Customs, Excise and Gold Tribunal - Delhi
Fransa Corporation vs Collector Of Customs on 1 May, 1991
Equivalent citations: 1991(56)ELT586(TRI-DEL)
ORDER K.S. Venkataramani, Member (T)
1. These two appeals arise from two separate orders - (1) dated 12-4-1989 passed by the Additional Collector of Customs, Import Air Cargo, IGI Airport, New Delhi; and (2) dated 4-10-1990 passed by the Additional Collector of Customs, Customs House, New Delhi. Both these orders relate to the adjudication proceedings against the same appellants and relate to the import of the same goods by the appellants - one at the Air Cargo, New Delhi and the other at the ICD, New Delhi of certain consignments of goods described as 'synthetic rubber products' (Erasers) in one case and as 'synthetic rubber' in the other case (ICD).
2. Appeal No. C/1340/90-A:
Facts - The goods described as 'synthetic rubber products' (erasers) were imported for which Import Licence issued under paras 175 & 177 of Import Policy, 1988-91 under Appendix 3-A Sl. No. 396 was produced. The Customs House found that erasers were consumer goods capable of directly satisfying human beings and as such are covered by entry No. 145 of Appendix 2-B of Import & Export Policy, 1988-91 and also further found that the Import Licence dated 14-12-1988 produced cover import to the extent of one lakh of a single item and thereby in the Import Licence value had been exceeded in the present case. As per the impugned order :
"The invoice value against Bill of Entry No. 203894 dated 20-1-89 and Bill of Entry No. 203895 dated 20-1-89 has been shown in the following manner : CIF New Delhi US $ 20160.00 Freight charges US $ 14000.00
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C & I Value US $ 6160.00 and against BE No. 203860 dated 20-1-89 CIF New Delhi US $ 17280.00 Freight charges US $ 12000.00 ----------------------------- C&I US$ 5280.00
Thus it is clear that it is the freight which controls that C&I price whereas the C&I and F.O.B price have their own identity the said condition of freight charges from CIF price may make the C&I price and the FOB price to almost negligible and much below their real prices."
Proceedings were initiated against the importer by issue of a show cause notice dated 25-2-89 on the ground that the goods were liable to confiscation under Section 111(d) of the Customs Act, 1962 and importer liable to penalty under Section 112 of the Customs Act, 1962 for the reason that the import was not covered by a valid licence and also for seeking to confiscate the goods under Section 111(m) of the CEA 1962 for mis-declaration regarding the value which, according to the show cause notice, has been under-declared and according to the notice, the assessable value was to be enhanced to Rs. 3,02,400/-. The Additional Collector of Customs, Air Cargo, on consideration of their defence, held that there has been mis-declaration as the items had not been given the true description as 'eraser' which had been written on the Bill of Entry by the examiner of the Department. He found that entry No. 396 in Appendix 3-A of the Import Policy, 1988-91 'rubber products'. The Additional Collector inspected this sample and observed that the goods imported is 'eraser' used by school and office goers for rubing pencil marks which are ordinarily sold in the market in stationery shops. He concluded that the goods were finished products and such consumer goods are covered by entry No. 145 in Appendix 2-B of the Import Policy. Thereby, the licence produced was not valid. On valuation, the Additional Collector found that there was an evidence to show suppression of fact of actual freight paid by the importer and observed that when the actual air freights are deducted from the invoice CIF value, the C&I value becomes much more than what has been declared in the Bill of Entry. Thereafter, he proceeded to determine the value by arriving at the FOB value and adding to it freight and insurance. The Additional Collector, in his order, ordered the confiscation of the goods under Section 111(d) & (m) of Customs Act, levying a fine in lieu of confiscation of Rs. 1 lakh on the goods covered by two of the Bills of Entry covered by the adjudication order, and a redemption fine of Rs. 75,000/- on the third Bill of Entry covered by that order. The personal penalty of Rs. 1 lakh was also imposed on the appellants.
3. C/Appeal No. 3214/90-A Facts: In this case also, the import was of goods described in the Bill of Entry as 'synthetic rubber'. Invoice value US $ 1.49 per Gross CIF Delhi after adding insurance @ 1.125% to the invoice value, CIF value of the goods was declared as Rs. 2,73,542/- and assessable value as Rs. 2,75,594/-. The goods were claimed for assessment under Heading 4002.59 read with Notification No. 82/86 and Import Licences, similar to those in the above case with flexibility provisions under paras 175 and 177 of Import Policy, 1988-91, were produced for the clearance of the goods being covered under Appendix 3-A Sl. No. 396 of the Import Policy. The Customs House assessed the goods declared in the Bill of Entry to duty on the basis of the documents produced under what is known as second appraisement under which assessment after an order of the clearance of the goods is passed provided on superficial examination, the description of the goods are found to tally with the declaration in the invoice and in the Bill of Entry. The Assistant (ICD), while countersigning the assessment, directed to get the goods examined and called for representative sample to determine classification. The goods were examined and it was found that they were pencil erasers in consumer packing of boxes, each box containing 48 pieces. The markings on the boxes were as follows:
"High Glass Picture Eraser Rabbit Picture Eraser 48 pcs. in each box MADE IN JAPAN."
The Customs House, therefore, came to the conclusion that the erasers imported is a stationery item covered by serial No. 145 of the Appendix 2-B of the Import Policy as consumer goods and not covered by the Licence produced against the flexibility clause. The Customs House also noted that similar goods had been sought clearance by the appellants at the Air Cargo under the three Bills of Entry and the case had been adjudicated by the Additional Collector, Air Cargo and the Customs House, from this, concluded that there was a deliberate attempt of mis-declaration. Therefore, a show cause notice was issued on the above grounds as to why the goods should not be confiscated under Section 111(d) of the Customs Act, 1962. A supplementary show cause notice was also issued on 20-7-1989. This was to the effect that the Department had, on information, obtained an attested copy of Invoice No. 10273 dated 13-1-1989 from the Punjab National Bank where the importers are having their account and the documents on collection had been received from the foreign suppliers. The Customs House found that photo copy of the Invoice No. 10273 dated 13-1-1989 issued by the supplier received by the Bank when compared with a copy of the Invoice bearing the same number and date submitted by the appellants alongwith the Bill of Entry, it was found that the copy of invoice obtained from the Bank in several respects vary from that accompanying the Bill of Entry. Mainly, the description of the goods in the invoice from the Bank showed 'synthetic rubber' products viz. Erasers 12 Gross whereas in invoice enclosed with the Bill of Entry, the description of the goods was 'synthetic rubber' 12 gross. A statement was also obtained from Sh. A.K. Sarin, Proprietor of the Appellant Firm, in which he had admitted the discrepancy and said it is due to the fact that the invoice filed with the Bill of Entry was received by them immediately after the shipment was affected by sea freight and thereafter they had sent it to the supplier to get it amended to be enlighted with the contract for the purchase of the goods. Sh. Ravinder Singh, Manager, Punjab National Bank, in a statement, said that Sh. Sarin personally approached him to get the attested copy of invoice No. 10273 dated 13-1-1989. It was not compared with other documents received by the Bank directly from the supplier. He had attested it in good faith. The Customs House also alleged that the importer filed a declaration under Rule 10 of Customs Valuation Rules, 1988 as required disclosing full details relating to the value of the goods imported and thus suppressed correct factual position. In these circumstances, the Customs House sought to enhance CIF value of the goods to Rs. 6,80,786.68 as against the CIF value of Rs. 2,73,542/- by taking the price of one gross of erasers as USD 3.75, besides seeking to confiscate the goods imported unauthorisedly. On considering the defence of the appellants, the Additional Collector held that there had been mis-declaration of the goods by the appellants by pointing out that declaration regarding gross quantity is written in the Bill of Entry that too only in original copy thereof. The other copies are totally silent about it. The Additional Collector also found that the discrepancies between the two invoices, the one obtained from the Bank and the other with the Bill of Entry, were serious in that the value declared therein and the description of the goods significantly differ. In this connection, he also noted the fact that in respect of the consignment imported at the Air Cargo, the value declared by the appellants had not been accepted by the Deptt. and observed that the difference in value between the air consignment and the sea consignment was definitely not on account of the fact that one was imported by air and the other by sea. Therefore, the Additional Collector concluded that there was sufficient reason to dispute the invoice value declared by the importer under Rule 11 of the Customs Valuation Rules, 1988 and the value, he held, was to be determined under Section 14(1) of the Customs Act, 1962 read with Rule 11 of the Central Excise Valuation Rules, 1988. The Additional Collector took into the consideration, the importers' statement that the freight charges for one container is about U.S. $ 1300 and added it to C&I value declared by the appellants in respect of Air Cargo which was U.S. $ 1.47, when the CIF price per Gross worked out to U.S. $ 1.578 per Gross whereas he found that CIF price in respect of consignment is U.S. $ 1.49. On this ground, the declared value was not accepted. The Additional Collector also made the following observation in the order:
"the condition given at the bottom of the proforma invoice No. 10227 dated 13-12-1988 reads as -
"prices at CIF New Delhi Airport and freight charges to be deducted from CIF value and must be shown on invoices making C&I prices at the time of shipment." He observed, "This condition is uncommon and unacceptable as it gives a proposition that the C&I prices could be reduced to anything if the freight charges increase between the date of proforma invoice and the date of shipment and that the C&I value of a product would be governed by freight charges. Cost and insurance are two independent components of CIF value."
3.1 Additional Collector also found that during the transit from Japan the cost had also been incurred at Singapore which is required to be added to arrive at the correct cost and insurance price of 12000 gross of erasers. Therefore, he determined the assessable value on the basis of FOB Japan, sea freight and insurance to be Rs. 5,38,757.09. He proceeded to order confiscation of the rubber erasers valued at Rs. 5,38,757.09 CIF under Section 111(d) and (m) of the Customs Act levying fine in lieu of confiscation of Rs. 4 lakh and imposing penalty of Rs. one lakh on the appellants under Section 112(A) of the Customs Act.
3.2 The Ld. Consultant, Sh. B.B. Julka, appearing for the appellants contended that in both these cases, there was combined transport documents relating to freight. In one case, it was for the transport of the goods from Japan to Singapore by sea and from Singapore to Delhi by air, and in the other case it was by sea from Japan to Bombay and on to the ICD, New Delhi by rail. The Department had made, mainly, four allegations for under-invoicing on the ground that C&I prices cannot be determined by reducing freight charges from CIF value and that freight element was less than air freight as per air away bill and that the Department felt that CIF by air is really CIF by sea and had enhanced the value of the imported consignment. The Department had also accepted the CIF invoice value to work out the assessable value taking Singapore as the country of origin for which there was no justification. In the original show cause notice for the ICD consignment, there was no charge of under-invoicing which was made only in the supplementary show cause notice on the basis of the quotation from Hongkong. It was ultimately not relied upon in the adjudication order.
3.3 The Ld. Consultant, further, contended that the appellants had furnished the actual freight paid supported by a certificate but yet the Department had worked out the value of the goods by taking the freight paid at a half-way point on an amount representing freight which was not actually paid or charged by the airline. The Learned Consultant referred to Rule 9(2) of the Valuation Rules, 1988 relating to cost of services and to the proviso of the Rule and urged that at Singapore, the goods have borne the cost of transport loading and unloading and they were shipped FOB at Kobe Japan. Before redetermining the value, the Department was bound to show that the FOB value, according to the appellants, is wrong or unreliable, and it cannot be computed from Singapore, because, according to the appellants, it is a transit port. Regarding grounds for enhancing of the value of the ICD consignment, the Learned Consultant pointed out that this was received by sea and land, the Department itself had chosen not to rely on invoice of similar goods according to the Department. The consignment was part of a contract for a large order with its consequential price advantage as per general commercial practice. The Ld. Consultant, further argued that the Additional Collector in the ICD case had invoked Rule 11 of the Valuation Rules, 1988 without showing how the other Rules 4 to 8 were inapplicable. The Department had sought to adopt a method which is forbidden under Rule 8(2) of the Valuation Rules. It was contended that the invoices produced represented the transaction value and should be accepted. The Ld. Consultant, further, addressed arguments on the import trade control angle and the questions raised about the validity of the import licence produced for the clearance of the goods. He pointed out that the Department relies on a clarification obtained after the import of the goods from the Chief Controller of Import & Export. It was submitted that the goods 'synthetic rubber erasers' were covered by generic entry Appendix 3-A Sl. No. 396 which covers synthetic rubber products, because, according to the appellants, eraser is nothing but a small piece of sheet of synthetic rubber. From the three competing entries in the ITC Appendix, namely, Sl. No. 396 and Sl. No. 433 covering products of synthetic rubber and Appendix 2 Part B Sl. No. 145, the goods imported, according to the appellants, answer to this description synthetic rubber products. The very fact that the Department had sought clarification from the CCIE shows that they were themselves unsure. Then the benefit of doubt should go to the appellants. In any case, there was no case of mis-declaration and at worst it could be a case of incomplete declaration. The redemption fine imposed in both the orders and penalty are harsh and excessive.
4. Sh. B.S. Ganu, Ld. S.D.R. submitted that the import licences in this case were produced for clearance of the goods were issued under paras 175 and 177 of the Import Policy relating to flexible clause and referred in this connection to the provisions of para 182 (1) of the Policy and as regards the nature of the goods, the Ld. SDR drew attention to the examination report of the goods by the Department which showed that they were nothing, but erasers as a stationery item. The Additional Collector also inspected the sample and confirmed the nature of the goods as consumer goods going directly to satisfy human needs. There was mis-declaration of the goods not only for the purpose of ITC, but for assessment under Customs Tariff Act, as 'synthetic rubber' under Heading 4002.59 primary form instead of specific entry 4016.92 CTA for erasers. The appellants also understood the goods only as erasers, but yet declared it as 'synthetic rubber' products. They had claimed exemption Notification 82/85 as raw-rubber while importing fully finished goods. This, however, had been subsequently rectified. In respect of ICD import, which was subsequent to the one at air cargo complex, the appellants had failed to give details of the earlier import by air which is a requirement under Valuation Rules to be made on the Bill of Entry. The Ld. SDR also pointed out the discrepancies in description of the goods on the invoice obtained from the Bank as compared to that filed with B/E. The Tribunal also, at this stage, found that it could not agree to the request made by the SDR to introduce certain materials which had come to light, which were not before the Collector as it was made at a stage when the hearing was half-way through as a part heard matter. The Learned SDR, further, submitted that the appellants had failed to give full and correct details regarding valuation of the goods in the declaration appended to the Bill of Entry in terms of Rule 10 of the Valuation Rules. The Additional Collector has found that this was a case where the value has to be determined in terms of Section 14(1) of the Customs Act, 1962 and not in the Valuation Rules and it is well settled that as between the statutory Section and the Valuation Rules, the former should prevail. Under Section 14(1), the value has to be based on the value of such goods ordinarily sold in the course of international trade. The goods, namely, rubber erasers were restricted items under ITC Policy and thus are not regular imports and as such it will be difficult to determine the price at with such goods are ordinarily sold. The Additional Collector's order in respect of ICD consignment clearly brings out significant discrepancies regarding value declared in Bill of Entry and the value as found in the invoice received from the Bank. The statement the appellants' partner, Sh. Sarin, has clearly admitted that the goods were sold in the market, clearly indicating that they were consumer goods. The Additional Collector had been justified in looking to the value of the air consignment and a perusal of the records would show, according to the Department, that freight element is an inflated sum as seen from the certificates submitted. The vast difference between the two consignments cannot reasonably be on account of freight only. The quantum of fine and penalty is justified, according to the Department, having regard to the high margin of profit on the goods imported. In reply, it was contended by the appellants that in the ICD B/E, the price regarding air cargo complex import were not given as that consignment had not been cleared. The goods had been imported against REP licence under its terms and the rubber eraser being a product of synthetic rubber is covered by Sl. No. 396 of Appendix 3(A) ITC Policy, according to the appellants.
5. We have carefully considered the submissions made by the Ld. Consultant and the Ld. S.D.R. Two questions that arise in this case are whether the import was valid or not and also whether the value for assessment purposes as declared by the appellants in these two cases represented the correct value in such purposes under Section 14(1A) of the Customs Act, 1962. Taking up the question about the validity of the import, the appellants have produced import licences under Appendix 3 Part (A) of the ITC Policy, 1988-91 and claimed clearance against Sl. No. 3% thereof for the goods imported by them which have been described in the invoice as 'synthetic rubber' product and which the Department, on examination of the goods and inspection of sample thereof, had found that these are erasers which are ready to use as stationery items. The detailed description of the goods found on examination is as follows :
"High Glass Picture Eraser Rabbit Picture Eraser 48 pcs. in each box MADE IN JAPAN".
The lower authorities had also seen this sample and confirmed the conclusion that these are articles of stationery and consumer goods. The ITC Policy defines consumer goods for the purpose of import policy as meaning consumption goods which can directly satisfy the human needs without further processing and would include consumer durables. In the same policy, it has been, further, stated that this definition has been incorporated for the purpose of import policy only and that it is illustrative and not exhaustive and that further it will be left to the Customs authorities to identify the goods which, in their judgment, could be appropriately classified as consumer goods vide para 20(6) of the Import Policy, 1988-91. That these are the consumer goods directly being sold in the market has also been confirmed by the statement given by Sh. Sarin of the appellants who said in his statement on 24-5-89 before the authorities that he had imported these goods to be sold in the market. The description of the goods as given on examination also shows that these are finished pieces of picure rubber erasers with the picture of a rabbit. These are also packed in boxes each containing 45 such pieces. Clearly, the goods are ready-to-use rubber erasers and the conclusion arrived at by the Customs authorities on inspection of the sample that these are nothing but stationery articles and consumer goods by nature and, therefore, covered by entry at Sl. No. 145 Appendix 2(B) of the ITC Policy, 1988-91 is correct because this entry is as follows :
"All consumer goods, howsoever described, of industrial, agricultural or animal origin, not appearing individually in Appendix 3 Part A and 5 of specifically listed for import under Open General Licence."
6. In such a context, having regard to the nature of the goods as clearly brought out by examination thereof, it is difficult to agree with the appellants that such rubber erasers fall under Sl. No. 396 of Appendix 3(A) of the ITC Policy, 1988-91 which is as follows:
"Rubber products inclusive of products from natural and/or synthetic rubber and accessories excluding the following :
(i) Oil seal, bushings, O Rings and tyres/tubes (including flaps in equal numbers) for automotive application.
(ii) Drive rubber belts, rubber rings, rubber cushions and rubber rollers for tape recorders/tape deck-mechanism.
(iii) Rubber blankets, for drafting machines and condensers rubbing aprons woollen cards."
7. The appellants' case is that such erasers are 'synthetic rubber products' covered by the above entry. However, the description of the goods in Appendix 3(A) as above, cannot be taken to be a specific description for synthetic rubber erasers, but the Sl. No. 396 is only a generic description of synthetic rubber products. We have also found that as a ready to use consumer goods, this rubber eraser is also includible under the generic description of 'consumer goods howsoever described not appearing individually in Appendix 3(A)' covered by Sl. No. 145 of Appendix 2(B). When such is the position, when rubber erasers are covered by the generic description in Appendix 2(B) as also in Appendix 3(A), then according to the para 21 of the ITC Policy, 1988-91 relating to clarification and interpretation of the Policy, "An item with a generic description in Appendix 2(B) will prevail over an item with a generic description in Appendix 3(A)". Therefore, the rubber erasers imported will fall under Appendix 2(B) Sl. No. 145 as consumer goods which have been so identified by the Customs authorities as being appropriately classified as consumer goods and is, thus, correctly held to be not covered by the licences produced. It is also on record that on a reference being made by the Customs authorities, the Chief Controller of Import & Export, has confirmed that the goods are consumer goods. This is in accordance with the provision of the Import Policy which requires that since in matters relating to import-export policy, the interpretation given by the CCI & E will prevail, the Customs authorities should consult the Import Trade Control Authorities in such matters before clearance in case of doubt. In these circumstances, it is to be held that the import licences produced had correctly been found by the Additional Collectors as not being valid to cover the import of the rubber erasers and thereby the order confiscating the goods under Section 111(d) of the Customs Act, 1962 is correct in law. That a clarification had been sought by Customs in the matter will not affect the confiscability of the goods imported unauthorisedly.
8. As regards valuation, the Additional Collector in the order relating to the consignment imported at ICD has found that the price quotation of erasers of Chinese origin obtained by the Department, cannot be relied upon in the light of the Customs Valuation Rules, 1988 and that, therefore, he was not placing any reliance on this quotation. On the other hand, the Additional Collector has invoked Rule 11 of the Valuation Rules read with Section 14(1) of the Customs Act, 1962. Section 14(1) of the Customs Act provides that for the purpose of Customs Tariff Act, 1975 or any other law for the time being in force where goods are assessed to duty on their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. The Collector has also invoked Rule 11 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 which provides that in case of dispute between the importer and proper officer of customs valuing the goods, the same shall be resolved within the provisions contained in Section 14(1) of the Customs Act, 1962. It is seen that the Additional Collector has found that the price quotation of the goods (of) Chinese origin cannot be made basis for determination of assessable value and there is no allegation that the seller and the buyer are related persons or that they are interested in the business of each other or that the price is not the sole consideration for the sale or offer for sale. The price with which the comparison is to be made is that at which such or like goods are ordinarily sold and offered for sale for delivery at the time and place of importation. It is, further found that the Additional Collector has proceeded to determine the assessable value on the basis of the CIF price of the consignment imported at the Air Cargo Complex minus air freight between Singapore and Delhi minus sea freight between Japan and Delhi minus 1.18 per cent plus sea freight from Japan to Delhi plus 1.18 per cent. It is not clear from the Additional Collector's order as to how such a method of determination of the assessable value flows from the show cause notice and whether the appellants were put on notice about this method of determination of assessable value proposed to be adopted. On the other hand, the show cause notice directed the appellants to show cause why, quotation obtained by the department be not accepted and ultimately, the Additional Collector had not, in fact, made that quotation obtained by the Department as the basis for determination of the assessable value. It is also not clear from the records as to how the Additional Collector has recorded at page 25 of his order, "Secondly, in one invoice, the value is given as U.S. $ 1.10 per Gross whereas in the other the value is given as CIF New Delhi 1.49 per Gross." The appellants, vehemently claimed that no such invoice exist that shows the value as 1.10 per Gross. It is also a fact that there is no reference to the existence of such an invoice even in the show cause notice. In the circumstances, therefore, the explanation of the appellants that the difference between the declared value of their consignment imported at the Air Cargo Complex and that imported through the ICD, New Delhi is due to difference in the element of combined transport and air freight seems plausible, and in any case, in the circumstances discussed above, it will not be unreasonable to extend to them the benefit of doubt, and in this view of the matter, the declared value for the goods should be accepted in the circumstances as the assessable value thereof. Further, as regards the valuation adopted for the consignment at the Air Cargo Complex, this order of the Additional Collector does not proceed on the basis of disputing the invoice produced for the consignment. Further, although certain prices of comparable goods like, Viton, Nitrile or Crude synthetic rubber had been mentioned in the show cause notice as a base of re-determination of assessable value, yet ultimately, in the Additional Collector's order, these have not been made the basis. It may be noted that in this case, the invoice value was CIF by Air New Delhi, the goods being sea and air cargo covered by a combined transport document with the transit at Singapore. The Additional Collector determined the assessable value at CIF, New Delhi by deducting actual air freight from Singapore - New Delhi and arriving at the CIF Singapore price deducting therefrom 1.12 per cent to arrive at CIF price at Singapore and adding 16% to the above CIF as assessable value CIF, New Delhi. It is not clear from the Additional Collector's order as to the particular method in the Valuation Rules, 1988 adopted by that authority in arriving at the assessable value.
It is also correct that the appellants were not put on notice regarding this method. Moreover, although the Additional Collector's order is not very clear, in so far as the invoice produced for the goods is not disputed in the order, the valuation has to be within the frame-work of Customs Valuation Rules, 1988 sequentially from Rule 4 thereof and when it is a question of adding the cost of freight only and insurance charges such an exercise will have to be done in terms of Rule 9(2) of the Valuation Rules. But this Rule also lays down that addition to the price actually paid or payable, shall be made under this Rule on the basis of objective and quantifiable data. There is also force in the submissions made in this context by the appellants that proviso to Rule 9(2) of the Valuation Rules refers to Free On Board Value, which term means the seller to bear all expenses before putting the goods on ship in the case at Kobe, Japan while the purchaser is to bear all costs like freight, insurance and incidentals. The goods when they reached Singapore, being loaded at Air Cargo, had already borne freight and insurance from Kobe, Japan to Singapore apart from transhipment handling and documentation charges at Singapore which were brone by the purchasers, i.e., the appellants. They have, further asserted that no goods can be simultaneously freight and insurance paid as also Free On Board. It will be a contradiction in terms. Therefore, the Free On Board value of the goods at Kobe cannot be confused with freight, insurance and transhipment value at Singapore. The method adopted by the Additional Collector seems to have certain infirmities when viewed from this angle. In the circumstances, therefore, on a consideration of the materials evidence on-record, there appears to be reasonable grounds for extending the benefit of doubt to the appellants. It may also be observed that the Customs authorities could have investigated the matter and tried to ascertain the price at the suppliers' end and ascertained the relevant factors relating to pricing which would have strengthened the Department's case. In such circumstances, it is reasonable that the benefit of doubt should be extended to the appellants and as a result, the value declared for assessment purposes, should be in the circumstances, accepted.
9. Therefore, on consideration of the totality of the evidence in this case, the Department's charge against the appellants of under-declaration of the value of the imported goods for assessment purposes is not established. As regards the charge of mis-declaration of the description of the goods, this charge is well founded since the goods were described as synthetic rubber products and the description of the goods was expanded by the authorities on examination of the goods when found to be rubber erasers. The Import Licences produced under Appendix 3 Part (A) for synthetic rubber products, is not valid for the goods which are nothing but consumer goods being stationery articles. As regards the quantum of redemption fine and personal penalty, having regard to the nature of the goods, which are fast moving consumer items with considerable margin of profit, the quantum of fine is modified to be 100% of the declared assessable value. However, as regards the quantum of personal penalty, in view of the finding on valuation, as above, there is a case for reduction of the personal penalty which is reduced to Rs. 50,000/- in respect of the order dated 12-4-1989 passed by the Additional Collector of Customs, Import Air Cargo, IGI Airport, New Delhi in its Order No. 383/89. The personal penalty, in respect of consignment at ICD is also similarly, reduced to Rs. 50,000/-. The appeals are disposed of in the above terms.