Judgment:
1. This appeal arises from order-inoriginal dated 30-6-1990 passed by Collector of Customs, Air Cargo Complex, Bombay. The importer imported 18 (eighteen) numbers Laser Jet Printer Model 2106 and filed a Bill of Entry for its clearance. The same was valued at Rs. 4,44,176/- for assessment and in support of the said value produced invoice No.DE/324/12/89, dated 20-12-1989 from Diplomat Electronics, Singapore, which showed the value of S$2767 (FOB) per piece. The assessment was claimed under Heading 8471.92 read with Notification 58/88 attracting duty at 35% - 45% -15% CVD.2. The department was of the view that the value declared by the party was found to be 50% of the price in respect of S. No. 1 and 60% of the price in the case of S. No. 2 of the chart below :--------------------------------------------------------------------------------Case B/E No. Inv. No.Impor- Supplier Descrip- Value Qty TotalNo. ters tion C/O Rs.1.
5456 DE/312/ Zenith Diplomat LaserJet US$5514 5 241181 dated 11/89 dt. Compu- Electronics Printer per unit USA 16-11-1989 8-11-1989 ters Singapore (FOB)2.
7699 9-2028/89 Aftek SBEE TI2106 US$25001 41552 16-9-1989 Business COPTEU TI2106 per unit USA Machine Singapore Laser (CIF) 26-12-1989 189dated Techno- Electronic Printer per unit USA 20-12-1989 logy Singapore Model (FOB) In view of this, the department called upon the appellants to explain about the undervaluation on the basis of the details furnished in the above chart. It is contended by the importer that (a) In case No.1 the importers, M/s. Zenith Computers, imported not only Laser Jet Printer but also extra options as has been confirmed by the suppliers M/s. Diplomat Electronics who have supplied the working sheet. According to the said working sheet the value of the laser jet printer is b$ 2767 per unit and that or extra options supplied to M/s. Zenith Computers is another S$ 2747.
(b) In case No. 1:, quantity was only 5 only whereas in their case quantity is 18.
(c) Price of US $ 2500 CIF in case No. 2 should be of Laser Printer alongwith extra options and not of only Laser Printer. Further, value in case No. 2 is for only one unit whereas in their case value is for 18 Nos.
It is alleged by the department that they took up the matter with the importer No. I shown in the table i.e. M/s. Zenith Computer to find out whether extra options were imported by them. It is stated that the importer confirmed that the extra options were imported by them but were not shown separately in their own case because these were in built in the laser printer. The department examined the above contention of the importers, S. No. 1 of the above table namely M/s. Zenith Computer with reference to Operation Manual of the goods and the examination reports for the Case No. 1 and 2 of the above chart and issued show cause notice to the importers. The allegations in the show cause notice are as follows: (a) As per examination report recorded on the reverse of the original bill of entry in Case No. 1 the goods were found to be as per invoice description which is Laser Printer. Examination report does not indicate that there were extra items.
(b) According to the Operational Manual of Laser Printer there are six software interfaces and 35 type faces already resident in the laser printer. Further as per the said Manual, optional font catridges contain character sets and type faces in addition to those provided by 35 resident font i.e. to say extra font option to be necessarily different from the resident type faces. However, on perusal of the list of extra options which the party has contended has been supplied in Case No. 1 it is found that many of the extra optional fonts are same as the resident fonts. Therefore, the explanation that the extra options were inbuilt in the laser printer did not seem to be correct.
(c) One of the extra option reported to have been imported in Case No. 1 is 250 optional input paper tray. This also has been stated to be in - built in the laser printer. However, on perusal of the Operational Manual it is found that optional input tray can be installed only after removing the standard input tray. In other words both standard and optional input trays cannot be fitted/built in the laser printer simultaneously and therefore the explanation that extra optional input tray was imported in that case did not appear to be correct.
(d) In Case No. 2 the description of the goods in Bill of entry/invoice is laser printer and not laser printer with options.
As per examination report recorded on reverse of Bill of entry in Case No. 2 the goods are found to be as per invoice description. As such, no presumption could be made that the laser printer is Case No. 2 was alongwith options.
On the basis of the above analysis it appeared that the goods imported in all the above cases inckiding that of the importers are same i.e.
laser printer. Hence it appeared from the comparative chart mentioned in Para 2 that the value in case of subject imports is significantly low when compared to value of contemporary imports (viz. Case No. 1 and Case No. 2). In accordance with normal trade practice it could not have been possible for the suppliers to supply the subject goods at such a ridiculously low price and hence the invoice did not appear to reflect the correct price at which such goods are sold or offered for sale at or about the time of import. The prices charged in the invoice cannot therefore be deemed as 'transaction value' as contemplated in Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Accordingly, it appeared that valuation is not determinable under Rule 4 of Valuation Rules and therefore to be determined sequentially under Valuation Rule 5 to 8. The goods in Case Nos. 1, 2 and 3 are identical. However, the quantity and time of the importation in Case No.1 above is closer to quantity and time of importation in importer's case. In view of this the assessable value in the present case appeared to be determinable on the basis of value in Case No.1 in terms of Rule 5 of the said Valuation Rules. Accordingly price of 18 Nos. printers works out as under :(i) FOB value @ S$ 5514 Rs. 8,49,942/-(ii) Actual freight Rs. 13,901/-(iii) Insurance Rs. 3,477/-(iv) Handling charges Rs. 285/- ----------------- Further the licence produced is for Rs. 444176/- as against the correct value of Rs. 867605/- determinable under Rule 5 of said Customs Valuation Rules. Accordingly a show cause notice was issued calling upon the importers to show cause why the value of the goods should not be determined at Rs. 849942/- and why the goods covered by the Bill of entry No. 9668 dated 26-12-1989 should not be confiscated under Section 111(m) of the Customs Act, 1962 and why the goods valued at Rs. 423429/- should not be confiscated under Section 111(d) of the Customs Act, 1962 in the absence of a valid ITC licence and why penalty should not be imposed on them under Section 112 of the Customs Act, 1962.
The importers filed the reply dated 6-6-1990 and contended that the prices of goods compared with the importer's goods are not identical in quality and quantity since in other cases laser printer are with optional accessories whereas in importer's case the goods are only laser printer. The quantity in their case is 18 whereas in other cases the quantities are 5 and 1. It was also represented by them that their value represents the transaction value which should be accepted as per Valuation Rules because Show Cause Notice does not disclose any reason for rejecting the same.
3. Ld. Collector after due consideration rejected their plea on valuation. However, no dispute has been raised by the department with regard to classification of the benefit of notification in question. In the impugned order the Collector has held that the identical goods has been imported by the same country of origin at almost double price. It itself shows that the declared transaction value is not at all acceptable in this case in view of the reasons : (i) that the department had produced evidence of two imports of laser printer at much higher price and details of these are the one disclosed by them. He has held that the import in other two cases were also only laser printer and there was no extra options/accessories imported therein. He has rejected the importer's contention that the importer in S. No. 1 of the table had imported extra options on the ground that the importer had informed the department that this input tray was inbuilt in the laser printer. He has also rejected the plea of the importer that the extra optional type faces/character sets were inbuilt in the laser printer, is not correct. For this he has again relied on the imports of the other two parties. He has also rejected the plea of quantity of 18 imported by this importer as against 5 and 1 by the other importers on the ground that cannot be a satisfactory reason for explaining such a large variation in prices. He has held that the party has not been able to satisfactorily explain why the price in their case is almost half the price of the identical goods in respect of the other importers. Therefore, he rejected the declared price as not being the transaction value and held that the assessable value cannot be determined under Rule 4 and hence proceeded to Valuation under Rule 5 to 6. He also held that they did not submit licence for differential value which is based on the value determined by him and the value declared by them on the Bill of Entry. That being so the goods of the value of approximately Rs. 4,05,000 / were held to be not covered by a valid licence. Therefore, the order for confiscation under Section 111(d) of the Customs Act, 62 but however granted redemption on payment of fine of Rs. 2,00,000/- on the ground that there has been misdeclaration of value making the goods liable for confiscation under Section 111(m) of the Customs Act, 1962.
4. The appellants in their case have contended that the said printers were normal and bare laser printers without any additional features or extra options and as such, the price paid by them was a proper international price as per the provisions of Section 14 of the Customs Act. It is stated by them that the import made by the importer at S.No. 1 of the table i.e. Zenith Computers at Singapore $ 5514/- per piece was a totally different printer since the said printers were with number of other accessories/extra options which increased the cost namely double the price of the bare printer. It is stated that the comparison between the appellant's goods with that of Zenith Computers did not arise. It is stated that one printers imported by Aftek Business Machines Pvt. Ltd., the same even in point of time of import was three months prior to the import of the Appellants and the same was also with extra accessories and hence they are not comparable qualitywise and quantitywise with that of the Appellant's. It is stated that even the supplier in this case was different and the unit of currency was also totally different as the same was in U.S. Dollors. It is further stated by them that the evidence of contemporaneous imports cited by the different department is totally different from the quality thereof since the one imported by Zenith Computers - a sister concern of the appellants had various extra accessories which had been fully described in the supplier's invoice. It is stated by them that the said invoice itself explicitly showed that the bare printer is priced at Singapore Dollars 2767/- which is the same as the price charged to the Appellants by the same supplier for supply effected to the Appellants.
It is further stated that the said invoice further mentions and enlists six different types of instruments attached and described as "Extra options" which had been separately valued at Singapore $2767/-. It is stated by them that even the Bill of Entry filed by the said Zenith Computers also showed the said value and as such described as "Laser Jet Printer Texas Instruments" and further described in the invoice as "Texas instruments" under the caption Extra Options. It is stated that the Appellants' invoice in terms described 18 numbers of the said printers as "Laser Jet Printers" which by itself proved that the same was without any extra options and that there was no Texas instruments attached thereto. The appellants stated that the inquiries made with M/s. Diplomant Electronics, Singapore, being the common supplier who had by their letter informed them that the goods sold to Zenith Computers was with extra options as the bare printer had been invoiced to both Zenith Computers as also both at the same price of Singapore $2767/-. It is stated that the departmental authorities totally ignored this evidence. It is also stated by them that the operation manual produced in the matter also amply showed that such printers come with or without attachments/accessories. The word "optional" by itself means requirement of buyer whether to buy a printer in its bare state or with accessories/attachments/instruments. In view of their import being of a bare minimum printer and having been purchased in more quantities, the price filed by them in terms of the invoice is required to be accepted.
They have challenged the examination report on the ground that the report has restricted itself with the description of the goods covered by the Bill of Entry. He did not throw any light with regard to such extra fitments individually since the goods examined were found to be as per the description given in the invoice. It is stated that the authorities have erred in arriving at a conclusion that since the examination report did not record anything with regard to such accessories/instruments, the said two imports were comparable with that of the Appellants' goods.
It is also stated that the country of origin is also not the same and the lower authorities have wrongly come to the conclusion on all aspects of the matter. It is also stated that the department has not showed how there is a commercial price and that there was nothing like extra commercial relations between the Appellants and the foreign supplier. It is stated that authorities have erred in applying Rule 5 of the said Valuation Rules.
5. We have heard ld. Advocate Shri Nitin Kantawala for the appellants and Shri K.K. Jha, ld. SDR for the revenue.
6. Ld. Advocate argued on the basis of the grounds of appeal which have already been extracted. Ld. Counsel relied on the ratio of the following judgments.Atco Industries Ltd. v. Collector of Customs - 1992 (57) E.L.T. 654 (Tribunal)Elite Packaging Industries v. Collector of Custom. & Central ExciseSupreme Laces v. Collector of Customs -1992 (60) E.L.T. 442 (Tri.) 5. Sushil Kumar Kayan v. Asstt. Collector of Customs -1993 (68) E.L.T. 537 (Cal.)Collector of Central Excise & Customs v. Papyrus Papers Ltd. -1993 (65) E.L.T. 212 (Tribunal)Manjushree Minerals Ltd. v. Collector of Customs -1993 (68) E.L.T. 273 (Cal.)Gandharv Trading & Investment Pvt. Ltd. v. Collector of Customs, MadrasBasant Industries v. Addl. Collector of Customs, Bombay -1996 (81) E.L.T. 195 (SC)Poysha Indl. Co. Ltd. v. Collector of Customs, Bombay, - 1996 (86) E.L.T. 141 (Tribunal) 7. Ld. DR argued on the basis of the findings given by the lower authorities.
8. We have carefully considered the submissions made by both the sides and have perused the records. The question that arises to consideration is as to whether the price declared in respect of Laser Jet Printer by the appellants in the invoice and the Bill of Entry is required to be accepted? The department has relied on the Bill of Entry dated 16-11-1989 in respect of Zenith Computers wherein the value has been shown as Singapore $ 5514 as against $ 2767 declared by the importer herein. The department has also relied on the Bill of Entry 21-9-1989 of Aftek Business Machines Pvt. Ltd. wherein the description of the goods is ESBEE COPTEU Singapore and unit price has been shown as US $ 2500. It is the contention of the appellants that the price was not comparable and that the quantity and quality also differs in as much as in the case of Zenith Computers. The imported item had with it several extra accessories in respect of Aftek Business Machine and the import had been from a different supplier and the price had been declared in US dollars. The supplier's own letter clarifies the position that the price of single unit in respect of supplies made to Zenith Computers as well as to the appellants. The value of appellants' item is US Dollars 2767 and that the supplies made to the Zenith Computers comprises of extra accessories and supplier had given details of split up values of these extra accessories is $ 5514/-. This document is placed at Annexure 'A' of the paper book which had been relied by the appellants before the Collector. On a perusal of the document, it is very clear that the supplier has clearly indicated the value of laser Jet Printer 2767 and the supplies made to Zenith Computers with extra options and the details of split up values of extra accessories have been shown in addition to all the values, the price has been shown as US $ 5514/-.
Therefore, it is very clear that the department has not taken into consideration this clarification and also the declaration of the item made by the appellant as mere "Laser Jet Printer" with that of declaration of Zenith Computers as "Laser Jet Printer Texas Instrument". The supplier has explained that Texas Instrument referred to the extra accessories and the details of which have been shown in their clarification letter with split up values.
9. As regards the comparison made with Aftek Business Machines, it is very clear that the declaration in the Bill of Entry in respect of Aftek Business Machine is "Components for computers TI2106 Laser Printer 1 pcs". The price has been shown in US $2500 when the price in respect of by the appellants has been shown in Singapore dollars. It is very clear from the declaration that the goods are not comparable both in terms of the type of goods, value and date of supply. Therefore, the department has not been able to show that the value of Aftek Business Machine is comparable with the importers. It is also very clear on perusal of the impugned order and the evidence on record that the department has not proved the case of under valuation in the present case. They have also not shown the reasons for rejecting the invoice price declared by the appellants and for proceeding under Rule 5 of the Customs Valuation Rules. The rulings relied by the appellants in their favour supports the stand they have taken up and it required to be applied in the present case.
10. In the case of Honesty Traders, the Tribunal has held that under Section 14(1)(a) of Customs Act, 1962, the value for the purpose of assessment of duty would be the deemed value as provided for under that Section. It has been held that for comparison of the value, the goods should be the same in respect of physical characteristics, quality, reputation, country of origin, timing of import. It has also been held that the assessed value cannot be determined on the basis of mere assumptions and presumptions and that suspection however, grave cannot be substitute for positive proof and in this regard, the Tribunal has relied on its earlier judgment rendered in the case of Automotive Enterprises v. CollectorConsolidated Coffee Ltd. v. Collector 11. In the case of Atco Industries Ltd., the Tribunal has held that the two invoices in the name of Principal, L.E. College, Morbi and Gujarat Narmada Valley Fertilizers Co. Ltd. cannot be accepted in as much as the goods imported in these cases were only one set unlike 24 sets in the present case. Further, the goods were imported by actual users there, whereas the goods are imported here by a dealer who will further resell the goods. It further held that these are the differences which cannot be ignored and that the goods in these cases cannot, therefore, be called identical goods. The Tribunal further held that the price in the instant case has not been shown by the department to be in any way an influenced price where price is not the sole consideration for sale.
Discounts on the listed price are a normal feature in international trade and it is not unusual that a higher discount may be given to a supplier on the listed price if there is a big order.
12. In the case of Elite Packaging Industries, the Tribunal has held that in applying the transaction value of similar goods, the transaction value should be at the same commercial level and in substantially the same quantity as the goods being valued. In the case of Supreme Laces, the Tribunal has held that the burden to prove charge of undervaluation is on the Department.
13. In the case of Manjushree Minerals Ltd., Calcutta High Court held that unless it can be shown and proved by the Customs Authorities that the importer had paid to the foreign supplier more than what has been reflected in the agreement or invoice the c.i.f. value has to be taken as the basis for debiting the licence. It has been further held that under Section 14(1), it is not the actual price which is paid for the goods which is relevant for the purpose of determining the assessable value. The valuation for the purpose of Customs Duty i.e. assessable value, has nothing to do with the actual c.i.f. value of the goods.
14. In the case of Gandharv Trading & Investment Pvt. Ltd., the Tribunal has held that the invoice value should be accepted in the absence of any evidence to show that the prices of imported goods were comparatively low. In case of Basant Industries. Hon'ble Supreme Court has held that mere comparison of invoices received by the importer with the invoice of imports of same goods by other importer is not conclusive for determination the question of undervaluation. Hon'ble Supreme Court has held that the relationship between the importer and foreign supplier has also to be kept in mind because it is a matter of common knowledge that a price which is offered by a supplier to an old customer may be different from a price which the same supplier offers to a totally new customer.
15. In the case of Poysha Indl. Co. Ltd., the Tribunal has held that the Collector placed reliance on two instances of contemporaneous import at value higher than value declared by the appellant. The relevant invoices bore the dates 18-3-1987 and 13-4-1987. The corresponding dates of indents were 30-1-1987 and 16-2-1987. The quantities imported are not known. The Tribunal held that the appellant had contracted with the suppliers for import of 5000 m.t. of tin plate prime in March, 1986 and the price was fixed at that stage itself. By the time the subject import was made, more than half the contracted quantity had already been imported and cleared. Thus, there are two significant differences between the subject import and the compared import. The price for the subject import was fixed nearly one year before the date of indent of the compared imports. The subject import was made on the same contract for supply of huge quantity of 5000 m.t.
Therefore, the Tribunal held that there is nothing to indicate that the time of shipment was the essence of the contract. The difference in the contracted last date of shipment and the date of actual shipment was only a few days. It held that even this difference was clarified by stating that the ship could not enter the Port before 31-3-1987 on stormy conditions. The Tribunal held that hence the reason for rejecting the contract is not sound. It held that it must follow that there are no materials to indicate that the invoice price did not reflect the normal price in international trade for import at the time and place of import.
16. In the case of Sushil Kumar Kayan, Hon'ble Calcutta High Court has held that the burden of misdeclaration and undervaluation is on the department in convincing evidence with reference to comparable goods, comparable quantity, comparable time and place and from the same country of origin is required to produce otherwise invoice value is to be accepted.
17. In view of the discussion made above and in the light of the citations which supports the appellants, we are of the view that the department has not proved undervaluation in this case and that the supplier has clarified that the Laser Jet Printer supplied to the appellants as well as to Zenith Computers is S$ 2767 and that the goods imported by Aftek Business Machines is not comparable with that of the appellant's.
18. In that view of the matter, we set aside the impugned order and allow the appeal with consequential relief.