Customs, Excise and Gold Tribunal - Tamil Nadu
Cc vs Grover Overseas (P) Ltd. And Ors. on 17 March, 1999
Equivalent citations: 1999(84)ECR184(TRI.-CHENNAI)
ORDER S.L. Peeran, Member (J)
1. These are 7 Revenue appeals which had been heard by the Tribunal by a Bench comprising of Shri V.P. Gulati, Hon'ble Vice President and Shri T.P. Nambiar Hon'ble Member, and the matter had been disposed of by Final Order No. 2109 to 2117/97 dated 1.8.1997 by remanding the matter to the original authority with certain directions. The respondents were aggrieved with the said order and had filed a Writ Petition before Hon'ble Madras High Court in W.P. Nos. 15621, 15622/97 and WMP Nos. 24785 and 24787/97. The Hon'ble High Court by their Order dated 2.2.1998 set aside the order of the Tribunal and has remanded the case to the Tribunal to decide the case on the basis of evidence before it had enter into a definite finding. In terms of the direction of the Hon'ble High Court, notices were issued and the matter has come up for final hearing today. The appellants were represented by Shri S. Kannan, Ld. JDR and the respondents were represented by Shri M. Ramachandran, Consultant and Shri Raja Kalifulla, Advocate.
2. The short facts for the purpose of determining this case are that the respondents were importers of Mulberry Raw Silk (20/22 Denier F Grade) of Chinese origin from M/s. Dolly (Exports) (Far East) Ltd., Hong Kong, out of which 7: consignments were imported by M/s. Shakun Overseas Ltd., New Delhi, 2. M/s. Siddarth International and 3. by M/s. Grover Overseas (P) Ltd. The imports of Grover Overseas Pvt. Ltd. were of Korean origin in respect of one consignment only. The importers had filed their Bill of Entry along with all the documents to show that the declared price was in terms of the transaction value. However, the said valuation was not accepted and it was rejected without assigning any reasons and arbitrarily enhanced the value of the consignment. The importers paid the enhanced value under protest and the goods were cleared. Thereafter, they preferred 7 appeals before the Collector (Appeals) Madras and the Collector (Appeals) set aside the order and remanded the matter to the original authority with a direction that the original authority should furnish all the materials to the importers on which the department had relied upon for enhancing the value. On remand, the Assistant Collector of Customs again without any discussion on the various points raised by the importers and without considering the abundant documents and records, reiterated the same findings and rejected the importer's case. While so doing, the Assistant Collector on remand did not furnish any material evidence which was required to have been disclosed in terms of the Commissioner (Appeals)'s order of remand. Again aggrieved with this order of j the Assistant Collector, the importers preferred the appeal contending on the following points:
(i) That the importer had made a true and correct declaration of the assessable value of goods in question. The value declared by the importer should be accepted in the absence of any evidence to the contrary. The importer had produced original invoice and the contract, and also other documents in support of the value declared. Hence the department should have accepted their invoice value;
(ii) They submitted that the observation of the original authority that the Special Investigation Branch of the Customs House after detailed investigation had established a price of US $ 46.74 per kg. for Grade 4A and US $ 38.75 per kg. for Grade A and for all other grades a minimum of US $ 40.84 per kg. in wholly without any basis and it was based on mere surmises. They stated that no material was either produced or shown to the importers at any time to substantiate the above claim. The original authority had relied on a undisclosed investigation without any evidence to substantiate the same to enhance the assessable value which is not proper and justifiable.
(iii) They further stated that the Order form dated 18.11.1989 relied by the original authority cannot form the basis for determining the value of consignment under Section 14(1) of the Act. The Order form relied can at the most be only a quotation and it had not culminated in a full fledged scale. Further, the quotation was for Mulberry Raw Silk of Grade A to 3A and it did not reflect the grade imported or the quality of the material. The impugned goods were Grade F and the quotation did not reflect the deemed value, of Grade F material in the international market. The order form referred to in the order was alleged to have been raised by one M/s. Jayanand (International) Bombay and there was no evidence to show that the said M/s. Jayanand International, Bombay had actually imported any consignment of Mulberry Raw Silk pursuant to that order. The order form relied upon by the cinginal authority was not at all a sufficient evidence to discharge the onus.
(iv) They further stated that the original authority has failed to consider the various documents produced by the importers in support of their invoice value. In the absence of any documents to show contemporaneous imports at Higher rates than the declared value and in the absence of any evidence that the importer had remitted to the supplier any amount clandestinely more than the invoice amount, the declared value had to be accepted. The invoice value reflects the true transaction value of the subject goods and the original authority had no evidence to prove that the invoice value did not reflect the transaction value, hence the invoice value should have been accepted for assessment. The manufacturer's invoice produced by them related to all the consignments, hence the original authority's observation that 'the importers were unable to produce the original invoice under cover of which the goods were sold by the Chinese National Silk Import and Export Corporation to the Hong Kong Company M/s. Dolly Expo (Far East) Ltd. 1 was factually incorrect. The lower authority's observation that "goods were brought from China by Hong Kong firm which in turn deliberately under-invoiced to the importer" was wholly without any basis. On mere suspicion the invoice value cannot be enhanced.
(v) They again stated that the order was passed mechanically on mere doubt or information received from unidentifiable quarters, without the authority himself ascertaining prices of contemporaneous imports of similar goods hence illegal and not justifiable in law.
(vi) One importer (M/s. Siddarth International Ltd.) in their appeal memorandums contended that they have imported two consignments of Raw Silk Mulberry Grade 'F' from M/s. Dolly Expo (Far East) Hong Kong and the assessing authority had rejected the value without assigning any reasons and arbitrarily enhanced the assessable value. The facts of the case and the points of contention made by M/s. Siddarth International were identical to M/s. Shakun Overseas Ltd., New Delhi. Both the appellants therefore requested for setting aside the lower authority's orders.
3. The Commissioner after a detailed consideration and after taking into consideration several case laws in the matter, upheld their contention and allowed their appeals. Being aggrieved with the said order, the Revenue has filed the present appeals.
4. The findings given by the Commissioner is as follows:
I have gone through the facts of the case and considered the issue in detail. The subject goods are Mulberry Raw Silk of 'F' Grade 20/22 deniers in respect of seven consignments, 'B' grade 20/22 denier in respect of one consignment and Raw Silk Yarn of 33/37 D without any grade, according to the copies of the invoices produced. These are priced at 30.80 US dollars per kg C and F in respect of 'F' Grade and 28.00 US dollars per kg. C and F in respect of other two consignments. The lower authority has enhanced the value of 'F' grade consignments to 40.84 US dollars, 'B' grade consignment to 46.74 US dollars and 22/37 D (without any grade) consignment to 38.75 US dollars based on the order placed by M/s. The Handicrafts and Handloom Export Corporation, Madras through M/s. Jayanand (International) Bombay to M/s. China National Silk Import and Export Corporation and the undisclosed investigation conducted by special Investigation Branch of the Madras Custom House. Apart from the order form placed by M/s. The Handicrafts and Handloom Corporation, Madras, the lower authority has not indicated any documentary evidence in support of his enhancement. The order form raised by the Handicrafts and Handloom Corporation, Madras is for 3 grades of Mulberry Raw Silk of grades A to 3A of 20/22 or 19/21 deniers for a value of 3S. 75/ 41.40/ 41.15 US dollars per kg. GIF Madras. The quantity is about 900 kgs. and the order form is dated 18.11.1988. As already observed out of the nine consignments involved in the present appeals, seven are 'F' grade Raw Silk of 20/22 deniers, one is Raw Silk of 33/37 denier without any grade. The order form relied upon by the lower authority relates to Raw Silk of Grade A to 3A whereas the consignments under dispute are of other grades. Further, even though the lower authority has indicated the order form as the basis for enhancement he has not adopted the values indicated in the said order form while enhancing the invoice values. Actually the enhancements are based on the undisclosed investigation conducted by SIB of Madras Custom House but the lower authority has unnecessarily projected the said order form as the basis for enhancement, which is rather misleading. From the above facts, it is evident that the said order form has no relevance to the present dispute and the lower authority himself has not enhanced the invoice values based on the order form".
Further the order form or offer for sale cannot be construed as the transaction hence the value indicated in the offer cannot be treated as Transaction Value' under Valuation Rules, 1988. Since the lower authority's orders are silent about the basis for enhancement the concerned case records were perused. The perusal of case records reveal that the undisclosed investigation of Special Investigation Branch of Madras Custom House and the resultant fixation of values is actually based on the offer from M/s. Indo China (International) for various grades of Mulberry Raw Silk. Even though the notings in the case records refers to the above offer of M/s. Indo-China (International) copy of the above said offer is not available in the case records. It should be noted that the present appeals were originally remanded to the lower authority with a specific direction to disclose the basis for the enhancement. In spite of the above direction the lower authority has failed to disclose the basis or documentary evidence for the enhancement. This amply proves that the lower authority is not in possession of any valid documents to substantiate the enhancement and the enhancements of assessable value are rather arbitrary in nature. Further the offer of Indo-China (International) for various grades of Mulberry Raw Silk cannot be construed as 'Transaction Value' under Valuation Rules 1988 since (here is no evidence to show that actual transaction has taken place. The lower authority has not indicated any contemporaneous invoice price for the goods of similar nature and similar grades hence the enhancements are not based on any valid documents acceptable under Valuation Rules, 1988. Further, he has not produced any evidence for the rejection of Invoice values under Rule 4 of Customs Valuation Rules 1988 hence the invoice values should be accepted as the true Transaction Value. The appellants have produced a copy of Invoice raised by M/s. China National Silk Import and Export Corporation dated 18.7.1989 to M/s. Dolly Expo (Far East) Ltd. indicating a price of 28 US Dollars per kg C and F for Mulberry Raw Silk in support of their invoice price. They have also produced copy of an invoice to the original authority raised by M/s. China National Silk Import and Export Corporation dated 9.8.1988 to M/s. Sowbagya Exports (P) Ltd., Bangalore indicating 28 US dollars per kg CIF as the price for Mulberry Raw Silk of 20/22 Denier for both A grade and B grade. It should be noted that the above invoice is raised by M/s. China National Silk Import and Export Corporation (the so-called manufacturer) and the period of shipment is also within 3 months from the date of Order form i.e. 18.11.1988 raised by M/s. The Handicrafts and Handloom Export Corporation of India Ltd. which was relied upon by the lower authority. They have also produced copy of another invoice to the original Authority raised by M/s. Amoli Enterprises dated 29.9.1988 indicating 29.95 US dollars per kg and 32.69 US dollars per kg CIF for Mulberry Raw Silk of grade A and 2A respectively. The above two transaction values indicate a value much lower than the value of the order form relied by the original authority for Mulberry Raw Silk and the period is also nearly comparable. The above evidence amply prove that the order form relied by the lower authority does not reflect the actual transaction value of the goods, Further the case laws relied upon by the appellants support their contention that mere quotations or offer for sale cannot be taken as the Transaction Value and on its basis the invoice values cannot be enhanced. In the absence of any evidence to the contrary the invoice values submitted by the importers should be accepted as the Transaction value for the purposes of assessment. In view of the above facts I order that the invoice values produced should be accepted for assessment purpose. Accordingly the lower authority's orders are set aside and the appeals allowed.
5. The grounds of appeal, narrates that at the time of personal hearing before the Assistant Collector on 11.10.1991 the importer's representative wanted to know as to how the department had arbitrarily enhanced the value of the imported goods without valid documents/evidence. They had stated before the Assistant Collector that the declared value is correct and in support of their claim they cited number of bills of entry and invoices assessed in Custom House, Madras and Custom House, Bombay. The Assistant Collector made further enquiries at the time of hearing and asked about the manufacturer's invoice for which the importers had stated that they had brought only one manufacturer's invoice and that too in favour of the supplier and all other invoices are only by this suppliers, they stated that though the letters of credit opened in favour of M/s. Sun Mak Hong later it was amended in favour of supplier M/s. Dolly (Expo) (Far East) Limited. They produced a copy of the sales confirmation of SUN MAUHONE. They also showed the order form of M/s. China National Silk Imports Exports Corporation to M/s. The Handicrafts and Handloom Exports Corporation of India Limited, Madras, which in turn, is passed on to M/s. Jayanand (International) Bombay. A copy of the said order was also produced at the time of personal hearing.
6. Ld. JDR points out from the grounds that the goods had been valued after giving due personal hearing to the importers. He points out to the further grounds made out wherein it has been stated that since the declared price was much lower than the quotation price and the importers had also not produced, substantial evidence such as manufacturer's invoices, letter of credit, etc., therefore valuation as per Rule 5, 6 and 7 were ruled out in the absence of details and the valuation was done under Rule 8 of the Customs Valuation (Determination of Price for Imported Goods) Rules, 1988 for using reasonable means consistent with the principles and general provisions of these rules and Sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India. He points out that the grounds stated that transaction value was rejected based on the quotation (or) offer (or) offer for sale is in order. He points out to the grounds and states that the quotation prices can be taken up for rejecting the transaction value. Based on this ground Ld. JDR points out that the procedure adopted by the department is valid and therefore the order of the Commissioner is not legal and proper and hence the same is required to be set aside.
7. Ld. Consultant and Advocate point out that the grounds taken up by the department in the Revenue appeals are all imaginary and not factual and not supported by any evidence. They pointed out that despite remand of the matter, the department did not disclose any evidence for enhancement of the transaction value. This ground which the department is pointing out was never raised before the Commissioner (Appeals) or before the adjudicating authority. They. submitted be that as it may, even otherwise, the law is well settled that transaction value has to be accepted and the same can be set aside only if the Revenue produced evidence of contemporaneous imports showing import of same goods and from the same country which were at higher price. They also submitted that mere quotation cannot be the basis for enhancing the value as this is not an evidence of contemporaneous imports. It is their contention that even in the present case, no such evidence was disclosed and hence the order of the Commissioner is legal and valid. In this regard they relied on the following judgments:
(1) Collector of Customs, Bombay v. Nippon Bearings (P) Ltd. as reported in 1996 (82) ELT 3 (SC) : 1997 (69) ECR 255 (SC). In this case Hon'ble Supreme Court has laid down that burden to prove under-valuation is on the department. The order further laid down that the department can dispute such invoice price only by producing evidence for contemporaneous imports at higher price than reflected in the disputed invoices in terms of Section 14 of the Customs Act, 1962.
(2) Meera Exports (Pvt.) Ltd. v. Collector of Customs as . In this case, the Hon'ble Supreme Court again reiterated that burden to prove under-valuation is on the department. It further observed that ordinarily the Court should proceed on the basis that the apparent tenor of the agreements reflect the real state of affairs and what is to be examined is whether the Revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price. In this regard, they relied on their earlier judgment rendered in the case of Basant Industries v. Additional Collector as , Collector v. Nippon Bearings (P) Ltd. as reported in 1996 (82) ELT 3 : 1997 (69) ECR 255 (SC), Union of India v. Mahindra and Mahindra Ltd. as and the judgment rendered in the case of Sharp Business Machines Pvt. Ltd. v. Collector as reported in 1990 (49) ELT : 1990 (31) ECR 177 (SC) : ECR C Cus 1749 SC - Distinguished. The other judgment distinguished were Padia Sales Corporation v. Collector and that of Commerce International v. Collector 1995 (7) ELT 20 (SC) : 1995(58) ECR 201 (SC).
8. In counter, Ld. DR points out the grounds of appeal and also refers to one unreported judgment of the Tribunal rendered in the case of Michael Consultants v. CC, Madras by Final Order No. 618/92-A.
9. On a careful consideration of submissions and on a perusal of (he order impugned, we are totally satisfied that the Collector (Appeals) has passed a detailed, considered and a speaking order. There is no infirmity or illegality in the order. Initially the department assessed the goods on a higherprice without disclosing any evidence to support rejection of the transaction value. The importers paid duty under protest and filed their appeal before the Collector. The Collector remanded the matter with specific direction that the department should disclose the evidence. Such evidence was not disclosed at all and the party's case was again rejected. On appeal, the Collector after detailed analyses, set aside the order as noted already wherein he has clearly noted that the department has not come out with any evidence to reject the Transaction Value. The Collector has also relied on several judgments which are well laid principles of law in terms of the Hon'ble Supreme Court judgments already noted. In the present appeals, the grounds have been clearly brought out above in terms of the arguments placed by Ld. D.R. We have also checked these grounds and we notice that the grounds for enhancement of valuation has been made out on the basis of submissions made by P.B. Agarwal, M.D. of M/s. Shakun Overseas Ltd. and their Clearing Agent Shri D. Sukumaran, Assistant Manager, Jeena and Company, Madras at the time of hearing before the Assistant Collector on 11.10.1991. What conspired during the hearing has become the basis for the grounds in this appeal. We may say at this stage that the very grounds raised by the Revenue is misconceived and totally unsustainable. These grounds which are being made out in the appeal memo were never the basis either at the time of assessment of the goods or at the time of initial adjudication. Nor these submissions were brought to their notice before Collector (Appeals) at the first stage. Nor this was disclosed in the Order-in-Original. Even before the Collector (Appeals) these facts were never brought out. The Collector (Appeals) therefore set aside the order. Therefore, to urge these facts as the grounds in the appeal is totally unsustainable and not acceptable. The department ought to have disclosed the evidence in the nature of contemporaneous imports at the time of assessment which they had not dos and hence initially itself the orders were set aside on the basis of violation of principles of natural justice. Even on remand, the department had not produced any evidence. Therefore, on a total analyses of the matter, the Collector (A) bavins coma to conclusion that the Invoice price placed, is the Transaction Value is a correct order. The Collector has given a detailed finding as to win the transaction value is required to be accepted which we find is in term of Section 14 of Customs Act as well as in terms of the judgement of the Hon'ble Supreme Court in the above noted judgements. Further we have noticed from these judgements that mere quotation cannot be the basis of enhanced valuation. This being a settled law, therefore, ami attempt by the Revenue to introduce a new ground or to brinpit new facts at this stage before the Tribunal is not acceptable in law. In that view of the matter, we do not find any infirmity in the impugned order and there are no other grounds for consideration and hence the Revenue appeals are rejected.
(Pronounced and dictated in open Court).