Customs, Excise and Gold Tribunal - Delhi
G.K. Mercantile Pvt. Ltd. vs Commissioner Of Customs on 25 May, 2004
Equivalent citations: 2004(95)ECC49, 2004(170)ELT550(TRI-DEL)
ORDER C.N.B. Nair, Member (T)
1. Notification No. 45/94-Cus., dated 1-3-94 exempts goods specified therein "when imported into India for use in the Leather Industry" from so much of the duty of Customs which is in excess of 20%. Under the heading, "components, consumables and other items," the Notification exempts "insoles or mid-soles and sheets therefore" at Sl. No. 3. The appellants in the present case imported a consignment of "Texon insole sheets for Footwear Industry from Quatar at a value of 8400 Italian Lira (ITL) per sheet". Under the impugned orders, Customs authorities have held that the consignment was undervalued and it is required to be assessed at the value of 20,000 ITL per sheet. The revised valuation is stated to be in terms of contemporaneous import by other parties. The appellants have also been denied exemption under Notification No. 45/94-C.E. on the ground that they were only a trader and, therefore, goods cannot be treated as for use in the Leather Industry. There is also mention in the order that the imported goods could find use in non-leather shoes also. The present appeal challenges these finding.
2. The contention of the appellants with regard to valuation is that the lower authorities were required to assess the goods based on the transaction value as reflected in the invoice. It is further being pointed out that the finding that the higher value adopted is based on contemporaneous import is not factually correct. It is being pointed out that the basis for the higher valuation was a proforma invoice dated 22-5-1996 purportedly from the same supplier offering the goods at 20,000 ITL.
3. The ld. Counsel for the appellants has pointed out that the proforma invoice cannot constitute the basis for assessment, particularly in this case for many reasons. The very first is that proforma invoice is only an offer price and does not represent any actual transaction. Therefore, a proforma invoice cannot be called the price in a contemporaneous import. The another point raised by the ld. Counsel is that description of the goods also does not tally. In the proforma invoice, description of the goods is shown as "sheets of texon printed gold size 100 x 150 cm. thickness 2mm," while the consignment imported by the appellant was being described as "insoles". With regard to the rejection/denial of exemption to the goods, ld. Counsel for the appellants submitted that there is no prohibition in the notification for imports by traders. It is his contention that once the goods are according to the description in the notification, any party is at liberty to import at the concessional rate. He also pointed out that the finding about the material being used in footwear of other kind is not based on any evidence whatsoever. Ld. Counsel has also referred to the decision of this Tribunal in the case of Sha Harakchand Dharmaji v. CC, Madras [1996 (88) E.L.T. 764 (Tribunal)] wherein the Tribunal held that the words and phrases "for use" in Leather Industry as appearing in the instant notification did not mean "actual use" or that the import must be by an actual user.
4. We have perused the records and have heard the ld. SDR also.
5. We are not able to uphold the findings in the impugned orders either on the question of valuation or on the question of eligibility to exemption. It is well settled that a proforma invoice does not represent any actual transaction. It is only an offer price. An offer price cannot be the basis for rejecting a transaction value, particularly, when there is no material available on record to cast any doubt on its representative character i.e. it is the price at which the transaction actually took place. In the present case, lower authorities have erroneously reached a finding that proforma invoice represented contemporaneous import price. The appellant's claim for the exemption is directly covered by the aforesaid decision of this Tribunal in the case of Sha Harakchand Dharmaji v. CC, Madras [1996 (88) E.L.T. 764 (Tribunal)] that there is no requirement under the notification that the goods must be imported by actual users. That there is no requirement to produce proof of actual use of imported materials in the use of Leather Industry, is clear from the notification itself. The proviso to notification states that items mentioned under Heading B would require the importer to furnish an undertaking to the Asstt. Collector of Customs to the effect that the said imported goods shall be used for the purpose specified in the notification, that the party will keep an account of use of the imported goods, etc. The insoles in question falls under category A of the notification. There is no condition stipulated in the proviso for such items. May be, the notification treats insoles or mid-soles and sheets therefore as material usable only for the Leather Industry. Whatever be the case, the lower authorities were in error in holding that the goods in question could be used in other footwear of other materials, particularly when they had not collected any material which indicated such use. Therefore, the finding regarding denial of exemption was also entirely unwarranted and unjustified.
6. In view of what is stated above, we hold that the impugned order is entirely unsustainable. It is set aside and the appeal is allowed with consequential relief to the appellants.