Customs, Excise and Gold Tribunal - Mumbai
Kanhaiyalal & Co. vs Commissioner Of Customs on 22 November, 2002
Equivalent citations: 2003(151)ELT674(TRI-MUMBAI)
ORDER J.H. Joglekar, Member (T)
1. The appellants imported 9 Consignments of Yellow Poppy Seeds from Turkey. Nine show cause notices were issued in the case of each import. In the 5 show cause notices issued on 8-6-2001, it was alleged that the goods were not permissible imports inasmuch as the conditions of DGFT Notification No. 27 (RE-2000)/1997-2002, dt. 1-8-2000 had been contravened. In these show cause notices and the next 4 show cause notices dt. 27-8-2001 the second allegation was made namely that the value was wrongly declared thereby rendering the goods liable to confiscation under Section 111(m) of the Act, and also proposing to increase the value to US$ 900 PMT (CIF) from that declared by the importers between the range of 500 US$ (FOB) PMT to 625 US$ PMT (FOB). The importers contested these allegations. The Commissioner Customs, Pune after hearing the importers passed orders enhancing the valuation, confiscating the goods but permitting the redemption on payment of fine and imposing penalties upon the importers. Against this order the present appeal has been filed.
2. We have heard Shri V.M. Doiphode for the appellants and Shri R.K. Pardesi for the Revenue.
3. The DGFT notification referred to above prescribed three conditions. The first specified certain countries from which alone such goods could be imported. The second required an appropriate certificate of licit growth of such seeds from the competent authority in the exporting country. Turkey was one of the notified countries and the certificates have been tendered. On these two aspects there is no contest. The third condition however became the point of contest between the Revenue and the importer. The condition read as follows :-
"All import contracts of this item shall complusory (sic) be registered with the Narcotics Commissioner, Gwalior, prior to import".
4. The phrase "date of import was clarified in the following words by the DGFT in their letter dt. 15-12-2000 to the Customs at Pune.
"Please refer to your letter No. CFS/Cus. Be-500, dated 27-11-2000 regarding import poppy seeds and conditions with respect to Notification No. 27, dated 1-8-2000.
In this regard, I am directed to clarify that date of import for registration of import contracts is to be decided with reference to the date of shipment as defined in paragraph 15.14 of Handbook of Procedures (Vol. 1). Accordingly registration of import contract with Narcotics Commissioner, Gwalior should have been effected prior to date of shipment, as given in para 15.14 of Handbook of Procedures (Vol. 1).
The issues with approval of Director General of Foreign Trade (DGFT)".
5. Before the Commissioner the importers cited the definition of "Import" in terms of Section 2(23) of the Customs Act. The Commissioner referred to the aforesaid letter and adopted the date of shipment as the date of import. Shri V.M. Doiphode arguing before us refers to the definition of import in the Foreign Trade (Development and Regulation) Act, 1992 which reads as below :-
Section 2(e) :-
"Import" and "Export" means respectively bringing into, or taking out of, India, any goods by land, sea or air.
6. We find that the definitions of import in the FTDR Act, 1992 and the Customs Act, 1962 are similar and refer to the physical importation of goods in India. The date of shipment is an event much prior in time to exports. The very Act under which the DGFT operates prescribed import as the physical arrival of goods and not the shipment thereof from the place of export.
7. Paragraph 15.14 of the Handbook of Procedures serves an entirely different purpose. It speaks of the validity of a licence for covering imported consignments. Thus if a licence were valid in time at the time of shipment, but had expired when the goods arrived, this provision would enable the goods to be cleared under that licence even after the date of expiry of that licence. The clarification given by the DGFT on the strength of which the Commissioner held the goods as illegally imported, was not in terms of the Act governing that organisation.
8. In their judgment in the case of Photokom Industries v. Collector of Customs [1995 (75) E.L.T. 292 (Tribunal)] the Tribunal rejected a clarification given by the CCI & E which was not in consonance with the Import Policy declared by the Government at the material time. In yet another judgment [General Traders v. Commissioner of Customs, Cochin - 2000 (124) E.L.T. 971 (Tribunal)] a clarification issued by the DGFT in conflict with the provisions of the Policy was held as not binding on a Tribunal. The case before us is more severe, inasmuch as the clarification given by the DGFT violated not the policy, but the very provisions of the parent Act.
9. It is not dispute that the contracts in the case of these 5 bills of entry, were duly registered with the Narcotics Commissioner before the date of import. The conditions of the aforesaid notification were fulfilled and therefore the orders of confiscation of the Poppy Seeds under Section 111(d) of the Act do not sustain.
10. The second dispute is on valuation of the goods. In each consignment there is on invoice issued by the supplier which value has been declared in the bill of entry. The prices declared ranged between US$ 500 (FOB) to US$ 625 FOB. These values were raised to US$ 900 PMT CIF by the Commissioner. In doing so reliance had been placed by the Commissioner on a number of sources disclosed in the show cause notice.
11. The show cause notice refers to "Directorate of Valuation Study Report". This is in the form of a note which bears no signature. The prices quoted are from local market. Only one price is remotely relevant of Rs. 63/-per kg. of Turkish poppy. But this is for white poppy and would not be relevant for determination of the price of yellow poppy seeds.
12. The next evidence is quotations given in "Spices Market Weekly". There is a clarification given by the Spice Board which is a Government of India Agency to the effect that the quotation pertains to blue poppy seeds. Therefore this communication is also not relevant.
13. The quotation from the "public ledger" is also for blue poppy seeds and therefore not relevant.
14. The next statement is based on spice market weekly which shows prices in Chennai market and Mumbai market. In view of the communication that the spice market weekly quotations are only for blue poppy, the statements also lose relevance.
15. A letter written by the Chief Commissioner of Customs, Mumbai to the Board is also cited. It appears to deal with some complaint, by the Trade. A note from the Valuation Directorate is enclosed thereto. It itself shows that there was a quotation in Banglore for supply of yellow poppy seeds at US$ 550 PMT. This letter indicates an arbitrary stand taken by the Chief Commissioner and has no evidentiary value.
16. On the other hand are letters us from the supplier certifying the prices of yellow poppy seeds as prevalent in the Turkey during the relevant period, which compare favourably with the declared prices. There is also a certificate from the Aegean Exporters Union which is a semi-official body in Turkey Exporting Oil Seeds. They have certified that during the relevant period yellow poppy seeds were exported to India for prices ranging between 473 US$ to 612 US$ PMT.
17. In terms of the provisions of the Customs Act, 1962, where the buyer and seller are independent of each other and where the price is the sole consideration, the value should be accepted in the absence of any suspicious circumstances or in the absence of evidence disproving the transaction value. The judgment of the Supreme Court in this respect was cited before the Commissioner. He however choose to rely upon half baked investigation conducted by the Directorate of Valuation which in turn were based on a wrong data. The prices of white poppy seeds and blue poppy seeds cannot be adopted for the valuation of yellow poppy seeds. The three varieties were shown to us during hearing and we were informed that blue poppy was higher in value than the other two varieties.
18. On perusal of the entire evidence we find no reason for the Commissioner to have rejected the transaction value. His order enhancing the valuation also does not sustain.
19. Thus on both grounds that is the importability and the valuation, the appeal succeeds and is allowed with attendant benefit as per law.