Judgment:
1. These four applications relate to four appeals filed against the same impugned order. These applications are, therefore, being disposed of by this common order.
The vessel M.V. Arjun arrived on 18-2-1998 carrying cargo of 1950 MT of scrap. Prior to the entry, IGM had been filed on 16-2-1998. Three Bills of Entry were filed by M/s. Jaswantrai & Co., CHA on behalf of the importers M/s. Shree Electromelts Ltd. The goods were described as Heavy Melting Scrap under sub-heading 7204.49. The value was declared as US $ 120 cif. Benefit of Not. No. 11/97-Cus. was claimed which prescribed the rate of 5% adv. on imported heavy melting scrap provided the importer produced evidence within a stipulated time that the scrap was so melted. All the Bills of Entry were dated 16-2-1998. Vide letter dated 18-2-1998 the CHA M/s. Jaswantrai & Co. furnished supplier's certificate that the Heavy Melting Scrap consisted of railway lines, ship hulls and other parts which are fit for melting. On 2-4-1998 the importers requested for cancellation of the Bill of Entry. This permission was granted. The goods were thereafter sold by the consignor to two other firms. M/s. Ragav Alloy Pvt. Ltd. purchased 1550 M.T. of goods described as Heavy Melting Scrap. M/s. Regency Exim House purchased the remaining and claimed their clearance as rerollable scrape. Both claimed purchase value as 120 US $ PMT. The cargo was unloaded and examined thoroughly. The jurisdictional officers were of the opinion that the goods did not qualify for the phrase 'heavy melting scraps' but for rerollable scraps'. The cargo as well as the ship were seized. Statements of concerned persons were recorded. Show cause notices were, thereafter issued alleging liability to confiscation of the goods imported under Section 111(f) and 111(m) of the Customs Act, 1962.
2. The second importers were asked to show cause why the value should not be enhanced to 163 US $ and 185 US $ PMT cif respectively.
Allegations to penalty were made on the suppliers cum owner of the vessel M/s. Almighty Shipping Corpn. and the steamer agents M/s. Ocean Shipping Services and on the first importers M/s. Shree Electromelts Ltd. and on their CHA.3. After hearing the concerned persons, the Commissioner of Customs, Gujarat, Ahmedabad passed the impugned order enhancing the value and imposing penalties on the applicants as below:M/s. Almighty Shipping Corpn.
Rs. 2 lakhsM/s. Ocean Shipping Services Rs. 2 lakhsM/s. Shri Electromelts Ltd. Rs. 5 lakhsM/s. A. Jaswantrai & Co.
Rs. 2 lakhs 4. We have considered the submissions made by Shri Parthsarathy, Advocate for M/s. Almighty Shipping Corpn.; Shri A.D. Maru for M/s.
Ocean Shipping Services; Shri M.A. Patel, Advocate for M/s. Shree Electromelts Ltd. and Shri V.M. Doiphode, Advocate for M/s. A.Jaswantrai & Co. We have also heard Shri Patwari, JDR, for the Revenue.
5. The show cause notices proposed escalation in the value of the imported goods on the following grounds : "Inquiries were also made with the Bombay Custom House to ascertain the import prices of the melting Scrap and it was revealed from the computer print out received from Bombay that the import price of Melting Scrap was declared as 163 U.S. Dollar per MT.C.I.F. as well as the import price for Rerollable scrap was declared as 185 U.S. Dollar per M.T. C.I.F. Directorate of Valuation also informed that the prevailing import price of Heavy Melting Scrap was at the rate of 160 U.S. Dollar per M.T. Therefore, the import prices declared at US $ 125 per M.T. C.I.F. in the Bills of Entry appeared to be misdeclared." 6. The proceedings do not show that the copies of the computer print out showing contemporaneous valuation received from the Directorate of Valuation were disclosed to the importers or to the suppliers. At the same time, we find from the orders of the ld. Commissioner that he had taken recourse to Rule 8 of the Customs Valuation Rules in justifying the enhancement.
7. The Customs Valuation Rules require acceptance of transaction value of the contested goods in terms of the Rule 4 thereof. Where for any reason the value is not acceptable, the valuation is to be sequentially done following the rules. Rule 5 speaks of transaction value of identical goods. Rule 6 speaks of transaction value of similar goods.
If any evidence was available for the valuation of such goods contemporaneously imported, then the Commissioner could have recourse of these rules. The rule which he has taken recourse to speaks of the residual method. Prima facie, it would appear that not only the Commissioner made an error resulting in the violation of principles of natural justice but also that he followed an entirely different rule from what was suggested in his own show cause notice.
8. The confiscation of the vessel was under Rule 115(2). The words "smuggled goods" would generally apply to goods which are secreted or which are not claimed. Even otherwise, the contest is limited to l/5th of the total cargo. Out of the 1950 M. Tons declared as Heavy Melting Scrap, 400 M.Tons were found to be rerollable scrap. There also the submission of Shri Rai, the representative of the suppliers, does not seem to have been examined by the ld. Commissioner. In his submission, Shri Rai claimed that the railway lines had high carbon content and if they are rerolled the damage to machinery would take place.
9. Notification No. 11/97 which gives exemption to Heavy Melting Scraps ensures that the goods are in fact melted after the importation.
Therefore, the identity of the goods as Heavy Melting Scrap is to be established on their being melted and not at the point of importation.
10. Thus on both the grounds, we find that the evidence fell considerably short in establishing the allegation.
11. The other two importers have cleared the goods. They are not before us today as appellants. It is appropriate that the total issue is decided only when their appeals are filed and are taken up for consideration. At the present stage, we find that M/s. Shree Electromelts Ltd. had filed Bs/E on the basis of Bs/L in their hands through their CHA M/s. A. Jaswantrai & Co. The evidence discussed does not indicate any part played by them in the alleged misdeclaration. The role of M/s. Ocean Shipping Services are limited to filing of IGM based on some Bs/L issued by the shipper. As regards M/s. Almighty Shipping Corpn. are concerned, the evidence does not establish their complicity.
12. Having found that the 4 appellants have made prima facie case in their favour, we grant unconditional stay and waiver of the penalties imposed on them.