Customs, Excise and Gold Tribunal - Delhi
Shehla Enterprises vs Collector Of Customs on 11 October, 1995
Equivalent citations: 1995(80)ELT360(TRI-DEL)
ORDER Jyoti Balasundaram, Member (J)
1. The brief facts of the case are as follows :
M/s. Barua & Choudhuri, Custom House Clearing Agent filed a Bill of Entry for home consumption on 28-9-1993 on behalf of M/s. Shehla Enterprises for clearance of one container containing 108 pieces of used diesel engines described as used spare parts for trawlers. The invoice value was shown as Rs. 7,34,982.80. The country of origin was Japan and the goods were shipped from Singapore. The container was opened and examined in the presence of Machinery Expert Appraiser on 30-9-1993 and found to be meant for use in motor vehicles and not for trawlers. The engines were found to be old and used, they did not appear to have undergone any major repair/reconditioning and the year of manufacture was not found on the engines and most of the engines were found fitted with alternators, compressors, clutch and gear box. The goods were re-examined in the presence of Shri Saghir Ahmed who had signed the declaration on the reverse of the Bill of Entry and the representative of the Clearing Agent on 10-11-1993 and the goods were found to be as under :
1. Toyota with gear and compressor - 1500 cc -14 pcs.
2. Toyota with gear but without compressor -1500 cc -11 pcs.
3. Isuzu without gear but with compressor -1800 cc -10 pcs.
4. Isuzu with gear and compressor -1800 cc - 36 pcs.
5. Isuzu with gear but not compressor -1800 cc - 20 pcs.
6. Isuzu without gear and compressor -1800 cc - 4 pcs.
7. Dihatsu with gear and compressor -1000 cc - 10 pcs.
8. Nissan with gear and compressor -1800 cc -1 pc.
9. Nissan with gear but not compressor -1800 cc -1 pc.
10. Magnam Mazda with gear and compressor -1500 cc - 1 pc.
11. Used Suzuki Rim - 1 set (pcs-5).
The goods were examined by the Deputy Works Manager, Unit Exchange Ship, CSTC on 12-11-1993 and he opined that from the physical condition of the engines, it could be inferred that the engines along with the transmission assemblies already covered 5 years of service during initial service life and the same may further be extended after observing routine repair and maintenance upto 4 years. The description of the goods raised doubt about the authenticity of the invoice and the bona fide of the importer and hence enquiries were conducted with the Bombay Customs which disclosed that no firm by the name Shehla Enterprises existed at the address given in the Bill of Entry as that of the importer, and that the premises in question was a Government Quarter allotted to one Shri Munani, and that no person by the name of Saghir Ahmed was staying there. From detailed enquiries regarding fair price of used diesel engines conducted by the Department in the case of import by M/s. Manjushree Minerals and Ritu Minerals and from enquiries conducted about contemporaneous imports at Madras and Bombay, it was opined that price of used diesel engines quoted in the invoice did not represent the true transaction value in terms of Rule 4 of the Customs Valuation Rules, 1988. The Department proposed fixing the value of the consignment at Rs. 16,94,828/- c.i.f. as against the declared value of Rs. 7,34,982.80. Further, the Department alleged that the goods had been imported without a licence as required in terms of Para 29 of the Import-Export Policy, 1992-97. The further allegation of the Department was that the goods had been imported in the name of a fictitious firm. Show cause notice was issued to Shehla Enterprises and its Proprietor, Shri Saghir Ahmed proposing confiscation of the goods for undervaluation and unauthorised importation and proposing penal action. The appellant filed detailed reply to the show cause notice denying all the allegations and contending inter alia that the invoice value represents the true transaction value and that the gear box and compressors are the integral parts of the diesel engines and hence cannot be independently valued and also contending that the importer is not a fictitious firm and that it is a firm in existence which has been allotted an Import and Export Code No. by the Ministry of Commerce. The adjudicating authority confirmed the value proposed in the show cause notice which is as under :
1. Toyota engine with gear and compressor - 1500 cc Rs. 16,000 + 980.00 + 1,275.00 = 18,255.00;
2. Toyota engine with gear but without compressor - Rs. 16,000 + 980.00 = Rs. 16,980.00;
3. Isuzu engine without gear but with compressor - Rs. 13,000 -980.00 + 1275.00 = Rs. 13,295.00
4. Isuzu engine with gear & compressor 1800 cc - Rs. 13,000.00 +1,275 = Rs. 14,275.00.
5. Isuzu engine with gear but without compressor 1800 cc = Rs. 13,000.00.
6. Isuzu engine without gear and compressor 1800 cc - Rs. 13,000 - 980.00 + 1,275.00 = Rs. 13,295.00.
7. Daihatsu engine with gear and compressor 1000 cc - Rs. 12,500.00 + 1,275.00 = Rs. 13,775/-.
8. Nissan engine with gear and compressor - 1800 cc - Rs. 22,000 + Rs. 1,275 = Rs. 23,275.00.
9. Nissan engine with gear but without compressor - Rs. 22,000.00.
10. Magnum Mazda with gear and compressor 1500 cc - Rs. 12,500.00 + Rs. 1,275.00 = Rs. 13,775.00.
11. Suzuki rim 1 set = Rs. 392 00.
12. Alternators fitted with engine - Rs. 882.00.
He also held that the importation was unauthorised in the absence of any specific licence to cover the goods and accordingly upheld the liability of the goods to confiscation, upheld the charge of clandestine import of the goods by a fictitious firm which had fraudulently obtained the Import Export Code No. He also upheld the charge of misdeclaration of description. He, therefore, ordered absolute confiscation of the goods under Section 111(d) and 111(m) of the Customs Act, 1962 and imposed a penalty of Rs. 1 lakh on M/s. Shehla Enterprises and Rs. 50,000/- on Sagnir Ahmed under Section 112 of the Customs Act, 1962. Hence this appeal.
2. We have heard Ms. Tasneem Ahmedi, Learned Counsel for the appellants and Shri A.K. Singhal, learned DR for the Revenue.
3. The issues for determination in the appeal are :
(a) Whether the importer has subscribed to a true declaration of all the material particulars of the goods while seeking clearance thereof or whether there has been any attempt to misdeclare the description and other material particulars which would render the goods liable for confiscation.
(b) Whether the goods imported are covered under Para 22 of the Import and Export Policy 1992-97 as claimed by the importer, or require a valid import licence.
(c) Whether the transaction value as declared by the importer in the invoice could be accepted as genuine price obtained/negotiated in the normal course of business in the International trade between two independent parties having no interest in each others business and held to be acceptable for assessment of duty at the material time of presentation of the Bill of Entry for home consumption or whether the value was substantially lower than that could be accepted for assessment.
(d) If the transaction value was not held to be acceptable, what would be the fair price for the consignment for the purpose of customs duty.
(e) Whether the goods had been imported in the name of a fictitious firm.
4.1 At the time of clearance of the goods, the importers submitted invoice from M/s. Fateh Marketing and Trading P. Ltd., Singapore, no copy of any letter of credit or contract was produced along with the invoice. The Department found the following discrepancies vis-a-vis the declarations for the details of engines as per the invoice and bill of entry. Whereas the invoice and the bill of entry indicated only as old and used with the make and quantity, while the detailed examination revealed that these were of the capacity in the range of 1000 cc to 1800 cc found fitted with or without gears, alternators, clutches and compressors and also found to be diesel engines of different makes and capacity meant for motor vehicles. The examination was conducted by the Machinery Expert Appraiser and the Works Manager of the Unit Exchange Ship, CSTC and the appellants have not challenged the reports nor have they adduced any evidence to substantiate their contention that the goods are spare parts for trawlers, beyond a bald assertion that the parts can have inter-changeable application both for motor vehicles as well as for trawlers. In these circumstances we see no infirmity in the order of the adjudicating authority in upholding the charge of misdeclaration of description.
4.2 On the valuation aspect enquiries regarding fair price of used and old diesel engines was conducted by the Department in the case of import by Manjushree Minerals and Ritu Minerals in the year 1991, and enquiries were also conducted of contemporaneous imports at Bombay and Madras and the value adopted by the adjudicating authority is on the basis of the contemporary value at which used diesel engines were cleared at Madras and Bombay. The learned Counsel has not succeeded in establishing that these values have been wrongly arrived at. She has referred to two orders in the case of Moon International and Shahin International in which the value of old and used spares for trawlers has been fixed at US dollars 235/- per piece cif and submits that this is the declared invoice price of the disputed goods (Singapore dollars 300/-is equivalent to US dollars 235/-, according to the learned Counsel) and hence the invoice price should be accepted. We find from a careful reading of the impugned order that these orders referred by the learned Counsel were not put forth before the adjudicating authority and what was urged before the Collector was that at the relevant point of time in India, the Customs Houses in India was releasing similar goods at an average price of US Dollar 235 per piece for used diesel engines having capacity of 1000 to 1800 cc and that the adjudication orders in the case of Manjushree Minerals and Ritu Minerals were under appeal. The challenge to valuation by M/s. Manjushree Minerals and Ritu Minerals cannot be a ground for holding that the value adopted in the impugned order which is based on similar contemporaneous is not correct. The reference by the learned Counsel for the appellants to the commercial price of used car engines as advertised in the Newspaper "Commercial Japan" dated 15-10-1993 as Rs. 5,000/- and above is not very apt as the value has been arrived at by the adjudicating authority on the basis of contemporaneous imports of similar goods. Since the charge of undervaluation by mis-description of the goods has been upheld by us, the Department was entitled to reject the invoice value as held by the Tribunal in the case of Poonam Plastic Industries v. Collector of Customs reported in 1989 (39) E.L.T. 634. The exceptionally low price declared in the invoice cannot form the basis of assessment as this was not the price available to the other importers at the relevant time. This would hold good even if the exceptionally low price was bona fide, as held by the Tribunal in the case of Navbharat Enterprises reported in 1988 (34) E.L.T. 388 and it is pertinent to note at this stage that the appellants have not been able to establish with reference to any correspondence that the low price was the result of successful negotiation. Viewed in this background, the assessable value determined in accordance with the provisions of Section 14 of the Customs Act, 1962 read with Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 is in order.
4.3 Regarding the requirement of licence for the imported goods, the claim of the appellants before the adjudicating authority was that the goods do not appear in the negative list of AM 1992-97 of the Import and Export Policy. However, Paragraph 29 of the said Policy stipulates that all the second-hand goods, other than capital goods, may be imported in accordance with the Public Notice or Licence issued in this behalf. There is no dispute that the items imported are old and used diesel engines and also these are not capital goods.' Hence import of the same can be allowed only in accordance with the Public Notice or Licence issued in this behalf. The Collector has rightly held that in the absence of any Public Notice in this regard and in the absence of any import Licence to cover the goods, importation is unauthorised and the goods liable to confiscation. We accordingly uphold the charge of unauthorised importation.
4.4 We also uphold the finding that the goods have been imported in the name of a fictitious firm as enquiry with the Bombay Customs about the existence of the firm Shehla Enterprises disclosed that no such firm existed at the address stated in the invoice and that the premises was Government Quarter allotted to one Munani and no person named Saghir Ahmed (who is purported to be the Proprietor of Shehla Enterprises) was staying in the said premises. The appellants' contention that the Proprietor might have shifted his establishment elsewhere temporarily is not acceptable in the absence of any evidence adduced by him to this effect.
5. In the result we answer the issues formulated as under :
(a) The importers have mis-declared the description and other material particulars of the goods rendering them liable to confiscation under Section 111(m).
(b) The goods imported requir a valid import licence in default of which they are liable to confiscation under Section 111(d).
(c) The invoice value was not genuine price obtained/negotiated in the nor- mal course of business in international trade and it was substantially lower than the value that could be accepted for customs duty purposes.
(d) The assessable value determined by the adjudicating authority is reasonable.
(e) The goods have been imported in the name of a fictitious firm.
We, therefore, uphold the order of absolute confiscation and penalty on Saghir Ahmed. However, we set aside the penalty imposed on M/s. Shehla Enterprises, which is not a separate legal entity, as according to law, the sole proprietor and the proprietary concern are one and the same. Subject to the above modification, the impugned order is confirmed and the appeal rejected.