TMI Blog1987 (7) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... tubing arrived at Bombay. The appellants filed a bill of entry valuing the said tubing at £ 0.15 per Kg. On 7th July, 1973 the appellants were called upon by the Customs authorities to show cause why the said tubing should not be confiscated for there had been a mis-statement in regard to its value. The show cause notice stated that no price list or manufacturer's invoices had been produced to substantiate the correctness of the value. A quotation given by M/s. John Elmore Ltd. (hereinafter referred to as "Elmore") for identical tubing was £ 0.429 per Kg. and a quotation given by M/s. Chance Brothers Ltd., (hereinafter referred to as "Chance"), who were the manufacturers of the said tubing, was £ 0.430 per Kg. Copies of the said quotations were enclosed with the show cause notice. 5. On 10th July, 1974 the appellants replied to the show cause notice. They stated that they were not the direct purchasers of the said tubing from Chance and, as such, were not aware of the price at which Chance sold it. The appellants were in technical collaboration with Kupfer who had supplied and would be continuing to supply them with technical information and know-how. Under the collaboration agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the price had changed. The Collector, therefore, ordered that the said tubing should be re-assessed on the basis of the price of £ 0.430 per Kg., which was shown by the said quotations. He also confiscated the said tubing but permitted redemption on payment of a fine of Rs. 54,500/-. 8. The second consignment of 164 cases containing 10,030 Kgs. of the tubing arrived at Bombay in May, 1973. A bill of entry in respect thereof was filed by the appellants on 24th May, 1973 valuing the tubing at £ 0.075 per pound, i.e. £ 0.15 per Kg. On 7th July, 1973 a show cause notice in terms similar to that first show cause notice was issued to the appellants. The appellants' reply was in similar terms, as was the order of the Collector thereon. He directed reassessment of the said tubing in the second consignment on the basis of the price of £ 0.430 per Kg. He confiscated the said tubing but permitted its redemption by payment of fine of Rs. 54,500/-. 9. In September, 1973 a third consignment, yet again of 164 cases, of the said tubing was imported by the appellants. On 10th September, 1973 the appellants filed a bill of lading for 8,030 Kgs. at the price of £ 0.12 per Ib. (i.e. £ 0.25 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id tubing in the third consignment be assessed on the basis of the price of £ 0.430 per Kg. The Collector noted the explanation given by the appellants in regard to the mis-declaration of weight but gave no finding thereon. However, he did order that the re-valuation would include the excess weight of 2,007 Kgs. which had been accepted by the appellants. The Collector confiscated the said tubing in the third consignment but gave the appellants the option to redeem it on payment of a fine of Rs. 33,000/-. He also imposed a penalty of Rs. 27,000/-, which has been found by the appellate and revisional authorities to be in regard to the misdeclaration of weight. 13. The appellants filed appeals in respect of the three orders passed by the Collector on the three show cause notices. The appeals were dismissed on 16h January, 1978 by the Central Board of Excise and Customs. 14. The appellants then preferred revision applications to the Central Government. By its order, dated 13/20th October, 1979 the revision applications were disposed of. That Customs duty should be paid on the basis of £ 0.430 per Kg. was confirmed. In regard to the first and the second consignments, the confiscatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that the appellants' explanation in that behalf was not acceptable, but he felt that there was hardly any doubt that the Collector was not inclined to accept that explanation because he had levied the penalty of Rs. 27,000/-for such mis-declaration. This penalty had been confirmed in appeal and in revision. The learned judge felt that the mere fact that the appellants' explanation had not been assessed in detail and a finding was not recorded that it was unacceptable was no ground to examine the explanation in the writ proceedings. Assuming that he could re-examine the explanation, he found that the explanation was false and frivolous. He noted that the conduct of the appellants indicated that they had no value for the truth and were willing to procure false evidence to sustain their claim and to evade duty. It was impossible, he said, to rely upon the statement of such persons while considering whether the mis-declaration of weight was by genuine error. 16. Before we deal with the contentions it is necessary to set out the provisions of Section 14(1) and examine the material upon which the appellants and the authorities rely on the question of the value of the said tubing. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 14 are, therefore, applicable. An analysis of Section 14(1), already quoted, will be of assistance. Where customs duty is chargeable on an ad valorem basis, the assessable value of the goods is, under clause (a), the price at which the goods or similar goods are ordinarily sold at the relevant time and place, in the course of international trade, but provided that 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. We are not concerned with the provisions of the proviso. Sub-clause (b) comes into operation where the price is not ascertainable under the terms of clause (a), in which event it is the nearest ascertainable equivalent of such price and is determined in accordance with rules made for the purpose. 20. Mr. Talyarkhan, learned counsel for the appellants, urged that the authorities ought to have accepted as the assessable value of the said tubing the amount of £ 0.15 per Kg. which was in fact the price paid by the appellants. In this connection, the letter written by Electronic to Kupfer on 24th April, 1972 in relation to the said tubing sold to the appellants is relevant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le value of the said tubing for the purposes of Customs duty. There is no corroboration of this price. In fact, the price quoted by Chance to the unnamed inquirer becomes the more credible by reason of the appellants' statements in the communication, dated 10th July, 1973. It is obvious that by reason of Kupfer's interest in the appellants' business, Kupfer had prevailed upon Chance to deal preferentially even in the matter of price with the appellants. It is, therefore, not possible to accept the submission that the price of £ 0.340 per Kg., quoted by Kupfer to the appellants in the letter, dated 7th November, 1973, should be accepted as the assessable value of the said tubing for the purposes of Section 14. 22. This, then, brings us to the quoted price of £ 0.430 per Kg. which was accepted by the authorities. As has been pointed out, this price was quoted by Chance and Elmore to unknown Indian inquirers. Copies of letter written to Chance and the telegram sent to Elmore and the replies of Chance and Elmore have been furnished by the authorities to. the appellants but in such a manner that the names of the inquirers are obscured. 23. It was submitted by Mr. Talyarkhan that unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heir mind to this plea to consider, in the first place, whether penalty should at all be levied and, then, what its quantum should be. There was no application of mind to the plea by either the Collector or by the Board in appeal. The Central Government in revision observed only that the appellants had mis-declared the weight and thereby rendered themselves liable to penal action so that the imposition of the penalty was correct in law, considering the fact that due to the mis-declaration there would have been a loss of duty of about Rs. 27,000/-. Even the Central Government, therefore, did not apply its mind to the plea put forward by the appellants, supported by letters, that they had filed the bill of entry on the basis of the shipping documents which showed the lesser weight, that the consignment was found to be heavier in the course of inspection at the docks, that they had written to their suppliers for an explanation, that the explanation was that two consignments of the said tubing, one to the appellants in India and another to a party elsewhere, had been confusedly amalgamated; and that the suppliers had by their letter of explanation offered to take back the excess quanti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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