Full Judgment
2. The facts are not much in dispute. The respondents imported the goods (Adast Dominant 725P and Two Colour Offset Printing Machine) and filed bill of entry dated 22-2-1991 through Customs House Agent M/s.
While and Company, Mumbai, seeking clearance of those goods which were supplied to them by M/s. Koyo Foreign Trade Corporation, Praha, Czechoslovakia, vide invoice dated 2142-1990 for C & F value of Rs. 8,86,623/-. The respondents showed Rs. 44,778/- in that bill of entry as local agent's commission. They also along with the bill of entry submitted a copy of the order dated 4-9-1990 placed by them on M/s. J.Mahabeer & Co. Pvt. Ltd. for import of the said goods, as on the imported goods they were to pay Rs. 1,79,115/- to that company towards commission, installation and technical advice. The break up of this amount given in that order was Rs. 44,778/- as commission and balance towards the installation and technical advice. The clearance of the goods was claimed against import licence dated 4-9-1990 for the value of Rs. 9,40,356/- (inclusive of Indian Agent's Commission of Rs. 44,778/-). But, later on it revealed that the break up of this amount given by the respondents was incorrect, in fact, the entire amount of Rs. 1,79,115/- was paid as commission to M/s. J. Mahabeer & Co. Pvt.
Ltd. by the respondents on account of import of the goods as the later company was the local agent, of the supplier of the goods, in India During investigation, statements of various persons/officers of M/s. J.Mahabeer & Co. Ltd. were recorded and their books of accounts were also scrutinized. The Officers of the company admitted of having charged the entire amount of Rs. 1,79,115/- as commission charges from the respondents. The respondents were consequently served with a show cause notice for the addition of the entire amount in the CIF value of the goods for the purpose of determining the duty amount payable on the imported goods. Penalty was also proposed to be imposed on them. The adjudicating authority came to the conclusion that there was suppression of the facts about the true value of the imported goods, and directed that the entire amount of Rs. 1,79,115/- paid by the respondents to M/s. J. Mahabeer & Co. Ltd. be included in the assessable value of the goods chargeable to Customs Duty in terms of Section 14(1) of the Customs Act read with Rule 9(1)(i) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and also ordered the confiscation of the goods. However, since the goods were not available for confiscation having been already released, the adjudicating authority directed that the assessment be finalized accordingly and also demanded Rs. 50,000/- as fine from the respondents. The adjudicating authority also imposed penalty of Rs. 50,000/-on the respondents and of Rs. 10,000/- on M/s. J. Mahabeer & Co. Pvt. Ltd. (not appellants before us). That order of the adjudicating authority dated 29-4-1994 has been reversed by the Commissioner (Appeals) through the impugned order on the ground that there was no suppression of the true price of the imported goods and that the amount shown in the bill of entry was only paid as commission and the balance amount was paid towards the installation and technical advice.
3. Feeling aggrieved with the impugned order, the Revenue has come up in appeal. The controversy in the present appeal centres round the question, as to whether the 20% of the CIF value charges collected locally by the indenting agents, M/s. J. Mahabeer & Co. Pvt. Ltd., from the respondents (importer) deserves to be included in the assessable value of the imported goods or not. The CIF value of the imported goods (machines) declared by the respondents was Rs. 8,95,578/- and the local agent's commission disclosed was Rs. 44,779/- in the bill of entry.
Thus, the total value of the goods for the purpose of charging customs duty disclosed by them was Rs. 9,40,356/- CIF.4. The amount of 20% of the CIF value i.e. Rs. 1,79,115/- collected by the local indenting agent, M/s. J. Mahabeer & Co. Pvt. Ltd., had been bifurcated by the respondents in two parts. First part, i.e. 5% which comes to Rs. 44,778/- was reflected in the bill of entry as commission of the local agent; and the second part i.e. remaining 15% amount of Rs. 1,34,337/- as installation, technical advice and service charges, which were not liable to be included in the CIF value of the goods.
Only 5% charges were sought to be included in the CIF value of the imported goods for the purpose of charging customs duty. But there is no material on the record to support this bifurcation of the charges.
No letter in this regard issued by the supplier to its local indenting agent, M/s. J. Mahabeer & Co. Pvt. Ltd. separately sent along with the goods and the invoice etc. was produced by the respondents along with the bill of entry. Even at any later stage, the respondents had not placed on record any letter to that effect from the supplier that out of the total 20%, 5% were only chargeable as commission fee while others as installation and technical advice charges, from the respondents by their local indenting agents.
5. Even the local indenting agent, M/s. J. Mahabeer & Co. Pvt. Ltd., has not supported this plea of the respondents that only 5% was paid to them as commission charges and the remaining 15% were charged by them for providing installation, service and technical advice. They had rather in their books of accounts shown the entire amount of 20% i.e.
Rs. 1,79,115/- as commission, received from the respondents. Their officers had even also admitted this fact in their statements recorded during investigation. The adjudicating authority after taking into account the statements of the officers of M/s. J. Mahabeer & Co. Pvt.
Ltd. and the correctness of the entries made by them in their books of accounts, rejected the plea of the respondents and directed the inclusion of the entire 20% amount in the CIF value of the total goods, for the purpose of charging the customs duty. The adjudicating authority had recorded detailed reasons in the order-in-original. But the learned Commissioner (Appeals) has without any sufficient material on the record reversed that order. He has failed to justify the break up of the 20% of the CIF value of the goods as furnished by the respondents for determining the customs duty chargeable on the imported goods. He has recorded findings that there was no mis-declaration by the respondents and that 15% out of 20% was paid by the respondents towards the installation, technical know-how and service charges to the local agents, without having any tangible and cogent evidence before him. He has wrongly accepted the plea of the respondents that since they were not furnished any guarantee by supplier and the 20% charges were compulsorily given by them to the indenting agent and they had come to an understanding with the indenting agent that 15% would be charged towards the installation and technical advice and for these reasons they did not include the same in the application submitted by them for taking the licence. No material evidence has been brought by the respondents to corroborate this plea and as such their bald version for lack of any corroborative evidence, should not have been accepted by the Commissioner (Appeals) for reversing the order-in-original of the adjudicating authority.
6. The break up of 20% of the CIF value of the goods which the respondents paid to M/s. J. Mahabeer & Co. Pvt. Ltd., in fact, had been prepared by them of their own without any basis, arbitrarily. They had wilfully showed 5% out of those 20% as commission charges and left out the remaining 15%, to avoid the appropriate payment of customs duty. If they had mentioned the entire 20% of the CIF towards the commission fee, the duty payable by them would have been much more. They suppressed this fact while getting the licence as well as while obtaining the clearance of the goods. The impugned order of the Commissioner (Appeals) in the light of the facts and circumstances, discussed above, cannot be sustained and must be set aside.
7. In view of the discussion made above, the impugned order of the Commissioner (Appeals) is set aside and that of the adjudicating authority is restored. However, keeping in view the facts and circumstances of the case, we reduce the personal penalty of Rs. 50,000/- imposed on the respondents by the adjudicating authority to Rs. 25,000/- (rupees twenty-five thousand only). Except for this modification, the order-in-original of the adjudicating authority is maintained. The appeal of the Revenue accordingly stands disposed of in the above terms.