TMI Blog2000 (2) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... to be proceeded with in accordance with law, it is clear that the High Court did not decide finally whether the licences could, at all, be relied upon by the respondent No. 1 for avoiding their liability for contravention of clause (3) of the Control Order. The adjudicating authority will, therefore, have to decide (i) whether in law, a licence subsequently produced in respect of items already imported is acceptable in law, (ii) If so, whether the licences in fact covered the items imported and are otherwise valid. We make it clear that there was no finding by the Tribunal that the penalty imposed was unreasonable. On the other hand, the dissenting Member who had opined against the remand, had held, in our opinion correctly, that in the circumstances of the case the quantum of the penalty was justified. Appeal partly allowed. - 9026-9028 of 1996 - - - Dated:- 24-2-2000 - S.P. Bharucha and Ruma Pal, JJ. [Judgment : Ruma Pal, J.]. - The issues in these appeals arise out of the import of Tape Deck Mechanisms (TDMs) by the respondent No.1. According to the appellant, not only were the TDMs imported at a gross under-value which resulted in a non-payment of the appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondent No.1 should have declared the value of the TDMs at Rs. 88,34,698/- as against the declared value of Rs. 64,30,847/-. He, therefore, concluded that the respondent No. 1 had sought to evade duty to the extent of Rs. 32,03,594.00 and that the entire consignment was liable to confiscation under Section 111(m) of the Act. The Collector also held that the TDMs required an import licence and since no import licence had been produced, the goods were liable for confiscation under Section 111(d) of the Customs Act read with Section 3(2) of the Import and Export (Control) Act, 1947 and Clause 3 of the Import Control Order, 1955. 7. Having regard to his findings and the fact that the goods had already been released pursuant to an order of the High Court, he directed the respondent No. 1 to pay the differential duty of Rs. 32,03,594.00 and imposed penalty of Rs. 40 lakh on the respondent No. 1 under Section 112(a) of the Act (as the redeemable value of the goods) and Rs. 5 lakh each on the Managing Director and Director of the respondent No. 1. 8. The respondent No.1 and its Directors preferred an appeal before two Members of the Tribunal. 9. During the pendency of the appeal, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the sentence : "However, if the Department now decides not to accept the licences the party may be given another hearing to argue the merits of the case from the ITC angle." 12. The first question raised before us by the appellant relates to the finding of mis-declaration of the value and the evasion of customs duty. In our opinion, the finding of the Collector that the TDMs imported from Yamato should be valued at S $ 343.45 instead of S $ 250.00 was justified in fact and was in keeping with the relevant statutory provisions on the subject. As for the finding on facts, the relevant and admitted facts are required to be set out chronologically. 13.The respondent No. 1 had placed several orders in July, September, October and December 1988 on M/s. Mohan Impex for supply of TDMs. None of the orders mentioned the model or the make of the TDMs. Each of the earlier consignments had been obtained by respondent No. 1 from M/s. Mohan Impex @ S $ 343.45 per set. 14.As far as the consignment in question is concerned, the DRI recovered two identical proforma invoices bearing the same number, both dated 29-12-1998 for supply of 3000 sets of TDMs. Both were invoices of M/s. Mohan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elivery'. It was also stated that the supplier, Yamato had written stating that they were 'holding the goods ready' and that L/C should be amended accordingly. The implication of this letter is that Yamato was to supply the same material for which the order had been placed on M/s. Mohan Impex and that Yamato was the agent of M/s. Mohan Impex. 19.Incidentally, the respondent No. 1's Director subsequently admitted that the amendment of the L/C had been obtained on a mis-representation that Yamato had been introduced to the respondent No. 1 by M/s. Mohan Impex in May, 1995. In fact, the respondent No. 1 and its Directors were personally known to Yamato and its partners for several years and Yamato was wholly independent of M/s. Mohan Impex. 19-A.The Collector held that the consent of the Bank of India and Reserve Bank of India to the amendment of the Letter of Credit by substituting Yamato in place of M/s. Mohan Impex and change in the Port of shipment in place of origin of the TDMs was obtained by suppression and mis-representation of essential facts. It was also held that the letter of credit which was operated for payment of M/s. Yamato was in fact a new letter of credit and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in connection with the price of NEC model TDMs were also sought to be relied upon by the respondents. The basis of the argument was never established and was contrary to the evidence. 21.Firstly, the respondent No. 1 utilised the letter of credit to import 500 sets of TDMs from M/s. Mohan Impex @ S $ 260 per set and 3000 sets of TDMs at S $ 250 from Yamato. The 500 sets from M/s. Mohan Impex arrived at Bombay and the 3000 sets from Yamato arrived at Kandla. No change, however, had in fact been effected in the Letter of Credit in respect of the nature of the goods for which the letter of credit was initially opened, namely, "electronics components, namely, Tape Deck Mechanisms, as per order No. TC-89-004, dated 5-1-1989". In other words, the type and rate of TDMs of S $ 343.45 remained the same. In availing of the letter of credit, the parties thereto must be taken to have done so in fulfilment of the original order placed on the Mohan Impex where the rate mentioned was S $ 343.45 per set. 22.Secondly, Yamato's invoice which was filed with the Customs authorities also described the TDMs as 'electronic components for VCRs viz. Tape Deck Mechanisms as per order No. TC/89/004, date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o know the same as it is a trade information of such and such manufacturer." 25.Again the clearing agent stated that the price of the TDM as shown by respondent No. 1 was unusually low. He said : "I am very well aware that in past consignments, the same was never so low at S $ 250 per set. Tape Deck Mechanism has never been passed by me for any importer for any model. I had told the importer that this value was too low but they stated that they would manage by showing that these goods were different. The party also said they would produce some engineer to show that these were different while I on the basis of my experience told them that these goods did not look different from what I have been clearing on their behalf. But they said they would try to bring some engineer." 26.The respondents sought to rely upon an invoice dated 10th March, 1989 passed by NEC to Yamato for which the price was shown at approximately @ 237.00 S $ per set. The invoice further showed that the shipment was to be made to India. The significance of the date was not lost on the Collector who noted that it could not relate to the shipment in question as admittedly the contract for supply of TDMs was pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of that transaction for the TDMs was S $343.45 per set. It may, therefore, be stated that the transaction value was S $ 343.45 per TDM set within the meaning of Rule 3. 33. The reasoning of the two Members of the Tribunal who set aside the order of the Collector proceeded on the fallacious premise that the Collector could not 'adopt two different dates, one from the date of L/C and other from the date of the valuation'. They also relied on the invoice dated 10th March, 1989 issued by NEC as well as statement of the Collector quoted out of context to come to the conclusion that it was evident that the value of TDMs had substantially fallen. 34. The two Members misread the order of the Collector completely. The Collector had referred to the date of L/C only in connection with applicability of paragraph 4 of the Public Notice and not in connection with the valuation at all. They also misconstrued the statement of the Collector relating to the fall in prices. What he had said was that the fall in price of TDMs was manipulated because of the change in the import policy by which the import of TDMs was restricted considerably. 35.We would, therefore, uphold the finding of the Col ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t aside the penalty on the respondent No.1 because they negatived the finding under valuation and evasion and also in view of the order of remand. It is not possible to apportion the quantum of penalty between the contraventions found. Therefore, although we have upheld the Collector's finding on the issue of mis-declaration and evasion, the question of quantum of penalty will have to be re-determined by the Collector after determining the issue on the licensing aspect. 40. We make it clear that there was no finding by the Tribunal that the penalty imposed was unreasonable. On the other hand, the dissenting Member who had opined against the remand, had held, in our opinion correctly, that in the circumstances of the case the quantum of the penalty was justified. 41. The appeal is accordingly partly allowed. The decision of the Tribunal is set aside in so far as it relates to the finding on mis-declaration and evasion. The order of the Collector directing payment of differential duty is affirmed. On the question of the violation of the Import Control Order, the adjudicating authority will decide the matter in the light of the questions earlier framed. Depending on his decision t ..... 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