Bombay High Court
Parle Products Pvt. Ltd. vs The Union Of India (Uoi), A.C. Saldhana, ... on 24 June, 1987
Equivalent citations: 1988(15)ECR258(BOMBAY)
ORDER H. Suresh, J.
1. The petitioner herein thought of importing certain machines from abroad. Some time in 1971 they made enquiries with an Italian manufacturer who quoted the price at 38,250,000/- Italian Lire for the said machines. The petitioner accepted the said price and accordingly applied for an import licence for the said machines. The licence was issued on July 17, 1973. But in between on or about January 11, 1973, the Indian agents of the said Italian manufacturers informed the petitioner that the C.I.F. price of the said machinery would be 41,340,000/- Italian Lire. The petitioner pointed out that they were not agreeable for this higher price and, therefore, they requested the manufacturers to agree to the original price to which the Italian manufacturers had agreed. The Italian manufacturers agreed. However, they stated that they were agreeing on the basis that that was a special offer made to the petitioner for the package order of all those items and the same will be valid for a period of one month. The petitioner availed of the said offer and the said machinery was shipped and the invoice value was shown at the original price of 38,250,000/- Italian Lire.
2. Similarly the petitioner also wanted to import certain other machinery and, therefore, again contracted the Italian Manufacturers some time in 1972 and for such machines they quoted the price at 32,481,000/- Italian Lire. The petitioner adopted the same procedure and was granted an import licence for the import of the said machinery on June 8, 1973. Again the Italian manufacturers wanted a higher price and they demanded a sum of 34,980,000/- Italian Lire, but when the petitioner requested the said Italian manufacturers, they reduced the price to the original figure as a special offer valid for a period of one month. Both the items were shipped and were brought to India.
3. When the said machinery reached the port of Bombay, the Customs department asked for the original proforma invoice, but it appears that the petitioners were not in a position to get the proforma invoice in both the cases. Accordingly, they gave, to the Customs authorities, the letters written by the Italian manufacturers showing as to how they had given a special offer to the petitioner. On this, the Customs department said that for the purpose of Cus. Duty the petitioners had not Shown proper value and according to them the proper value would be the said enhanced figure as demanded by the Italian manufacturers and that the C.I.F. value shown would not be accepted. After giving a personal hearing the Deputy Collector of Customs, by his order dated November 11, 1975, held that the price of the machines for the purpose of Section 14 of the Customs Act was the enhanced price demanded by the Italian manufacturers. He also held that the said goods were imported by the petitioners without the cover of a valid I.T.C. licence and that the import of the said goods had been made in contravention of and/or was an offence attracting the provisions of Section 111(d) of the Customs Act, 1962 read with Section 3 of the Imports and Exports (Control) Act, 1947. He also ordered that the goods in question were liable to be confiscated. He, however, allowed, under Section 125 of the said Act, an option to the petitioners to pay, in lieu of such confiscation, a fine of a sum of Rs. 21,000/- in the case of the first machine and a line of Rs. 16,000/- in the case of the second machine, and to clear the goods. The petitioners paid, under protest, the said fines so imposed. They also paid the additional customs duty of Rs. 16,327.60/- in respect of the first machine and a sum of Rs. 13,204.80/- in respect of the second machine, and cleared the goods. Thereafter the petitioners filed two appeals against the said orders but the appeals were also dismissed. But the fine amounts, in lieu of confiscation, were reduced to Rs. 5,000/- and Rs. 3,000/- respectively. Thereafter the petitioners filed two revision applications before the Government. The said revision applications were also rejected by the Government. In these circumstances the petitioners filed the present writ petition some time in August, 1981.
4. Mr. Setalvad appearing for the petitioner, submitted that there was no justification whatsoever for the department to reject the invoice value inasmuch as that was the original price quoted by the manufacturers and on the basis of which the petitioner had obtained the import licence. He also submitted that the said price can be considered as the proper value for the purpose of valuation under Section 14(1)(a) of the Act. He also submitted that in any event the onus is on the department to show that the price as shown in the invoice is not the international price and which onus they had not discharged at all. Mr. Setalvad submitted that these are not ordinary articles which can be bought and sold at any time. These are special machine parts which they got from Italian manufacturers and, therefore, certainly if while buying such machine parts which are specially required for the manufacture of petitioner's products, if the petitioner had to bargain, there is no reason why such a bargain should be ignored or should not be considered as a proper value as contemplated under Section 14(1)(a) of the Act.
5. As against this Mr. Sethna submitted that it is well settled that what is contemplated under Section 14(1)(a) is the deemed value of the goods and not necessarily the invoice price. He submitted that in the present case the price shown on the invoice was the special offer and, therefore, it cannot be said that that was the price at which the goods are ordinarily sold at the time and place of import and, therefore, if the department had not accepted the same, there was nothing wrong in that. He submitted that what is to be taken as the basis of valuation is the price at which such goods are originally sold at the time and place of exportation and not the contract price of sale in question.
6. While there is no quarrel with regard to the submission made by Mr. Sethna, I cannot forget the fact that in the present case the department has not been able to show as to what was the market price in respect of these machines. On the other hand the petitioner has clearly shown as to how that was the price at which the Italian manufacturers had initially offered and on the basis of which they had obtained the import licence. It is only during the time they took for obtaining the import licence, the Italian manufacturers thought of enhancing the price to which the petitioner did not agree and, therefore, they requested them to come down to the original price. If that is so, I cannot understand as to why the same cannot be accepted as the price for the purpose of valuation under Section 14(1)(a) of the Act. It cannot be said that the price shown by the petitioner was not the price of the machinery. There is no comparative data with the department excepting that the manufacturers had sought to raise the price as against the earlier offer. In my view, therefore, the department was wholly wrong in rejecting the invoice value of these two machines imported by the petitioner and, therefore, there is no justification for demanding any additional duty on the basis of the value as suggested by the department.
7. Mr. Setalvad also submitted that there is no violation whatsoever on the part of the petitioner of any of the provisions of Import and Export (Control) Act, 1947 or of the Import (Control) Order No. 17 dated December 7, 1965. He submitted that the petitioner had in fact imported the said machines at the prices which had been mentioned in the invoice and they had paid exactly the same amount to the foreign manufacturers. Therefore, there is no justification whatsoever for the department to think that the value of importation was much more than what was indicated under the said import licence. In fact the department's attention was drawn to a case of this High Court in the case of Union of India and Ors. v. Glaxo Laboratories (India) Ltd. in which it is expressly stated that the department ought to have taken the actual price as shown in the invoice and they could not have taken into account the import value for the purpose of debitting the licence. However, the department would not follow the said judgment. In my view, the department's action in this behalf is expressly contrary to the law as laid down by this Court in the said judgment. Therefore on that count also the department has clearly defaulted.
8. In the result, this petition will have to be allowed and I, therefore pass the following order:
Rule is made absolute in terms of prayers 'A', 'B', '(i)' and '(ii)'. As regards the sum of Rs. 5,000/- and Rs. 3,000/- being the amounts of fine, in lieu of confiscation, I am told that they have been deposited in this Court. The petitioners are entitled to have the amount back.
As regards the other sums of the customs duty of Rs. 16,327.60/- and Rs. 13,204.80/-, the respondents are bound to refund the said amounts to the petitioner. I, therefore, direct the respondents to refund the said amounts within a period of two months from today.
The petitioners are also entitled to the costs of this petition.