Customs, Excise and Gold Tribunal - Bangalore
India Campus Crusade For Christ vs The Commissioner Of Customs (General) on 16 March, 2006
Equivalent citations: 2006(108)ECC276, 2006ECR276(TRI.-BANGALORE)
ORDER S.L. Peeran, Member (J)
1. This appeal arises from Order-in-Original No. 95/2001 dated 31.12.2001 passed by Commissioner of Customs, New Delhi. The appellants have taken permission from this Bench to pursue this appeal in this bench by Miscellaneous Order No. 123/05 dated 4.2.2004.
2. The Department proceeded to investigate the matter pertaining to consignment covered under Bill of Entry No. 972858 dated 18.11.2000 pertaining to the import made by the appellant in regard to 50 pieces of EIKI SSL-O film projectors 16mm. The declared value was US $ 280 per piece. The Revenue after detailed examination has enhanced the value per piece to US $ 1960 per piece on the basis of the price available on website HTTP://www.eiki.com. A discount of 30% from the internet retail price i.e. US $ 1960 per piece was worked out to US $ 1372 per piece on the goods imported.
3. The following submissions were made by the importer challenging the enhancement of the declared value.
(i) The Department had relied on the price ascertained by the Consulate General of India (CGI) at USA, which has also been contested by the appellants in the light of the following two rulings.
(i) Vicky Enterprises v. CC
(ii) East Punjab Traders
(ii) The importer took the ground that there was no undervaluation of the goods and the price was a negotiated one. In this regard Apex Court judgment rendered in the case of Basant Industries was relied.
(iii) It was further contended that there was no evidence of prices of contemporaneous imports of similar goods and in this regard, they relied on ruling rendered in the case of Walla Enterprises v. CC .
(iv) It was contended that the charge of undervaluation had not been proved. Hence, Section 111 and 112 of Customs Act was not attracted.
(v) They pleaded that mens-rea has not been established for imposition of penalty under Section 112 of Customs Act and relied on following two rulings:
(a) Akbar Badruddin Giwani v. UOI .
(b) Hindustan Steel Limited v. UOI .
(vi) Before the Commissioner in the personal hearing in support of their contentions that internet quotation of the price cannot be the basis for rejecting the invoice price, in this regard reliance was placed on the Apex Court judgment rendered in the case of Sounds N. Images v. CC reported in 2000 (38) RLT 242 (SC).
(vii) It was submitted that price given in the internet quotation and that furnished by CGI is the retail price in US $ for sale in USA. It was submitted that Rule 8 of the Customs Valuation (DPIG) Rules, 1988 specifically provides that price of the goods in the domestic market of the country of exportation cannot be adopted as the basis of the valuation of the goods imported in to India. Hence, it was submitted that in view of this specific prohibition in the said Rule 8 adoption of internet retail price in USA is not legal and correct. Hence, they pray for accepting the declared price.
(viii) It was further submitted that no basis of 30% deduction from internet retail price had also been advanced in the show cause notice.
(ix) It was further submitted that the price communicated by CGI in New York is an unauthenticated price and unsigned, not on the letterhead of Eiki but on the letterhead of ICG whose source of information is doubtful; the quantity for which these prices are valid is not mentioned and the prices are not comparable. It was submitted that reliance cannot, therefore, placed on the letter of ICG in support of this plea. Reliance was placed on the rulings of Abdul Halini v. CC, Calcutta reported in 2001 (43) RLT 609.
(x) It was also submitted that the imported projectors were without central speaker systems and some accessories were also missing. The price quoted in the internet or those communicated by CGI are not prices without central speaker system /accessories and therefore, they cannot be made the basis for determining the value of the goods under import. Further, model of projectors under import is IS SSL-O only while the price proposed to be adopted is of model No. SSL-O/3580. The items were of different model and hence, prices are not comparable, was the submission made by the appellant.
(xi) Further submission made was that the imported projectors were outdated model as 16mm technology which had become obsolete and, are, thus being sold at much reduced and depreciated price. M/s. Eiki International Incl. USA vide their letter dated 23.7.2001 stated that the internet prices is not correct and had been withdrawn. It was submitted that M/s. Inspirated Films, USA, the supplier-trader had certified the correctness of declared price of US $ 280. Furthermore, the Indian 16mm projectors of like kind and quality are available for Rs. 20,000/- approximately. In support to this contention, certain sale invoices of Indian goods had been submitted.
(xii) It was also submitted that M/s. Inspirated Films and the importer were not related and the price is thus not influenced by the alleged relationship.
(xiii) It was also submitted that the value after rejection under Rule 10A of the Customs valuation (DPIG) Rules 1988 has to be determined under Rules 5 to 8 sequentially as laid down in Rule 3. Rule 10A does not override the provisions of Rule 3 or Rules 5 to 8. The Show cause notice directly proceeds under residuary Rule 8 and this vitiates the proceedings.
4. The Commissioner in the impugned order has rejected all their contentions. He has upheld the Revenue adopting the internet price on the ground that it had been displayed by the manufacturer in the website. In the impugned order, the Commissioner has not referred to the contentions raised on the citations relied on by the appellant but has simply rejected all the documents and the pleas on the basis of the internet price communicated by CGI.
5. The learned Counsel submitted that in the light of the judgment cited by them, the internet price is not sustainable. He again pointed out to the CGI's letter adopting the price on the basis of internet price declared by the manufacturer. It is submitted that the imported item did not have central speaker system and some accessories but the price declared on internet were inclusive of the same and hence, the prices of the goods are not comparable. The learned Counsel also submitted that the supplier and importer are not related persons and hence, the basis for enhancing the value is against the principles laid by the Supreme Court in the case of Sounds. N Images (supra). He relied on the following judgments to contend that the internet prices are not to be adopted.
(a) Puja Poly Plastics Pvt. Ltd. v. CC, Calcutta 2001 (42) RLT 523.
(b) Overseas International v. CC, Chennai 2000 (41) RLT 101.
(c) Mohan Sales (India) v. CC, Calcutta 2000 (40) RLT 17.
He relied on the judgments of Abdul Halini (supra) for rejection of the letters of CGI in New York.
6. The learned JDR read out the Commissioner's order in detail and also filed the following citations:
(i) Sharp Business Machines Pvt. Ltd. .
(ii) Mirah Decor v. CC 1993 (65) ELT 3 (SC).
(iii) Pradeep Kedia v. CC .
7. On a careful consideration, we notice that the Department has proceeded to adopt the internet prices of the manufacturer as sold in the retail market in USA. The contention of the appellant is that such adoption of the price is against law and Rule 8 of the Valuation Rule. This is a well taken ground. This ground is supported by the judgments relied by them that the internet price cannot be adopted. Furthermore, the CGI has sent letters on the basis of the internet prices available in local market in USA. The appellants have produced manufacturer's letter to show that the 16mm projector sold to the supplier of the appellant is different from 16mm projector model SSL-O/3580 previously shown on the Eiki website. They have also stated in the letter dated 23.7.2001 that the price shown (previously on their website) for 16mm model SSL-O 3580 was not an accurate gauge of SSL-073580 value because it was not a actual price charged by their dealers nor paid for by the end-use customer. It was also stated that 16mm projector model SSL-O 3580 has been removed from the products section of their website and the only continuing reference to this model is for technical service repair issues. This clarification given by the manufacturer with regard to the price on the website completely demolishes the case of the Revenue. It is well settled law by several judgments already cited by the assessee that the internet prices cannot be the sole ground to prove the charge of under-valuation as rendered in the case of Sounds. N Images (supra).
8. The learned DR relied on the ruling of Sharp Business (supra), in this case the undervaluation had been established by the Revenue while in the present case the Revenue has failed to do so. Hence, this judgment is clearly distinguishable. In the case of Mirah Decor (supra), the custom authorities had relied on the price quotation obtained by them from the foreign supplier. This matter was remanded by the Apex Court for denovo and hence, this judgment is not directly applicable to the facts of the case. In the case of Pradeep Kedia (Supra), the Revenue relied on the pricelist from the manufacturer's themselves but in the present case the manufacturer has clarified that the price shown in the internet is not to be taken seriously while it was for some other obsolete goods, which has not been supplied to the importer. This case is also not applicable to the present case.
9. Furthermore, we take into consideration the plea of the appellant that the goods received by them were without central speaker systems and some accessories. The quotation obtained by CGI are of different model, therefore the prices cannot be said to be comparable. The appellants have made out a very strong ground that charge of undervaluation has not been proved. Furthermore, Revenue adopting the price of the goods in the domestic market of the country of exportation cannot be adopted as the basis for valuation of the goods imported into India in view of the specific prohibition in Rule 8 of Customs Valuation (DPIG) Rules. The Revenue has failed to establish the charge of undervaluation, hence the impugned order is not legal and proper and the same is set aside by allowing the appeal with consequential relief.
(Pronounced in open Court on 16 Mar. 2006)