Customs, Excise and Gold Tribunal - Delhi
Popular Exports (P) Ltd. vs Collector Of Customs on 24 November, 1992
Equivalent citations: 1993ECR505(TRI.-DELHI), 1993(67)ELT695(TRI-DEL)
ORDER P.K. Kapoor, Member (T)
1. This is an appeal against order dated 15-8-1988 passed by the Collector of Customs and Central Excise (Appeals). Briefly stated the facts of the case are that the appellants imported from Dubai a consignment of 100 Nos. Modulator Motors Model M944A 1010 made by M/s. Honeywell Inc., U.S.A. at unit price of U.S. $ 62.00 against invoice No. 3016 dated 2-2-1987 issued by M/s. Zainab Air Conditioning, Dubai. Based on the CIF price of US $ 6200.00 shown in the invoice, the value of the goods was declared as Rs. 80,564.00 in the Bill of Entry. Enquiries made by the Customs authorities revealed that Modulator Motors Model Motors model 944G1097 had been offered to M/s. Bharat Heavy Electricals Ltd., Tiruchirapalli at U.S. $ 287.40 (Ex-works) by M/s. Honeywell High Tech Trading Singapore who were the representatives of M/s. Honeywell Inc., U.S.A. for Asian Pacific Region including India. During their enquiries the Customs authorities also obtained from M/s. Usha Services and Consultants (P) Ltd. the representative of M/s. Honeywell High Tech Trading in India a quotation for the import of Modulator Motor Model M 944A1010 at the rate of U.S. $ 271.41 (Ex-works). On the basis of the unit price of U.S. $ 271.41 the assessable value of the imported goods was worked out as Rs. 4,07,818/- as against the declared value of Rs. 80,564/- and the appellants were served with a notice requiring them to show cause as to why the duty should not be levied on the value of the goods as determined by the Custom House.
2. On receipt of the reply to the show cause notice the Assistant Collector passed an order determining the unit price of the goods as US $ 189.99 (FOB) on the basis of the quotation of M/s. Usha Services and Consultants (P) Ltd. on which a reduction of 30% was permitted having regard to the quantity imported and other relevant factors.
3. In the appeal before the Collector (Appeals) the appellants contended that the lower authorities had relied only upon certain quotations whereas they had imported the goods from M/s. Zainab Air Conditioning, Dubai who were the authorised dealers of M/s. Honeywell Air Conditioning, Middle East Ltd., Sharjah. They contended that on the basis of the quotation received from M/s. Honeywell Airconditioning, Middle East, M/s. Zainab Air Conditioning, Dubai had offered Modulator Motors at US $ 62.00 CIF per piece to M/s. Achinta Trading, Bombay. However, by the impugned order the Collector (Appeals) rejected the appellants contentions and confirmed the order passed by the Assistant Collector.
4. On behalf of the appellants the learned Advocate Shri V. Sridharan appeared before us. He referred to the copy of the quotation dated 30-11-1986 at pages 50 and 51 of the paper book in respect of various items of residential controls given by M/s. Honeywell Middle East Ltd., Sharjah to M/s. Zainab Air Conditioning, Dubai. He also referred to the quotation at page 52 of the paper book in which M/s. Zainab Air Conditioning, Dubai had offered to M/s. Achinta Trading, Bombay all the Honeywell residential air conditioning parts listed in the quotation dated 30-11-1986 given by M/s. Honeywell Middle East, Sharjah. Shri Sridharan pointed out that the rates at which the various parts were offered by M/s. Zainab Air Conditioning, Dubai to M/s. Achinta Trading, Bombay were the same at which they were offered by M/s. Honeywell Middle East Ltd., Sharjah to M/s. Zainab Airconditioning except that the 7.5% special discount which was to be received by M/s. Zainab Air Conditioning was not offered by them to the Bombay firm. He added that on the basis of the offer received by them M/s. Achinta Trading Company acting as indenting agents placed an order on behalf of the appellants for the import of 100 Nos. Honeywell Brand Modulator Motors Model M944A 1010 at US $ 62.00 CIF per piece. The learned Counsel argued that the invoice value of US $ 62 per piece represented the assessable value of the goods since it was based on the offer given by the manufacturers own branch namely Honeywell Middle East Pvt. Ltd. Sharjah and the appellants had produced before the lower authorities Computer print out showing contemporaneous imports of the item at the same price through, Bombay Custom House. He stated that the offer at a price of US $ 287.47 per piece (ex-works) made by M/s. Usha Services to M/s. BHEL was not relevant for the reason that no import had been made by M/s. BHEL and also on account of the fact that it was in respect of Model 944G1097 which had application in boilers whereas the imported Motor of Model M944A was for refrigeration and air-conditioning appliances. He added that the only other evidence on which reliance was placed by the lower authorities was the offer addressed by M/s. Usha Services and Consultants Pvt. Ltd. to Appraisers, SIB, Madras Custom House undertaking to supply the item in question at a price of US $ 271.41 per piece (ex-works). Shri Sridharan contended that even this offer could not form the basis for determining the assessable value of the imported goods since M/s. Usha Services and Consultants were the agents of M/s. Honeywell only for Process Control and Test Instruments and not for parts of refrigeration and air-conditioning machinery. He argued that the offer made to an officer of the Custom House by the local agent could not form the basis for determining the value under Section 14 of the Customs Act, 1962 since it did not relate to the price at which the goods in question were sold or offered for sale in the course of international trade. He contended that the confirmation from M/s. Usha Services and Consultants Pvt. Ltd. that their quotation was based on the official price book of M/s. Honeywell was obtained by the Assistant Collector after conclusion of the personal hearing, and was not communicated to the appellants to enable them to offer their explanation. He stated that the telex from the Divisional Manager, Product Division, Honeywell, Sharjah which was produced by the Departmental representative during the hearing before the Tribunal on 23-9-1991 confirmed that M/s. Usha Services, New Delhi were not the agents of M/s. Honeywell for commercial and residential controls which were imported by the appellants. He contended that the observations of the lower authorities that the offer of M/s. Usha Services was based on the official price list of M/s. Honeywell was incorrect since the price of Honeywell products could vary widely depending upon the various factors which had been listed in their telex. He stated that the determination of the price of the imported consignment consisting of 100 pieces by the lower authorities by extending discount of 30% on the price of 1 piece quoted by M/s. Usha Services was wholly arbitrary. He pointed out that the Collector (Appeals) had observed that in the appellant's case there was no allegation of misdeclaration attracting the provisions of Section lll(m) of the Customs Act. In support of his arguments the learned counsel placed reliance on the Calcutta High Court decision in the case of Trident Televisions Pvt. Ltd. v. Collector of Customs reported in 1990 (45) E.L.T. 24.
5. On behalf of the Revenue Shri Prabhat Kumar, learned JDR stated that the Department had relied upon a quotation given by M/s. Usha Services and Consultants (P) Ltd. who were representing M/s. Honeywell in India for certain product ranges. He stated that their quotation was based on the official price book of M/s. Honeywell. He added that as held by the Tribunal in the case of M/s. Wax and Wax Producsts v. Collector of Customs [1990 (48) E.L.T 421] it was permissible for the Department to determine the assessable value of the imported goods on the basis of the quotation given by the local agent of the foreign supplier of the goods. In this regard he also placed reliance on the decision in the case of Peakcraft v. Collector of Customs [1991 (53) E.L.T 122]. He added that having regard to the fact that the imported consignment consisted of 100 pieces, a discount of 30% was allowed while determining the value of goods on the basis of the quotation given by the local agent for 1 piece. On the grounds that the Tribunal had observed in the case of M/s. Metal and Alloy Industries v. Collector of Customs [1989 (40) E.L.T 207] that the quantity discount normally ranges between 5% to 10%, Shri Prabhat Kumar contended that the discount of 30% was adequate. He stated that it was well settled that the value for the purposes of assessment under Section 14 of the Customs Act, 1962 is the "deemed value" as provided for under that Section and the price paid for the imported goods in an individual case can be rejected if such goods are sold or offered for sale at higher price in the course of international trade. In support of his argument he relied upon the decisions in the following cases :-
(i) Macneill & Magor Ltd. v. CC [1987 (28) E.L.T. 318]
(ii) Consolidated Coffee Ltd. v. Collector of Customs [1986 (24) E.L.T. 429]
(iii) Calcutta Motor Dealers Association v. CC [1989 (42) E.L.T. 693] (iv) Sanjay Chandiram v. Collector of Customs [1991 (52) E.L.T. 413] Shri Prabhat Kumar further contended that the proforma invoice in respect of Model M 944G offered to M/s. BHEL supported the Department's case since there was very little difference between the Modulator Motors of Model M 944G and the imported Model M 944A1010 Modulator Motors. He contended that the fact that M/s. Usha Services and Consultants had not been formally authorised by M/s. Honeywell to represent them in respect of the air conditioning items imported by the appellants would not make any difference since M/s. Honeywell had confirmed that they had authorised M/s. Usha Services to issue proforma Invoices for domestic controls in some cases. He added that the quotations relied upon by the Department being from the representative of M/s. Honeywell in India had to be deemed as correct in the absence of any evidence to the contrary having been placed on record by the appellants. He referred to the copy of the sales offer made by M/s. Honeywell, Sharjah to M/s. Zainab Airconditioning, Dubai, at page 50 of the paper-book and contended that quantities of various items listed being uneven, it was evident that the goods covered by the offer were 'stock lots'. He argued that prices for stock lots cannot constitute the assessable value under Section 14 of the Customs Act, 1962 and this fact can be taken into account by the Tribunal even though it was not raised before the original authorities. In this regard, he placed reliance on the following case law :-
(i) Satellite Engineering Ltd. v. Union of India [1987 (31) E.L.T. 356]
(ii) Automotive Enterprises v. Collector of Customs [1986 (22) E.L.T. 283]
(iii) Aar Key Ess Imports Corp. v. Collector of Customs [1988 (37) E.L.T. 118]
(iv) CIT v. Walchand [AIR 1967 (SC) 1439]
6. We have gone through the records of the case and the submissions made on behalf of both sides. It is seen that the point that arises for consideration in this case is whether the invoice value represents the assessable value of the goods or the deemed price of the goods under Section 14(l)(a) of the Customs Act, 1962 as determined by the lower authorities on the basis of quotations furnished by the authorised representative of the manufacturers in respect of certain products would be the real value of the goods in quesiton.
7. The appellants have contended that invoice value has to be deemed as the value under Section 14(l)(a) of the Customs Act, 1962 since it was based on the prices quoted by the suppliers in the normal course of international trade and there was no evidence to show any relationship between the suppliers and the appellants or any amount having been remitted to the suppliers in addition to the invoice value. According to them the impugned order is contrary to the provisions of Section 14(l)(a) of Customs Act, 1962 since it relied upon certain quotations or offers for sale against which no goods were imported and even if any goods had been imported against these quotations such imports would not have been in the course of international trade as contemplated under Section 14 of the Customs Act. The appellants have also claimed that the quotations furnished by M/s. Usha Services and Consultants Pvt. Ltd. could not be relied upon for the determination of the value of the imported parts of in India commercial and residential airconditioning systems for which M/s. Usha Services and Consultants were not representing M/s. Honeywell as their authorised agents in India.
8. It is seen from the impugned order that while rejecting these arguments the Collector (Appeals) has held that under Section 14(l)(a) of the Customs Act, 1962 the value for the purposes of assessment of duty is the deemed value as provided for in that Section and for that reason the invoice price even when proved to be as agreed between the importer and the suppliers would not represent the value under Section 14(l)(a) if it is found to vary significantly from the price contemplated under Section 14(l)(a). The argument that value of the imported goods could not be determined on the basis of the quotations by M/s. Usha Services and Consultants Pvt. Ltd. since they did not represent M/s. Honeywell for the class of goods to which the imported parts belonged and no goods had actually been imported on the basis of such quotations was also rejected on the ground that the copy of the telex from M/s. Honeywell High Tech Trading Singapore produced by M/s. Usha Services and Consultants Pvt. Ltd. confirmed that even though M/s. Usha Services and Consultants Pvt. Ltd. were not the agents for Honeywell commercial and residential airconditioning controls but they had been permitted to issue quotations for such controls in few cases. In this regard the Collector (Appeals) had also observed that M/s. Usha Services and Consultants Pvt. Ltd. had confirmed that the quotations given by them were based on the official price book of M/s. Honeywell.
9. We find that it has been held by the Tribunal in the case of M/s. Automotive Enterprises v. Collector of Customs, Bombay reported in 1985 (22) E.L.T. 283 that under Section 14(l)(a) of the Customs Act, 1962 the value for the purposes of assessment of duty is the deemed value as provided under that Section and for this reason the invoice price even when proved to be the true price agreed to between the parties, would not necessarily represent the assessable value in all cases. The relevant extract from para 4 of the decision is reproduced below :-
"We have heard Shri N.C. Sogani, Consultant for the appellants and Shri A.K. Jain, Senior Departmental Representative for the respondent. Shri Sogani has cited several decisions in support of his contention that the prices mentioned in the invoices should be accepted as the proper prices unless the department is able to produce any other acceptable evidence to prove that the same was not the proper price. There can be no doubt that if a charge of misdeclartion is made against an importer it would be for the department to establish the said charge by acceptable evidence. But the same proposition would not be wholly correct so far as the assessment to duty is cocnerned. This is so because under Section 14(l)(a) of the Customs Act the value for purposes of assessment of duty would be the deemed value as provided for under the said Section, even if the invoice price is proved to be the true price as agreed to between the parties. The decision of the Bombay High Court in the case of Union of India and Ors. v. Glaxo Laboratories [1984 (17) E.L.T. 284 (Bom.)] is authority for this proposition. It had been laid down therein that though the price mentioned in the invoice may be the real price as between the parties the department would be entitled to levy duty on the deemed price as would be arrived at on application of the principles of Section 14(l)(a) of the Customs Act. This could be found stated at page 291 as follows :-
'This actual price of supply which we would assume is a genuine price in that deal can vary from the international market price which is the 'value' for the purpose of Customs taxation'."
10. It is seen that in the case of Automotive Enterprises v. Collector of Customs (supra) it has also been held that an offer of sale by the foreign supplier or his authorised representative even when no imports are made on the basis of that offer can be deemed as the assessable value under Section 14(l)(a) of the Customs Act, 1962. The relevant extract from para 11 of this order is reproduced below :-
"As earlier mentioned the acceptability of the case of the appellants would depend upon the truth of their claim that in view of the stock having been held as dead stock for quite some time the exporter as prepared to offer the same at a particular price and that would therefore have been the normal international price at which such goods would have been available for anybody. But we have also seen that though the declared stock (dead stock as claimed by the appellants) was at a particular figure, and the appellants had placed the order for the entire stock as mentioned in the letter dated 22-8-1977, the actual supply was at any rate so far as bearing of particular sizes are concerned of a quantity in excess of the order. That would mean that at any rate so far as this excess was concerned it could not have formed part of the dead stock. Nor is there any explanation offered why and in what circumstances this excess supply was made by the exporter even without an order therefor. This circumstance would only excite the suspicion that the negotiations between the parties may not have been only under the correspondence before us. In the above circumstances the claim of the appellants as to the normal international price having been only as under the offer dated 22-8-1977 cannot be arrived at on the basis of the said offer or the alleged supply in pursuance of that offer. In this connection the department has relied upon the circular letter dated 7-2-1977. That was by an approved supplier of the Glacier Bearings, the letter being addressed to an authorised agent in India. That letter indicates a considerably higher price than the one mentioned in the letter dated 22-8-1977 or the orders and invoices following the same. The contention for the appellants in respect of that letter is that the same was merely an offer for sale at the prices mentioned therein but that the actual prices were to be concluded on further negotiations only. In their reply to the show cause notice the appellants had mentioned, with reference to his letter dated 7-2-1977, that Fiat Engine bearings mentioned in the said price list have been exported by M/s. A.E. Auto Exports at almost half the prices mentioned therein. During adjudication no proof had been offered of such an allegation. Before us Shri Sogani produced an invoice with reference to Perkins bearings, stating that the same related to Item No. 13 of the letter dated 7-2-1977 and that the supply was at a price lesser than the one mentioned in the letter dated 7-2-1977. No reference had been made to this supply before the lower authorites. Nor has been any application made to receive this an additional evidence. It is not known whether the invoice now relied upon by the appellants was itself the subject matter of any adjudication or whether it had been accepted as such for assessment in connection with that import. In these circumstances we are not inclined to go into that matter any further or to act upon eivdence based on that import to disbelieve the prices mentioned in the circular letter dated 7-2-1977. As mentioned earlier, that circular letter is by an authorised supplier of Glacier Bearings, mentioning special nett prices for India. In the absence of any acceptable evidence to doubt the prices mentioned therein we do not see any reason why that should be disregarded."
11. On behalf of the appellants the learned Counsel had strongly urged before us that the quotations by M/s. Usha Services and Consultants Pvt. Ltd. could not be the basis for the determination of the value of the imported goods under Section 14(l)(a) of the Customs Act since the imported goods were parts of domestic and commercial air-conditioning controls whereas M/s. Usha Services and Consultants Pvt. Ltd. were representing M/s. Honeywell as agents only for Industrial Air-conditioning Controls. He had also contended that the confirmation by M/s. Usha Services and Consultants Pvt. Ltd. that their quotation was based on the official price book of M/s. Honeywell, was as a result of enquiries initiated behind the back of the appellants after the conclusion of the personal hearing without giving any opportunity to the appelants to contest the information obtained by the Department. We agree with the following extracts from the impugned order wherein these points have been adequately dealt with by the Collector (Appeals).
"Determination of value on the basis of an offer for sale (quotation) is permitted under the provisions of Section 14 of the Customs Act 1962. The law does not require that the basis of valuation should be actual import of such or like goods. In the subject case, valuation is based on a quotation of identical goods. The appellants have questioned the veracity of the quotations given by M/s. Usha Services, imputing motives as they were a competitor. The available documents do not lead support to the suspicion of the appellants. It is true that M/s. Usha Services issued proforma No. HW/PCD/BAN/0004 dated 28-10-1987 in favour of the Appraising Officer, S.I.B. This was in response to an enquiry made by the Department. Just because quotation was given to the Department and not to a prospective buyer, it does not follow that the information furnished was incorrect and that value given was inflated. Price quoted for model M 944 A 1010 (US $ 271.41) compares well with the price quoted for model M 944 G1097 (US $ 287.40) to M/s. Bharat Heavy Electricals Ltd., Tiruchirapalli. It is seen from the catalogue that Modulator motor model M 944A and Model M 944G are reversing proportional motors used to operate dampers or valves in electronic or electric modulating circuits. There is no such difference between one model and another. Model M 944A has internal balance relay. 24 50/60 HZ, 18 watts, and model M 944G requires external balance relay, 120V (50/60 HZ), 13 Watts. Basically both model are similar and, therefore, their prices can be considered for comparison. As already pointed out, prices quoted by M/s. Usha Services for model M 944A cp,/are as well with the price quoted to M/s. BHEL for model 944G. It is also seen from the case records that M/s. Usha Services informed the Department that their quotation was based on official price book and microfiche plates of M/s. Honeywell. In the circumstances, there is no reason to doubt the correctness of the price quoted by M/s. Usha Services.
The appellants have also raised the objection that as M/s. Usha Services were not the authorised representatives for airconditioning and refrigeration products of M/s. Honeywell, they had no locus standi to quote price of the impugned goods. On this point M/s. Usha Services has forwarded to the Department a copy of Telex from M/s Honeywell High Tech. Trading, Singapore clarifying that though M/s. Usha Services were not agents for commercial and residential controls, they were allowed to issue quotations in one or two cases based on their (Honeywell's) prices."
12. Since M/s. Honeywell had confirmed that M/s. Usha Services and Consultants Pvt. Ltd. had been permitted to issue quotations in respect of parts of commercial and residential controls in few cases, it follows that as confirmed by them M/s. Usha Services and Consultants were in possession of the official Honeywell price book on the basis of which they had claimed to have issued quotation in proforma invoice No. HW/PCD/SAN/0004, dated 28-10-1987 in respect of 1 piece Model M 944 A 1010 Modulator Motor at the rate of US $ 271.41 FOB (ex-works). Since, they were representing in India M/s. Honeywell, who are a company of international repute it stands to reason that the quotation furnished by them must have been on the basis of the necessary authorisation from the principals and in accordance with their official price-list. We find from the proforma invoice dated 28-10-1987 that M/s. Usha Services and Consultants (P) Ltd. had also endorsed a copy of their quotation for information to M/s. Honewywell, European Distribution Centre in Netherlands. Evidently, they would not have done so if they were not authorised to issue the particular quotation or it was not in accordance with the official price-list issued by their principals. Under these cirucumstances we do not find any force in the appellants arguments that M/s. Usha Services and Consultants (P) Ltd. were not authorised to issue the proforma invoice dated 28-10-1987 and the price quoted by them could not form the basis, for the determination of the value of the imported goods under Section 14(1)(a) of the Customs Act, 1962.
13. In the light of the preceding discussion, we are of the view that even if the offer by M/s. Honeywell High Tech. Trading Co., Singapore to M/s. BHEL in respect of a sightly different Modulator Motor of Model M 944G 1097 is disregarded; the value of the imported 100 pieces Modulator Motors of Model 944A 1010 under Section 14(l)(a) was determinable on the basis of the proforma invoice dated 28-10-1987 issued by M/s. Usha Services and Consultants (P) Ltd. on the basis of the official price book of M/s. Honeywell.
14. The appellants have contended that in arriving at assessable value of the imported 100 Nos. Modulator Motors by giving a discount of 30% on the price of only a single piece by M/s. Usha Services and Consultants (P) Ltd. was wholly arbitrary. In this regard our attention was drawn by the learned JDR to the Tribunal's observations in the case of M/s. Metal and Alloy Industries v. Collector of Customs reported in 1989 (40) E.L.T. 207 that quantity discount normally ranges between 5% to 10% only. Having regard these observations of the Tribunal we do not find any force in the appellants claim that the determination of the assessable value of the imported goods on the basis of the quotation relied upon by the Department was arbitrary or unreasonable.
15. In view of the above discussion and on the ratio of the Tribunal's decision in the case of Automotive Enterprises v. Collector of Customs (supra), we do not find any infirmity in the impugned order. We, therefore, dismiss the appeal.
Harish Chander, President
16. I have perused the order written by my learned brother, Shri P.K. Kapoor, Member Technical. I do not agree with the conclusion of my learned brother, Shri P.K. Kapoor. Accordingly, I am recording a separate order.
17. My learned brother, Shri P.K. Kapoor, Member Technical at length has narrated the facts in his order and also submissions of both the sides and as such, I need not narrate the same in my order. The appellant had imported a consignemnt of 100 numbers of Modulator Motors Model M 944A 1010 made by M/s. Honeywell Inc., U.S.A. at unit price of U.S. $ 62.00 against Invoice No. 3016, dated 2nd February, 1987 issued by M/s. Zainab Air Conditioning, Dubai, whereas the revenue had assessed the same on the basis of a quotation of Modulator Motors Model 944G 1097 offered to M/s. BHEL by M/s. Honeywell High Tech Trading, Singapore, representative of Honeywell Inc., U.S.A. M/s. Usha Services and Consultants (P) Ltd., the representatives of M/s. Honeywell High Tech Trading in India had issued a quotation for import of Modulator Motor Model M944A1010 at the rate of US $ 271.41 ex works. The revenue had increased the value from the declared value of Rs. 80,564.00 to Rs. 4,07,818.00. The order passed by the lower authorities was confirmed by the Collector (Appeals). Being aggrieved from the order passed by the Collector (Appeals), the appelalnt has come in appeal before the Tribunal. Shri V. Sridharan, the learned advocate referred to the proforma invoice dated 28th October, 1987 addressed to the Appraising Officer. He also referred to the quotations which appear on pages 50 and 52 of the paper book. The value of the Modulator Motor is US $ 62.00 per unit. The quotation appearing on page 50 is in the name of Zainab Airconditioning, Dubai and the other quotation appearing on page 52 is in favour of M/s. Achinta Trading, Harpal House, Bombay and the same is dated 10th December, 1986. Shri Sridharan referred to pages 18, 19 and 20 of the paper book which are the invoices dated 15th July, 1987, 2nd February, 1987 and 15th July, 1987. On pages 21 and 22 are the Bills entry which were filed at Bombay and on page 27 appears the proforma invoice in favour of the Appraising Officer, Madras, dated 28th October, 1987, where the value of the Modulator Motor has been shown as US $ 271.41. Shri V. Sridharan, the learned advocate referred to page 54 which is a telex. Shri V. Sridharan referred to page 38 of the paper book where a reference has been made to a quotation issued by M/s. Usha Services and Consultants Pvt. Ltd. who are the agents of Honeywell High Tech Trading, Singapore and as per the quotation the price mentioned is US $ 271.41 F.O.B. The revenue's main reliance is on the proforma invoice appearing on page 27. Shri Sridharan argued that the price which has been paid by the appellant is the correct price and argued that no reliance should be placed on the same and invoice price should be accepted and no penalty is leviable. He pleaded for the acceptance of the appeal.
18. Shri Prabhat Kumar, the learned JDR who has appeared on behalf of the respondent, referred to the observations of the Assistant Collector on page 33 of the paper book. He argued that no regular printed price list has been filed. He also argued that it is not disputed that the origin of goods is United States. Shri Prabhat Kumar, the learned JDR argued that the Tribunal is the final fact-finding body. In support of his argument, he cited the following decisons :-
AIR 1967 SC 1435 - CIT v. Walchand & Co. (Pvt.) Ltd., 116 ITR 778 - Commissioner of Income-tax v. Gangappa Cables Ltd.
He referred to the order-in-original and pleaded that full reliance may be placed on the evidence collected by the Collector. In support of his argument he referred to the following decisions :-
1. 1990 (48) E.L.T. 421 (Tribunal) - Wax & Wax Products v. Collector of Customs
2. 1987 (31) E.L.T. 356 (Bom.) - Satellite Engineering Ltd. and Anr. v. Union of India and Ors.
3. 1989 (40) E.L.T. 207 (Tribunal) - Metal and Alloys Industries v. Collector of Customs Shri Prabhat Kumar, the learned JDR argued that quotation can be relied upon. He further argued that while calculating the assessable value, 30% discount has been given to the appellant which is very reasonable, and the quotation obtained from the local agent is the correct quotation. He pleaded for the dismissal of the appeal.
19. In reply, Shri Sridharan, the learned advocate referred to a decision of the Bombay High Court in the case of Ashok Leyland Ltd. v. Union of India and Ors. reported in 1986 (26) E.L.T. 676 and laid special emphasis on para No. 9 of the said decision. He argued that M/s. Usha Services and Consultants (P) Ltd. is not an agent. The telex also contains the same. He also referred to a decision of the Calcutta High Court in the case of Trident Televisions Private Ltd. v. Collector of Customs reported in 1990 (45) E.L.T. 24 at page 35, para 32, where the Hon'ble High Court had held that a quotation at higher rate would not be itself show under-invoicing of the goods sought to be imported. Shri Sridharan, the learned advocate argued that there is no final price list. He referred to page 39 of the paper book, paras 13 and 14 of the order-in-original where the Assistant Collector has made his observations. He also referred to page 69 of the paper book where the Collector (Appeals) has also made a reference to the quotations of the suppliers.
20. I have heard both the sides and have taken into account the submissions of both the sides. For the proper appreciation of the legal position relevant portion of Section 14 of the Customs Act, 1962 as in force at the time of bill of entry is reproduced below :-
"14. Valuation of goods for purposes of assessment. - (1) For the purposes of the [Customs Tariff Act, 1975 (51 of 1975)], or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value the value of such goods shall be deemed to be-
(a) the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, 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 of the sale or offer for sale :
(b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf."
The revenue's main case is based on the proforma invoice dated 28th October which appears on page 27 of the paper book. A simple perusal of the proforma invoice shows that the quantity in the proforma invoice is mentioned as one Thermostat Modulator Motor. In my view, a mere quotation cannot be equated with invoice. Hon'ble Bombay High Court in the case of Ashok Leyland Ltd. v. Union of India and Ors. reported in 1986 (26) E.L.T. 676 (Bom.) had observed in para No. 9 as under :-
"9. Shri Hidayatullah for the petitioners contended that this course sought to be adopted by Shri Natu for the respondent is not open to him. Relying on an earlier decision in AIR 1952 Supreme Court 16, a five-Judge Bench has held in AIR 1978 Supreme Court 851 Mohandra Singh v. Chief Election Commissioner that when a sttutory functionary makes an order based on certain grounds, its validity must be judged by the reasons in the shape of affidavits or otherwise. Otherwise an order which is bad in the beginning may by the time it comes to Court on account of a challenge get validated by additional grounds later brought out. Shri Hidayatullah has cited two moe cases of this Court (both Division Bench decisions) where the aforesaid decision of the Supreme Court has been applied to orders passed by the statutory authorities under the Central Excises and Salt Act. See 1980 (6) E.L.T. 258 Bush (India) Ltd. v. Union of India and 1983 (14) E.L.T. 2289 Dunlop Rubber Company v. M.V. Raghavan Ayer. Shri Natu did not profess to controvert the submission advanced by Shri Hidayatullah and in our opinion rightly. It is thus clear that the respondent is not entitled to support the impugned orders on grounds which do not figure in those orders. Resultantly we must restrict him to the reasons and grounds mentioned in his orders."
Hon'ble Calcutta High Court in the case of Trident Televisions Pvt. Ltd. v. Collr. of Cus. reported in 1990 (45) E.L.T. 24 (Cal.) in para No. 32 had held as under :-
"32. Some of the instances set out in the Adjudication order regarding valuation are quotations. A quotation at higher rate would not by itself show under-invoicing of the goods sought to be imported. For many reasons quotations may disclose higher rate. It is only after the quotations are accepted and contract is concluded and actual sale takes, the price may then indicate whether there is any case of under-invoicing. In Kazaria Exports Ltd. and Ors. v. Collector of Customs and Ors. reported in 1986 (1) CLJ 231, Umesh Banerji, J. considered at length this aspect of the matter and negatived the contention of the Revenue. A higher quotation would not by itself without there being any other material or evidence justify the inference of under-invoicing."
As already discussed above, in the proforma invoice there is mentioned only one unit of purchase item. The Tribunal in the case of Janta Traders, Bombay v. Collector of Customs, Bombay reported in 1988 (34) E.L.T. 65 had held as under :-
"There is no finding of the lower authorities that the seller or the buyer had any interest in the business of each other or that the prices were not the sole consideration for sale or offer for sale or the importer had paid any amount to the supplier over and above the invoice or any clandestine remittance over the contract price was made. Since the transactions were at arms length, the price at which the goods were sold by the Hongkong supplier and purchased by the importer was the price at which the value of the goods could be fixed under Section 14(l)(a) of the Act. The two invoices adopted as the basis of valuation against the importer is not sufficient evidence which can lead to inference that there was under invoicing resulting in under valuation. Under valuation must be proved by proper evidence and the onus to prove the charge of under valuation was on the revenue. The Revenue did not produce sufficient evidence to discharge the heavy onus which lies on them. Therefore, in these circumstances the correct assessable value of the goods is as declared by assessee in relevant import document and the finding of under valuation was quashable."
In the matter before me, 100 Modulator Motors were imported. Accordingly, no reliance can be placed on the proforma invoice. Accordingly, in view of the above discussion, I hold that the price declared by the appellants in the bill of entry as Rs. 80,564.00 should be accepted.
21. In the result, the appeal is allowed.
POINT OF DIFFERENCE Whether in the facts and circumstances of the case, the declared invoice value of Rs. 80,564.00 should be accepted as held by the President or the value assessed at Rs. 4,07,818.00 as ordered by the Member (Technical)?
Sd/- Sd/-
(Harish Chander) (P.K. Kapoor)
20-4-1992 President Member (Technical)
P.C. Jain, Member (T)
22. Following point of difference between the Hon'ble President and learned Technical Member, Shri P.K. Kapoor has been referred for my opinion :-
"Whether in the facts and circumstances of the case, the declared invoice value of Rs. 80,564.00 should be accepted as held by the President or the value assessed at Rs. 4,07,818.00 as ordered by the Member (Technical)".
23. I have heard both sides represented by Shri V. Sridharan, learned advocate for the appellant and Shri Prabhat Kumar, learned JDR for the Revenue. I have also gone through the orders of the Hon'ble President as well as of the learned Technical Member.
24. The question involved herein is whether the quotation of M/s. Usha Services and Consultants (Pvt.) Ltd., the authorised representative of M/s. Honeywell High Tech Trading Company in respect of some of their products in India is acceptable to the department as against the prices based on the invoice of M/s. Zainab Air Conditioning, Dubai, who in turn obtained their quotations from M/s. Honeywell Air Conditioning Middle East Ltd., Sharjah.
25. Shri V. Sridharan, learned advocate for the appellant has endorsed the order passed by the Hon'ble President that a mere quotation cannot be relied upon for determining the assessable value of the goods in terms of Section 14 of the Customs Act. The arguments advanced by him before me are essentially the same which were advanced by him before the Regular Bench of this Tribunal. I find that all the pleas taken by the learned advocate for the appellant have been adequately dealt with by the learned Technical Member in his order dated 9th January, 1992 and I agree with the order passed by the learned Technical Member for the following reasons :
25.1 There is no law that quotations of the indenting agents or quotations from the suppliers cannot form the basis of value under Section 14.I draw authority for this from Supreme Court's judgment in the case of Sharp Business Machines [1990 (49) E.L.T. 640 SC]. In this connection extract from para 10 of the aforesaid Report are given below :-
"According to the above provision the value of the goods shall be deemed to be the price at which such or like goods are ordinary 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 considertion for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alognwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. [Emphasis supplied]
26. One of the arguments of the learned advocate for not relying on the afordsaid decision of the Supreme Court in the case of Sharp Business Machines is that in that case the quotation was produced by the importer itself and therefore, it could not be disputed. In the instant case, however the quotation has been produced by the department. This distinction drawn by the learned advocate in my view is not material to the facts and circumstances of this case. No material has been produced by the appellant to rebut the aforesaid quotation from M/s. Usha Services and Consultant (Pvt.) Ltd. The appellant under the CEGAT (Procedure) Rules has the facility to produce the additional evidence and it is not uncommon that additional evidences are produced to rebut the finding of the lower authorities. Burden is greater on the appellant to rebut the said quotation when the price differential is several times the price at which the goods have been imported.
26.1 For the same reason there is no merit in the plea of the learned advocate for the appellant that lower appellate authority's finding that the said M/s. Usha Services and Consultants (Pvt.) Ltd. have clarified that they have based their quotation on the official Price Book of Honeywell was on the basis of enquiry made behind the back of the appellant. This clarification of Usha Services & Consultants (Pvt.) Ltd. was in furtherance of their carrier quotation relied upon by the department. If the appellant has any grievance against the said clarification, he ought to have put any rebutal evidence from his suppliers or M/s. Honeywell Air Conditioning, Middle East at this stage in the form of additional evidence with the permission of the Tribunal. That method having not been adopted by the appellant, he cannot make a grievance at this stage before the Third member.
26.2 I further notice that the so-called quotation of M/s. Usha Services & Consultants (Pvt.) Ltd., in view of the fact that it is based on the official Price Book of M/s. Honeywell, acquires the status of a price list of the manufacturers. Various judgments relied upon by the learned advocate for the appellant and referred to in the order passed by the Hon'ble President would, therefore, be not of much relevance so far as this case is concerned. This is apart from the fact that the cases referred to in the judgment of the Hon'ble President were passed before the judgment of the Supreme Court in the case of Sharp Business Machines.
26.3 Price declared by the appellant on the basis of quotations of their suppliers which in turn is based on the quotation dated 30-11-1986 of Honeywell Air Conditioning, Middle East, does not inspire any confidence at all. As rightly pointed out by the learned JDR, those quotations indicate quotations for uneven quantities available Ex-stock. There is substantial force in the learned JDR's arguments that these prices are the prices meant for the disposal of the entire stock. These prices, therefore, cannot be treated as prices in the course of international trade in terms of Section 14 of the Customs Act.
26.4 Another grievance of the learned advocate against the lower appellate authorities' order is that discount of 30%. given by the lower authorities is arbitrary. In view of the reasons given by the learned Technical Member, I do not think that this quantum of discount can be termed 'arbitrary'. I also find from a copy of telex from Mr. B. Redwan of Honeywell (Annexure 10 to the appeal) in the case of M/s. Popular Exports (P) Limited that quantity discount ranging from 5% to 30% depending upon bulk buying to their authorised wholesale dealers has been indicated in the said telex. The lower authorities have given the maximum quantity discount of 30% available on such products as given by M/s. Honeywell even in case of bulk buying.
27. Accordingly, I agree with the learned Technical Member.
Sd/-
(P.C. Jain)
3-11-1992 Technical Member
28. In view of the majority decision, the appeal is dismissed.