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1. The appellant placed an order on the Swiss supplier for the import of a Form Fill and Seal Machine alongwith necessary attachments required for the production of intravenous solution in asceptic packaging. The proforma invoice issued by the supplier showed the price of machine and the necessary attachments as S. Fr. 9,93,730/-. Even though the Proforma Invoice was issued by the supplier in August, 1987 the Letter of Credit for S. Fr. 9,93,730/- for the import of the machine was opened by the appellant in favour of the supplier on 17-11-1989. For the clearance of the machine which was imported in June, 1990, the appellants filed Bill of Entry No. T.K. 3803 dated 11-7-1990 in which the goods were declared as "One No. of Asceptic Form Fill and Seal Machine. Type 302 complete with accessories for pharmaceutical industry". The value of the imported machine and accessories was declared as Rs. 1,25,13,177/-. In respect of Invoice No. 8406 dated 28-6-1990 against which the goods were imported, the appellants produced Proforma Invoices, dated 5-8-1987, 10-11-1989 and 10-1-1990, each one of which showed the CIF value of the machine and accessories at S. Fr. 9,93,730/-. They also produced a letter dated 20-8-1990 in which the supplier while confirming the price of the goods quoted in Proforma Invoice dated 5-8-1987 had stated that after conclusion of the negotiations the importers had accepted the Proforma Invoice dated 5-8-1987. The customs authorities held the view that the goods having been imported in June, 1990, the Invoice price based on the price quoted by the supplier in 1987 could not be deemed as the value of the goods under Section 14(1) of the Customs Act, 1962. From the declared CIF price of S. Fr. 14,50,000/- of an identical 'Type 302 Form Fill and Seal Machine' imported by M/s. Gujarat Injects Limited against Invoice No. 8452 dated 14-7-1990 and Bill of Entry No. 5369 dated 16-7-1990 the department after deducting the values of three attachments which had not been imported along with the appellants machine, worked out the value of the machine and accessories imported by the appellants at Rs. 1,66,35,345/- as against the declared value of Rs. 1,25,13,177/-.

3. On behalf of the appellants the learned Senior Advocate Shri Kapil Sibal with Advocate, Shri S.H. Sanjanwala appeared before us. Shri Kapil Sibal stated that in 1987 the appellant had entered into a contract with the Swiss manufacturer for the import of an "Asceptic Form Fill and Seal Machine - Type 302" alongwith essential attachments at a price of S. Fr. 9,93,730/- C & F equivalent to Rs. 1,25,13,177/-. He added that on the basis of the order placed by the appellant, the supplier had undertaken the manufacture of the machine but due to certain reasons the appellant could not open the Letter of Credit before November, 1989. He stated that for the clearance of the machine and the attachments which were imported in June, 1990 a Bill of Entry No. P/M 3763/39 dated 1-7-1990 was filed. However, having regard to the import of an identical machine though with different attachments by M/s. Gujarat Injects Ltd. at the declared price of S. Fr. 14,59,000/- equivalent to Indian Rs. 1,64,70,639l- a show cause notice dated 5-9-1990 was issued by the Assistant Collector of Customs alleging that in terms of Rule 5 of the Customs Valuation Rules, 1988 the value of the imported machinery worked out to Rs. 1,66,35,345/-. The show cause notice also proposed the confiscation of the goods in question and imposition of a penalty on the appellants. The learned Senior Advocate contended that the machines imported by M/s. Gujarat Injects Ltd. and by the appellants were not identical inasmuch as accessories and attachments imported with each of these machines differed materially and certain attachments imported by M/s. Gujarat Injects Ltd. were not imported by the appellants. He stated that the machine imported by M/s. Gujarat Injects Ltd. was transacted for importation in the year 1990 and in respect of machine which was manufactured in 1990 the Letter of Credit was opened in May, 1990 whereas the machine imported by the appellants was manufactured in 1987 and the Letter of Credit for its import was opened in November, 1989. He added that apart from pointing out these differences, in the proceedings before the Collector the appellants had referred to the Bill of Entry filed by M/s. Core Parenterals Ltd., Ahmedabad for the importation of identical machines at a price of S. Fr. 7,50,000/- in March, 1990 and two earlier Bills of Entry relating to the import of similar machines by the same party in December, 1989 and January, 1988 at the declared price of S. Fr. 7,50,000 and S. Fr. 9,00,000/- respectively. He contended that in terms of Customs Valuation Rules, 1980 the value of any imported goods has to be determined by applying the Rules sequentially. He argued that Rule 5 had no application in the appellant's case since the transaction value was determinable in accordance with provisions of Rules 3 & 4. He stated that even if it was assumed that Rule 5 was applicable, then in terms of sub-rule (3) of Rule 5 on account of availability of different values for identical goods imported by M/s. Core Parenterals Ltd. the value of the appellants goods should have been based on the lowest of the different available prices. He contended that the order passed by the Collector, determining the value of the imported machine and the attachments at Rs. 1,66,35,345/- on the basis of the declared price of the machine and attachments imported by M/s. Gujarat Injects Ltd. as against the declared value of Rs. 1,25,13,177/- and holding that the goods were liable for confiscation under Section 111(m) of the Customs Act was bad in law and without jurisdiction inasmuch as Section 14(1) of the Customs Act, 1962 provides for levy of Custom duty on the price at which such or like goods are ordinarily sold or offered for sale when there being no other consideration for sale. He argued that in absence of any mutuality of interest between the importer and the supplier and the transaction between the appellants and the supplier being on principal to principal basis and the price being the sole consideration for the sale, the contracted price should have been taken as the assessable value under Section 14 of the Act.

(7) The decision in the case of Aarkeyness Imports Corporation, New Delhi v. CC, New Delhi, reported in 1988 (12) ETR 112, is not relevant since in the appellants case the department has not been able to establish that the transaction was not genuine or some extra commercial consideration was involved.

9. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that in pursuance of a contract entered into by the appellants in 1987, the foreign suppliers issued the proforma invoice dated August, 1987 for C & F S. Fr. 9,93,730/- in respect of an " Asceptic Form Fill and Seal Machine Type 302 together with attachments." The appellants established a Letter of Credit for the importation of the machine on 17-11-1989. The machine was imported in June, 1990 against Invoice No. 8406 and for its clearance Bill of Entry No. T.K. 3803 dated 17-7-1990 was filed in which the goods were declared as "One No. of Asceptic Form Fill and Seal Machine Type 302 complete with Accessories for Pharmaceutical Industry". The value of the imported machine and accompanying attachments was declared as Rs. 1,25,13,177/-. In the impugned order, it has been held that the value of the imported machine and attachments had been misdeclared in the Bill of Entry and did not represent the assessable value of the goods in terms of Section 14 of the Customs Act, 1962. On the basis of the transaction value of an identical machine imported at or about the same time by M/s. Gujarat Injects Ltd. the adjudicating authority further held that in terms of Rule 5 of the Customs Valuation Rules, 1988 the assessable value of the machine and attachments imported by the appellants ought to have been Rs. 1,58,04,073/- as against the declared value of Rs. 1,25,13,177/-.

1. Bill of Entry No. H 41452 dated 30-12-1987, Value S. Fr. 9,00,000/-
2. Bill of Entry No. I 324/1289 dated 5-12-1989 Value S. Fr. 7,50,000/-.
3. Bill of Entry No. 1417/5-90 dated 20-3-1990 Value S. Fr. 7,50,000/-

The appellants argued that the declared value of S. Fr. 7,50,000/- in respect of a "Form Fill and Seal Machine - Type 302" imported by M/s. Core Parenterals Ltd. just 3 months prior to the appellants import having been accepted by the Department, there was no justification for the rejection of the 'transaction value' of the machine and attachments imported by them.