TMI Blog1998 (2) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thus the appeals are allowed, the impugned judgment of the Tribunal is set aside and it is held that the invoice prices as mentioned in the invoices for the imports of ball bearings by the appellants shall be treated as the value for the purpose of assessment of customs duty under Section 14 of the Act. - 47 of 1990 - - - Dated:- 4-2-1998 - S.C. Agrawal and G.T. Nanavati, JJ. [Judgment per : S.C. Agrawal, J.]. - These appeals have been filed against the judgment of the Customs, Excise Gold (Control) Appellate Tribunal (hereinafter referred to as `the Tribunal') dated September 4, 1989. They raise the question whether there was undervaluation for the purpose of levy of Customs duty under Section 14 of the Customs Act, 1962 (hereinafter referred to as `the Act') in the invoices of the various consignments of ball bearings which were imported by the appellants. 2.Skefko India Bearing Co. Ltd. (hereinafter referred to as `the Skefko'), appellant in C.A. Nos. 1030-34/90, are importers of ball and roller bearings. They also ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized by the Enforcement Directorate. After further investigation a show cause notice dated May 31, 1984 was issued to (i) Skefko; (ii) Mirah Exports; (iii) Punjab Bearing Traders; and (iv) the clearing agents of Mirah Exports. In the said show cause notice it was stated that by undervaluing, Mirah Exports had misdeclared the value for bearings Nos. 6201, 6202, 6203 including shielded bearings in each of 24 Bills of Entry which misdeclaration had rendered all the 24 imports liable for action under Section 111(m) of the Act and that in respect of the goods, so undervalued to the extent as indicated in the said show cause notice, no import licences had been produced and in the absence of any import licence in respect of such goods in each consignment, such goods had apparently become liable for action under Section 111(d) of the Act read with Section 3(2) of the Imports Exports (Control) Act, 1947 and that Mirah Exports, Punjab Bearing Traders and Skefko had done or omitted to do certain acts, which acts of commission/omission had rendered the goods liable for confiscation and that they had thus become liable for action under Section 112 of the Act. The parties mentioned above wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on their invoice value. The Addl. Collector of Customs has found that the appellants herein, particularly during the personal hearing, had led substantial evidence to chronologically show that despite the said price list there was a development of a new sales and pricing policy for not only India but the world over, after exchange of numerous correspondences and personal discussions during visits of representatives of the seller and that this policy distinguished between following categories of buyers on logical commercial grounds :- Replacement users who order small lots at infrequent(i) intervals; Original Equipment Manufacturers (OEMs) who import for(ii) fitment in their manufactured products and for this build up inventories with sizeable orders after securing favourable prices between various competitors and in view of their sizeable orders and the competition involved, the sales policy allowed up to 20% discounts (on quantity) upon the prices of the said price list; Canvassers and Skefko, who import in even greater bulk for(iii) the purposes of only trading, and may secure even lower price, particularly if they generated additional volumes of sales. This policy wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of his own profits and continuance of industry in the teeth of fierce international competition and the buyer's considerations of obtaining goods of acceptable quality at the lowest possible prices. The Addl. Collector also held that the Department has not been able to prove beyond doubt that a special relationship exists between supplier (M/s. SKF) and the importers (Mirah Exports) through the media of Skefko and Punjab Bearing Traders inasmuch as no evidence was forthcoming to prove that there is any interest in the business of each other e.g. due to share holdings, royalty, common directorships, family relationships, etc. and there is also no evidence available to prove or even create a doubt that any illegal relationship exists in the subject transaction i.e. that any extra sums have been unofficially passed on by the buyer to the seller either directly or indirectly though the canvassers/indenting agents. 7.In pursuance of the orders dated June 7, 1985 passed by the Central Board of Excise Customs, the Collector of Customs presented three appeals against Skefko, Mirah Exports and Punjab Bearing Traders against the order of the Addl. Collector before the Tribunal. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted under Section 14 of the Act, unless it is shown that it is the price at which such or like goods are normally sold or offered for sale in such quantities at the time and place of importation. The Collector has also referred to one of the seized documents, namely, "Fixation of Price Level Objective for 1983" and has observed that the said document shows sales to Kirloskar Electric, Bangalore of Bearing for c.i.f. value of Rs. 22,43,000/- at 0.5% discount of list price, to M/s. Premier Automobiles Ltd., for c.i.f. value of Rs. 20,64,000/- at a price 30% higher than the list price, to Eicher Good Earth for c.i.f. value of Rs. 20,36,000/- at a discount of 20% of the price list as against the sales to Punjab Bearing Traders of Rs. 9,21,000/- at 48.7% discount. The Collector has observed that this clearly shows that discounts given for even larger quantity or value is not more than 20%. According to the Collector, the contention of the importers that only negotiated price which is actually paid should be the assessable price is therefore not tenable and is contrary to the provisions of Section 14 of the Act and that once it is established that for the similar quantity, discount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal has not taken note of the documents referred to by the Addl. Collector of Customs in his order dated April 16, 1985, showing that other importers had been given 50% to 70% discount over the list price by SKF. 10.Shri H.N. Salve, the learned Counsel appearing on behalf of the appellants, has urged that burden lies on Revenue to show that the invoice price does not represent the true price of the goods and that there is an under-valuation and that in the present case Revenue has not adduced any evidence except the price list No. 8102, dated February 15, 1981 which was found among the documents seized during the course of search and seizure of the premises of Skefko, etc. It was submitted that on the basis of the said price list only it could not be said that the value as indicated in the invoices was not the correct value of the goods which were imported by the appellants. It has also been urged that the Addl. Collector of Customs in his order dated April 16, 1985 has taken into consideration the evidence that was produced by the appellants to come to the conclusion that the invoice prices represent a proper basis for valuation of the consignment for the purpose of ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be examined is "whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price." [See : Union of India v. Mahindra Mahindra, (supra), at P. 487]. 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 in the impugned judgment. The matter of discount to be given on the prices indicated in the price list is actually mentioned in other documents that were seized during the search. The said documents include the various letters and telexes received from SKF Oversees Bearings Division, Sweden which indicate the new pricing policy of the foreign supplier. As pointed out by the Addl. Collector of Customs in his order dated April 16, 1985 the said documents show that 20% discount is allowed to the original equipment ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which such goods 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. In the present case neither has it been alleged nor has any material been produced to show that Mirah Exports and the foreign suppliers have any interest in the business of each other. As regards Skefko it has been pointed out that AB-SKF, Sweden holds 39.8% of the share capital in Skefko but there is nothing to show that Skefko has any interest in the business of AB-SKF. Moreover it is of no consequence in the present case because the invoice price at which the imports were made by Skefko were the same at which Mirah Exports and other importers had imported and no special price was given to Skefko for import. In these circumstances, we are of the opinion that the invoice prices as mentioned in the invoices could be treated as the price at which the goods are ordinarily sold or offered for sale in the course of international trade and that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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