Customs, Excise and Gold Tribunal - Mumbai
Kishandas And Sons vs Commissioner Of Customs on 15 April, 1999
Equivalent citations: 1999ECR615(TRI.-MUMBAI), 1999(112)ELT227(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. M/s. East India Hotel Ltd. (EIH for short) 6 appellant in C/74/86 imported by sea colour heads model AC 707, AC 650 M 670 for photographic enlarger and conversion kits for model 707. The import was made in September, 1984. M/s Kishindas & Sons, appellant in Appeal C/2645/86, imported by sea in February, 1985 colour heads for photographic enlarger. M/s. A.K. Corporation Ltd., appellant in Appeal C 774/86, imported in the same month the same goods. The goods in question were manufactured and supplied by M/s. Durst Phototechnik, Italy. Notice in writing was issued to the EIH and oral notices to the other two importers proposing confiscation of the goods on the ground that the imported goods constituted photographic enlarger import of which additional licences produced were not valid. When EIH appeared before the Additional Collector for hearing, they were informed that they were also proposing to enhance the value of the goods from the declared value on the basis of their value contained in the price list issues by the manufacturer through which the local Indian agent M/s. Agfa Gevaert (I) Ltd. After hearing the importer and considering the cause shown the Additional Collector passed orders holding that the goods in the manner in which they were imported constituted complete photographic enlarger and were therefore not covered by the additional licences which were only valid for spares of such goods, ordering their confiscation with option to redeem them on payment of fine. He also increased the value of the goods as proposed in the oral notice. Apparently relying on this order, the Deputy Collector of Customs increased the value of the colour heads AC 650 to the level determined by the Additional Collector and also ordered their confiscation on the same ground. On appeal from these two orders, the Collector (Appeals) confirmed the finding with regard to the import but ordered that the value should be reduced by 30% deduction. Hence these appeals.
2. We shall first consider the entitlement of the imported goods under the additional licences produced. Clearances were claimed in terms of the provisions of para 186 of the Import Policy of 1983-84, which permitted import of spare parts of goods classifiable under specific headings of the Tariff. These headings included goods falling under chapter 90 in which photographic enlarger is found. The objection was on the ground that what was permitted was parts of such goods and that the nature of the goods imported required them to be considered as complete photographic enlarger which are not covered by the licences. The goods imported consisted of colour head and Bellows assembly, Baseboard with column and transformer were missing in the case of EIH. In the case of goods imported by the other two importers in addition to the baseboard, transformer lens and filter assembly were also not present. The Additional Collector has found that functionally, the colour head has the essential characteristic of enlarger. It can be used as an enlarger without the baseboard and column by mounting on the wall. He agrees that the column in the case of model AC 650 has values indicated on it for assistant in focus but disregards this fact.
3. The purpose for which the transformer is required is not clear. However, it is not possible for us to agree that the colour head by itself, or even with a lens and filter assembly could perform the function of the photographic enlarger. The extent of enlargement from the negative, and sharpness of the enlargement requires processing adjustment of distance between negative to be enlarged and the photographic paper, on which they enlarged positive images. This is a matter of common sense and everyday observation. The colour head assembly would no doubt contain a screw, or clamping arrangement to enable to it to be slid up and down the column mounted on the baseboard. The baseboard itself would have assisted in securing firmly the paper on which the enlarged image of the negative would be projected. It is no doubt possible in theory to mount the head on another column and use something else as a substitute for the baseboard. However, it is reasonable to say that in ordinary parlance when one speaks of photographic enlarger one speaks of an apparatus that is capable by itself of performing the function of enlarger. The colour head by itself would not have performed this function. The fact that column for AC 650 at the reference value to enable correct focussing which the Collector himself mentioned this conclusion. This position with regard to the imports by other two appellants is even stronger. In those cases, lens and filter assembly were also not present. It is also significant that the treatment of the goods as a complete .enlarger was not given to the parts of enlarger other than model AC 650 in the case of models A 707, AC 670 and the conversion kit which forms part of these consignments, the goods were treated as parts and allowed clearances under the licence.
4. Although this finding is not present in the Additional Collector's order, the departmental representative sought to contend that at the relevant time the import policy was aligned with the Customs Tariff and that therefore by virtue of Rule 2(a) of the Interpretative Rules of the Customs Tariff, the goods would have been classified as complete enlarger under the tariff and hence would be treated as a complete enlarger for the purposes of the policy. In the absence of any reference in the Additional Collector's order or in the order of the Collector (Appeals) confirming the Deputy Collector's orders to this view, the argument cannot be considered. However, ever, if we do so, the position will not be different. The departmental representative's reliance upon Note I to Appendix IB of Import (Control) Order, 1955 which reads as follows:
"Each heading number in Column (1) corresponds to the respective Chapter and heading number of the first Schedule to the Customs Tariff Act, 1975 (21 of 1975) and each entry in Column (2) has the same scope and meaning as the corresponding Chapter and heading of the said, first schedule."
Column 1 is heading number and column 2 is description of articles. It would follow from this note that the tariff heading and description of the goods given against the tariff and in the policy would have the same meaning as the corresponding heading and description of the Customs Tariff. Thus, the term complete photographic enlarger would be classifiable both for the purpose of the tariff and the policy under heading 9009. Parts would also be classifiable under this heading for both purposes. However, it is not the scope and meaning of the words in heading 90.09 that required classification of an assembled enlarger or those parts of enlarger which had the essential characteristics of such enlargers as complete enlargers. It is interpretative note 2(a) which alters the scope and meaning of this heading so as to justify treating such goods as complete enlargers and not as parts. In the absence of that note not even in the Customs tariff parts could be classified as complete enlargers. In the absence of that note in the Schedule to the Import (Control) Order, the goods would merit classification in the manner in which they would otherwise be classifiable as parts. The additional licences produced therefore were valid for import of these goods and confiscation was not justified.
5. The next question for consideration is of valuation of the goods. Both the Additional Collector and the Deputy Collector had applied value for the goods to be found in the price list issued by the manufacturer to its legal agent. This price list was not produced before us and it was contended that the importers were only shown typed copy. Advocate for the appellant relies on the letter dated 12-12-1984 issued to M.M. Corporation apparently a trader through whom the sales to all the three appellants took place. The letter states that price list given to Agfa Gevaert India Ltd. is only for amateur individual based on single piece order and not a quantity order, and that it was prepared at the request of Agfa Gevaert India Ltd who assured the manufacturer that they would be able to get business from amateurs. It goes on to say that they failed to set any business from Indian market for the enlargers. It further says that Agfa Gevaert is not its agent for supply of spare parts business in India.
6. This letter makes some speculation as is significant. No agent would normally insist on higher price or undertake to sell the goods at such higher price as Agfa Gavaert is stated to have done in the present case. It is also that curious while Agfa Gavaert is the agent for the enlarger, it is not an agent for the spare parts. This letter requires to be viewed with some caution. At the same time, however there is no material to show that imports had actually taken place at the prices contained in the Agfa Gavaert prices. The written notice issued to EIH did not cite details of such prices; it could not have since the notice itself did not propose enhancement of the value. The Additional Collector says that Agfa Gavaert have affected imports for government department and others on that price list but does not cite any instance of such import. Nor it possible to say that details of such imports were given to these importers. It is settled law that value of imported goods cannot be increased merely on the basis of quotation or offers in the price list and that there must be evidence of actual importation of goods at the prices proposed to be adopted. It is also to be noted that the valuation of the goods was done following the finding that they were complete photographic enlargers. There is nothing in the material produced before us to show that the price adopted was specific for parts. Parts which were not imported, which required to make a complete enlarger would contribute the value of the enlarger. Inclusion of that component in the price list is not justified. Therefore, there is no basis for not accepting the values declared in the invoice.
8. Accordingly, appeals are allowed. Impugned orders set aside. Consequential relief.