Customs, Excise and Gold Tribunal - Delhi
Prahlad Singh Chadha vs Collector Of Customs on 5 July, 1996
Equivalent citations: 1996(88)ELT200(TRI-DEL)
ORDER
U.L. Bhat, J. (President)
1. These appeals are directed against order No. 33, dated 28-12-1992 passed by the Collector of Customs, Bhubaneswar in relation to goods imported purportedly under OGL in six containers described as Fax Machines, Automotive parts, Hand-tools, Clutch Assembly etc. as per two Bills of Entry in respect of three containers each at declared price of Rs. 7,43,068.88 CIF and Rs. 6,46,384.80 CIF respectively. The Collector enhanced the value in all to Rs. 60,54,298.64 and also held that some of the items, namely, car tyres, auto fans, car lamps (bulbs) and car coolants required specific licence which the importers did not possess. Accordingly various items of goods were confiscated under Section 111(m), or Section 111(b) or Section 111(m) and (b) of the Customs Act, 1962 respectively. However, redemption was allowed on payment of separate amounts as fine in regard to each Bill of Entry. Six containers were also confiscated, allowing redemption on payment of fine quantified. Differential duty was demanded. Penalty of Rs. 10 lakhs was levied on each of the two importing concerns and also on Shri Prahlad Singh Chadha, common partner of the two concerns. The Collector further directed that if the duty is not paid, the Bank Guarantee furnished shall be encashed. There was mis-declaration of quantity and description as also inadequate description.
2. The imports are governed by 1992-97 Policy, as it existed in 1992-93. Para 22 of Chapter V of the Policy states that capital goods, raw materials, intermediates, components, consumables, spares, parts accessories, instruments and other goods may be imported without any restriction except to the extent such imports are regulated by the Negative List of imports or any other law for the time being in force. According to paragraph 7(10) of Chapter III of the Policy, "components" means one of the parts of a sub-assembly or assembly of which a manufactured product is made up and into which it may be resolved. A "component" includes an "accessory" or "attachment". An "accessory" or "attachment" means a part, sub-assembly or assembly that contributes to the efficiency or effectiveness of a piece of equipment without changing its basic functions. "Part", according to paragraph 7(29), means an element of a sub-assembly or assembly not normally useful by itself and not amenable to further disassembly for maintenance purposes. A part may be a component or an accessory. "Spare", as defined in Para 7(37) means a part or a sub-assembly or assembly for substitution, that is, ready to replace an identical or similar part or sub-assembly or assembly. Spare includes a component or an accessory. Chapter XV of the Policy contains Negative List of Imports. Paragraph 156 deals with restricted items. Part 'A' refers to "consumer goods". Serial No. 1 takes in all consumer goods, howsoever described of industrial, agricultural, mineral or animal origin, whether in SKD/CKD condition or ready to assemble sets or in finished form. These goods are not permitted to be imported except against a licence or in accordance with a Public Notice issued in this behalf. All types of tyres of bus, truck and earthmoving machinery are included in a list of items which shall be freely importable notwithstanding anything contained in part 'A'. The expression "consumer goods" is defined in paragraph 7(12) of Chapter III as meaning any consumption goods which can directly satisfy human needs without further processing and includes consumer durables. The inclusion of "accessories thereof" was made in the year 1993-94. The expression "consumer durables" has not been defined in the Policy; but it is generally taken to mean consumption goods of a durable nature which can directly satisfy human needs without further processing. If the goods are consumer goods as defined, then they have to be regarded falling in the Negative List and import under OGL would not be permissible.
3. Our attention has been invited to a number of decisions. In Colour Chem Ltd. v. Collector of Customs, Bombay -1986 (25) E.L.T. 549 (Tribunal) there was import of Xerox Photo Copier Model 3107 and clearance was claimed under OGL in terms of entry 5 of Appendix 10 of 1979-80 Policy. The Department held that the Photo Copiers were consumer goods, requiring specific licence. The Tribunal noticed that the expression "consumer goods" was not defined in the Policy and the expression means goods which directly satisfy human wants and goods which are so sophisticated that they require technological skill or scientific knowledge for their operation or use cannot be regarded as goods that satisfy human wants directly. The photo copier was costing Rs. 1 lakh and not an item of domestic use but employed in large offices or institutions. Accordingly it was held that the photo copier of this model could not be classified as consumer goods and could be imported under OGL. This case was decided at a time when "consumer durables" were not brought, by definition, within the purview of the expression "consumer goods", but the definition adopted by the Tribunal was broadly similar to the definition under consideration by us, except regarding the inclusion of "consumer durables".
4. Indian Airlines v. Collector of Customs -1988 (38) E.L.T. 679 (Tribunal) was decided by a larger Bench of the Tribunal. The import was of Aeroplane tyres for servicing by the importer who had a fleet of aeroplanes. The importer claimed exemption under Notification No. 99/81 which replaced Notification No. 145/77. Notification No. 145/77 exempted Aeroplanes, Aeroplane parts, Aeroplane engines, Aeroplane engine parts and rubber tyres and tubes used exclusively for aeroplanes. Notification No. 99/81 exempted only Aeroplane spare parts imported for servicing Aeroplanes. The Tribunal accepted that the tyres were spare parts of Aeroplanes, distinguishing the same from gramophone needles and type-writer ribbons. That was because without tyres, Aeroplanes will be completely grounded and cannot function as such. It was held that Aeroplane tyres were Aeroplane parts imported for servicing and attracted the exemption under the Notification. This decision has no relevance in understanding the connotation of the expression "consumer goods".
5. In Collector of Customs v. Foreign Fashion - 1989 (40) E.L.T. 124 (Tribunal), it was held, following an earlier decision, that steering wheel covers were accessories which could be imported on OGL under Para 265(6) of 1985-88 Policy. The Bench did not specifically consider the aspect whether the goods were "consumer goods".
6. In Resham Singh Brothers v. Collector of Customs -1989 (41) E.L.T. 171 (Tribunal), tyres, tubes and flaps were imported and clearance was claimed under OGL as per paragraph 10(4) of 1983 Policy. The importer was an actual user (non-industrial) owning 40 vehicles, and needed the goods for servicing. The department contended that they were consumer goods attracting serial No. 121 of Appendix 2 Part B of the Policy. Definition of "consumer goods" in the relevant Policy was the same as the one in the subject Policy. The Tribunal affirmed the earlier decision in the case of Colour Chem Ltd. and Indian Airlines and held that tyres, tubes and flaps imported wefe for servicing of the importer's fleet of vehicles and in that view of the matter the goods cannot be considered as common purpose consumer goods meant directly for satisfying human needs.
7. In Basant Export Corporation v. Collector of Customs -1989 (43) E.L.T. 65 (Tribunal), 2000 pieces of 250 watts high pressure Sodium Vapour Lamps imported were sought to be cleared under OGL in terms of Appendix 10 of 1984 Policy. Part III of Appendix 8 referred to "All other items permitted under OGL in terms of the Import Policy in force, other than those covered by Appendices I and n." According to the appellant, since the lamps were not covered by the appendix, could be imported under OGL. The heading of List 8 which came under OGL was "Raw materials, components and consumables". According to the appellant, the lamps were components of street lighting system and can be used only with a ballast, ignitor and capacitor and hence cannot be regarded as consumer goods. Department contended that the lamps were "consumer goods" attracting serial No. 93 of Appendix 4. The Tribunal held that "components" means one of the parts that has to be assembled and the Policy, requires that the component should be one of the parts of a manufactured product, that the lamps were not used for the purpose of manufacturing a product, but were to be used in street lighting with other accessories and fittings and they cannot be regarded as "component" within the meaning of paragraph 5(1). It was also held that Sodium lamps satisfy human need of electrification without any further processing to the bulbs themselves though they may require a ballast or a capacitor and are finished goods known in the trade parlance as Sodium Vapour Lamps and are to be treated as "consumer goods". The three-Member Bench indicated the fact that the goods were not capable of domestic use made no difference, apparently overruling the contrary view expressed in Colour Chem Ltd. The High Court of Bombay has taken a similar view in a later decision in United Breweries Ltd. v. Union of India and Ors. -1994 (53) ECR 13 holding that "consumer goods" cannot be restricted to goods consumed by domestic users and hence Sodium Vapour Lamps are "consumer goods" not covered by the additional licence produced by the importer.
8. In Trident Television Private Ltd. v. Collector of Customs - 1990 (45) E.L.T. 24 (Calcutta HC) the first writ petitioner imported 540 Colour Picture Tubes and 500 sets of Plastic moulded parts and the second writ petitioner imported 500 sets of PCBs, sub-assemblies, speakers and accessories. The second petitioner was director of first petitioner. Both were manufacturers of TV sets, had import licences as actual users and claimed eligibility to import items listed in Appendix 6 of 1985-88 Policy actual users as also as transferees of certain REPs. The department's contention that the goods were not spares but complete TV sets in SKD condition, not covered by OGL was rejected by the High Court relying on the decision of the Supreme Court in Tara Chand Gupta -1983 (13) E.L.T. 1456. It was also held that there was no restriction of OGL items under OGL and the restricted items against valid licences and even if all the items were put together, would make complete TV sets, they cannot be considered nationally as complete TV sets. It was further held that the imported goods would not satisfy human need without further processing and such processing would be required before the complete TV set could come into existence and as such they cannot be regarded as "consumer goods". The aspect of further requirement of further processing was emphasised in Kumar Associates v. Collector of Customs -1993 (65) E.L.T. 500 (Tribunal), Plast Fab v. Collector of Customs -1993 (66) E.L.T. 441 (Tribunal), and Sterlite Cable Ltd. v. Collector of Customs -1991 (53) E.L.T. 367 (Tribunal) and other decisions.
9. In Tata Engineering and Locomotive Company Ltd. v. State of Bihar -1994 (74) E.L.T. 193 (SC), the question was whether a dealer under the Sales Tax Law who intended to purchase tyres, tubes etc. for the purpose of manufacturing and processing its products, namely, motor vehicles, trucks, bus chassis etc. was entitled to concessional rate of Sales Tax applicable to "raw materials (inputs)". It was held :-
"Raw material is not defined in the Act. It has, therefore, to be understood in the ordinary and well-accepted connotation of it in the common parlance of the persons who deal with it. The ordinary common sense understanding of it is that it is something from which another new or distinct commodity can be produced ... . An item may be raw material for manufacturing goods 'A' and the goods so produced may itself be raw material for goods 'B'. For instance, batteries, tyres and tubes are by themselves finished products. But when it is used for manufacture of vehicle then it becomes raw material for it as it is essential and necessary for producing the goods in which it has been used. No vehicle can operate or work nor can it be said to have been produced unless tyres, tubes, batteries are fixed to it. Use of these items is integrally connected with the ultimate product. They retain their identity in the end product.
The Notification applies to any goods used in the manufacture. Since the Notification was issued under Section 13(1)(b), any goods which could be included in the expression "raw material" would be entitled to concessional rate of tax provided it was usable in manufacture or processing of goods ... ".
"The tyres, tubes and batteries were purchased for being put in the vehicle, which could not be operative without it. They were thus "input". The use of the word was indicative that the benefit was intended for every item which was raw material in the widest sense made wider by using the expression "input". The purpose was for broadening the meaning of raw material by including in it even those items which could be placed in the vehicle, to make it marketable as vehicles."
[Emphasis supplied] This decision is not helpful in deciding the controversy in this case.
10. In Aviautos v. Collector of Customs - 1992 (57) E.L.T. 184 (Tribunal) import of Nylon Tyres, tubes and flaps was claimed under OGL as falling under Item 6 of Appendix 6 of 1988-91 Policy and the item, the eligible category was Association of owners of vehicles in which tyres are used." An association issued letter of authority to a private party, the importer. The Tribunal held that the letter of authority had no legal force and hence the appellant could not import the goods. The question whether Tyres were consumer goods or not, did not arise for consideration.
11. In Dripless Faucets (India) v. Collector of Customs-1995 (77) E.L.T. 183 (Tribunal) the import was of "Headworks High Flow with Red Bottom" made of brass under OGL provisions of 1985-88 Policy, as components parts covered by Appendix 6 Serial No. (1). According to the departments the goods were "consumer goods" under serial No. 121 of Appendix 2 Part B. appellant was actual user (industrial), as manufacturer of water taps. The Tribunal held that the imported goods were not consumer goods as they required fitting in water taps for use.
12. In Shah and Shantibhai v. Collector of Customs (appeal No. C/349/91-A Order No. 5/92-A, dated 7-1-1992), horns, lights and stickers were imported as auto spares against two licences and clearance was claimed under Appendix 3 - Part A and Appendix 6, List 8, Part III of 1988-91 Policy. The definition of "consumer goods" in the relevant policy was similar to the definition in the subject Policy except that there was no specific reference to consumer durables. The Tribunal held that horns, lights and stickers cannot be used directly for satisfying human needs following the decision in Colour Chem Limited, the goods were covered specifically under Appendix 3 Part A and Appendix 6, List 8, Part I and as such, the same were excluded from the purview of serial No. 165 of Appendix 2, Part B of the Policy and there was no restriction for importing the goods under OGL and department was not correct in holding that the goods were not covered by valid import licence.
13. The dispute is whether Car Tyres, Auto fans (to be fitted in car cabin), Halogen Lamps (bulbs) are "consumer goods"? Learned counsel for appellant agrees that car coolants (liquid used to keep engine cool) are consumer goods. There is also no dispute that Car Tyres, Auto fans and Halogen Lamps are consumption goods. The question for consideration is whether these goods are consumer durables or whether they directly satisfy human needs without further processing as contemplated in the 1992-97 Policy as it was originally issued. We notice that with effect from June 1992, the definition of "consumer goods" in the Policy was amended so as to include "accessories, components, parts or spares of such consumer durables." The contention of the department is that Tyres and Halogen Lamps are parts or components of car and though they are not consumer durables, they satisfy directly human needs without further processing and that auto fans are consumer durables and directly satisfy human needs without further processing and that all these goods are "consumer goods". Appellants contend that these three kinds of goods are only parts of car and cannot directly satisfy human needs without further processing and as such are not "consumer goods". The decisions referred to above are relied on in support of the respective contentions.
14. In Colour Chem Ltd. - 1986 (25) E.L.T. 549 (Tribunal) the Tribunal was not required to consider any statutory definition of "consumer goods" since there was no such definition available and the meaning attributed to the expression did not take into consideration the requirement that goods, in order to be consumer goods should be capable of satisfying human wants without further processing. The contention that the goods should be so capable without further processing is an important element in the present statutory definition and the emphasis in the case was on the photo copier of a particular model. This decision is, therefore, of no assistance in deciding whether the goods in question in this case are consumer goods. The Indian Airlines case -1988 (38) E.L.T. 679 (Tribunal) did not consider the connotation of the expression "consumer goods" or the application of that connotation to that case and is, therefore, of no assistance. So also the case of Foreign Fashion -1989 (40) E.L.T. 124 "* (Tribunal). The importer in Resham Singh Brothers -1989 (41) E.L.T. 171 of tyres, tubes and flaps was an actual user non-industrial and required the goods for c servicing and purporting to follow Colour Chem Ltd. and Indian Airlines the Tribunal took the view that the goods cannot be considered as common purpose consumer goods meant directly for satisfying human needs. It is puzzling to note that the decision introduced the words "common purpose" to qualify the expression "consumer goods" and did not take into consideration the requirement that the goods do not need further processing. The emphasis was on the requirement of servicing of vehicles. The three-Member Bench in Basant Export Corporation - 1989 (43) E.L.T. 65 (Tribunal) took note of the fact that Sodium Vapour Lamps were not used for the purpose of manufacturing any product but were used in street lighting with other accessories and fittings which took them out of the category of components and brought them within the category of "consumer goods". The lamps as such were to be used in street lights, of course, with some accessories. Therefore, it was held that they directly satisfy human needs for electrification without further processing. In other f words, the fact they required to be fitted with or to some other items did not have any significance. Similar is the view of High Court of Bombay in United Breweries Ltd. case - 1994 (53) ECR 13. Many of the decisions emphasised the aspect of requirement of "further processing" for direct satisfaction of human needs. Dripless Faucets (India) - 1995 (77) E.L.T. 183 (Tribunal) dealt with a component of a water tap. The two decisions dealing with Tyres did not consider the question whether tyres can be regarded as consumer goods. Therefore, the reported decisions are not of much assistance.
15. As indicated by the Supreme Court in Tata Engineering and Locomotive Company Ltd. case -1994 (74) E.L.T. 193, tyres, by themselves are finished products, though they may be inputs to make vehicles operational. Tyres, by themselves and without further processing can directly satisfy human needs by using them to make vehicles operational. Therefore, tyres have to be regarded as consumer goods. This conclusion is supported by .two other circumstances. As per serial No. (1) of Part A of Paragraph 156 all consumer goods are restricted items and, therefore, cannot be imported under OGL. Part A also contains another list of freely importable goods and this list includes all types of tyres of bus, truck and earthmoving machinery. This would suggest that but for the inclusion of tyres of bus and other enumerated vehicles in the list of freely importable goods, they would fall within the meaning of the expression "all consumer goods". That being so, tyres of cars also must be regarded as "consumer goods". We have looked into "ITC (HS) Classifications of Export and Import items" 1st April 1992 - 31st March 1997, published by the Ministry of Commerce, Government of India. Paragraph 3 of the Foreword I states :
"With the formal notification of this publication under the current Export and Import Policy, the list of freely importable items which existed under Section A, Part II of the Negative List of the Imports and list of items permissible for import against freely transferable Special Import Licences under Appendix XXXV of the Handbook of Procedures, Vol. I have not been separately included as had been done in the past in the Export and Import Policy book and the Handbook of Procedures, Vol. I respectively."
Serial No. 40.11 deals with New Pneumatic tyres, of rubber. Tyres used in different kinds of vehicles are enumerated and it is indicated whether import of tyres is restricted or free. The following are some of the particulars :-
"[4011.10] of a kind used on motor Not permitted
Restricted cars (including to be imported
station wagons and racing except against
cars) a licence or in
accordance with
a public Notice
issued in this
behalf.
[4011.20] of a kind used on buses "
Free or lorries.
This would also indicate that tyres of bus and lorry are freely importable (by virtue of inclusion in the list of freely importable goods in part A of paragraph 156), tyres of car are restricted items and therefore are not freely importable. These circumstances support our conclusion that car tyres are consumer goods and are, therefore, not importable under OGL except to the extent specifically provided. Specific provision covers only tyres of bus and lorry and not of car. We, therefore, hold that tyres of car are not importable under OGL.
Halogen Lamps Halogen Lamps imported are to be fitted to cars. Halogen Lamps are finished products and even without being fitted to cars are capable of directly satisfying human needs without further processing. Therefore, the Collector was justified in regarding Halogen Lamps as consumer goods.
Auto Fans Auto fans are also finished goods which are directly capable of satisfying human needs even without being fitted to vehicles. They do not require further processing for satisfying human needs. The Collector was, therefore, justified in regarding Auto Fans as consumer goods.
Car Coolants Learned counsel did not contend that car coolants should not be regarded as consumer goods. We agree with the view taken by the Collector that car coolants are consumer goods.
16. Adjudicating authority has indicated that in regard to various items, there has been inadequate or improper description or mis-description and mis-declaration of quantity. The particulars are as follows :
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Goods as described Description as Quantity Quantity Remarks in import docu- shown on declared actually ments examination imported
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CAR TYRE RIM TUBELESS TYRES 1580 Units 1000 Units Import documents
SIZE 13" JAPAN (JAPAN) "BRI- Steel Radial do not contain
DGE STONE" 500 Ra-dial correct description,
STEEL RADIAL specification &
TYRE AND Brand name.
RADIAL TYRE
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LOWER/ UPPER COUNTRY OF Ditto. Described as
ORIGIN MA- automotive parts
LAYSIYA but actually parts
of car aircondi-
tioner
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BLOWER MOTOR - - - Ditto WITH WHEELS
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DRAIN HOSES - - - Ditto
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BRACKET WITH - - - Ditto SCREW
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SWITCH WITH - - - Ditto HARNESS
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HEAT EX- - 2300 2000 Ditto CHANGER
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DRYERS - - - Ditto
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BRAKE SHOE BRAKE SHOE FOR 250 sets 4000 pieces Import documents
FRONT WHEEL (Number in = 2000 sets do not specifi-
(JAPAN) set not cation Brand name
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HALOGEN LAMP FLOSSAR HA- 1040 Sets 4000 pieces Ditto
LOGEN LAMPS (number in 2000 sets
12V- 60165 W set not
(GERMAN) stated)
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CLUTCH CLUTCH COVER 1409 sets 20 pieces Ditto
ASSEMBLY AND CLUTCH
DISC PACKED
SEPARATELY
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TOOLS (JAPAN) DISC GRINDER 140 pieces - Ditto
D. GRINDER HITACHI PDA
1000
A. GRINDER DISC GRIN-DER 40 pieces - Ditto
HITACHI G 105F
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DRILLING HAMMER HI- 22 pieces - Ditto
MACHINE TACHI 22VB
[ER] HITACHI MXI-ZV 4 pieces - Ditto
CISAW CIRCULAR SAW 10 pieces - Ditto
HITACHI C8
JI SAW JIG SAW HITA- 7 pieces - Ditto
CHI C8 60 T
CUTTING HAMMER HIGH SPEED CUT 9 pieces - Ditto
OFF MACHINE
HITACHI 110-12
MINI HORN MINI HORN 7424 Units 14848 Ditto
WITH VALVE WITH VALVE 0320 pieces=7424
043 Oil 12V 335H Units
and 0820 043011
12V 420HZ
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FAX MACHINE - PAPER FAX UF 10 10 Ditto F1-12 102-7 FAX MACHINE- PARA FAX CHA- 20 20 Ditto 270- S NNON- 270-S FAX MACHINE (i) PARA FAX 10 10 Ditto 12 MURATA - F1
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GUMMED PAPER PLASTIC FILM - - Ditto
(JAPAN) BACKED WITH
ILLUMINATION
ROADSIGN AND
NUMBER PLATE
(CHINA/
TAIWAN)
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AUTO FANS CHINESE/TAI- - - Ditto (JAPAN) WAN ORIGIN
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CARCOO-LANT RADIATOR COO- - - Ditto
LANT PLASTIC
CONTAINING OF
450 ML+450 ML
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17. Learned counsel did not dispute the existence of the descrepancies noted above. However, he contended that the import documents are not required contained specification and brand name and the absence of such particulars does not amount to mis-description. The proforma prescribed for Bill of Entry requires furnishing of various particulars, including, country of origin and "Goods". "Goods" obviously refers to description of goods, which means, adequate description. In our opinion, description is complete and adequate if it refers to correct specification, brand name and other particulars referred to in the proforma. In regard to some of the imported goods country of origin is not declared or not correctly declared. In regard to major items, the quantity declared was found to be erroneous.
18. In regard to valuation, learned counsel for appellant contended that transaction value as shown in the invoice has some sanctity and the burden is on the department to collect evidence to show that the invoice value is not genuine or below ordinary price in international trade at the time and place of import and no such reliable evidence has been produced in this case. This proposition cannot be applied to cases of import where description is substantially inadequate, incomplete or erroneous. In such a case the question of accepting transaction value does not arise. The importers, though called upon to do so, did not produce Manufacturer's price list or invoice. In these circumstances, rejection of invoice prices was justified. See Shiv Shakti Enterprises v. Collector of Customs -1992 (52) E.L.T. 439 (Tri.), Universal Commercial Corpn v. Collector of Customs - 1994 (69) E.L.T. 150 (Tri.) and Amber Woollen Mills v Collector of Customs, Bombay -1994 (72) E.L.T. 855 (Tri.).
19. Appellants challenge the valuation made by the Collector as also the basis of such valuation.
CAR TYRES, BRAKE SHOE, HALOGEN LAMP AND CLUTCH ASSEMBLY In regard to Car Tyres, the Collector refers vaguely to market enquiries, without furnishing any particulars of such enquiries. In regard to all the above goods, the only documentary evidence relied on consists of three invoices relating to export to Nepal from other countries, through Calcutta Port. The invoices are dated 12-6-1992,10-8-1992 and 25-5-1992. The importer in each of the invoices is a person from Nepal. Two of the invoices specifically mention "Calcutta in transit to Nepal". These imports are governed by Indo-Nepal Treaties. According to the provisions of the Treaty of Transit, the parties shall accord to "traffic in transit" freedom of transit across their respective territories through mutually agreed upon routes with right to take indispensable means to prevent infringement of legitimate interests, traffic in transit shall be exempt from customs duties, there shall be point or points of entry or exit on mutually agreed terms and subject to relevant laws, and the traffic in transit shall be *f" subject to the procedure laid down in the Protocol annexed. According to the Protocol, specified warehouses, sheds and open spaces and such others as may be agreed upon shall be made available for the storage of transit cargo meant for transit to and from Nepal through India subject to the terms of the Protocol, inspection and other facilities shall be imported to the owner of the goods and all such goods shall be subject to relevant Indian laws and regulations. According to the memorandum annexed to the Treaty, transit shall be allowed against Nepalese Import Licence or certificate on the Customs Transit Declaration. The Declaration shall be submitted at the Custom House in sixtuplicate. The Custom House shall make a percentage examination of the goods to check whether the goods are in accordance with the Declaration and conform to the Import Licence. Such goods shall be approved for onward transmission and ^ transported from the Custom House to the border port in closed railway wagons or in pilfer-proof containers that can be securely locked and the same shall be locked and sealed. The goods shall be covered by an insurance policy and/or such undertaking. The Policy shall be for an amount equal to the Indian Customs Duty and the amount shall become payable to the Collector in the event of the goods not reaching Nepal. Custom House shall endorse all copies of Declaration. On arrival of goods at the border railway station, the sealed wagon or container shall be presented to the Indian Customs Officer at the station who shall examine the locks and seals and if satisfied, permit the unloading under his supervision. Other formalities prescribed have to be followed.
20. Thus it is seen that valuation by Calcutta Custom House of goods in transit to Nepal is only to provide for the contingency of the goods not reaching Nepal, i.e. of the goods being sold or used in India. The amount of duty calculated on such value shall be collected from the Insurer. This, however, does not mean that the goods are not exported to Nepal from other countries. The valuation in this case has been done under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Rule 8(2)(iv) of the Rules states that no value shall be determined under the provisions of Rule 8 on the basis of the price of the goods for their export to a country other than India. The goods covered by the Nepal Invoices perhaps could be said to be "imported" into India, in the sense that they are brought into India from a place outside India; at the same time, these are goods exported to a country other than India, that is, Nepal. It is thus clear that the price shown in the Nepal invoices cannot be the basis for determination of value under Rule 8 of the Rules. All the invoices relied on, notwithstanding the ambiguity of the language used in one of them, are of goods exported to Nepal and covered by Rule 8(2)(iv) of the Rules. The adjudicating authority was in serious error in determining the value of the goods on the basis of these invoices. In regard to Car Tyres, Brake Shoes and clutch assemblies, the quantities imported under the Nepal invoices are very small (20 Tyres, 125 sets of Brake shoes, 82 pieces of clutch cover and 40 pieces of clutch and 300 pieces of Halogen Lamps) and quantities imported in the present cases are very large. (1500 Tyres, 2000 sets of Brake shoes, 1409 sets of clutch assembly and 4000 pieces of Halogen lamp that is an item as shown to be under-valued, another item lamps. There is also discrepancy regarding country of shipment as Brake shoes imported in these cases were shipped from Singapore while those covered by the Nepal invoice were shipped from Hong Kong. In these circumstances, the value determined for Car Tyres, clutch assembly, Brake shoes and Halogen Lamps cannot be sustained.
21. LOWER/UPPER HOUSING WITH FRONT GRILL AND SWITCH WITH HARNESS These items are accepted to be parts of Car Air-conditioners and not of car as declared by the importer. The impugned order relied on imports as per three invoices, dated 1-1-1992, 16-6-1992 and 6-12-1992 of switch suitable for National Evaporator, Plastic moulded and extruded parts. The Collector has made a casual statement that on examination "Switch with harness" was found to be consistent with the description "Switch suitable for National Evaporator". This casual statement was made in the midst of discussion regarding valuation and is not supported by any other record. Regarding LOWER/UPPER HOUSING WITH FRONT GRILL AND BLOWER MOTOR WITH WHEELS, the impugned order itself states that the description does not directly conform to the description of the items covered by the compared invoices. In these circumstances, the imported items are not seen to be similar to the goods covered by the compared invoices. Hence, the value determined for these items is not sustainable.
22. DRAIN HOSES, BRACKET WITH SCREW, BLOWER MOTOR WITH WHEELS and DRYERS The import documents to not contain specification or Brand name. They were declared to be automotive parts. They were found to be parts of Car Air-Conditioners. The Collector did not have any documentary evidence on the basis of which correct value could be arrived at. He determined the value "based on pro-rata ratio of under-invoicing of other items, keeping in mind the market value of the items." The basis adopted has no support of law. There can be no presumption in law that if an item is shown to be under-valued, another item also has been under-valued and in the same proportion. The reference to "market value is vague and devoid of necessary particulars. It is not indicated that market rate referred to was of items of Indian origin or of imported goods and if so, from what country. We, therefore, find the value determined to be unacceptable.
23. HEAT EXCHANGER As against the declared price of Rs. 80.90 per unit for 2000 units the Collector has fixed the value at Rs. 160.00 per unit relying on an invoice, dated 22-4-1992 for 49 units. The goods imported in this case are of Malayasian origin while the country of origin of the compared goods is not known. In these circumstances, the value determined is not lawful.
24. MINI HORNS WITH VALVE As against the declared price of about Rs. 19 per unit for 7424 units of German origin, the Collector fixed the value at Rs. 64 per unit on the basis of a comparative price list relating to an import. The specifications of goods imported in the present case were 0-320-043010-12V-335 HV and 0-320-043-011-12V-420 HZ, and the specification of goods covered by the relied on import w' was 12V-30M-002. The description is not shown to be identical or similar. While the subject import covered 7424 units, the quantity shown in the price list was only 1005 sets. The Collector also refers vaguely to a "market enquiry" showing the price of Rs. 500 per unit, without giving particulars of the enquiry or the goods in respect of which enquiry was made. In the light of the above circumstances, we hold that the value determined cannot be accepted.
25. TOOLS Regarding various kinds of Tools also the descriptions of goods in the import documents were incomplete, inadequate and did not contain specification or Brand name as can be seen from the Chart given earlier. These Tools were of "HITACHI" Brand name. The Collector determined the values on the basis of comparable goods shown in the manufacturer's price list sent to an Indian importer. This price list came into effect on 1-7-1992. The appellants' contention that the price list does not bear signature is of no moment since it is accompanied by a proper letter of the manufacturer. IT is true that the price list is of a period three months after the subject import. The importer did not produce relevant price list or invoice of the manufacturer, though called upon by the Collector to do so. It is not shown that there was any significant price fluctuation during the interval. In these circumstances, we find no ground to interfere with the values determined by the Collector.
26. FAX MACHINES There is mis-description in regard to each of the machines as could be seen from the chart given earlier. Manufacturer's price list or invoice has not been produced in spite of being called upon to do so. The three models and prices declared were as follows :-
PARA FAX S$ 250 per unit UP 102-7 (10 pieces) (Rs. 4750.00) PARA FAX S $ 400 per piece CANNON-270-s (20 pieces) (Rs. 7600.00) PARA FAX S$ 300 per piece MURATA - Fl (10 pieces) (Rs. 5700.00)
The alleged comparable import relied by the Collector was of 5 pieces of "FACSIMILE TRANSEIVER MACHINE MODEL 270S" at US $ 700 (Rs. 22012.58 approximately). These goods were also of Japanese origin shipped from Singapore. The appellant's contention that the item covered by the relied on invoice was not identical or similar to "PARAFAX CANNON -270S" imported in this case is not correct. CANNON is only a Brand name. The items can be regarded as similar, though not identical. However, the Collector was in error in rejecting any price implication in the disparate quantities, i.e. 5 units and 20 units. From the normal commercial point of view quantity discount would be very much in the picture. In these circumstances, we reduce the value of the CANNON-270-S model to Rs. 20,000.00 per piece.
In regard go PARAFAX UF 102-7, the Collector relied on a computer printout relating to Bill of Entry dated 10-4-1992 for import of one unit of Panasonic Fax Machine UF-127B at Rs. 25,442.00. The price declared in the import documents for UF 102-7 model was Rs. 4750.00. This was clearly a case of deliberate under-valuation. The model numbers do not tally but the Collector stated that the models are same referring to the description "F-1-127" given in the subject import documents. This approach was erroneous. Physical examination showed the model to be actually UF 102-7 which could not be same as "F-1-127". Quantity also varied. Hence the price of "F-127" shown in the computer printout could not be adopted without adjustment. We are of opinion the value could be reduced to Rs. 20,000.00.
In regard to PARAFAX MURATA-F1, the price declared was S $ 300 per piece (Rs. 5,700/-). The Collector relied on a Fax quotation of M/s. NINA FAX to K. Agarwal. The addresses of the sender or receiver of the quotation are not indicated therein. Price of MURATA -Fl is stated to be S $ 455 (Rs. 10,3^5.30). In the face of the failure of the importer to produce manufacturer's price list or invoice, we do not think the value determined should be interfered with.
27. GUMMED PAPER, AUTO FAN AND CAR COOLANT The chart referred to above shows that the import documents contained erroneous description of Gummed Paper and Car Coolant and erroneous country of origin of Auto Fan. Specification and Brand names were not furnished. The Collector erroneously referred to the result of vague market enquiry without indicating relevant particulars. No documents have been cited to load the value. Value has been loaded only on a pro-rata ratio based on the proportion of enhancement of value in the case of other items. This was without justification or sanction of law and the same has to be set aside.
28. Our findings can be summarised as follows :-
(a) The Collector was justified in holding that Car Tyres, Halogen Lamps, Auto Fans and Car Coolant are consumer goods.
(b) There was mis-declaration of description and quantity in many cases as found by the Collector.
(c) The value determined of Car Tyres, Brake Shoe and Halogen Lamp, Clutch Assembly on the basis of Nepal invoices was not lawful. Value of these items has to be determined afresh.
(d) Value of Lower/Upper Housing with Front Grill, Switch with Harness, Drain Hoses, Screw, Blower Motor with Wheels, Dryers, Heat Exchanger, Mini Horns with Valve, Gummed Paper, Auto Fans and Car Coolant as determined by the Collector is set aside. Value has to be determined afresh.
(e) Value determined of Tools by the Collector is confirmed.
(f) Value of Para Fax UP 102-7 is reduced to Rs. 20,000.00 per unit.
(g) Value of Para Fax Cannon-270-S is reduced to Rs. 20,000.00 per unit.
(h) Value determined of Para Fax Murata Fl is confirmed.
29. The above findings will necessitate the passing of a fresh adjudication order. In this view, we set aside the impugned order and remand the cases to the jurisdictional Commissioner for fresh disposal in accordance with law and the findings in this order. If the Commissioner desires to rely on further material to assess the correct value of goods whose value is not concluded by this order, he shall furnish copy of such material to the appellants and also give an opportunity to the appellants to furnish further material in regard to valuation. The appeals are allowed in this manner.