Customs, Excise and Gold Tribunal - Mumbai
Cc vs Kamal Pharmaceuticals Ltd. on 19 April, 1999
Equivalent citations: 1999(85)ECR220(TRI.-MUMBAI)
ORDER G.N. Srinivasan, Member (J)
1. The respondent to this appeal is absent and unrepresented. By letter dated 3.2.1999 adjournment is sought on the ground that the respondent's advocate Shri V. Lakshmi Kumaran is busy in some other hearing. An adjournment of the hearing fixed for 13.1.1999 was granted on the same ground. In view of the fact that there is no request from Shri V. Lakshmi Kumaran assuming him to be the advocate for the respondent, indicating reasons as to why he is unable to come, we are decline to adjourn.
2. We have heard the departmental representative and perused the records.
3. The respondent imported a consignment comprising 50 MT of licorice roots from United Arab Emirates. The bill of entry presented for clearance of these goods showed the value to be US $ 5,500 CIF. The department's investigations to believe that the initial contract was for the goods to be transported by country craft from Ajman to Mumbai. The goods were in fact transported in 10 containers on a steamer. Freight actually paid for this transport was found to be US $ 5,000. A statement of Mukesh Sharma, Managing Director, was recorded. In the statement Mukesh Sharma said the goods were initially to be transported by JT country craft in bulk packing but they were actually transported in containers on a steamer. The contract was not amended to incorporate this fact, and continued to show the original price which was US $ 110 PMT CIF Bombay. He said the freight actually charged was US $ 500 per container tolling US $ 5,000 instead of constituting US $ 1173 in the original contract. He accepted that the total value of the consignment was US $ 9327. He waived issue of written notice and hearing. The Additional Collector thereupon passed orders holding that the correct assessable value to include freight of US $ 5,000 as against the declared freight of US $ 1173 and held the value to be Rs. 2.94 lakhs approximately against the declared value of Rs. 1.73 lakhs. He also ordered confiscation of the goods permitting them to be redeemed on payment of a fine of Rs. 1.50 lakhs and imposed a penalty of Rs. 50,000/-.
4. The importer appealed from this order. The Commissioner (Appeals) said that Rule 9(2) of the Valuation Rules provided for adding the cost of transportation to the imported goods, and that was US $ 1173. He relied upon a commentary on the GATT Valuation Code to say that if by error the goods contracted to be shipped by sea were shipped by air only the actual cost to the buyer has to be added to the price. He therefore held that only US $ 1173 was to be taken as freight. Hence this appeal by the department.
5. It is not in dispute that the actual cost incurred for transportation is US $ 5,000. This is the amount that is required to be added according to Rule 9(2) of the Valuation Rules. We do not have the benefit of commentary by S.L. Sherman and Hinrich Glashoff on the GATT Valuation Code which the Commissioner (Appeals) has referred to. It seems to say that where due to no fault of the buyer expenditure is incurred on freight in addition to that agreed between buyer and seller, it is only the agreed amount that should be taken as freight. In the case before us, it was not the contention of the importer that the shipment by steamer, on payment of higher freight was an error on the part of the supplier. Mukesh Sharma in his statement had not said so, nor has the Commissioner (Appeals) recorded that this plea or was raised before him. Therefore it is not necessary to consider the conclusion on the commentary relied upon by the Commissioner. On the facts before us, it is difficult to escape the conclusion that the increased freight was arrived at mutually between seller and buyer and it has not been in any case claimed or shown due to mistake of shipment by supplier. Therefore the freight actually incurred should rightly form part of the assessable value. Since the part of the freight actually incurred was not disclosed, confiscation of the goods and imposition of penalty are justified. We do not find the redemption fine and penalty to be incommensurate with the gravity of the offence.
6. Accordingly we allow the appeal, set aside the impugned order and restore the order of the Additional Collector.
(Dictated in Court).