart- ment Actual unit price as per the report of H.K. Customs Excise Department Unit price finally approved by Collector, Customs 1. 2. 3. 4. 5. D.C. Micromotors H.K.$ 0.75 -US $ 0.85 US $ 0.86 Ann. II to letter dated 8-9-1993 US $ 0.88 + handling charges and commissioner US $ 1 - HK $ 7.8 US $ 0.85 (Para 67 r.w.) page 40 of the order Calcula- tors H.K. $ 3.12 - US $ 1.75 Actual FOB - HK $ 7.025 Sl. Nos. 11 12 of Ann. I to letter dated 14-5-1993 HK $ 10.50 US (sic) Digital clocks HK $ 3.71 Price list of Wattari Ind. US $ 1.30 Sl. No. 13 14 of Anne. II to letter dated 14-5-1993 (read with invoice Nos. in Para 75 of the order) HK $ 13.00 US $ 1.30 (sic) para 77 Cardiac patches or Gra-phics-electro des HK $ 0.07 (page 278) - US $ 0.15 Sl. No. 13 of Ann. 1 to letter dated 14-5-1993 (See invoice No. mentioned in Para 79 of Collector s order) HK $ 1.20 US $ 0.15 (para 81 r.w.p. 40) Foley baloon cathetors ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents on the ground that the bills of entry and invoices relating to different periods are not contemporaneous documents. These documents were allowed to be taken on record subject to arguments of evaluation of their evidentiary value during the course of the hearing of the main appeals. The Department sought permission to bring on record the following two documents : (1) Report dated 14-5-1993 of Hong Kong Customs (issued by the Deputy Head of Trade Standards Investigation Bureau, Honk Kong) forwarded to the Indian Customs alongwith two enclosures; (2) Report dated 8-6-1993 forwarded by the Hong Kong Customs to Indian Customs alongwith the enclosures. The appellants objection to these documents was that the reports were not utilised by the department during the original adjudication proceedings even though they were available and till date, the documents on which the reports are based, have not been disclosed to the appellants. Similarly, the statement of the foreign suppliers had not been given to the appellants. The learned DR appearing for the Revenue stated that he was not in a position to supply the original documents in view of the International understanding betwe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he consignments for which no Bills of entry have been filed. On the other hand, it has been submitted on behalf of the Revenue that the acts and omissions of either the assessee or the department cannot be considered in isolation; the data on the invoices constitutes an integral part of the declaration on the Bill of entry; moreover, the appellants had themselves organised the procurement and shipping of the goods at Hong Kong and they were aware of what was being shipped and what was the price mentioned in the invoices. When the appellants had made wrong declarations on the Bills of entry in respect of 26 consignments, a change of heart could not be expected in respect of the remaining 14 consignments. We have carefully considered the rival contentions. Section 111(m) of the Customs Act reads `any goods which do not correspond in respect of value or any other particulars with the entry made under this Act or, in the case of baggage, with the declaration made under Section 77 in respect thereof . The term `entry is defined in Section 2(16) as entry in relation to goods means an entry made in a `Bill of entry . If a Bill of entry has not yet been filed, the question of goods im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of customs. Thus the wrong manifestation of goods was the handiwork of the appellants themselves and not the Shipping Corporation of India who made the declaration on the basis of the facts made available to them by the suppliers who were acting on behalf of the appellants. We have carefully considered the submissions made by both the sides. We do not find any evidence on record to show that any instructions were given by or on behalf of the appellants to the Shipping Corporation of India in respect of the declarations to be made in the import manifest. The Import Manifest (Aircraft) Regulations, 1976 provide that every import manifest shall cover all the goods carried in the Aircraft and consist of, inter alia, a cargo manifest in Form III. The cargo manifest shall be delivered in separate sheets in respect of (a) cargo to be landed (b) unaccompanied baggage (c) goods to be transhipped and (d) same bottom or retention cargo. Import Manifest (Vessels) Regulations, 1971 also provide for submission of a cargo declaration in Form III. The manner of declaring cargo is also the same as in the case of Import Manifest (Aircraft) Regulations, 1976. Form No. III of Cargo Manifest for air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refers to a 5% reward commission. It also speaks about a certain payment of US $ 40,000/- by Shri Vasudev Moolrajani. This letter further says, correct goods values were given on all export declarations except those under Serial No. 10 and 12 shipments. Over valuation on the export declaration of these two shipments were attributable to typing error and misunderstanding in the communication between the Indian buyers and the Company. There was, however, no malpractice involved. At the end of the letter, it is stated that a statement has been obtained from a Director of the Company, Mr. C.J. Sujan to confirm the above findings . The second letter dated 8th June, 1993 is more detailed and refers to the supplies made by several companies to the supplier of the present goods namely CNS Fortune. At the end of this letter, the following statement has been made, in the respect of 5 declarations lodged for the consignments, four are correct and one incorrect. The incorrect export declaration was a genuine mistake of the company which wrongly quoted the US dollar for the Hong Kong dollar in the amount declared. No legal action will be taken against the above (C) and (E) companies since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement of Shri B.J. Sujan referred to in the reports, has neither been furnished to the appellants nor submitted to the Court. Copies of the so called true invoices and the statements of the various suppliers have also not been furnished. In these circumstances, it was impossible for the appellants to rebut the contents of the two reports. He challenged the veracity of the reports and the details contained therein. During the arguments on the department s application for additional evidence (viz. the two aforesaid reports), the Counsel for the appellants insisted upon the production of primary material on the basis of which these reports were prepared. The learned Departmental Representative stated that he was not in a position to supply the original documents in view of the International understanding between India and Hong Kong and the conditions subject to which the Hong Kong Customs had supplied information and the documents to the Indian Customs viz. the prohibition on use of these documents in legal proceedings. Accordingly he claimed privilege. Countering these submissions the Counsel for the appellants, argued that there are certain principles governing claim of privil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Collector of Customs v. Sanjay Chandiram reported in 1995 (77) E.L.T. 241 (SC) = 1995 (58) ECR 574 (SC) and the Tribunal s decision in the case of Gapp s Industries reported in 1992 (60) E.L.T. 305 (Tribunal). On the other hand, the Counsel for the appellants referred to the Supreme Court decision reported in the Court Room Highlights in 1996 (84) E.L.T. A47 and various other decisions of the Tribunal to the effect that quotations alone cannot form the basis for proving undervaluation. We are of the view that quotations can be relied upon if they are found to be genuine, reliable, relevant, contemporaneous and relate to the sale of comparable goods meeting the requirements of Section 14 of the Customs Act and the Customs Valuation Rules, 1988. Therefore, evidentiary value of each quotation has to be considered on its own merits. 9. We now deal with the individual items of import, in respect of valuation, ITC contravention and the rate of duty. 9.1 DC Micromotor :- The appellants have claimed benefit of ITC Public Notice 32/92-97 which provides that components of consumer durables can be imported by actual users. According to the appellants, they manufacture alarm clo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he predominant or ordinary use is relevant for the purpose of classification but it is not important if the only question to be considered is whether or not the importer is an actual user. Here, since the manufacturers have confirmed that these DC micromotors can be used for alarm clocks for operating the bell, and since the appellants manufacture alarm clocks, we are inclined to hold that the appellants can be considered actual users in relation to the import of DC micromotors for use in the manufacture of alarm clocks. It is also noticed that the appellants had offered to demonstrate the use of these DC micromotors in their alarm clocks before the Collector. In these circumstances, we hold that the benefit of PN 32/92-97 cannot be denied to the appellants for the import of DC micromotors. As regards classification, there is not dispute that DC micromotors are classifiable under Heading 85.01 and are also eligible to the benefit of Notification 62/88-Cus., dated 1-3-1988 as amended. The dispute is whether Sl. No. 2 or Sl. No. 2A applies. The department submits that Sl. No. 2 is applicable whereas the appellants claim that Sl. No. 2A is applicable. Both the serial numbers cover DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Department of Electronics dated 10-2-1993 in which he has stated that On examination of the sample, prima facie it appears to be a complete kit of calculator and there are no missing components like resistors or capacitors. However, it is advisable if ERTL (North), Okhla, New Delhi STOC Lab under this Department may be contacted for confirmation. Import of populated PCB is in any case under the negative list of Exim Policy 1992-97 and requires an import licence from the office of the Director General of Foreign Trade (page 130 of the paper book). The appellants contended that the opinion itself suggested confirmation from a lab. They also stated that resistors and capacitors are missing and cross-examination of the officer of Department of Electronics was not allowed. We do not see much force in the contention of the appellants. They have already stated that they are not pressing their grievance regarding cross-examination. They have also not categorically disclosed as to what parts are missing. In our opinion, the advice given by the Department of Electronics shows that the goods imported appears to be calculators in CKD form. In any event, the goods contain populated PCBs whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have much force because the solar cell was not separately imported, but was assembled in the calculator. Therefore, confiscation of solar cells under section 111(f), 111(I), 111(m) is not justified. However, since the calculators have been held to be liable to confiscation under Section 111(d) the Solar Cells are also liable to confiscation. 12. Digital Clocks : The Department has alleged that the goods have been misdeclared as `components of digital clocks whereas they are digital clocks in CKD condition, based on the examination report and the personal opinion of the adjudicating officer based on the examination of the samples by him. The Collector has observed that 5,000 pieces of metal contact and 5,000 pieces of reflector have not been found in the packages when examined together. The goods are however invoiced, implying that they have been short landed. The absence of the same in no way proves that the item is not a CKD digital quartz clock. The Collector has therefore, confiscated this item under section 111(d) of the Customs Act. Whether it is a case of short-shipment or short landing, the facts remains that the goods as imported, are not complete digital clocks in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r or not cardiac patches are complete electrodes. However, in paragraph 79 of his order, the Collector has observed that on examination of the goods, it was found that the description given in the wrapper was graphic electrodes. That being so, we uphold the finding of the Collector regarding valuation of this item. 14. Balloon Catheters : During the hearing the Counsel for the appellants, conceded that the goods were not eligible to the benefit of Notification No. 201/81-Cus. He, however, claimed exemption from additional duty under Notification No. 339/86-C.E., dated 11-6-1986. In support of this claim, he relied upon the judgment of the Calcutta High Court in the case of Fitwell Fastener (India) Pvt. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 50 (Cal.). Although the appellants had not claimed the benefit of Notification No. 339/86 at the original stage, we extend the benefit of this Notification because the appellants had claimed exemption from additional duty at the original stage, though under a different notification and the exemption is available on merits. 14.1 Concerning valuation, the show cause notice relied upon the price list of Sanko Trading Co. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts incurred within India. It is not clear from the show cause notice, whether these costs of transport etc. have been deducted. Further, the rule envisages a maximum gap of 90 days between the date of importation and the date of sale. No doubt, interpretative note to Rule 8(2) provides for a reasonable flexibility in the application of the method. But if one looks at the examples given in Rule 8(3), it would appear that the flexibility is with regard to the definition of similar or identical goods or with regard to the time gap of 90 days. Moreover, even if flexibility is applied, some adjustment in value on account of flexibility has also to be made. Therefore, we are not satisfied that all the conditions of Rule 7 have been met and that Rs. 14.21 can be taken as a reasonable price under Rule 7 or Rule 8 of the Valuation Rules. 15. Button Cells : ITC Circular 12/92-97, dated 3-9-1992 (page 285) states that there existed certain doubts about the importability of items listed therein, including button cells. It has been clarified that button cells do not fall under the category of the negative list of imports and therefore, can be freely imported without a licence. On 21-10-1992 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department of Electronics, the benefit of Notification No. 345/85, dated 2-12-1985 is not admissible to the appellants. 17. Alloy Metal bezel : The question for consideration is whether benefit of Notification No. 41/85, Cus., dated 28-2-1985 is available to the appellants. This notification exempts parts of digital, digi, digiana, electronics wrist watches and similar combination type wrist watches from payment of duty in excess of 60%. For getting the benefit of this notification, a certificate from the Directorate of Industries of a State is required. Such a certificate was issued by the Directorate of Industries, Rajasthan, Jaipur. Initially this certificate was issued on 22-6-1992 and by mistake also referred to another Notification No. 345/85-Cus. Thus this certificate was issued for two Notifications namely 41/85 and 345/85. Realising that the Joint Director, Industries was not competent to issue a certificate under Notification No. 345/85-Cus, the certificate was partially modified and made valid only under Notification No. 41/85-Cus. Since both the unamended and amended certificates were valid under Notification 41/85-Cus., the appellants are entitled to the benefit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h glass, the issue is settled in favour of the appellants by two decisions of this Tribunal - (1) Collector of Customs v. India Watch Parts Manufacturers (page 192 of the paper book) and (2) Collector of Customs v. Sagar Electronics (Order Nos. 141-143/94-NB, dated 13-3-1996). We do not think that the addition of metal strap would make any difference because, even with metal straps, the goods cannot be regarded as watch cases. There is no evidence that the backs of cases detained by the Department in Foreign Post Office or elsewhere are compatible with the bezels imported in these consignments. We therefore, hold that importation of this item cannot be held as unauthorised and the goods are not liable to confiscation under Section 111(d) of the Customs Act, 1962. 20.1 As regards valuation, the Department has relied upon three quotations : (i) Quotation of M/s. Oam International; (ii) Quotation of M/s. Shui Hing; and (iii) Quotation of M/s. Rich Mal. We have already dealt with them in relation to the item `alloy metal bezel fitted with glass and our finding in relation to that item would equally apply here. Accordingly, the charge of undervaluation is not sustainable. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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