Customs, Excise and Gold Tribunal - Delhi
Narayan International vs Collector Of Customs on 21 May, 1991
Equivalent citations: 1991ECR656(TRI.-DELHI), 1992(58)ELT126(TRI-DEL)
ORDER S.V. Maruthi, Member (J)
1. The appeal arises out of an order-inoriginal No. 8/91, dated 15-1-1991 of the Addl. Collector.
2. The appellants imported a consignment of "Y.K.K. polyster zippers type LFC-32, No. 3, size 8" of Japanese origin from Singapore under invoice number RIC/9023 dated 15-6-1990. The total number of zippers imported are 4,10,000 pieces. The value declared by the appellants is at the rate of Singapore dollars 13 per 100 pieces. The total value of the consignment was Singapore $ 53,300/- C.I.F. The Bill of Entry was filed on 23-6-1990.
3. The appellants did not insist on a show cause notice as they were incurring heavy demurrage. However, the Addl. Collector enhanced the value of the goods imported without hearing the appellants. The appellants, therefore, approached this Tribunal by way of an appeal. This Tribunal set aside the order of the Collector and remanded the matter to the Addl. Collector with the following observations :
"We, therefore, without going into the merits set aside the impugned order and remand the matter to the Collector of Customs, Delhi with the following directions :-
(i) The appellants should file written submissions before the Collector including their pleas on various invoices etc. including copies etc. wherever possible. Shri Asthana undertakes to do this by 7th November, 1990.
(ii) The Collector should thereafter fix a date of hearing as soon as it is possible for him.
(iii) Considering that the goods are under detention and are incurring demurrage of nearly Rs. 2000/- a day, fresh orders should be passed within three weeks from the date of receipt of written submissions.
(iv) The Collector of Customs may adjudicate this matter or he may entrust it to any competent officer other than the original adjudicating officer as the said authority, is said to have associated himself with the investigation.
4. In pursuance of the above order, the Addl. Collector heard the appellants and furnished the material on which the Department relied upon and passed the impugned order. The Collector relying on the invoice value of imports made by M/s. Durga Enterprises enhanced the value from $ 13/- per piece to Rs. 151.36 and confiscated the goods and gave an option to the appellants to pay redemption fine of Rs. 50,000/- and a penalty of Rs. l,50,000/- against which the present appeal is filed.
5. Shri Asthana, appearing for the appellants, raised the following contentions. The imports made by M/s. Durga Enterprises cannot be treated as comparable imports as the quantity imported is less than the impugned imports, viz., the appellants have imported 4,10,000 pieces whereas M/s. Durga Enterprises imported 3 lakh pieces under two independent invoices on different dates and under different Bills of Entry. Therefore, they might have paid a higher price. The Department relying on the letter dated 11-6-1990, alleged to have been written by M/s. Vimpex Times Ltd. to M/s. Durga Enterprises, is treating the two imports as one single import which is unwarranted. The letter dated 11-6-1990 refers to shipments effected on 12/13-6-1990 and the said letter was not sent with the invoices. The said letter refers to invoice dated 14-6-1990. Therefore, the letter is fabricated and it cannot be taken as conclusive.
6. The next contention is that the Additional Collector relying on some record without disclosing the same has given a finding that the letter is not fabricated. Therefore, there is a violation of principles of natural justice.
7. The Collector also relied upon two more invoices viz., imports alleged to have been made by M/s. Diamond Enterprises at the same prices from M/s. Vimpex Times Ltd. under invoice No. VC/24/90 & VC/25/90 dated 20-6-1990 without furnishing copies of the same.
8. On the other hand, he submits that he has furnished one invoice dated 24-5-1989 of M/s. YKK Zippers (S) Pvt. Ltd., Singapore which discloses CIF price of 8" at 1159 Yen. He also submitted that he filed a Bill of Entry No. 26477 dated 26-9-1990. It indicates import of LFC-32,8" and also filed an import invoice No. 1914/90 dated 30-6-1990. He also filed a Bill of Entry No. 3318 dated 12-6-1990. The reasons given by the Collector while rejecting these documents are erroneous. Shri Asthana brought to our notice two Price Lists dated 1-1-1987 and 1-1-1990 indicating the price of LFC-32 3-Polyster zippers of 8" at 1159 Yen and submitted that there is no substantial change in the prices of the commodity between 1989-90. Therefore, the invoice dated 24-5-1989 is a relevant piece of evidence, and the Addl. Collector ought to have relied upon the saame. He also referred to a letter dated 5-6-1990 which relates to an offer made by M/s. Bhalla & Co. offering to the appellants LFC-32 size 8" at 1159 Japanese Yen per hundred pieces. In the letter, they also indicated goods worth Japanese Yen 6,00,000 for shipment. M/s. Bhalla & Co. are the agents of M/s. YKK Zippers (S) Pvt. Ltd. The appellants also filed a invoice dated 24-5-1989 indicating the price of M/s. YKK Zippers (S) Pvt. Ltd at 1159 Yen.
9. The contention of Shri Asthana is that the Collector ignores all the above material produced before him indicating the price of M/s. YKK Zippers (S) Pvt. Ltd. and adopted the price of M/s. Durga Enterprises which is in violation of Rule 5 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. He submitted that Rule 5 of the Rules provides for the transaction value of identical goods. According to Sub-rule (3) of Rule 5 in applying Rule 5 if more than one transaction value of identical goods is found the lowest of such value shall be used to determine the value of imported goods. Therefore, he submitted that the value declared by him should be accepted. In support of his contention, he also relied upon the orders of this Tribunal in Honesty Traders No. 389/1990-A dated 16-4-1990 [reported in 1991 (55) ELT 102 (Tri.)] and Shree Tarak Stores No. 672/89-A dated 25-9-1989.
10. Shri Prabhat Kumar for the Department submitted that Section 14(1) provides for the value of the goods and it is the deemed value. Section 14(1) further says according to him, the value is the deemed value and it should be the price at which such or like goods are ordinarily sold. He also pointed out Sub-section (1A) of Section 14 provides that subject to the provisions of Sub-section (1), the price referred to in that sub-section in respect of the imported goods shall be determined in accordance with the rules made in this behalf. His further submission is that in this context Rule 2(c) is relevant which defines identical goods as goods which are same in all respects including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of the goods; secondly, produced in the country in which the goods being valued are produced; and thirdly, produced by the same person who produced the goods, or where no such goods are available, goods produced by different persons.
In the instant case, the evidence of the Department is that the imports made by M/s. Durga Enterprises is an identical import in terms of Rule 2(c). The appellants' declared value is Rs. 120 per hundred pieces whereas the import of M/s. Durga Enterprises is 156.36 per hundred pieces. In other words, there is a discount of 43% over Rs. 2 lakhs which no supplier would give. He also relied upon the order of this Tribunal in Metal & Alloys [1989 (40) ELT 207] and contended that the discount cannot be more than 5 to 10%. The Price lists relied on by the appellants are not relevant according to him as the country of origin is not known. The invoice in the order of R.S.T. Traders is dated 24-5-1989, therefore, it is one year old and is not relevant. The case of Shree Tarak Stores v. C.C.E. is also not relevant, according to him, as the difference in quantity is huge. The invoice No. 1914 does not deal with identical goods. He, therefore, submitted that the order of the Collector is in accordance with the rules and requires to be confirmed:
11. The question under the above circumstances is what should be assessable value of the goods. The Collector enhanced the value from 119 to Rs. 156 per hundred pieces relying on the imports made by M/s. Durga Enterprises and also on the imports said to have been made by M/s. Diamond Enterprises under invoice No. VC/25/90 & VC/24/90 dated 20-6-1990. At the outset, we may point out that the copies of invoice No. VC/24/90 and VC/25/90 dated 20-6-1990 were not furnished to the appellants. Therefore, the Collector is not justified in placing reliance on these two invoices. Shri Prabhat Kumar also submitted that these invoices may be ignored. The next document relates to the imports of M/s. Durga Enterprises. M/s. Durga Enterprises imported two consignments each consisting of 3 lakh pieces of MKK zippers under two invoices viz., invoice No. VC/18/90 dated 11th June, 1990 and the relevant Bill of Entry is dated 15th June, 1990 and the invoice No. VC/21/90 dated 14th June, 1990 and the corresponding B/E is dated 15th June, 1990. The Collector on the basis of the letter dated 11th June, 1990 treated the two imports as one and observed that the import is of 6 lakh pieces and therefore, the import is relevant for enhancing the prices of the impugned imports on the ground that it is a contemporaneous import. It is difficult to agree with the finding of the Collector. M/s. Durga Enterprises imported the goods under two independent invoices and cleared them under separate Bills of Entry. These two imports were for a similar quantity of 3 lakh pieces. One invoice is dated 11th June, 1990 and the other invoice is dated 14th June, 1990 although both the Bills of Entry were filed on 15-6-1990. The Department has not adduced any evidence to show that both the imports are made by placing a single order for the goods. Therefore, we cannot club these two independent imports and hold that the total quantity of goods imported are 6 lakh pieces. It is not clear why the importer imported the goods under two independent invoices. Even if he wanted to import 6 lakh pieces, nothing prevented him to place a single order and import under one single invoice. We cannot amend two invoices and the Bills of Entry by means of the letter dated 11th June, 1990 and club the imports for the purpose of holding that it is one single import of 6 lakh pieces. It is not clear what prompted the supplier to write letter dated 1.1th June, 1990. Further the language used in that letter is that "We have effected two shipments of 3 lakh pieces" whereas the invoices are dated 11th June, 1990 and 14th June, 1990. It is not clear how the letter dated 11th June, 1990 referred to the invoices of a later date, viz., 14-6-1990. There is also no evidence whether the two imports arrived by the same shipment or by different shipments. Even otherwise, the two imports cannot be treated as one import treating the import of 3 lakh pieces each as the import of 6 lakh pieces,
12. The impugned imports admittedly are of 4,10,000 pieces whereas the imports of M/s. Durga are of 3 lakh pieces. Therefore, there is no comparison between the two imports as the appellants' imports are nearly more than 1 lakh and a quarter. Further the imports of M/s. Durga is from Hong Kong, whereas the impugned imports are from Singapore. Therefore, there can be a reasonable difference between the prices at which the goods are imported.
13. At this juncture, we may also refer to Rule 5(1)(b) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 which provides for the transaction value of identical goods. According to which, in applying Rule 5, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods. The conditions for applying Rule 5(1)(b) is that sale should be at the same commercial level and the quantity should be substantially the same. As pointed earlier, the impugned imports are from Singapore though the goods are of Japanese origin whereas the imports of M/s. Durga Enterprises are from Hong Kong. Therefore, it cannot be said that the sale is at the same commercial level. Secondly, the quantity of M/s. Durga Enterprises is 3 lakh pieces whereas the appellants' imports are for 4,10,000/-pieces. Therefore, it cannot be said that the quantity is substantially the same. Hence, Rule 5(1)(b) is not applicable.
14. The findings of the Collector that the letter dated 11-6-1990 is a mistake is based on no evidence as no material is produced before us in support of the same. We are therefore, of the view that the imports of M/s. Durga Enterprises cannot be treated as contemporary import and the Collector is not justified in enhancing the value on the basis of the said imports.
15. We have rejected the invoice of M/s. Durga Enterprises. The next question for consideration is whether the price declared by the appellants should be accepted for the purpose of determining the assessable value under Section 14(1) of the Act. The appellants declared the price at the rate of Singapore dollars 13 per hundred pieces. The appellants themselves produced the invoice dated 29-5-1989 which indicates the price of identical goods at 1159 Japanese Yen. The Price Lists filed by the appellants, namely, the Price List dated 1st Jan. 1987 and 1st Jan. 1990 respectively show the price of the impugned goods at 1159 Japanese Yen. The price lists indicate that there is no substantial change in the value of the impugned goods. The Department also issued a show cause notice in the case of M/s. Honesty Traders wherein they have mentioned the price of identical goods at Japanese Yen 1159 per hundred pieces. Further there is an offer from M/s. Bhalla & Co. who are the agents of J.K.K. Zippers offering the goods at 1159 Japanese Yen for 100 pieces. The identical goods imported under Bill of Entry No. 03318 dated 12th June, 1990 at Madras indicate the price of goods at Rs. 125 for 100 pieces. The total quantity also is 3 lakh pieces. The Collector himself in his order observed that the prices in the import invoice No. 1914/90 dated 30th June, 1990 and the B/E No. 3318 dated 12th June, 1990 can both be held more contemporaneous as compared to that of M/s. Durga Enterprises if the comparative dates of the invoices are taken into consideration, although he rejected the invoice No. 1914/90 on the ground that No. 32 is not mentioned. The material referred to above indicates that there is a uniformity in the price of identical goods. Further these are the documents produced by the appellants. In other words, their own evidence indicates the price of the goods uniformally sold at the rate of 1159 Japanese Yen.
16. From the above, it follows that the value of identical goods right from 1989 to the relevant date viz., on which the impugned goods are imported is around 1159 Japanese Yen per 100 pieces. We, therefore, hold that the assessable value of the impugned goods should be fixed at 1159 Japanese Yen. Since, there is an under-valuation to the extent indicated above, the appellants are liable to pay the difference in duty on the enhanced value. We also direct the appellants to redeem the goods on payment of a redemption fine of Rs. 25,000/-.
17. The contention of the appellants that under Rule 5(3) of the rules, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods need not be considered in the light of the view which we are expressing namely, that the uniform contemporary price of identical goods is available.
18. As regards the penalty, we set aside the order of the Collector. The appellants have been penalised sufficiently. For non-compliance with principles of natural justice, the appellants have to approach this Tribunal and the appeal was allowed and remanded to the Collector. This is the second round of litigation. In view of the fact that the appellants have to face litigation twice, we do not propose to impose penalty.
19. The Collector is directed to assess the goods at 1159 Japanese Yen and the appellants may be given an option to redeem the goods on payment of a redemption fine of Rs. 25,000/-. The appeal is disposed of accordingly.