Document Fragment View

Matching Fragments

1. This is an appeal against the order passed by the Additional Collector of Customs, Calcutta. Briefly stated the facts of the case are that the appellants filed a Bill of Entry for the clearance of a consignment of 200 pieces of cooling coils, 2100 pieces of driers and 500 pieces of FICD. On the basis of the invoice issued by the supplier M/s. Contax Marketing Singapore showing the unit price of cooling coils, driers and FICD as S $ 10.00, $1.10, and S $ 2.00 per piece respectively the aggregate CIF and the assessable value were declared in the Bill of Entry as S$ 5310.00 and Rs. 49202.74 respectively. The certificate of origin filed along with the Bill of Entry showed that the goods were of Japanese origin. On examination of the goods, the cooling coils were found to be fitted with expansion valves and the driers were of two different types namely, "Filter Drier Receiver Model No. 460 (Made in Canada)" and "Receiver Drier Model LP-8-318 (Made in Japan)". The Department took the stand that apart from misdeclaring the origin of the driers, the importers had also misdeclared the description of the cooling coils fitted with expansion valves which being sub-assemblies of car air conditioners had to be deemed as "consumer goods" falling under Serial No. 146 of Appendix 2B of the Import Policy for the period 1990-93 and the Import Licence covering "cooling coils" under Sr. No. 538 (6) of Appendix 3, Part A of the Import Policy 1990-93 against which they had been imported was not valid. Further, having regard to the unit price of S $ 50.00 CIF in respect of cooling coils (without expansion valves) of Japanese origin shown in invoice No. CX-004/88 dated 16.9.1988 issued by M/s. Products International Pvt. Ltd. Singapore and the price of US $ 13.00 per piece FOB in respect of cooling coils with thermostat shown in invoice No. 61/18654/BEK dated 29-11-1989 issued by M/s. Thai Heat Exchange Co. Ltd., the Department felt that the value of the imported cooling coils with expansion valves had been misdeclared. Further, having regard to the prevailing market price in the country of driers and FICD, the Department worked out the deduced CIF value of these items at Rs. 33.50 and Rs. 84.00 per piece respectively as against the unit price of Rs. 10.09 and Rs. 18.34 respectively declared by the importers.

2. On these grounds, the appellants were served with a notice requiring them to show cause as to why:

(i) the goods which had been misdeclared in respect of description, value and country of origin should not be confiscated under Section 111(m) of the Customs Act, 1962;
(ii) the cooling coils fitted with expansion valves having the ascertained value of Rs. 1,00,914/- should not be confiscated under Section 111(d) of the Customs Act, 1962; (3) the declared price of the goods should not be rejected and the goods assessed at the ascertained value under Section 14 (1) of the Customs Act, 1962; (4) the differential duty Rs. 6,72,468.00 not be recovered; and (5) penalty should not be imposed under Section 112 of the Customs Act, 1962. Thereafter, in the impugned order the Additional Collector held that the imported driers and cooling coils were liable to confiscation under section 111 (d) and (m) of the Customs Act, 1962 on the ground that the country of origin in respect of the driers had been misdeclared and the cooling coils fitted with expansion valves being "consumer goods" falling under Serial No. 146 of Appendix 2B of the Import Policy were not covered by the Import Licence covering 'cooling coils' which were specified against Serial No. 538 (6) of Appendix 3 Part A of the Import Policy for the period 1988-93. On the grounds that the value of the imported cooling coils could not have been less than the price of such goods shown in the invoices relied upon by the Department, the adjudicating authority also held that the value of the imported goods had been misdeclared. He, therefore, ordered the enhancement of the value of the cooling coils, driers and FICD to Rs. 504.57, Rs. 33.50 and Rs. 84.00 per piece respectively and the confiscation of the goods under Section 111 (d) and (m) of the Act. He, however, gave the importers the option to redeem the goods on payment of a fine of Rs. 2,00,000/-. He also imposed a penalty of Rs. 25000/- on the importers under Section 112.

7. Taking up the second point, we find that the appellants on the basis of the Invoice issued by the supplier M/s. Contax Marketing Singapore, had declared the unit price of the imported goods, namely, cooling coils, driers and FICD as Singapore $ 10.00, S $ 1.10 and S $ 2.00 per piece CIF respectively. However, having regard to the fact that in the Invoice dated 16.9.1988 issued by M/s. Products International Pvt. Ltd., Singapore cooling coils of Japanese origin were charged at the rate of S $ 50.00 per piece and even cooling coils with thermostat of Thai origin had been charged at the rate of US $ 13.00 per piece FOB in the invoice issued by M/s. Thai Heat Exchange Co. Ltd., the adjudicating authority after adding 225% on account of freight and insurance to the FOB price of goods of Thai origin determined the CIF price of the imported cooling coils with attached expansion valves as US $ 15.87. He, therefore, held that the appellants had misdeclared the value as well as the description of the imported sub-assemblies consisting of cooling coils and expansion valves rendering them liable to confiscation under Section 111(m) of the Customs Act, 1962. It is thus, seen that the finding of the Additional Collector that the value of the cooling coils with expansion valves imported by the appellants in April, 1990 against Bill of Entry No. 1150 dated 18-4-1990 had been misdeclared was based only on two invoices. One of these was issued on 16-9-1988 by a Singapore firm and the other on 29-11-1989 by a firm in Thailand. Evidently, the imports covered by the two invoices relied upon by the Department were not effected at or about the same time when the disputed goods were imported. In this regard, we find that in the case of Satya Vijay Exports Pvt. Ltd. v. Collector of Customs, reported in 1991 (51) E.L.T. 457 (Tribunal), the Tribunal had held that for the purposes of valuation of imported goods it would not be permissible to treat the prices of imports from two different countries as comparable even when the goods imported from those countries may be comparable and the invoice price with which comparison is to be made has to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. The relevant extract from the said decision is reproduced below:

(i) the value of imported goods shall be the transaction value,
(ii) if the value cannot be determined under the provisions of Clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these rules."

It is evident that in straightaway resorting to Rule 7 for the determination of the value of the imported Driers and FICD instead of proceeding sequentially through Rules 5 to 8, the Department failed to observe the mandatory requirement as laid down in Rule 3. Under these circumstances, we hold that the Additional Collector's finding that the value of the imported driers and FICD was misdeclared by the appellants is also not sustainable.