TMI Blog1999 (6) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... he goods worth Rs. 1,16,42,272 (CIF) being the difference between the ascertained value and the declared value has been imported without a valid import licence/list attestation rendering these goods liable to confiscation under Section 111(d) of Customs Act, 1962. The importer have also resorted to deliberate gross mis-declaration of value of the goods. Entire goods valued at Rs. 3,69,17,713. But for the detection duty to the tune of Rs. 2.41 crore would have been lost to the Govt. are therefore liable to confiscation under Section 111(m) of the Customs Act, 1962. I find from records that the importers had secured the differential duty covering the present consignments by furnishing Bank Guarantee of Rs. 50 lakhs (Rupees fifty lakhs only) and pledging a consignment of 400 sets of photocopier parts in bonded warehouse. These facts were also incorporated in the Order of the Hon'ble High Court dated 4-9-1991. After careful consideration of all the facts, I hold the goods liable to confiscation under sections 111(m) and 111(d) of the Customs Act, 1962. However as the goods are not available for confiscation on account of these have already been released in compliance with the Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... release 300 sets arrived earlier on the ground that the indigenous material manufactured by them would only be utilised in respect of said 300 components already imported and detained by the Customs. The department insisted that the importers furnished a further bank guarantee of Rs. 70 lakhs or alternately furnish bank guarantee for Rs. 20 lakhs and keep as security the 400 sets of components. Appellants furnished bank guarantee for Rs. 20 lakhs. The last consignment arrived at Calcutta on 25-5-1991. The appellants filed bill of entry for warehousing. Appellants on 6-8-1991 filed a bill of entry for 200 sets only out of 400 sets of components. However, in the mean time a show cause notice was issued on 9-8-1991 alleging that during investigations made earlier into the importation of goods to be components of photocopying machines the importers submitted CKD pack price of Toshiba, Japan for Model BD 5110 showing Yen 2,07,200 per set. The supplied goods are from Toshiba, Japan; that the unit price declared in the for proforma invoice for CKD pack price showed much higher price than the one declared in the invoices of the subject consignment. Shri Aloke Garg, Dy. Manager of the impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine was declared as J. Yen 3 lakh 20 thousand imported components 588 numbers and indigenous components 491 numbers. 5. CIF price for individual items were to be declared on the basis of SKD/CKD/price quoted by Toshiba, Japan + 10% approx. towards freight and insurance. It was also noticed that Toshiba, Japan had confirmed the prices of the complete machine of Model No. BD 5110 as J. Yen 3 lakh 20 thousand CIF in their letter dated 24-11-1983. It was also contended that after execution of foreign collaboration agreement with M/s. Toshiba, Japan the Indian importer initiated further negotiations with M/s. Toshiba, Japan who agreed to supply the complete machine BD 5110 at a price of J. Yen 1 lakh 55 thousand without drum; that they also agreed to a price of J. Yen 1 lakh 95 thousand 6 hundred FOB for SKD packs in 315 items, J. Yen 2 lakh 7 thousand 2 hundred FOB for CKD packs in 960 items, complete machine BD 3110 at a price of J. Yen 63 thousand 3 hundred FOB (without drum), J. Yen 1,09,670 FOB for CKD pack of 343 items. It was alleged that M/s. Toshiba, Japan appeared to have agreed to supply at the prices mentioned above on the basis of a request/suggestion made by M/s. H.C.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that no value can be determined of the highest of the two alternative values or on the price of goods in the domestic market of the country of export; that there was no authority vested in the Customs to fix 3 lakh 20 thousand J. Yen as value when the same is not the transaction value. It was submitted that the department had violated Section 14 of the Customs Act and Valuation Rules, 1988. It was contended that at the time of applying for special licence on 21-1-1991 the importer had given the said price for the purpose of obtaining the special licence; that when the importer approached M/s. Toshiba for supply of large quantity of components M/s. Toshiba offered to sell such large quantity of components on the basis of the prices in the proforma invoice and that on the basis of this proforma invoice the Indian importer placed the Order with M/s. Toshiba that the same was a commercial sale at arms length. It was also contended that no evidence had been placed on record that the prices shown in proforma invoice were not transaction values or were not at arms length; that the collaboration agreements dated 24-9-1987 is for technology including technical know-how on payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in Sneha Traders (P) Ltd. and Sandip Agarwal (supra) and the adjudication Order dated 6-12-1991 of the Collector of Customs (Judicial), we are of the view that the valuation made by the Collector in the adjudication Order dated 15-11-1991 cannot be sustained. We, therefore, set aside the Order dated 15-11-1991. So far as it relates to the valuation and determination of the assessable value the Collector of Customs (Judicial) or any other Collector of Customs shall pass a fresh Order determining the assessable value taking into consideration the aforesaid decisions of the Court as well as other decisions on the aspect of valuation and the Order of those 1-2-1991 passed by the Collector of Customs (Judicial) and also the Customs Valuation (Determination of Price) Rules, 1988. Such fresh Order shall be passed after giving the appellant a reasonable opportunity of being heard within a period of three months from date. Pursuant to this Order the appellant in addition to oral submissions made the written submissions after the personal hearing on 17-9-1993. It was submitted that the importer had imported two consignments of 400 sets and 1400 sets of parts of photocopier Model No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e noticee itself this value has to be the basis for the current import of 1400 sets. It was also submitted that in respect of 60% to 65% of components of 1400 sets, the transaction value declared by Toshiba and the Indian importer is on principal to principal basis; that the department had not produced any contemporary invoices relating to the import components from Toshiba by other importer; that there is no allegation of any payments made by H.C.L. to Toshiba by channels otherwise than during the bank channels; that the value had already been accepted by the earlier Collector; that the price of J. Yen 3,20,000 was retail price in Japan and was inclusive of insurance and freight; that the issue of valuation was squarely covered by the decision of the Hon'ble Calcutta High Court in the following cases. (a) Sneha Traders (P) Ltd. - 1992 (60) E.L.T. 43 (Cal.) (b) Sandip Agarwal v. C.C. - 1992 (62) E.L.T. 528 (Cal.) 12. After considering the various submissions impugned order was passed by the Collector on 26-4-1994 holding as reproduced in the earlier paragraphs. 13. Shri A.R. Madho Rao, Adv. appears for the appellant whereas Shri R.N. Das, Sr. Adv. with Smt. Urmita Dutt (Sen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the seller and buyer have no interest in the business and the price is sole consideration. We note that this aspect has been deliberated upon in the findings of the Collector. Without a specific mention of these two cases, we note that the points settled in these cases were examined by the Collector and hence we do not find force in pleas of the Counsel for the appellants. 17. The second contention of the Counsel for the appellants was that the appellant cannot be saddled with a liability exceeding that which was imposed on them by the Order passed by Shri B.P. Srivastava. It was submitted that no penalty having been imposed earlier, penalty cannot be imposed when the matter was sent for re-adjudication after setting aside the order passed by Shri B.P. Srivastava. In support of his contention the ld. Counsel cited and relied upon the decisions of this Tribunal in the case of Ritu Minerals v. Collector of Customs, Calcutta - 1999 (113) E.L.T. 1005 (Tribunal) = 1999 (30) RLT 506, in the case of Padia Sales Corp. v. CC - 1992 (62) E.L.T. 760, in the case of Tata Oil Mills v. CC - 1990 (46) E.L.T. 438, in the case of State of Kerala v. Vijaya Stores - 1978 (42) STC 418, in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remaining components; that from the price list the price per set had not been arrived at; that this represented the transaction value of the goods; that there was no charge of clandestine remittance to foreign supplier, the transaction value had to be adopted in view of the amendment of Section 14 and enactment of Customs Valuation Rules in 1988. 2l. The Counsel for the Revenue submitted that in the instant case there was a quotation obtained from M/s. Toshiba of Japan that this quotation was produced by the appellants before the DGTD for getting licence on 21-1-1991 for import of certain goods under the phased manufacturing programme. He submitted that there is a tour report of one of the officials of the appellant company stating that I have also told Toshiba that I want Toshiba's vendor list under process and an introductory letter from Toshiba to vendor asking the vendors to cooperate and supply to H.C.L. directly or through their agent at Toshiba prices if necessary. Toshiba will appoint agent who will deal with vendors directly . In the report it has further been added I have emphasised that this profit will depend on royalty and know-how fees. I made a presentation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that enhancement of transaction value on the basis of mere quotation or offer was not permissible; that there was time lag inasmuch as the quotation is of 1988 and imports were made in 1991; that no evidence has been placed on record that there had been any clandestine remittance. It was also pleaded that quotations cannot be acted upon as it is not relevant evidence in the absence of an actual import in pursuance of the quotation. It was contended for the appellants that quotation is only in the nature of an offer in the absence of any concluded contract and actual imports in pursuance to quotation; that enhancement of assessable value only on the basis of a quotation is not permissible. 24. Replying to the pleadings of the Counsel for the appellants, the ld. Sr. Counsel for Revenue submitted that the quotation has to be seen in the peculiar circumstances of the case. The peculiar circumstances were that the foreign supplier had a transfer of technology agreement with the Indian importer; that the Indian Importer had to pay Royalty for technology transfer and technical know-how; that the tour note of the official of the Indian importer was a clear signal to show that there was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ative price for obtaining a licence in 1991. Had there been any reduction in price between 1988 and 1991, the appellants would have obtained another quotation for the purpose of a licence. Now the appellant cannot take the plea that the quoted price had undergone a drastic change. Negotiations thereafter in the form of tour note are extra-commercial considerations. It was argued that in the case before us in pursuance of the quotation contract was concluded and actual imports in 1991 were in pursuance of this contract; that in terms of the tour note, the enhanced amount of royalty was to go to the foreign supplier. Hence, clandestine remittance is proved. Therefore, ratio of Sharp Business Machines decision is fully applicable to the present case; that this Tribunal in the case of Pan Asia Enterprices [1995 (79) E.L.T. 322] held that quotation of identical goods produced in the same country by the same manufacturer found to be much higher, transaction value not acceptable. Goods being grossly under valued to be enhanced. 26. We have heard the rival submissions. We note that we have a quotation which was received by the importer for presentation to DGTD for sanctioning phased manu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that price which is shown in the proforma invoices. The price shown in proforma invoices is highly reduced price and hence value needs to be enhanced. 30. A lot of agitated arguments were adduced on the question of not accepting the proforma invoice value as the transaction price. The Counsel for the appellant submitted that any value other than the value shown in the invoices shall have to be examined strictly in the context of Customs Valuation Rules, 1988. We note that the Apex Court in the case of Sharp Business Machines v. CC - 1990 (49) E.L.T. 640 observed : In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd. in respect of the copiers and other items imported along with their application for approval of their phased manufacturing programme. The company itself having produced there quotations, they cannot dispute the correctness of the prices mentioned therein. The company has not only not disputed the correctness of these quotations, but has not produced any other materials on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07) E.L.T. 59 (Tri.), Arihant Auto v. CC - 1995 (76) E.L.T. 431 (Tri.) Kumar Associates v. CC - 1993 (65) E.L.T. 500, P.A.C. System v. CC - 1992 (58) E.L.T. 131. The ld. Counsel submitted that in the case of Informatica Software this Tribunal held that sub-rule 2 of Rule 4 lays down the conditions for acceptance of transaction value and in case any of the conditions are not satisfied, the transaction value will have to be accepted. Cousel therefore, submitted that Revenue has to show that any of the conditions under Rule 4(2) is satisfied. In the instant case we note that the quotation was obtained on 24-11-1988. This quotation was submitted to the DGTD for purpose of phased manufacturing programme licence for import of the goods was obtained in 1991. No evidence has been placed on record to show that prices had drastically changed during the material period. If the prices had so much changed during the material period, no evidence has been adduced before us and to show as to what prevented then to obtain a fresh quotation for production before the licensing authorities and to DGTD. We have already held that the value shown in this quotation is the actual value and this quotation i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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