Customs, Excise and Gold Tribunal - Delhi
Singapore Colour Centre vs Collector Of Customs on 14 February, 1989
Equivalent citations: 1989(24)ECR148(TRI.-DELHI), 1990(45)ELT409(TRI-DEL)
ORDER Harish Chander, Member (J)
1. M/s. Singapore Colour Centre, Madras have filed an appeal being aggrieved by the order passed by the Collector of Customs, Madras. Briefly the facts of the case are that the appellants had filed Bill of entry for the clearance of goods. The description of the goods in the Bill of Entry was given as 'Four sets of Second-hand KIS brand Still PHOTOGRAPHY PROCESSING AND PRINTING EQUIPMENT'. The appellants had declared the value of the goods at Rs. 1,06,146.00 on the basis of the invoice No. PC 0202/87 dt. 2nd Feb., 1987 issued by M/s. Premier Commercial Enterprises in favour of the importers. In the invoice the value of the goods was shown as US $ 8,000/- GIF Madras and the description was given as :-
"Four sets of Second-hand KIS brand still photography processing and Printing Equipment." The equipment is stated in the OGL APP. 1 Part B List 8 Item No. 39 of Import Export Policy 1985-88. The goods are in very good condition and as per your order dt. 12-12-86. The equipments comprise the following:
(a) Four - DN Negative Processors Serial Nos. 3924, 2525, 3914 & 3923.
(b) Four Colour Printer Serial Nos. 2225, 2161, 1911 & 1907.
(c) Four Film Dryers.
(d) Four sets of wooden cabinet stands for the film processors and printers."
2. As the goods imported were second-hand, a certificate dated 27-1-1987 issued by Daplas Electronics (P) Ltd., Chartered Engineers, certifying that the following 4 sets were KIS Mini Lab Colour Photographic Processing System viz.,
(a) DN Negative processors Sl. Nos. 3924, 2525, 3914 & 3923.
(b) Magnum speed printer Sl. Nos. 2225, 2161,1911 & 1907.
together with their associated Film Dryers and Wooden Cabinet stands for the above mentioned sets were inspected and the age of the machine was certified as 3 years and the then value of the same was US $ 2,000/- per set. The importers also produced a copy of catalogue of M/s. KIS INDUSTRIES (P) LTD, for the KIS Mini Lab system as well as KIS Colour Analyser. In the catalogue it is clearly slated that the KIS Mini Lab system was comprised of 4 standard components viz, the CPU Chemical preparation and storage Unit, the DN Negative processor, the Magnum speed printer and the film dryer cabinet. Further it was stated that the system was designed to print photographs in 3 sizes viz., 3R, 4R and 5R.
3. The clearance of the goods was sought under OGL App. 1, Part B, List 8, Item 39 of the Import Policy for AM 88. The appellants also subscribed to the declaration as to the truth of the contents in the bill of entry as provided for under Section 46(4) of the Customs Act, 1962. An information was received to the effect that the party imported excess goods over and above the goods declared in the bill of entry and had not furnished the details while filing the bill of entry. Accordingly the case was taken up for investigation. Preliminary scrutiny of the documents like packing list revealed that even though the gross weight was declared as 9500 kgs. in the bill of lading, the net weight of the 16 cartons to be stuffed in the container was found only to be 640 kgs. The importers originally declared a gross weight of 720 kgs. and net weight of 640 kgs. and later the gross weight was amended to read as 9500 kgs. Detailed examination of the consignment was done in the presence of Shri Abdul Rasheed, Power of Attorney of the Appellant Firm. It was found that there were 163 packages as against 16 packages as declared in the packing list. It was also found that the following goods were available as against 4 sets of second-hand KIS brand Mini Lab System :
NEW OLD TOTAL
(a) NEGATIVE PROCESSOR 7 10 17
(b) COLOUR PRINTER 10 9 19
(c) FILM DRYERS 12 6 18
(d) WOODEN CABINET STANDS 28 32 60 (3 stands from one set as per the catalogue)
(e) 3 Packages Negative album empty plastic spools and 2 packages wires (used) basides the above the following goods (personal effects) were also found :-
(a) Aerometer Imperial Dust Cleaner (used) & Hitachi Vacuum Cleaner (used)
(b) Safety Steel Vault
(c) Used Air-conditioner with Stabilizer
(d) Furniture (Wooden Table 2 set Steel Stools 5)
(e) Two Water Pumps (used), and
(f) 4 Nos New Cotton Shirts
4. A statement of Shri K.A. Basheer, Proprietor of the Appellant firm was also recorded. The value declared was found to be very low. At the time of filing of the bill of entry the importers had produced xerox copy of catalogue of KIS Mini Lab System. The same catalogue was produced by Shri K.A. Basheer when his statement was recorded on 30th March, 1987. The department obtained a quotation from M/s. KIS Industries Pvt. Ltd., Singapore through a source. According to the said quotation the price of 1 Unit KIS Mini Lab Magnum speed was found to be US $ 22,750 CIF Madras.
5. As per the detailed examination report, the importers had imported 17 complete units of KIS Mini Lab system (both used and new) apart from a few pieces of colour printers, film dryers and cabinets as well as other items viz.,
(a) 2 Nos Vacuum Cleaners (used)
(b) 2 Nos Water Pumps (used)
(c) 1 No Air-conditioner (used) with Stabilizer
(d) 1 No Steel Cash Box (used)
(e) 4 Nos Cotton Shirts (new)
(f) 2 Nos Wooden Tables (used)
(g) 5 Nos Steel Stools (used)
(h) 8390 Nos Negative Wallets in 3 packages (i) 50 Nos Plastic Spools (used) (j) 50 kgs. used wires.
6. These items were found imported as against the declaration of 4 sets of secondhand KIS brand still photography processing and printing equipment. Out of 17 complete KIS Mini Lab systems, 7 units had to be treated as new and balance units as used even though some new components were available. This was by virtue of the fact that only 7 units could be assembled as new out of the imported goods because Only 7 negative processors were found to be new on examination. The value of the new system is estimated as US $ 22,750 CIF Madras as per the quotation dated 9-4-87 raised by M/s. KIS Industries Pvt. Ltd., the CIF price of the used system was estimated as US $ 10,000 depending upon the extent of usage and the condition of the goods applying Rule 8 of the Customs Valuation Rules, 1963. The assessable values of other items were estimated as the following applying Rule 8 of the Customs Valuation Rules, 1963 :-
(a) 2 Nos Colour Printers Rs. 2,40,000/- (b) 1 No Film Dryer Rs. 60,000/- (c) 9 Nos Wooden Cabinet Stand Rs. 45,000/- (d) 2 Nos Vacuum Cleaners (used) Rs. 1,000/- (e) 2 Nos Water Pumps (used) Rs. 200/- (f) 1 No Air-conditioner with Stabilizer (used) Rs. 1,500/- (g) 1 No Steel Cash Box (used) Rs. 750/- (h) 4 Nos Cotton Shirts (new) Rs. 40/- (i) 2 Nos Wooden Tables (used) Rs. 150/- (j) 5 Nos Steel Stools Rs. 150/- (k) 8390 Nos Negative Wallets (3 packages) Rs. 50/- (1) 50 Nos Plastic Spools (used) Rs. 10/- (m) 50 kgs used Wires Rs. 50/-
7. The total value of the consignment was worked out to Rs. 37,88,705/- as against the declared value of Rs. 1,06,146/-. The importers had attempted to evade customs duty to the extent of Rs. 64,95,666.75. The Chartered Engineer's certificate was only in respect of four sets of machines. For the rest there was no certificate and as such the goods were held to be liable for confiscation under Section 111 (d) of the Customs Act and for under valuation under Section 111(m) and for excess goods under Section 111 (1) of the Customs Act, 1962. Accordingly a show cause notice was issued. The importers had filed a reply to the show cause notice.
8. After affording an opportunity of being heard in person, the learned Collector vide his order, absolutely confiscated the following goods under Section 111(m), (1) and (d) of the Customs Act.
Description of the item Appraised value
(In Rs.)
13 sets of second-hand KIS brand still photographic 17,24,878
processing & printing equipment
2 Nos. Colour Printers 1,20,000
1 No. Film Drier 30,000
9 Nos. Wooden Cabinet Stand 22,500
9. The following goods were also confiscated under Section 111(m), (1) and (d) of the Customs Act. However, the same were allowed to redeemed on payment of a fine of Rs. 5 lakhs under Section 125 of the Customs Act, 1962 :-
(i) 4 sets of second hand KIS brand still photographic Rs. 5,30,732 processing & printing equipment having Serial Nos. 3924, 2525, 3914 and 3923 in the negative processors and 2225, 2161, 1911 and 1907 in the printers (ii) 2 Nos. Vacuum Cleaners (used) 1,000/- (iii) 2 Nos. Water Pumps (used) 200/- (iv) 1 No. Air-conditioner with Stabilizer (used) 1,500/- (v) 1 No. Steel Cash Box (used) 750/- (vi) 4 Nos. Cotton Shirts (new) 40/- (vii) 2 Nos. Wooden Tables (used) 150/- (viii) 5 Nos Steel Stools 150/- (ix) 8390 Nos Negative Wallets (3 packages) 50/- (x) 50 Nos. Plastic Spools 10/- (xi) 50 kgs used wires 50/-
10. A penalty of Rs. 5 lakhs was also imposed on Shri K.A. Basheer, Proprietor of M/s. Singapore Colour Centre, under Section 112(a) of the Customs Act. Being aggrieved by the said order the appellants have come in appeal before the Tribunal.
11. Shri V. Lakshmikumaran, the learned Advocate has appeared on behalf of the appellants. He has reiterated the contentions made in the appeal petition. At the outset of the hearing he stated that he would withdraw pages 95 to 107 from the paper book which is a catalogue pertaining Magnum Model. Shri Lakshmikumaran has stated that the appellants had filed the catalogue before the Collector which appears on pages 25 to 28 of the paper book. Shri Lakshmikumaran has referred to the catalogue and stated that the goods imported were KIS Mini Lab system. Shri Lakshmikumaran has argued that the appellants had entered into an agreement for the purchase of these KIS Mini Lab system with an understanding that these machines could produce 3R, 4R and 5R photographs but later on it was found that it could produce only 3R photographs. He has referred to the letter dated 13th January, 1987 written by the appellants to DBS Finance Limited and stated that the letter appears on page 35 of the paper book and the Magnum Model can produce 3R, 4R and 5R sizes of photographs whereas Papier Model which is an old Model could produce only one. He further stated that it is only on 'Papier Model', the mention of TN/DN is there. TN stands for Printer and DN stands for Negative processor. Shri Lakshmikumaran argued that the learned Collector has wrongly mentioned it to be Magnum Speed Model, and the Magnum Speed Model was manufactured for the first time in 1985 whereas the machines imported is an older Model. The year of manufacture of the machines imported is 1983. KIS Industries had manufactured three different Models of Mini Lab Systems. The Papier Model which was known as TN/DN was manufactured until 1984 and this Model could produce only one size of photograph and take only one size of paper. In 1984 KIS Magnum Model was introduced and this could produce three sizes of photographs viz., 3R, 4R and 5R. The machine could be loaded with two different sizes of paper at the same time. The production of this Model was stopped in 1985. In 1985 KIS Magnum Speed Model was introduced. The basic feature of this Model is the same as that of the Magnum except the speed is faster than that of Magnum. KIS Mini Lab system comprised of four standard components. The chemical preparation and storage unit, the Negative Processor, the Printer and the Film Dryer. A letter to this effect is part of the paper book (Page 115) filed by the Respondent. The said letter dated 20th August, 1987 is written to Shri K.A. Basheer by M/s. KIS Industries (Pte) Ltd. Shri Lakshmikumaran, the learned Advocate has drawn the attention of the Bench to the Inspection Report of the Appraiser, which appears from pages 1 to 8 of the paper book filed by the Respondent and to the Bill of Entry filed by the appellants which appears on pages 9 & 10 of the Paper book. Shri Lakshmikumaran states that the Revenue's examination report clearly shows that the machine imported is 'Papier Model' which is at Sl. No. 109 of the examination report. It reads "1 Unit used papier colour printer Sl. No. TN 1913A -1". He has also stated that the inspection report on page 1 pertains to Negative Processor and Colour Printer and in all the items it is mentioned 'TN/DN' which clearly shows that the machine imported is a 'Papier Model'. There were totally 17 items and of them 12 were in working condition and 5 were in broken down condition. Shri Lakshmikumaran, the learned Advocate has, therefore, stated that the Collector's finding that the machines imported were 'Magnum Model' is not correct. He said that the Collector has relied on a quotation by a private party in Madras and the quotation is in respect of Magnum Speed Model. Shri Lakshmikumaran has referred to the Chartered Engineer's certificate which appears on page 15 of the paper book filed by the Respondent. Shri Lakshmikumaran has argued that the goods imported are not banned items and they fell under the OGL. He referred to Section 14 of the Customs Act, 1962 and also stated that the Revenue authorities were not correct in resorting to the provisions of Section 14(1 )(b). He also stated that Rule 8 of the Valuation Rules is not applicable in respect of the excess machines which have been found in the consignment over and above the quantity declared in the Bill of Entry. Shri Lakshmikumaran, the learned Advocate has pleaded for the acceptance of the appeal. Alternatively he has pleaded that if the appellants plea is not accepted he has no objection if an option is given to the appellants to redeem the goods after payment of 100% redemption fine. He also pleaded that the penalty imposed by the Collector is excessive and the same needs to be reduced.
12. Shri C.V. Durghayya, the learned JDR, who has appeared on behalf of the Respondent has relied on the order passed by the adjudicating authority and in particular paras 18, 19, 20, 21, 24, 25, 26, 27 and 28 of the order-in-original. He has filed a date-sheet chart. Shri Durghayya has argued that in the Bill of Entry, the appellants had declared 4 Mini labs but actually on examination of the goods, 17 Units were found. Referring to para 14 of the order-in-original he has argued that the appellants themselves had attached a catalogue alongwith the Bill of Entry and that catalogue indicated that the system imported was Magnum speed model and after arrival of the consignment the appellants had again produced the same catalogue. Only at the stage of replying to the show cause notice and during the personal hearing the claim was made by the appellants that the catalogue did not pertain to the goods imported. Shri Durghayya argued that even the Chartered Engineer's Certificate clearly indicates that the four sets of equipments at Sl. Nos. 2225, 2161, 1911 & 1907 were Magnum Speed Printers and the Chartered Engineer's Certificate was produced by the appellants for their claim under OGL and for valuation of the goods. Shri Durghayya argued that the goods on examination were found to be in agreement with the description given in the catalogue and in the Chartered Engineer's Certificate. The appellants had declared the value of the goods at US $ 8,000 which is equivalent to Rs. 1,06,146 and the Revenue has assessed the value of the same at more than Rs. 24 lakhs. The appellant had claimed that She equipment imported was 'Papier Model' whereas as per the Revenue it is Magnum Model. Shri Durghayya has referred to the letter written by DBS Finance Ltd. to M/s. Premier Commercial Enterprises dated 9th September, 1986 which appears on page 3. of the Respondent's paper book. It clearly shows that the machine was capable of printing 3R, 4R and 5R sizes and as such it is a Magnum Model. Shri Durghayya also referred to the letter written by M/s. Premier Commercial Enterprises to DBS Finance, whereby the appellants had accepted the offer. In all the appellants had imported 17 Units and had declared only 4 Mini labs. The appellants claim before the Tribunal that the importation was correct is not acceptable. This plea was not taken by the appellant before the adjudicating authority. There is mis-declaration of value as well as quantity and the goods do not fall under OGL. Shri Durghayya has referred to para No. 64 of the AM 85-88 and argued that in terms of that para, certificate from the Chartered Engineer had to be produced. Certificate produced is only in respect of four machines and the other 13 are totally unauthorised importation. Shri Durghayya further argued that the redemption fine and penalty imposed by the Collector are very reasonable. However, he leaves it to the Bench.
13. In reply, Shri Lakshmikumaran, the learned Advocate has referred to the Collector's observations as to his acceptance that ail the 17 sets of equipments were used ones and that the goods were re-conditioned. Adoption of value after applying Rule 8 of the Customs Valuation Rules at US $ 10,000 per set is not correct. He has referred to the letter dated 20th August, 1987 of the manufacturers' which appears at page 113 of the Respondent's paper book wherein it is clearly stated that 'papier model' was also known as TN/DN Model and the same was manufactured until 1984 and this model could print only one size of photograph. He has referred to the show cause notice and has stated that the Revenue has relied on the catalogue of Model Magnum. 'Papier' is a French word and it mean only paper. The catalogue filed by the appellant alongwith the Bill of Entry was just for explaining the machinery as the catalogue of Papier Model was not available. He has referred to the letter written by Spectrum Colour Lab, Madras dated 7th August, 1987 addressed to the Assistant Collector. In para 2 of the said letter it is clearly mentioned that the 'word papier means in French language paper. That means the machine is meant for colour paper processor.' He has further referred to page 15 of the appeal memo. The appellants have clearly mentioned that 'papier' model was available upto 1983-84 and this fact has been accepted by the Collector. Magnum speed model was introduced in the year 1985. Shri Lakshmikumaran, the learned Advocate has stated that even for the sake of argument if it is taken that the importation was unauthorised merely on account of non-furnishing of a certificate from the Chartered Engineer the appellants should have been given an option to redeem the goods after payment of fine. He has again pleaded for the acceptance of the appeal.
14. We have heard both the sides and have gone through the facts and circumstances of the case. Facts are not in dispute that in the Bill of Entry, the appellants had given the description as "Four sets of second-hand KIS brand still PHOTOGRAPHY PROCESSING AND PRINTING EOUIPMENT" and the value was declared at Rs. 1, 06, 146 and the value as per invoice was CIF US $ 8,000/-. We have also gone through the Chartered Engineer's Certificate, which is reproduced below :-
"Daplas Electronics (Private) Limited P.O. Box 195 Katong, Singapore 9143, CABLE : DAPRONICS TELEPHONE 414967 Your Ref:
Our Ref: AW/COV/8701-1 Singapore 27th January, 1987 Singapore Colour Centre, 669, Mount Road, Madras 600 006 India. Dear Sirs, CERTIFICATE OF VALUATION
I, ALLAN Y.K. WONG, Chartered and Registered Professional Electrical Engineer hereby certify that I have personally inspected the following four sets of KIS mini lab colour photographic processing system :
Name of Manufacture: KIS Industries Pte Ltd. A
wholly-owned subsidiary of
KIS International, Grenoble,
France.
Machine Sets: DN Negative Processor,
Serial Nos. : 3924, 2525,
3914, 3923
Magnum Speed Printer :
Serial Nos. : 2225,
2161, 1911 & 1907
together with their
associated Film Dryers
and wooden cabinet
stands for the
above-mentioned sets.
Year of Manufacture : 1983
Age of Machine : Three years
Present condition : In good working order
Original Value : US $ 3,300.00 per set
Present Value : US $ 2,000.00 per set
Expected working life : 12 years
Residual Value : US $ 300.00 per set.
Yours faithfully
Sd/- & Sealed
ALLAN Y.K. WONG"
15. A simple reading of the Chartered Engineer's Certificate shows that the year of manufacture of the machines is 1983 and the machines have been described as DN Negative Processor and the Printers have been described as 'Magnum Speed Printer'. We have also perused the letter dated 20th August, 1987 written by KIS Industries Pte. Limited, which is also reproduced below :-
"Our Ref: 145-87 20th August 1987 Mr. K.A. Basheer C/o. Comset Graphic Designs 08-08 Queensway Shopping Centre Singapore - 0314 Dear Sir I refer to your telephone conversation regarding the various models of KIS Mini lab systems. I am pleased to give you the following details for your information. KIS Industries have manufactured so far three different models of mini lab systems. They are as follows:
(i) The Papier Model which is also known as TN/DN Model was manufactured until 1984. This model can only print one size of photographs and take only one size of paper.
(ii) In 1984 we introduced the KIS Magnum Model. This model can print three different sizes of photographs, namely 3R, 4R and 5R sizes. The machine can be loaded with two different sizes of paper at the same time. We stopped production of this model in 1985.
(iii) In 1985 we introduced the KIS Magnum Speed Model. The basic feature of this model is the same as that of the Magnum except the speed is faster than that of Magnum.
KIS mini lab system comprised of four standard components. The chemical preparation and storage unit, the Negative Processor, the Printer and the Film Dryer. The model name in all the three models is imprinted in the Printer.
I hope the above details give sufficient information about our mini lab systems.
Yours faithfully KIS Industries (Pte.) Ltd.
Sd/-
PHILIPPE DARDEL Managing Director."
16. This letter was filed by the appellants before the Adjudicating authority. The genuineness of this letter has not been doubted by the Respondent. Para (i) of the said letter clearly says that Papier Model "which is also known as TN/DN Model was manufactured until 1984. This model can only print one size of photographs and take only one size of paper." Para (ii) of the letter shows that KIS Magnum Model was intro-Chartered Engineer's certificate the year of manufacture of the machines is 1983. The genuineness of the Chartered Engineer's certificate has also not been doubted by the Revenue authorities. The examination report which runs from pages 1 to 9 of the Respondent's paper book clearly shows that most of the goods imported were used. There are some new items also on page one of the examination report. It also contains details of Sl. Nos. and date of manufacture of the machines. A perusal of the same shows that for negative processor and colour printers the words 'TN/DN' are shown. Page 1 of the Respondent's paper book is reproduced below :-
"Details of serial number and date of manufacture noted on 3-8-1987"
-------------------------------------------------
Negative Processor Colour Printer
-------------------------------------------------
1. DN 3917 1-11-83 1. TN 2227 A 1-84
2. DN 2096 -06-83 2. TN 1930 A 6-83
3. DN 2528 -09-83 3. TN 1854 A 6-83
4. DN 2093 A -06-83 4. TN 2142 A 7-83
5. DN 2124 A -06-83 5. TN 2150 A 7-83
6. DN 2534 A -09-83 6. TN 1611 A 5-83
7. DN 3923 1-11-83 7. TN 1923 A 6-83
8. DN 2145 A -06-83 8. TN 1931 A 6-83
9. DN 3890 1-11-83 9. TN 1860 A 6-83
10. DN 3924 1-11-83 10. TN 1851 A 6-83
11. DN 3914 1-11-83 11. TN 2228 A 1-84
12. DN 3915 1-11-83 12. TN 1859 A 6-83
13. DN 2074 A -06-83 13. TN 2225 A 1-84
14. DN 2525A -00-83 14. TN 2222 A 11-83
15. DN 1829 A 15. TN 1911 A 6-83
16. DN 2094 A -06-83 16. TN 2161 A 7-83
17. DN 3913 1-11-83 17. TN 1913 A 6-83
18. TN 1907 A 6-83
19. TN 1862 A 6-83
-------------------------------------------------
17. The learned Collector has accepted that most of the items were manufactured in 1983 barring a couple of them in 1984 and he had accepted that 17 sets were used ones. The Manufacturers letter dated 20-8-1987 which is reproduced above clearly shows that 'Papier' Model was also known as TN/DN and it was manufactured until 1984. The learned Adjudicating Authority has given contradictory findings. On the one hand he accepts that most of the imported goods were manufactured in 1983 barring a few in 1984 whereas the manufacturers' letter dated 20-8-1987 which has already been reproduced above clearly shows that KIS Magnum Model was introduced in 1984 and Papier Model was also known as 'TN/DN'. Since the examination reports says that most of the items are TN/DN it cannot be assumed that it is magnum model. Once the examination report is accepted, the Revenue authorities cannot assess the goods as Magnum Model. The mere fact that the appellants had attached the catalogue of Magnum Model cannot lead to the inference that the goods imported arc Magnum Speed Model, especially when the Negative Processor and Colour Printers bear serial numbers as well as date of manufacture. We have perused in detail the examination reports dated 13-3-1987 and 16-3-1987. A close examination of the report shows the position of the Negative Processor and Colour Printers as under :-
"Relevant Extract from the Examination Reports dated 13/16-3-1987 (Pages 3 to 7 of the Respondent's paper book) Sl. No. Processors Sl. No. Printers
2. New 4. Old
5. New 9. New 1907 A
6. New 109. Used TN 1913 A
127. New DN 3914 125. Used TN 1895 A
128. New DN 3924 130. Used TN 2225 A
147. New DN 3890 135. Used TN 1923 A
151. New DN 3929 136. Used TN 1862 A
148. Used DN 3913 126. Used TN 1911 A
149. Used DN 2534 A 145. Used TN 2142 A
150. Used DN 2145 A 137. New TN 1860 A
152. Used DN 2528 A 138. New TN 2150 A
153. Used DN 2096 A 139. New TN 2228 A
154. Used DN 2093 A 140. New TN 1611 A
155. Used DN 3917 141. New TN 1930 A
156. Used DN 2074 A 142. New TN 1931 A
157. Used DN 1829 A 143. New TN 1854 A
158. Used No. not given 144. New TN 1851 A
146. New TN 2227 A
129. Used TN 2222 A 7 New-10 Used 10 New-9 Old
18. A detailed examination of the examination report shows that the colour printers and processors are DN/TN models. The manufacturers in their letter dated 20-8-1987 have mentioned that Papier Model was also known as TN/DN model which was manufactured until 1984. The learned Collector in Para 48 of his order has accepted the factum that the imported machines are old ones whereas the extract from the examination report which is reproduced above shows that out of the total 17 negative processors 7 are new and ten are old and of the colour printers 10 are new and 9 are old. The learned Collector while applying Rule 8 of the Valuation Rules had adopted the value on the basis that the machines imported are KIS Magnum Model. The Chartered Engineer in his certificate has mentioned that Magnum speed printers bear Sl. Nos. 2225, 2161,1911 and 1907. He has mentioned the year of manufacture of the machines as 1983 whereas on physical examination, as mentioned in the examination report dated 3-8-1987 (page 1 of the Respondent's paper book), the year of manufacture is found as below:-
Sl. No. Negative Processor Month & Year of Manufacture
10. DN 3924 1-11-83
14. DN 2525 A -83
11. DN 3914 1-11-83
7. DN 3923 1-11-83 Colour Printer
13. TN 2225 A 1-84
16. TN 2161 A 7-83
15. TN 1911 A 6-83
18. TN 1907 A 6-83
19. A comparison of the Chartered Engineer's Certificate with the examination report dated 3-8-1987 will show that Colour Printer at Sl. No. 1.3 bearing No. TN 2225A was actually manufactured in January, 1984, whereas the Chartered Engineer has mentioned it as 1983. Thus the Chartered Engineer has not taken sufficient care even while issuing the Certificate. It will be dangerous to place complete reliance on the Certificate of the Chartered Engineer. Accordingly we are of the view that mentioning of the Magnum Model in respect of Colour Printers in the Chartered Engineer's certificate should not lead to the inference that the machines imported was Magnum Model. Keeping in view the totality of the facts and circumstances of the case and on detailed examination of the examination reports we hold that the machines imported by the appellants arc Papier Models.
20. Now coming to the valuation aspect, in the invoice and packing list which appear at pages 16 and 17 of the Respondent's paper book, the value has been shown as US $ 8,000/- and the Chartered Engineer in his certificate had adopted the same value at US $ 2,000/- per set. The examination report shows that there are 7 new processors and ten new printers in addition there are ten used processors and 9 old printers. The number of processors imported is 17 and the printers imported is 19. Thus two printers are in excess. Keeping in view the totality of the facts and circumstances of the case, we hold that the value in terms of the provisions of Section 14(1)(a) of the Customs Act, 1962 cannot be adopted and as such we have to resort to the provisions of Section 14(l)(b) of the Customs Act, 1962 read with Rule 8 of the Valuation Rules. For 9 sets of colour processors and printers we order that the value should be adopted at US $ 2,000 per set lob and for 8 sets of processors and printers the value should be at US $ 3,000 fob per set. The price of brand new KIS Mini Lab Papier Model with accessories is at US $ 4,000/- fob per set, as per invoice No. P/18-2-1983 dated 14-2-1983 raised by KIS Industries (Pte.) Ltd., in favour of M/s. Fajrmas Foto, Indonesia, which appears at page 112 of the Respondent's paper. This invoice was relied upon by the appellants and was attached with the reply to the show cause notice dated 27-8-1987 which appears on page 123 of the Respondent's paper book. There is no catalogue or price lists on record. Genuineness of this invoice has not been doubted by the Revenue authorities and reliance has been placed on this invoice accordingly. Regarding the valuation of other items found in the consignment, value as adopted by the Collector is accepted namely:
(i) 2 Nos. Vacuum Cleaners (used) Rs. 1,000/- (ii) 2 Nos. Water Pumps (used) 200/- (iii) 1 No. Air-conditioner with Stabilizer (used) 1,500/- (iv) 1 No. Steel Cash Box (used) 750/- (v) 4 Nos. Cotton Shirts (new) 40/- (vi) 2 Nos. Wooden Tables (used) 150/- (vii) 5 Nos. Steel Stools 150/- (viii) 8390 Nos. Negative Wallets (3 pekgs.) 50/- (ix) 50 Nos. Plastic Spools 10/- (xi) 50 kgs. used wires 50/-.
21. The learned Collector has absolutely confiscated 13 sets of KIS Mini Lab systems. In terms of the provisions of Section 125 of the Customs Act, 1962, the Collector shall give an option to redeem the goods on payment of fine in lieu of confiscation, the importation or exportation whereof is prohibited. Section 125 of the Customs Act, 1962 is reproduced below :-
"125. Option to pay fine in lieu of confiscation. - (1) Whenever confiscation of any goods is authorized by this Act, the Officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods an option to pay in lieu of confiscation such fine as the said officer thinks fit: "Provided that, without prejudice to the provisions of the proviso to Sub-section (2) of Section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. (2) For the removal of doubts it is hereby declared that any fine in lieu of confiscation of goods imposed under sub-section (1) shall be in addition to any duty and charges payable in respect of such goods."
22. A simple reading of the Section shows that where the goods have been imported in violation of the conditions of licence granted to the assessee, the goods are liable to confiscation under Section 11 l(d) of the Customs Act, 1962. In the matter before us the goods fall under App. 1 Sl. No. 39 of Appendix 1 Part II List of Capital goods allowed under Open General Licence. The importation is subject to the condition laid down under para 64 of AM 85-88 which appears on page 22 of the AM 85-88 Policy. The appellants had produced a Chartered Engineer's Certificate only in respect of 4 sets of KIS Mini Lab system. No Chartered Engineer's Certificate has been filed for 13 Mini Lab system and the two colour printers which are in excess of the 17 sets. No bifurcation of value is possible in respect of the two printers. The invoice dated 14-2-1983 which appears on page 112 of the Respondent's Paper book is in respect of one set. A simple reading of para 64 of AM 85-88 shows that the intention behind the production of certificate from the Chartered Engineer is for ascertaining the age and life of the machinery. The Chartered Engineer in his certificate has mentioned the year of manufacture as 1983 and he has mentioned the age of the machine after reconditioning as 12 years. We have perused the examination report by the Revenue authorities which runs from page 1 to 1.0 of the paper book. A detailed examination of the report also shows that in most of the parts, the year of manufacture is 1983. As per the observations in the foregoing paras we have treated 9 sets as old and 8 sets as new. The importation of 4 sets is in accordance with Para 64 of the AM 85-88 Policy read with Appendix 1 Part B Sl. No. 39. Accordingly we hold that there was no justification for levying any fine in lieu of confiscation in respect of 4 old Mini Lab systems. However, there is justification for confiscation of 13 Mini Lab systems which were in excess of the quantity declared in the Bill of Entry. Keeping in view the totality of the facts and circumstances of the case and the offer of the learned Advocate for grant of option to the appellants for redemption on payment of 100% fine in lieu of confiscation, we order that the appellants may redeem the goods after payment of fine in lieu of confiscation of Rs. 4,75,000/- (Rupees four lakhs & Seventy-five thousand only). Since there is no bifurcation of the value of the processors, printers and other accessories, we order that the value of the two printers which are in addition to 17 sets may be fixed at US $ 1,200 fob each. The above fine in lieu of confiscation is fixed after taking into consideration all the aspects including these two extra colour printers. The fine in lieu of confiscation is to be paid in addition to any duty and charges payable in respect of such goods, the value of which has already been fixed above.
23. In view of the discussion in the foregoing paras, we hold that inasmuch as the appellants had under-valued the imported goods and had also mis-declared the value and quantity of the goods, we reduce the penalty under Section 112(a) of the Customs Act, 1962 from Rs. 5 lakhs to Rs. 4 lakhs (Rupees four lakhs only). The Revenue authorities are directed to give consequential effect to this order. Except for this modification as ordered above, the appeal is otherwise rejected.