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2016 (4) TMI 882 - CESTAT MUMBAI

2016 (4) TMI 882 - CESTAT MUMBAI - 2016 (344) E.L.T. 1061 (Tri. - Mumbai) - Misdeclaration - Undervaluation - Import of Hitachi Z-ONE-D Camera System and accessories - Held that:- the value of the 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 con .....

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quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. - Period of limitation - Appellant contended that declaration regarding the intended re-export was made in the first bill .....

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the list price. The misdeclaration is alleged, not merely on the basis of the misdeclaration that the goods were for exhibition and return thereafter, but on the basis of the fact that a specially discounted price was declared for the said purpose but not disclosed. It is apparent from the documents recovered that the price negotiated and the discounts offered during the tripartite meeting were different from those declared at the time of import. They had not shown the correct price negotiated .....

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. Ltd., imported five consignments of broadcasting equipments viz., Hitachi Z-ONE-D Camera System and accessories shipped by M/s. Sansho Co. Ltd., Osaka, Japan by air and 5 Bills of Entry bearing No. (1) 012933 dated 25/10/95 (2) 009184 dated 18/03/1996 (3) 005446 dated 13/01/1997 (4) 013507 dated 24/02/1997 and (5) 04910 dated 11/04/1998. The bills of entry were picked up for investigation on the basis of certain intelligence. In respect of bill of entry No.012933 the invoice of M/s. Sansho Co. .....

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f Hitachi Denshi Ltd., Japan for their entire range of products. The appellants were to negotiate sales with various purchasers like, Doordarshan India, BEL, Asianet, Gemini TV etc. In the search minutes of meeting between Mr. Nitin Shah of the appellants, Mr. G Fujiki of M/s. Sansho Co. Ltd., and Mr. K Osada of Hitachi Denshi was recovered. The said minutes also contained as an annexure the price list of Hitachi where prices of different products were mentioned. The prices were net ex-godown (J .....

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the exporter that in case they wanted to sell goods to these customers, price including additional 10% is to be quoted by Hitachi Camera System. Another documents dated 02/06/94 recovered was letter of M/s. Sansho Co. Ltd. addressed to the appellant regarding delivery of six units of Hitachi KP-C571. The said letter asked following from the appellant: 1) How should we deliver MSAS or other? 2) Is it all right to present our documents to our banker at full invoice value yen 9,30,000? 3) Please i .....

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Director of the appellants in his statement stated that M/s..Sansho Co. Ltd., are authorised export agents of M/s.Hitachi Denshi Ltd. In order to promote sales they called for demonstration of camera for exhibition to be held at Worli Trade Centre between 2nd and 4th November, 1995. He claimed that the low price was on account of negotiations and the fact that new product was being introduced in the market. 2 On the basis of scrutiny of these documents it was alleged that M/s. Shimnit Machine T .....

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exhibition . It was alleged that the seized documents reveal that they were to purchase 2 sets of Z-ONE-D Cameras from M/s. Hitachi Denshi Ltd. and that there was no precondition of returning the goods back to Japan in the sale. It was alleged that the declaration was only a clever poly adopted by the noticees to divert the attention of the Customs authorities from the alleged under invoicing of the imported goods. That instead of re-exporting the imported goods after exhibition the same were s .....

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y available to a particular importer by way of negotiations are admissible, provided it is not unusual in the course of international trade and the circumstances of the transaction justify a discount. It was alleged that in this case, the manufacturers (M/s. Hitachi Denshi Ltd.) Price Lists dated 6/2/95 and 18/12/95 do not show any discount schedules. The only document which talks about discount is the estimate dated 30/08/95 of M/s. Hitachi Denshi Ltd. This estimate indicates a Special Discoun .....

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acturers M/s. Hitachi Denshi Ltd. It was highlighted that the total per unit price for complete Hitachi Z-ONE-D Camera System is indicated as Japanese Yen 955000 FOB, Japan, in both the Price Lists dated 6/2/95 and 18/12/95 of M/s.Hitachi Denshi Ltd. Against this, it was alleged that invoice Nos.8098 dated 18/10/95 and 8557 dated 06/01/97 appended with Bills of Entry No.01233 dated 28/10/1995, 005446 dated 13/01/97 show the price of identical goods at Japanese Yen 122910 per unit, FOB, Japan and .....

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. It was alleged that the supplier, M/s. Sansho Co.Ltd., are authorized Export Agent of the manufacturer and the prices given in the Price Lists recovered during searches are based on the prices given by the manufacturers. It was alleged that the suppliers did not have any ground for supplying the goods on a price lesser than that of the manufacturers. 2.3 On the basis of above evidence, it was alleged that it would not be possible to accept value under Rule 4. Value of the goods has to be arriv .....

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ble data with regard to cost of production and cost overheads have been produced by the importers, Rule 7A is also not applicable. Therefore, the value has to be determined under Rule 8 read with Rule 9, using reasonable means consistent with the principles and general provisions of CVR read with Section 14 (1) of the Customs Act. 2.4 It was asserted that the manufacturers (M/s.Hitachi Denshi Ltd., Japan) had published different Price Lists at different occasions. These were the price lists avai .....

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on the basis of these arguments, for each bill of entry was worked to ₹ 55,95,830/- 2.5 On the basis of above a notice was issued; i) Seeking rejection and re-fixing of transaction value ii) Determination of value under Rule 8 iii) Demand of differential duty invoking extended period and interest thereon iv) Confiscation of imported goods v) Penalty on two firms under Section 114A vi) Penalty on Shri Nitin Shah 3. The learned Counsel argued that price list even if true cannot be basis of r .....

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mport fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. In doing so, the Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor's price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commer .....

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5 year old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1). 3.1 The learned Counsel argued that even if the price list is taken to be true it cannot be treated as the contemporaneous import for imports made in 1997 and 1998. The price list is of the year 1995. It was argued that the prices .....

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the Honble Supreme Court has observed as follows: 8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs Valuation Rules refers to the transaction value. Utilization of the word the as definite article indicated that what should be accepted as the transaction value for the .....

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f the particular value instead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it .....

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h Exports Pvt. Ltd., Vs CC - 1999 (98) ELT 3 has observed as under: 13. In the present case the only evidence that was? adduced by Revenue in support of the charge of under-valuation is the price list No. 8102, dated February 15, 1981 which was found during the course of search in the premises of Skefko, etc. that was conducted by the officers of Enforcement Directorate on or about June 22, 1983. The price list does not even mention about the discount of 20% that has been allowed by the Tribunal .....

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riginal equipment manufacturers who import for fitment in their manufactured products and for this build up inventories with sizeable orders after securing favourable prices between various competitors but as regards canvassers and Skefko, who import in even greater bulk for the purposes of only trading, the policy envisaged that they may even secure lower price particularly if they generated additional volumes of sales. The documents seized during the search and seizure that were produced by th .....

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70% on the list prices was the normal invoice price for a number of unconnected importers during the period. The Collector of Customs, while passing the orders dated December 5, 1986 and March 20, 1987 and the Tribunal in the impugned judgment have not taken note of the said documents and the fact that the importers had been given 50% to 70% discount on the prices indicated in the list price. 3.3 The learned Counsel also argued that extended period cannot be invoked in this case. He argued that .....

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ground D of the appeal memo. 4. The learned AR relies on the impugned order. He argued that the issue of time gap between the price list and the imports in 1997 & 1998 has not been raised before the Commissioner, nor the same is a ground of appeal in the appeal memo. He argued that there was an unholy alliance between M/s. Sansho Co. Ltd., and the appellant and documentation was being done in consultation. The supply price to BEL, Doordarshan and Ministry of Broadcasting was planned to be r .....

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siness Machines Pvt. Ltd. - 1990 (49) ELT 640 (SC). 4.1 The learned AR also relies on the decision of the Honble Supreme Court in the case of Padia Sales Corporation - 1993 (66) ELT 35 (SC). 5. We have gone through the rival submissions and the case records. The investigations started on the basis of intelligence that the Camera with landed costs of ₹ 3,22,026/- were sold to domestic buyer for about ₹ 26.43 lakhs. On investigation it was found that it was declared to customs that go .....

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llants have argued that a special price was offered as the import was intended to be for the purpose of display in exhibition for the purpose of promotion of sales. The rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 reads as under 4. Transaction value - (1) The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules. (2) .....

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motion of sales. In these circumstances this cannot be called the ordinary price which is available to every importer. This by itself is a good reason to reject the declared sales price. The Hon ble Supreme Court in the case of Padia Sales Corporation - 1993 (66) ELT 35 (SC)has observed as under: 4. We have been taken through the order of the Collector and of the Tribunal. We have also examined the correspondence placed on the record. The trade representative of the USSR in India in his letter d .....

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for the purpose of assessment would be :- (a) the ordinary price at which the goods are sold or offered for sale; (b) price for delivery at time and place of importation; (c) price in the ordinary course of international trade between the unrelated buyers. 6. The fact that the trade representative of USSR in his letter dated January 20, 1987 has asked the appellant not to divulge the specially quoted price to any other party in India, in itself indicates that the price offered to the appellant .....

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above that special prices offered for a certain purpose are not the ordinary prices in in the course of international trade. The declared prices need to be rejected on this ground. 5.1 Secondly it is seen from the documents recovered that the price list quoted a price of Japanese Yen 9,55,000 for each Z ONE D camera. The minutes of the meeting dated 29.8.1995 between Mr. Nitin Shah of the appellants, Mr.G Fujiki of M/s. Sansho Co. Ltd., and Mr. K Osada of Hitachi Denshi was recovered contained a .....

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D Camera for Japanese Yen 9,55,000 per piece. This document which is dated 30.8.95 (the day after the meeting for modalities of supplies for the exhibition on 29.8.1995) specifically mentions the discount that was being offered by Hitachi Denshi Ltd to the appellants. Here only a lump sum discount of Japanese Yen 8,05,000/- was offered on a total invoice value of Yen 3,108,000/-(Appendix VII to SCN). Thus it is seen that the real price for supply were as per the estimate dated 30.8.95 given by t .....

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the appellant regarding delivery of six units of Hitachi KP-C571. The said letter asked following from the appellant: 1) How should we deliver MSAS or other? 2) Is it all right to present our documents to our banker at full invoice value yen 9,30,000? 3) Please instruct about invoice etc. today The above documents reveal a connivance between the exporter and the appellants to the extent that the documents were being made in consultation. The appellants were able to dictate the exporter not only .....

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is is unbelievable and by itself a reason for rejection of the declared price. No agent can offer a discount of that magnitude without receiving the same from the manufacturer. Moreover this price was meant for special circumstances where the importer was required to participate and display the products in exhibition for promotion of sales. For this reason the invoice produced by the appellant cannot be accepted. It is seen that the price of all items in the invoice are showing discount ranging .....

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. In the said case the discount offered in that case was for a five year old stock. In those circumstances the purpose may have been to clear the stocks. In the instant case the goods are brand new and the reason for any discount is to penetrate into the market. 5.4 The appellants relied on the observations of the Honble Supreme Court in the case of Mirah Exports Pvt. Ltd., Vs CC - 1999 (98) ELT 3 that quantity discounts to the extent of 50 to 70 % are normal in course of International trade. I .....

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d as contemporaneous for the imports made in 1997 and 1998. Having rejected the declared price under rule 4, the learned counsel argued that the authorities should have proceeded sequentially from rule 4 onwards for determination of the value. For this purpose the appellants have relied on the the decision of Honble Supreme Court in case of South India Television Vs CC Calcutta 2007 (214) ELT 3 (SC). It is seen that the impugned order notes that the contemporaneous imports of the similar or ide .....

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dentical or similar products. The appellants have also not produced any evidence of contemporaneous imports or sale of identical or similar products at same commercial level. In these circumstances the rule 5 to 7 have been rightly rejected. Rule 7A would not be applicable to such commodities as it is not possible to obtain the cost data of such complex and advanced products involving such advanced technology. 5.6 Moreover Hon ble Supreme Court in the case of Sharp Business Machines Pvt. Ltd. - .....

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by reference to their value, the value of such 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 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 .....

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ch other and the price is the sole consideration for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of the prices mentioned therein. The company has not only .....

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