Customs, Excise and Gold Tribunal - Delhi
Pradeep Kedia vs Collector Of Customs on 30 March, 1993
Equivalent citations: 1993(67)ELT519(TRI-DEL)
ORDER
Harish Chander, President
1. Pradeep Kedia, sole proprietor of M/s. P.P. Trading Co., 242/6267, Pant Nagar, Naidu Colony, Ghatkopar (East), Bombay - 400 075, has filed an appeal being aggrieved from the order passed by the Collector of Customs, Calcutta. Briefly the facts of the case are that M/s. P.P. Trading Company, 242/6267, Naidu Colony, Ghatkopar (East), Bombay - 400 075 had filed a bill of entry through their clearing agent M/s. Barua & Chowdhury for clearance of the consignment of 14,000 kgs. of electrical resistance wire of 20, 22, 24 and 26 SWG declared as low grade resistance wire with low resistance capacity. The appellant had declared its value at US $ 13,000.00 (Rs. 1,96,671.70) CIF - per vessel s.s. Bangalore Shova, Rot No. 102/89, Line No. 17. On examination, the goods were found to be USK No. 4 JISC 2520 Licence No. 5614 made in Japan and manufactured by M/s. Hosokawa Seisen Co. Ltd., Japan. The goods were packed in original spools and having original packing. Each of the spools contained all the technical details of size, diameter and resistancy which ranged from 1.93 for 20 SWG to 7.71 for 26 SWG. The examination of the goods thus revealed that the goods found in the imported packages were electric resistance wire of the famous Japanese brand which was being imported regularly by several importers. On chemical test of the goods and comparing the details indicated in the labels on the spools with particulars indicated in the manufacturer's catalogue/technical literature, it was found that the goods were quality wire of famous HSK No. 4 brand without any defect. From the catalogue it was also found that the manufacturer's sole exporting agent from Japan was M/s. Tohwa Electric Co. Ltd., Japan. On comparison of the value indicated in some contemporaneous invoices from M/s. Tohwa Electric Co. Ltd., Japan for identical goods having same specifications, it was found that the value of the goods could not be less than US $ 98,500.00 (Rs. 14,90,166.30) CIF. Value of identical goods i.e. HSK brand electrical resistance wire manufactured by other Japanese manufacturers was also found to be more or less similar to the present brand. As such it appeared that the goods were undervalued to the extent of Rs. 12,98,569.00 and the importers attempted to evade customs duty to the tune of Rs. 16,39,569.00. Goods valued at Rs. 12,93,494.60 were also not covered by any licence and, therefore, appeared to be unauthorisedly imported. The goods were liable to confiscation under Section lll(d) and (m) of the Customs Act, 1962 and the importers were liable to penal action under Section 112(a). Accordingly, a show cause notice was issued on 10th August, 1989 to M/s. P.P. Trading Company. The appellants did not reply to the show cause notice within the stipulated period as well as after being given extension of time. Personal hearing was granted on 8th February, 1990 and the adjudication was done by the then Collector of Customs vide order No. 6/90 dated 14th February, 1990 and the goods were ordered to be confiscated under Section lll(d) and (m) of the Customs Act, 1962. An option was given to redeem the goods on payment of fine of Rs. 8,00,000.00 (Rupees eight lakhs only) and also a penalty of Rs. 5,00,000.00 (Rupees five lakhs only was levied on the importers under Section lll(d) of the Customs Act, 1962 and the goods were ordered to be cleared in case the importer had so chosen at the value ascertained in para 3 of his order.
2. Being aggrieved from the order passed by the Collector, an appeal was filed before the Customs, Excise and Gold (Control) Appellate Tribunal and the Tribunal vide its order No. 894/90-A, dated 12-6-1990 had set aside the order and remanded the case to the Collector of Customs, Calcutta for de novo adjudication after granting personal hearing to the appellants. It was also ordered that reasonable time should be given to the appellant to file written submissions as they had not yet filed the written submissions. In compliance with the Tribunal's orders, the importers were furnished with xerox copies of the documents relied upon in framing the charges in the show cause notice and they were also informed to inspect the documents on 6th August, 1990 and were requested to file their written submission in reply to the show cause notice on or before 20th August, 1990. The importers did not come for inspection nor submitted their reply to the show cause notice. Again time was given to inspect the documents on 1st September, 1990 and to file written submissions by 8th September, 1990 and on the request of the importers a personal hearing was fixed on 1st October, 1990. Again on importers' request it was adjourned to 10th October, 1990. The importer did not appear on that date. Another date of personal hearing was given on 24th October, 1990. The counsel for the importers requested for the fixation of the personal hearing on 15th October, 1990 at 3.00 p.m. and on 15th October, 1990 at 3.00 p.m. the importers' counsel had appeared. The importers had taken the plea that the order for the goods was placed by the importers on the basis of an advertisement appearing in Hong Kong publication which indicated the price for the resistance wire on the basis of quantity in bulk. The order was placed on 4th October, 1988. The importer had claimed the transaction at arm's length. The proforma invoice was issued in December, 1988 and the goods were received in February, 1989 and the indents relating to the invoices cited in the show cause notice were for the period July to September, 1988. The importer had contended that these were not contemporaneous imports and the goods in question were 5,000 kgs. each of 22 and 24 SWG, 3,000 kgs. of 20 SWG and 1,000 kgs. of 26 SWG resistance wire, whereas the invoices cited in the notice were only of 1,000 and 1,500 kgs. of 22 and 24 SWG, and the instances were not contemporaneous imports. It was also contended that the invoice covering the instant case was in terms of US dollars. The invoices cited in the show cause notice were in Japanese Yen and the rate of exchange applied for arriving at the valuation was not mentioned in the notice. The appellant had contended that the transaction was at arm's length and there was no question of taking any action under Section 111 or 112 of the Customs Act. The adjudicating authority had observed that the goods were made in Japan and against the "brand name/label" column in respect of each gauge of resistance wire, it had clearly been indicated as "HSK No. 4". The importers had placed reliance on an advertisement appearing in a Hong Kong newspaper dated 3rd June, 1989, stating that they had placed the order for the resistance wire on the basis of the quotation appearing in the said advertisement. The adjudicating authority in his order has made an observation that the advertisement is dated 3rd June, 1989, whereas the order for the goods was placed on 4th October, 1988 and the importation took place in February, 1989 and the advertisement is not related to the goods in any way and the advertisement did not relate to HSK No. 4 of Japanese origin. The Collector did not accept the contention of the appellants regarding advertisement. The purported invoices dated 15th December, 1988,30th December, 1988 and 3rd January, 1990 drawn by M/s. Sigma Technical Co., Hong Kong against the various purported Indian importers and which had been cited as proof of contemporaneous imports of identical goods were also not acceptable. In the first place, the goods covered by these purported invoices were not for HSK No. 4 brand of resistance wire of Japanese origin. Moreover, the invoices bear no serial numbers and though they bear the brand "proforma", there is no indication on them as to contrast no purchase order number, L.C. particulars, etc. and the adjudicating authority had taken the view that they were not relatable to any specific order of importation. As such, the invoices relied upon by the appellants were rejected. The Collector in his order has relied on eight specific invoices of importation of resistance wire of HSK No. 4 brand of Japanese origin of 20, 22 and 24 SWG. These invoices were of imports effected by various Indian parties from M/s. Tohwa Electrical Company, Tokyo, Japan, who, as per evidence produced, are the sole selling agents of the Japanese manufacturers and are, therefore, authentic as regards the price for the goods. The dates indicated in seven out of eight invoices are between July and September, 1988 i.e. within a period of 3 months before or after the date 4th October, 1988 on which the orders for the goods were placed. Except for invoice No. 55926 dated 14th March, 1988, the remaining seven invoices were contemporaneous for the purpose of Rule 5 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and the prices mentioned in seven invoices were of 20, 22 and 24 SWG in bulk quantities of 500 kgs. or more and were, therefore, in substantially the same quantity as the goods covered by the subject importation. The invoice also indicated that there was no further quantity discount so long as the orders for the bulk quantities of 500 kgs. or more, since in some cases the prices were higher even though the quantities indented were higher during the same contemporaneous period. For example, invoice No. 55951 dated 22nd November, 1988 drawn in favour of M/s. Zenith Exports Ltd., Calcutta, the price for 500 kgs. of SWG 20 resistance wire of HSK No. 4 brand is 690 Yen per kg. However, in invoice No. 55952 dated 26th December, 1988 relating to the same importer, the price for 200 kgs. resistance wire of the same specification is Yen 795 per kg. Similarly, the price of SWG 22 resistance wire is quoted at Yen 740 per kg. When the quantity imported was 1,500 kgs. in invoice No. 55951 dated 22nd November, 1988 mentioned above, whereas the price quoted for 2,000 kgs. of resistance wire of identical specification is Yen 825 in invoice No. 5-5943-2 dated 12th October, 1988 in respect of M/s. Ticina Electricals, Bombay. The adjudicating authority had adopted the value of the invoice in favour of M/s. Ticina Electricals, Bombay for resistance wire SWG 20 and SWG 22 in invoice No. 5-5952 dated 26th December, 1988 and the price for resistance wire SWG 24 mentioned in invoice No. 5-5943-2 dated 12th October, 1988 in favour of M/s. Ticina Electricals, Bombay was adopted, as these dates were nearest to the date of 4th October, 1988 on which the order was placed for the said consignment. The adjudicating authority had fixed the following value :-
SWG-20 resistance wire Yen 795 Kg.
SWG-22 resistance wire Yen 850 Kg.
SWG-24 resistance wire Yen 900 Kg.
As far as the resistance wire of SWG-26 HSK No. 4 was concerned, there was no evidence of contemporaneous imports. However, as per the importers themselves its price per kg. should be 10% more than the price for resistance wire of gauge SWG-24. Therefore, in terms of Section 14 of the Customs Act, 1962, the value of HSK No. 4 resistance wire of SWG-26 was fixed at Yen 990 per kg. The CIF value of the goods was determined as under :-
_______________________________________________________________________________ SWG Qty- Unit price (in ¥) Total value Total ascertained value (kg) (in¥) (in Rs.) _______________________________________________________________________________ 20 3,000 795 23,85,000 2,89,441.74 22 5,000 850 42,50,000 5,15,776.69 24 5,000 900 45,00,000 5,46,116.50 26 1,000 990 99,00,000 1,20,145.63 ___________ _____________ 1,21,25,000 14,71,480.50 _______________________________________________________________________________ Against the above ascertained value of Rs. 14,71,480.50, the declared value was Rs. 1,66,671.70. The adjudicating authority had ordered the confiscation of the goods under Section lll(d) and (m) of the Customs Act, 1962. The importer was given an option to redeem the goods on payment of a fine of Rs. 6,50,000.00 (Rupees six lakhs fifty thousand only) and a penalty of Rs. 5,00,000.00 (Rupees five lakhs only) was imposed on M/s. P.P. Trading Company and the value was fixed at Rs. 14,71,480.50.
3. Being not satisfied with the order passed by the adjudicating authority, the appellant has come in appeal before the Tribunal.
4. Shri M.M. Jayakar, the learned advocate has appeared on behalf of the appellant. He had reiterated the facts. He pleaded that the transaction was at arm's length and the declared value should have been accepted. He argued that it was on the basis of a Hong Kong newspaper advertisement. A copy of the same was given to the Collector. The order was placed on 4th October, 1988 with M/s. Sigma Technical Co. The invoice is dated 14th January, 1989 and the goods arrived in February, 1989. Bill of Entry was filed on 27-2-1989. The show cause notice was issued on 10th August, 1989. He referred to para No. 5 of the show cause notice as to contemporaneous imports. He argued that no exchange rate has been given in the show cause notice. The quantities are not comparable. He referred to the order-in-original. He referred to page 4 of the order-in-original and stated that the goods were purchased in bulk quantity. He also referred to page 7 of the order-in-original. He pleaded that the adjudicating authority had not given the quantity discount and the revenue has adopted the highest price available and there are no contemporaneous imports of SWG 26. He also pleaded that there is absence of element of mens rea and no penalty is leviable. In support of his argument, he cited the following decisions :-
(1) 1989 (44) E.L.T. 202 (Cal.) - Ghansyam Chejra v. Collector of Customs para 29 (2) 1990 (45) E.L.T. 24 (Cal.) - Trident Television Pvt. Ltd. v. Collector of Customs para 27 (3) 1988 (34) E.L.T. 65 (Tribunal) - Junta Traders, Bombay v. Collector of Customs paras 6 and 8.
He has pleaded for the acceptance of the appeal.
4A. Shri Prabhat Kumar, the learned Departmental Representative who has appeared on behalf of the respondent, drew the attention of the Bench to para No. 1 of the show cause notice. He pleaded that the goods were imported from Hong Kong. He referred to para 2.2 of the internal page 2 of the show cause notice. He argued that the value shown in the invoice is not the correct value. There was gross under-valuation. In support of his argument, he cited the following decisions :-
(1) 1991 (52) E.L.T. 439 - Shiv Shakti Enterprises v. Collector of Customs para 6 (2) 1991 (56) E.L.T. 801 (Tribunal) - Photo Copy Centre v. Collector of Customs para 11 He argued that the revenue is relying on the invoice of the sole selling agent M/s. Tohwa Electric Co. Ltd., Japan. He again referred to para No. 3 page 4 of the show cause notice. He has cited a decision of the Tribunal in the case of Wax & Wax Products v. Collector of Customs reported in 1990 (48) E.L.T. 421. Shri Prabhat Kumar, the learned Departmental Representative argued that advertisement cannot be a basis for the correct price. He also argued that the dumped goods can never have the normal price under Section 14 of the Customs Act, 1962. He referred to the following decisions :-
(1) 1988 (37) E.L.T. 118 - Aarkeyess Imports Corporation v. Collector of Customs para 10 (2) 1987 (31) E.L.T. 356 (Bom.) - Satellite Engineering Ltd. and Anr. v. Union of India and Ors. paras 11 and 17.
He argued that the date of contract is the date relevant for adopting the value. In support of his argument he cited a decision in the case of Kischo Cutlery Ltd. and Anr. v. Union of India reported in 1984 (15) E.L.T. 367 (Bom.). He pleaded that the imports cited by the adjudicating authority are contemporaneous imports. He cited the following decisions :-
(1) 1989 (40) E.L.T. 207 - Metal & Alloys Industries v. Collr. of Cus. para 4.
(2) 1983 (14) E.L.T. 2177 (Bom.) - Satellite Engineering Ltd. v. Union of India para 9 He argued that it was not necessary to mention the exchange rate in the show cause notice. He pleaded that the value has been correctly ascertained in terms of Customs Valuation Rules. He referred to a decision in the case of Narayan International v. Collector of Customs, Delhi reported in 1992 (58) E.L.T. 126 (Tri.). Shri Prabhat Kumar, the learned Departmental Representative pleaded that the penalty imposed is very reasonable and is in accordance with the gravity of the offence. In support of his argument, he cited the following decisions :-
(1) 1987 (28) E.L.T. 318 (Tribunal) - Macneill & Magor Ltd., Calcutta-I v. Collector of Customs, Calcutta (2) 1984 ECR 631 (SC) - E.R. Joseph and Co. (P) Ltd. v. Central Board of Revenue, New Delhi (3) 1989 (39) E.L.T. 630 - Muddeereswara Mining Industries Co. v. Collector of Customs.
(4) 1990 (45) E.L.T. 249 - Mehta Impex v. Collector of Customs para 30.
Shri Prabhat Kumar, the learned Departmental Representative pleaded for the dismissal of the appeal.
5. In reply, Shri Jayakar, the learned advocate pleaded that the sole selling agents' price itself differs from date to date. The price of invoice dated 6th December, 1988 and later invoices rates are different. He argued that the advertisement is a main base and exchange rate to be adopted for ascertaining the value is to be on that date. He pleaded for the acceptance of the appeal.
6. We have heard both the sides and have gone through the facts and circumstances of the case. The facts as to the importation of the goods are not disputed. The appellant had imported electric resistance wire of 20, 22, 24 and 26 gauges declared as low grade resistance wire with low resistance capacity, total quantity 14,000 kgs. The appellant had declared the value at US $ 13,000.00 (Rupees 1,96,671.70 and the assessed value is Rs. 14,90,166.30 (US $ 98,500.00). The main reliance of the appellant is on the advertisement in a Hong Kong newspaper. The appellant had placed the order on 4th October, 1988 and the proforma invoice relates to December, 1988 and the goods had actually arrived in February, 1989. Advertisement in the Hong Kong newspaper is dated 3rd June, 1989. A copy of the same has also been filed before us in the Court. The goods had arrived in February, 1989. This shows that the newspaper advertisement is of a later date even after the arrival of the goods. The copy of the advertisement is reproduced below :-
"3rd June, 1989 SING TAO JIH PAO (NEWSPAPER ADVERTISEMENT) "READY STOCK FOR SALE GAUGE 20 US $ .90/KG.
22 US $ .95 24 US $1.10 26 US $1.25 STOCK MENTIONED ABOVE MINIMUM 5,000/KGS. each CONTACT 5-229517 MR. SHEK"
SIGMA TECHNICAL CO.
Sd/-
Signature."
A perusal of the advertisement also shows that the goods imported are not similar to the goods mentioned in the advertisement. On examination of the goods, it was found that the goods were manufactured by M/s. Hosokawa Seisen Co. Ltd., Japan. The goods were packed in original spools and were having original packing. Each of the spools contained all the technical details of size, diameter and resistancy which ranged from 1.93 for 20 SWG to 7.71 for 26 SWG. On examination of the goods they were found in the imported packages and were electric resistance wire of the famous Japanese brand which is being imported regularly by several other importers and on chemical test of the goods and comparing the details indicated in the labels on the spools with particulars indicated in the manufacturer's catalogue/technical literature it was found that the goods were quality wire of famous HSK No. 4 brand without any defect and the sole exporting agent from Japan was M/s. Tohwa Electric Co. Ltd., Japan. The invoices on which reliance has been placed by the appellant do not bear any chronological numbers and we are of the view that no reliance can be placed on the same. We have looked into the judgments cited by both the sides. The judgments cited by the learned advocate do not help him. Hon'ble Bombay High Court in the case of Satellite Engg. Ltd. v. Union of India and Ors. reported in 1983 (14) E.L.T. 2177 (Bom.) has held as under :-
"9. Shri Talyarkhan submitted that the price charged to the petitioners in respect of the imported goods should be accepted because the petitioners had booked a very large order and in such cases M/s. Chance Brothers Limited grants certain concession in the price. In support of this submission, reliance was placed upon the contents of letter dated May 30, 1973 addressed by John S. Elmore Limited to the intending importer, where it is mentioned that M/s. Chance Brothers Limited suggested that the C1F Bombay price would largely depend upon quantities ordered at one time. It is common knowledge that when a bulk order is placed, then some concession is given in the price but it is impossible to imagine that M/s. Chance Brothers Ltd. would sell the goods at the rate of £ 0.430 per kg. In my judgment, the submission of Shri Talyarkhan that the price from the quotations available to the Department did not reflect the true price could not be accepted. It is obvious that the petitioners have under-valued the imported goods while declaring the value in the Bills of Entries and the Department was perfectly justified in holding that the petitioners had made a declaration which was not proper. The challenge to the orders of the three authorities below on the question of under-valuation of the goods cannot be accepted and deserves to be repelled."
7. The revenue has placed reliance on the contemporaneous invoices of M/s. Ticina Electricals, Bombay for resistance wire SWG 20 and SWG 22 invoice No. 5-5952, dated 26th December, 1988 in favour of M/s. Ticina Electricals, Bombay and price for resistance wire SWG 24 invoice No. 5-5943-2, dated 12th October, 1988 in favour of M/s. Ticina Electricals, Bombay. These dates are nearest to the date 4th October, 1988 on which the order was placed and we are of the view that the adjudicating authority had fixed the correct value as under :-
SWG-20 resistance wire ... ¥ 795/kg.
SWG-22 resistance wire ... ¥850/kg.
SWG-24 resistance wire ... ¥900/kg.
The value of SWG-26 has been fixed at ¥ 990 per kg. basing it 10% more than the price for resistance wire of SWG-24. The appellant's contention is that exchange rate has not been mentioned in the order. We are of the view that it does not vitiate the order. The learned advocate has not placed any calculation before us as to the wrong adoption of the exchange rate. We are of the view that the value has been correctly ascertained by the revenue authorities.
7. For coming to the imposition of penalty, the declared value was Rs. 1,96,671.70 (US $ 13,000.00), whereas the assessed value was Rs. 14,90,166.30 (US $ 98,500.00). The appellant was very much aware of the goods imported. Tribunal in the case of Macneill & Magor Ltd., Calcutta v. Collector of Customs, Calcutta reported in 1987 (28) E.L.T. 318 had held as under :-
"There could be no quarrel with the abstract proposition that the burden of proof required in penalty proceedings is much higher than in mere assessment disputes. But that does not mean that the evidence can be or has to be foolproof or beyond reasonable doubt. Thus, if in an abstract case it could be shown that a published price list of the goods was available that the importers in general were importing the said goods at that listed price and that one particular importer declared on importation a price which was more than 100% lower than the listed price, there would indeed appear to be a very heavy onus shifted to the importer to explain how he got such a low price. Under-invoicing and over-invoicing in the course of international trade are, like other present day white collar economic offences, sophisticated jobs. One does not get at direct and positive evidence like bogus invoices or documents relating to extra remittances just for the asking. Therefore, the appellants' proposition that just because no bogus invoice or other evidence of extra remittance had been discovered, confiscation, on the charge of mis-declaration under Section lll(m) and penalty proceedings could not be initiated against them, cannot be accepted."
Tribunal in the case of Mehta Impex v. Collector of Customs reported in 1990 (45) E.L.T. 249 (Tribunal) had held as under :-
"30. Shri Sunder Rajan submitted that the Department has established under-valuation by producing documentary evidence which was supplied by German Customs and with the other documents seized in Bombay. Therefore, the charges against the appellants are proved beyond reasonable doubt. In this context he referred to a judgment of the Tribunal in the case of Tara Art Printers v. Collector of Customs [1985 (20) E.L.T. 358] and submitted that as there is documentary evidence available the licences should be ordered to be debited to the full value and not the declared value. He also referred to another judgment of the Tribunal in the case of Delhi Plastics v. Collector of Customs [1988 (36) E.L.T. 360] (stated to have been upheld by the Supreme Court) and pleaded that the appeals should be dismissed and there should be no reduction in any of the amounts adjudged against the appellants. He also opposed the debiting of the licence with the declared value only, submitting that it is the ascertained value which should be debited in view of an amendment brought under Section 2E of the Imports and Exports (Control) Order, 1955 which equated the value for the purposes of imports as being the same as under Section 14E of the Customs Act."
Accordingly, we are of the view that it is a fit case where penalty should have been imposed.
6. In view of the above observations, we uphold the levy of penalty at Rs. 5 lakhs (Rupees Five lakhs) and uphold the imposition of redemption fine at Rs. 6,50,000/- (Rs. Six lakhs and fifty thousand). The findings of the lower authority are confirmed and the appeal is dismissed.