Customs, Excise and Gold Tribunal - Delhi
Elite Packaging Industries vs Collector Of Cus. And C. Ex. on 20 March, 1992
Equivalent citations: 1992(60)ELT311(TRI-DEL)
ORDER S.V. Maruthi, Member (J)
1. These four appeals are disposed of by a common order as the issue involved is common to the appeals. The facts in brief are as follows. The appellant No. 1 & 2 imported 500 MTs of HDPE (Blow Moulding grade). They have declared the value at US $ 825 per MT. The goods were cleared under ex-bond Bill of Entry for home consumption. The goods, according to the appellants were imported in pursuance of sale confirmation No. 008/EL/87 dated 7-8-1987 and 007/EL/87 dated 7-8-1987 for a total import of 500 MT by the suppliers namely, M/s, Wazilam Exports to the appellants namely, Elite Packaging Industries & M/s. Eko Packaging Industries. The bill of lading for the said imports are dated 30-4-1988. The consignments were shipped in terms of invoice No. 67/88 to 81/88 dated 30-4-1988 at the rate of US $ 825 per MT CIF. The appellants acquired eight REP licences issued under Appendix 17/AM-85-88 Policy Book. These licences are dated 29-4-1988, 21-4-1988, 16-3-1988. These licences are valid for the import of the impugned goods. The Bank of India, Singapore by their letter dated 28-5-1988 forwarded the original negotiable document to SBI Ahmedabad alongwith original bills of lading and they have retired the documents between 13-6-1988 to 7-10-1988. Since the department refused to recognise the appellants as the consignee importers on the ground that the import manifest did not contain the name of the appellants, they filed a writ petition C.S.A. No. 5804/1988 in the High Court of Gujarat. The Gujarat High Court by an order dated 30-9-1988 directed the Steamer Agents M/s. J.M. Bakshi & Co. to apply for amendment of the Import Manifest and thereafter, the proper officer should decide the same. On 4-10-1988, M/s. J.M. Bakshi & Co. made an application for amendment of the manifest which was rejected by the Assistant Collector. The said order of the Assistant Collector was brought on record before the High Court of Gujarat. Thereafter, the High Court of Gujarat directed the Collector to provisionally assess the value of goods on 17-11-1988. In pursuance of the same, the Collector issued a show cause notice on 15-12-1988. The Collector also in pursuance of the order of the Gujarat High Court while adjudicating the matter held that as long as the Assistant Collector's order remains on record rejecting to recognise the appellants as importers by incorporating their names in the Imports Manifest, the appellants cannot be treated as importers and therefore, the adjudication proceedings are premature. He also directed the Assistant Collector to file an appeal to the Collector (Appeals). The order of the Collector holding that the adjudication proceedings are premature was also brought on record before the High Court of Gujarat by amending the Writ Petition. Ultimately the Writ Petition was disposed of by the Gujarat High Court. The Gujarat High Court quashed the order of the Assistant Collector rejecting the prayer of the appellants to recognise them as importers and to incorporate their names in the Import Manifest. The High Court thereafter directed the Collector to adjudicate the matter in accordance with law. The relevant portion of the High Court's order is as follows:
"So far as legality and propriety of the orders of the Collector, Rajkot at An-nexure-XIV in special civil application No. 5804 of 1988 and Annexure K in special civil application No. 5861 of 1988 are concerned, it is obvious that once we have reached the conclusion that the petitioners have to be treated as importers of the disputed goods, the Collector, Rajkot would now be required to complete the adjudication proceedings on merits by treating the petitioners as importers of the concerned goods. The Collector, Rajkot refused to adjudicate upon this dispute and to decide upon the show cause notices only on the ground that said stage had not reached and that proceedings were at premature stage because the petitioner's names were not inserted in IGM. Once this hurdle has gone and the petitioner's names by our present order are required to be treated as validly inserted in the IGM as importers, stage has now obviously reached for the Collector, Rajkot to adjudicate upon the show cause notice issued to the petitioners and to proceed further in accordance with law thereafter. What was premature on the date on which the Collector Rajkot passed the impugned orders of his has now become mature pursuant to our present order. Hence the orders of the Collector, Rajkot both these petitions do not survive any further so far as maturity of the adjudication proceedings is concerned. We, therefore, quash and set aside the aforesaid orders of the Collector, Rajkot with a direction to him to proceed with adjudication proceedings pursuant to the show cause notice dated 15-12-1988 and after hearing the petitioners and permitting them to lead whatever evidence they want to lead in support of their defence and also permitting the department to produce their evidence to finalise the adjudication proceedings."
Thereafter, the Collector adjudicated the matter and passed the impugned order.
2. From the judgment of the Gujarat High Court, two aspects are clear :
(1) that the appellants have legally imported the goods;
(2) that there is no manipulation of documents.
The only question that remains to be considered and was considered by the Collector is regarding valuation.
3. The Collector held that in view of the judgment of the Gujarat High Court which has become final, there is no question to dispute the status of M/s. Eko Packaging Industries and M/s. Elite Packaging Industries as importers. Holding as above, he dropped the charge of manipulation of documents to claim the status of importer. He also held that in view of the above, the question whether the appellants are in possession or not of valid licence is irrelevant, even otherwise he found that the licences in question were in existence and valid for the import of goods on the date of shipment, irrespective of whether it was in possession of M/s. Elite Packaging Industries, M/s. Eko Packaging Industries on the date of shipment or not.
4. As regards valuation, he rejected the invoice value on the ground that there is no correlation between the invoice and the impugned goods. He held that the invoice and the contract do not give the grade of the products imported. The invoice does not refer to contract dated 7-8-1987. The contract dated 7-8-1987 of M/s. Wazilam Exports, Singapore is for HDPE of U.S.A. origin at a price of US $ 825 per MT and the shipment took place during the first quarter of 1988 whereas the goods were shipped in June, 1988 and arrived at Kandla in August, 1988. In other words, there is a delay in shipping the goods. He also held that the price quoted in the so-called contract is August, 1987 for shipment in January and it is difficult to believe that the same price prevailed even when the goods were shipped some time in June, 1988, while the price of the commodity is on the rise.
5. He found that the imported goods are of "HDPE Alathon DL 5860 and of USA origin" which are similar with the imports of M/s Pandya Plastics (P) Ltd. as the imports of the said company are HDPE Alathon Grade 8440. therefore, the price at which M/s. Pandya Plastics (P) Ltd. imported should be taken as the price for the assessment of the impugned goods. He referred to Platt's International Petro-Chemical Report (A Mc Graw Hill Publication) for August, 1988 and as per the "Platt's polymerscan" FOB value of US Gulf HDPE of Blow Moulding Grade in July 1988 ranged between US $ 1350 to US $ 1385 per M.T. He added US $ 283.5,21% of the FOB value and arrived at US $ 1633.5 per M.T. However, since in the show cause notice it was proposed to assess the goods on the basis of price at which M/s. Pandya Plastics (P) Ltd. cleared the goods, he determined the assessable value of the goods at the price US $ 440 per MT. The tonne US dollars difference is on account of adjustment due to difference in Port of unloading as in the case of Pandya Plastics (P) Ltd. goods had been cleared through Bombay Port whereas the appellants have cleared the goods through Kandla Port. The Collector confiscated the goods under Section 111(m) of the Customs Act, 1962 and imposed a redemption fine.
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Sl. Bill of Entry No. & Name of the Quantity of Quantum of redemption
No. Date Importer HDPE in- fine
Volved
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1. 5360/1-12-88 (Home M/s. Elite 16.675 Rs. 50.000/- (Rupees fifty Consumption) Packaging thousand only) Industries
2. 5361/2-12-88 (Into -do- 241.725 Rs. 8,00,000/-(Rupees Bond) eight lakhs)
3. 5362/2-12-88 (Home M/s. Eko 16.675 Rs. 50,000/-(Rupees fifty Consumption) Packaging thousand only) Industries
4. 5363/2-12-88 (Into -do- 224.650 Rs. 7,00,000/- (Rupees Bond) seven lakhs only).
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Total 499.725 Rs. 16,00,000/- (Rupees six-
teen lakhs only).
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He also imposed penalties of Rs. 4 lakhs each on M/s. Elite Packaging Industries and M/s. Eko Packaging Industries and Rs. 50,000/- each on Shri Rajesh Adani and Shri Gautam Adani who are the proprietors of both the concerns. Against which the present appeal is filed by the appellant companies and their proprietors.
6. The main contention of Shri Nankani for the appellants is that the finding of the Collector that there is no correlation between the invoice and the imported goods cannot be sustained as the invoice is dated 30-4-1988 and the covering letter is dated 7-8-1987 and the sale confirmation letter should be read together. So read, the correlation between the invoice and the imported goods is established.
7. The Collector relied upon M/s. Pandya Plastics (P) Ltd. which cannot be treated as similar imports. According to Shri Nankani, the goods of M/s. Pandya Plastics (P) Ltd. are HDPE Alathan Grade 8440 whereas the impugned imports by the appellants is HDPE Alathon DL 5850, therefore, there is a difference in the grade. He also pointed out that the appellants have imported 500 MT whereas the imports of M/s. Pandya Plastics (P) Ltd. is only 34 MT. Therefore, the imports made by M/s. Pandya Plastics (P) Ltd. cannot be treated as similar or identical to the imports of appellants.
8. As regards the reference to the reports of Platts International Petro Chemical, he pointed out that there is no reference made to the same in the show cause notice. Therefore, no opportunity was given to the appellants to explain as to whether the said International Petro-Chemical Report is relevant or not. He also submitted that the appellants themselves filed a number of Bills of Entries indicating the imports of identical goods during the relevant period and the Collector has not considered them.
9. He also submitted that Shri Rajesh Adani is a partner of M/s. Elite Packaging Industries and Gautam Adani is a partner of M/s. Eko Packaging Industries and penalty cannot be levied both on the firm as well as on the partner. Therefore, the penalty should be set aside.
10. Shri Prabhat Kumar appearing for the Department submitted that the contract referred to is a single contract in the name of two companies. The importers are not the actual users. The original prices of raw materials are fluctuating. No L.C. is established. The goods are imported against draft payment. The documents relating to the contract are not confirmed documents. Therefore, the Collector is right in holding that there is no correlation between the invoice and the imported goods. He also submitted that reference made by the Collector to the report of Platts International Petro-Chemical is justified as it is in the nature of a price list. He also pointed out that the prices declared by the appellants is lower by 50%. Therefore, the price cannot be accepted.
11. Shri Nankani in reply submitted that since the High Court held that there is no basis for the charge that the appellants have manipulated the documents and since the Collector also dropped the said charge on the basis of the judgment of the High Court the Collector should have accepted the price indicated in the three documents namely, the covering letter, sale confirmation letter and the invoice.
12. Taking up the first argument of Shri Nankani, that there is correlation between the imported goods and the invoice, we may refer to the contents of invoice, cover-big letter and the sale confirmation letter. The invoice is dated 30-4-1988 and it refers to the description of goods as bags HDPE and the price indicated is US $ 825 per MT CIF. The total quantity imported under this invoice is 16.675 per MT.
The sale confirmation letter reads as follows:
"SALES CONFIRMATION No. 008/EL/87."
It is addressed in the name of M/s. Elite Packaging Industries. It says, "We confirm having sold to you following goods on the terms and conditions mentioned thereunder:
Commodity: HDPE
Origin: USA
Quantity: About 250 MT or 5%
at Seller's option
Price: At US $ 825-PMT
CIF KANDLA
Packing: As usual
Shipment: During 1st Quarter
1988
Insurance : Included in the price
Terms: Sight D/P Through
S.B.I. etc."
The covering letter is dtd. 7-8-1987. It is addressed to M/s. Elite Packaging Industries and it reads as follows :
"As per our telephonic conversation, we confirm to sell to you about 500 MT HDPE-Blow Moulding Grade of USA Origin.
As per your instructions, we are enclosing herewith two contracts - one each in the names of M/s. Elite Packaging Industries and M/s. Eko Packaging Industries."
13. From the above, it appears that the covering letter only refers to the Grade of HDPE as Blow Moulding Grade. Neither the sale confirmation letter nor the invoice refer to as Blow Moulding Grade. On the other hand, the sale confirmation letter and the invoice refer to the goods as HDPE and no Grade is mentioned. The price also tallies. Therefore, correlation between the sale confirmation letter and the invoice is there. We may also refer to a letter dtd. 2-5-1988 whereas reference is made to the sale confirmation letter Nos. 007/EK/87 and 008/EK/87. The relevant letter reads as follows :
"We are pleased to inform you that the material against our Sales Confirmation Nos. 007/EK/87 and 008/EK/87 has been shipped from Houston to Kandla per vessel "Kalidas". Following are the shipment details for the same:
Party: Eko Packaging Industries. Quantity: 241.35 MT No. of bags: 9,654 B/L Nos.: A-16 to A-19 and A-25 to A-35 dtd. 30-4-1988"
In the letter dtd. 2-5-1988 a reference is made to Sale Confirmation Letter and the Bill of Lading dtd. 30-4-1988. From the above, we are of the view that there is a correlation between the Sale Confirmation and the invoice but the grade of the goods imported is not indicated in either of the two. However, from the Collector's order, it appears that as far as the grade is concerned he seems to have not disputed and therefore, we proceed on the basis that it is blow moulding grade.
14. The next question that arises for consideration is whether the transaction value is to be accepted.
15. The Collector relying on the invoice price of M/s. Pandya Plastics (P) Ltd. enhanced the value. He also relied on Rule 6 of the Customs Valuation Rules, 1988. Rule 6 incorporates Rule 5(1)(b) of the rules in itself. Therefore, in applying the transaction value of similar goods, the transaction value should be at the same commercial level and in substantially the same quantity as the goods being valued. Admittedly, the goods imported by the appellants are 500 MT whereas the imports made by M/s. Pandya Plastics is only 34 MT. Therefore, it cannot be said that the goods imported by M/s. Pandya is of similar type and therefore, the said value should be attracted for the purpose of determining the assessable value of imported goods. Consequently, the imported goods cannot be assessed on the basis of the imports of M/s. Pandya Plastics. Secondly, the Collector himself found that the goods imported are HDPE Alathon DL 5850 whereas the goods imported by M/s. Pandya Plastics are HDPE Alathon Grade 4440. In other words, the grade also is different. Therefore, in any view of the matter, the goods imported by M/s. Pandya Plastics cannot be treated as similar goods.
16. As regards the Platts International Petro Chemical Report referred to by the Collector, since it has not been referred to in the show cause notice, no reliance can be placed on the said report. We agree with Shri Nankani in this aspect.
17. From the above, it follows that neither the price of M/s. Pandya Plastics nor the price referred to in the Platts International Petro Chemical Report can be relied on for ascertaining the value of imported goods.
18. The appellants themselves in their reply to show cause notice referred to a number of Bills of Entries indicating the imports during the relevant period. The Collector has neither referred to the said Bills of Entry nor considered them. We, therefore, direct the Collector to examine and consider the assessable value of the goods in the light of Bills of Entries filed by the appellants. If the conditions, either under Rule 5 or 6 of the Customs Valuation Rules of 1988 are satisfied, he may adopt the same.
19. The appeals are thus allowed and remanded to the Collector for redeter-mining the assessable value in the light of the above observations.