Full Judgment
2.1 Briefly stated the facts are that the appellants imported "Maruzen" brand staple pin No. 10 from South Korea. In respect of Bill of Entry No. 107052, dated 13-1-1989, the Asstt. Collector, Customs, enhanced the value of the imported goods from US $ 0.5628 per dozen boxes to US $ 0.66 per dozen as 'Etone' brand boxes staple pin No. 10 was cleared at that price through other port and the country of origin in both cases was South Korea. The Collector (Appeals) also confirmed the adjudication order observing that there could not be difference in price of staple pin to the extent of 18.5% during July and November, 1988 and the importer had not shown that such difference in price was dependent on the quantity of the goods imported.
2.2 The Additional Collector, in the impugned order dated 23-1-1991, confiscated the imported goods with an option to redeem the same on payment of fine Rs. 12,500/- and imposed a penalty of Rs. 2,500/- under Section 112(a)(i) of the Customs Act, holding that the importer did not produce the licence for the increased value of Rs. 28,675/-.
3. Ms. Reena Khair, the learned advocate, submitted that the goods were supplied on the basis of proforma invoice dated 26-5-1988; that 3 consignments were imported and 3 Bills of Entry No. 107051 to 107053 all dated 13-1-1989 were filed for total quantity of 58,000 dozen boxes; that 2 Bills of Entry No. 107051 and 107053 were duly cleared by the Customs accepting the invoice price of the goods; that the Department raised the issue of enhancing the value only in respect of the goods covered by Bill of Entry No. 107052 though goods were covered under the same proforma invoice. She, further, submitted that the value had been enhanced on the basis of a computer print out of Bombay Customs House in respect of 4 Bills of Entry which covered a quantity of 5,000 dozen boxes only as against 19,500 dozen boxes covered by the disputed Bill of Entry and the total quantity of 58,500 dozen boxes imported by the appellants under three Bills of Entry; that the brands of the goods imported were different and the quantities were not comparable and as such the prices of the 4 Bills of Entry relied upon by the department could not be considered; that there was no evidence to show that the goods of the different brands were comparable.
Further, the transaction relied upon by the Department related to a transaction between traders whereas they had imported the impugned goods directly from the manufacturer; that the Korea Trading Office had certified that there were only 3 manufacturers of staple pins in Korea of which Korea Staple Co. was one of them; that there was substantial time difference between the date of invoice of the appellants and that of the invoice relied upon by the Department; that as such neither the time and the quantity of importation and placement of order nor the buyer and seller relationship coincided with evidences with the present transaction in relation to the transaction relied upon by the Department. She also mentioned that the computer print out itself indicated 2 imports of 'Gem' brand staple pins No. 10 made in Korea; that the prices were U.S. $ 0.54,67 per dozen boxes which was 3% less than the price declared by the appellants; that as per Section 5 of the Customs (Valuation) Rules, if more than one transactional value of the identical goods is found, the lowest of such value shall be used to determine the value of the imported goods and, therefore, the determined lowest value was U.S. $ 0.5467 per dozen. She also mentioned that the appellants had submitted copies of 2 Bills of Entry No. 105373 and 105375 both dated 7-9-1988 in which the price was U.S. $ 0.54 per dozen boxes which was more or less tallied with their declared price.
4. Regarding second order passed by the Additional Commissioner, the learned Advocate submitted that where the value is enhanced and there is no definite evidence of extra remittance or extra consideration, the CIF value alone is to be debited to the import licence. Reliance was placed on the decision in the case of Union of India v. Glaxo Laboratories (India) Ltd.; 1984 (17) E.L.T. 284 (Bom.) wherein the Bombay High Court held that "the interpretation put by the Customs authorities would lead to the result that all valid imports would automatically become invalid when the last consignment exceeds the face value of the licence, owing to the value based on the international market price being debited to the licence instead of CIF value".
Further the Appellate Tribunal, in the case of Atul Products Ltd. v.Commissioner of Customs, 1997 (94) E.L.T. 621 (Tribunal), held that "unless there was an evidence of fraudulent transaction showing additional payment through illegal channels to the suppliers, such debiting should not be made." The learned counsel thus contended that there was no justification for confiscation of goods and imposition of any fine or penalty.
5. Countering the arguments, Shri K. Srivastava, learned SDR, submitted that the price has been enhanced by the Department on the strength of the contemporary imports as shown by the computer print out; that the appellants had not adduced any evidence to show that any quantitative discount was given to them by the supplier. It has been held by the Tribunal in Shyam Antenna v. Collector of Customs, 1994 (55) ECR 497 that when there is satisfactory evidence of contemporaneous imports of identical goods at higher prices the authorities are justified in disregarding the value declared by the appellants. He also submitted that the fact that two other Bills of Entry filed by the appellants had been assessed and goods had been cleared does not debar the Department from enhancing the value of import in respect of goods covered by another Bill of Entry. The difference in the period of imports by the appellants and other importers was hardly 1 or 2 months and accordingly value relied upon by the Department is value of contemporary imports.
The difference in two prices is to the extent of 18.5% and there is nothing on record to show that there was any downward trend in the prices of the staple pins at the relevant time. Etona brand mentioned in the computer print out is a well known brand and as such the goods are comparable goods. Regarding argument of the appellants that the goods were purchased from traders in case of other imports, the learned SDR submitted that the dealers themselves generally purchased large quantities and then sold different quantity and as such difference of 18.5% in two values has not been explained by the importer. Regarding debiting of licence by the enhanced value, he mentioned that as per licensing regulation, value accepted by the Customs authorities has to be debited in the licence.
6. We have considered the submissions of both the sides. Rule 3(i) of Customs Valuation (Determination of Price of Imported Goods) Rules provided that the value of imported goods shall be the transaction value and Rules 3(ii) provides that if the value cannot be determined under Clause (i), the value shall be determined by proceeding sequentially through Rules 5 to 8 of Valuation Rules. As per Rule 4 the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India adjusted in accordance with the provisions of Rule 9. The transaction value shall not be acceptable for the reasons mentioned in Rule 4(2) of the Customs Valuation Rules such as the buyer & seller are related persons or the price is subject to some conditions or consideration for which a value cannot be determined in respect of the goods being valued. The Appellate Tribunal in Informatica Software (P) Ltd. v. C.C. (P), Calcutta -1997 (23) RLT 165 (T) has held that the transaction value can be discarded for the reasons given in Sub-rule (2) of Rule 4 of Customs Valuation Rules. In the present maters the Revenue has not brought any evidence on record to show that any of the restriction contained in the proviso to Sub-rule (2) of Rule 4 is applicable to the present matters so as to make the transaction value not acceptable. It has been held by the Supreme Court in Collector of Customs v. Nippon Bearings (P) Ltd. -1996 (82) E.L.T. 3 (S.C.) that, if a dispute is raised, despite evidences about the correct prices of invoices being filed by the importer, it would be necessary to produce the evidence of alleged higher price of the commodity imported by producing contemporaneous import documents justifying the assertion that the goods imported were costlier than the price shown in the disputed invoices. The Department had relied upon the computer print out which revealed import of staple pins of other brands at a higher price. The appellants have contended that relied upon Bill of Entry covered only a quantity of 5,000 dozen boxes whereas they had imported 19,500 dozen boxes under the impugned Bill of Entry and as such they have been successful in showing that the quantity of the identical goods was not substantially in same quantity as the goods imported by the importer. The Department had also not rebutted the submissions of the appellants that they had imported the goods from manufacturer M/s. Korea Staple Company. Korea Trade Office under letter of 1989 has mentioned that there are only 3 manufacturers of staple pins in Korea and Korea Staple Company is one of them. It is also not controverted by the Department that the relied upon imports were from traders. This is general trade practice that goods purchased directly from manufacturer would be available at a price lower than the price at which goods would be available from Traders. Accordingly the reliance of the department on the value shown in the computer print out for enhancing the value of impugned imported goods was not justified under the Customs Valuation Rules. We also observe that Sub-rule (3) of Rule 5 provides that if more than one transaction value of identical goods is found, the lowest of such value shall be used to determine the value of imported goods. The learned Counsel has also rightly contended that the computer print out of the Bombay Customs House also showed the price of Gem brand staple pin No. 10 made in Korea at the price of U.S.$ 0.5427 per dozen boxes which was less than the price declared by them and according to Rule 5(3), the lowest value of identical goods should have been taken by the Department for determination of the value of the imported goods. We, therefore, set aside the impugned order enhancing the value of the imported goods. As the enhancement of the value has not been upheld, consequentially the order passed by the Additional Collector imposing penalty and fine becomes inoperable and as such is also set aside. Accordingly both the appeals are allowed.