East Punjab Traders and ors. Vs. Collector of Customs - Court Judgment

Excerpt:
1. these appeals are directed against the order of the collector of customs, bombay dated 27-5-1985. since three appeals arise out of the same order, they are taken up together and are disposed of by this common order.2. the appellants imported what is described in the relevant invoices and bills of entry is "100% polyester lining material size 44". the price as per invoice was us$ 0.35 c.i.f. and the suppliers are m/s shabi boeki shokai, higashi ku p.o., osaka, japan. the import was effected in three vessels namely, "s.s. raya glory", "s.s. raya fortune" and "s.s. portoroz". the ships arrived on 4-11-1983 and 2-12-1983. the bills of lading were dated as follows :-raya glory 25-3-83 a total quantity of 3,01,393 yards was imported and the value declared was rs. 10,86,375/-. 29 bills of.....

Judgment:
1. These appeals are directed against the order of the Collector of Customs, Bombay dated 27-5-1985. Since three appeals arise out of the same order, they are taken up together and are disposed of by this common order.

2. The appellants imported what is described in the relevant invoices and Bills of Entry is "100% polyester lining material size 44". The price as per invoice was US$ 0.35 C.I.F. and the suppliers are M/s Shabi Boeki Shokai, Higashi Ku P.O., Osaka, Japan. The import was effected in three vessels namely, "s.s. Raya Glory", "s.s. Raya Fortune" and "s.s. Portoroz". The ships arrived on 4-11-1983 and 2-12-1983. The Bills of Lading were dated as follows :-Raya Glory 25-3-83 A total quantity of 3,01,393 yards was imported and the value declared was Rs. 10,86,375/-. 29 Bills of Entry were filed. Originally details of 13 import licences issued under 0.1 and 0.2 of Appendix 17 of Import Policy AM 1983 were given in respect of 5 Bills of Entry of appellants M/s East Punjab Traders. These were subsequently withdrawn and mention was made in a statement by Shri Adarsh Veer Jain representing the appellants of 34 others licences. No details of debit to these licences Bill of Entrywise amongst the 29 Bills of Entry were given. The Special Investigation and Intelligence Branch of Bombay Customs House had gathered intelligence during the course of investigations conducted in another case of import of similar goods from the same suppliers that in respect of the 29 Bills of Entry filed in this case, there has been falsification of the description of the goods, invoice values and date of shipments. The Bills of Entry were, therefore, taken over for investigation. During the course of investigation the officers also searched the office premises of the three appellant- firms at Bombay and certain documents were recovered. A statement was also obtained from Adarsh Veer Jain, Partner of M/s East Punjab traders under Section 108 of the Customs Act, 1962 (hereinafter referred to as the 'Act').

He. represented all the three firms. Ten consignments out of 29 were also examined by the Customs in February, May, October and November, 1984. The investigation further revealed that the dates shown on the Bills of Lading presented alongwith the Bills of Entry were not the correct date of actual shipment of the goods on board the vessels at Japan. According to the Department's investigation the correct dates were as follows:- It was found that having regard to the actual dates of shipment of the goods the period of validity of those licences which were indicated in the Bills of Entry filed by the appellants for clearance of the goods had expired. Therefore, the false date shown on the Bills of Lading filed with the Bills of Entry was found to be with a view to use the expired licences for the consignment. The history in respect of the consignors and the loading of the goods which was gathered by the Department during their investigation with the Shipping Agents and their Indian Agents supported this view :- ss Raya Glory ss Portoroz ss Raya Fortuni.

Container No.ICSU 370701 UFCU-361020 ICSU 3086309 container 20-10-83 2-11-83 16-11-83 examination 21-10-83 2-11-83 16-11-83 Board Vessel 28-10-83 9-11-83 19-11-83d.

Sailing of ship 29-10-83 12-11-83 21-11-83iii. Approx. location 25-3-83 20-4-83 23-4-83 of ship as on Durban, Kobe Japan Karachi- date of B/L Kaoshung on voyage-2W/83.

Bombay.

It was also found by investigation with the shipping Agents at Bombay that in the case of M/s. Aall & Co. the respective shipping company had confirmed on enquiry that the date on the Bills of Lading were false.

It was further found that falsification was done by the supplier of the goods M/s. Shabi Boeki Shokai, who had acknowledged it to the Shipping Company and has expressed regret to them. During the examination of the goods in the docks, samples therefrom were taken which showed that the goods imported were normally treated as "dress and shirting materials" and these were not lining materials as indicated in the import documents including the Bills of Entry filed by the importer. This was based from certain trade enquiries made with garment firms which confirmed that the samples shown to them were not lining material but dress and other garment materials. The imported goods were having finish on both sides with self-design and also had checks. The Custom House, therefore, held that these were dress materials and accordingly were fabrics made from man-made fibre/yarn covered the import of which was banned under Appendix 4 of the Import Policy for April-March 1983 and April-March 1984. Therefore, the licences presented by the importers for the clearance of the goods which were R.E.P. licences issued under Appendix 17 for Export Products group 0.1 and 0.2 namely, lining material and inter-lining material excluding nylon taffeca coated fabrics, were not valid to cover these man-made fabrics. A show cause notice was, therefore, issued on 12-4-84 in respect of 10 Bills of Entry filed on behalf of M/s. East Punjab Traders. As the Bills of Lading appeared to have been tampered with in respect of the dates of issue and shipment, enquiries were conducted by an officer of the Special Investigation Branch of Bombay Custom House at Hong Kong and Japan. The Officer visited Hong Kong, Kobe and Osaka and made enquiries with the steamer-agent and cargo brokers and the Custom House at Kobe and Osaka and collected certain evidences which inter alia included the Export Declarations in respect of all the three vessels by the Exporter/Forwarding Agent for the goods filed before Japanese Customs.

These documents showed that these were given under cover of a letter by the steamer agent the copies of all the documents, other than Customs Export Declarations for the consignment, were made available in original and these documents have been notarised from a Notary Public as true copies of original office copies of these documents. Further the three Customs Export Declarations covering the 29 consignments were obtained by the Steamer Agent from the forwarding agent and from the Stevedoring Agent, Sankyu Incorporated, Osaka. A scrutiny of these documents reveals that the true description, FOB value in Yen and CIF value in US $ of the consignments shipped was declared in the export declaration as follows in respect of each vessel :-Raya Glory ...

US $ 80.65 CIFRaya Fortune ...

US $ 89.78 CIFPertoroz ...

US $100.25 CIF The FOB value in Japanese Yen are also given in these documents. On the receipt of the above values declared the average value of the different types of consignments shipped was worked out as follows :-ss Raya Glory ...

US $ 1.053 per yardss Raya Fortune ...

US $ 0.818 per yardss Portoroz ...

US $ 0.869 per yard The invoice value of these goods in all the cases declared in US $ by the appellants was US $ 0.35 CIF as against the above CIF value of US $ found in the export declaration submitted before Japan Customs. They further found that the export declaration filed for each vessel and in respect of s.s. Portoroz, they covered four invoices, in respect of Raya Glory two invoices and in respect of Raya Fortune six invoices.

These had been subsequently split up and ultimately made into 29 invoices with subsidiary numbers such as 1, 2 etc. The total number of packages and the quantity in the three Export Declarations tallied with the total number of the 29 consignments. Based on this material a supplementary show cause notice was issued on 16-5-84 covering the Bills of Entry included in the original show cause notice. The charges were thus the goods imported are not lining materials but polyester fabrics which were covered by Item 25 of Appendix 4 of ITC Policy AM 1982-83 that the Bills of Lading were entedated, and, in the addendum to the show cause notice, the charge was regarding misdeclaration of the value to the extent of Rs. 7,08,744/-resulting in loss duty of Rs. 9,56,804.40. According to the Department the net price should have been 87.5 Cents as against the declared value of 35 Cents. Though the reply to the show cause notice was in respect of ten consignments, at the time of personal hearing the counsel for the appellants requested that all the 29 consignments should be adjudicated together and waived the show cause notice in respect of the 19 remaining consignments on behalf of M/s. Janata Traders and East Punjab Traders and P.C. Jain and Co. It was said in their reply that the goods imported were lining material and not man-made fabrics. They relied upon the letters to this effect gathered by them from several tailoring establishments, two certificates of experts in the line namely, Shri M.S. Kohli, a diploma holder in textiles and Dr. V.A. Shenoy, another textile expert of the Department of Chemical Technology, University of Bombay and also a letter from the Textile Commissioner to the Madras Customs that material stamped with the description "lining materials" can be allowed. In respect of the charge of under-valuation they produced affidavit of the suppliers, invoices and quotations from others to them and questioned the reliability of the copy of the Export Declarations on which this charge was based. They further denied the charge that they manipulated the date of shipment on the Bills of Lading and argued that in any case the licences produced by them are valid licences which would cover the goods imported. The Collector, however, held that the evidence on record did not prove that there was manipulation of the date of shipment on the Bills of Lading but concluded that the importers were not personally involved in this. He also held that the material was not lining materials and was only man-made fabrics which were banned for import and accordingly held that the licences produced were invalid for the consignments imported. He found that the price as declared in the Export Declarations was acceptable as assessable value under Section 14(l)(a) of the Act, which was higher than the value declared by the appellants in the Bills of Entry. He, therefore, held the charges as established, ordered absolute confiscation of the goods and imposed a penalty on the appellants as follows :-M/s. East Punjab Traders ...

Rs. 10 Lakhs;M/s. Janata Traders ...

Rs. 6 Lakhs &M/s. P.C. Jain & Company ...

Rs. 1.5 Lakhs 3. Appearing for the appellants Shri Habibullah Badsha, the learned counsel pointed out that in respect of the charge of manipulation of the date on the Bills of Lading, the Collector himself had come to the conclusion that the appellants were not personally responsible for such manipulation and in this view of the matter this issue was a minor one in this case. The major issue, according to the learned counsel, related to whether the goods imported were lining materials or not and regarding the charge of under-valuation levelled against the appellants. As regards the question whether the material imported was lining material or not the learned counsel pointed out that there was no definition of 'lining and inter-lining material' in the Import Policy. In this connection he referred to the evolution regarding the item 'lining material' in the Import Policy. In the Policy AM 1975-76 the description of the item was 'lining and interlining material made of cotton, rayon, synthetic or mixed fabrics coated arid/or uncoated (provided samples of materials to be imported are approved by the Textile Commissioner prior to Import)'; a change was made in this description in Policy AM 1978-79 when it was described as 'lining and interlining materials'; this description continued in 1979 and 1980 Policy and in the Policy AM 1980-81 the description was 'lining and interlining materials excluding nylon taffeta coated fabrics'. This description again continued until the Policy period AM 1984-85 when on 21-2-1984 the description was amended to read as 'lining and interlining material of width not exceeding 87.5 cm excluding nylon taffeta coated fabrics'. He pointed out that the concept of width for lining material was brought in only in February 1984 and that before that period any other material so long as it was not nylon and taffeta coated fabrics, could be treated as lining material. The Department also cannot rely on the Export Declarations filed in Japan because these are not taken from original documents but were photo copies obtained from the steamer agent who had obtained them from the forwarding agent and from the Stevedoring agent in Japan. The description of the material in those Export Declarations would have no relevance to the goods imported by the appellants. It is only the description of the type of goods shipped and even lining material falls with the generic description 'textiles' and the Customs Tariff does not have a definite description for 'lining material' which is dutiable under Item 51 of the Customs Tariff Schedule. The counsel also argued that Clause (ii) of Section 139 of the Customs Act, 1962 relied upon by the Collector was not available to the adjudicating authority but referred to proceedings before a Court of Law. Further the presumption in that Section regarding the truth of the content of the documents would relate to Clause (i) of that Section and not to Clause (ii) thereof. Another aspect was that the Collector had rejected the expert opinion given by Shri Kohli and Dr. Shenoy on invalid grounds. The Collector had made much of the fact that the materials were made of texturised yarn but there is no authority cited to show that fabrics made of texturised yarn cannot be used as lining material. Further the Collector has relied finally on personal inspection of the goods based on his own experience as an officer of Customs having dealt with cases of smuggling of textile into India, and in so doing had unlawfully acted as a Judge and witness. He also contradicts himself in several places; e.g. paras 37 and 54 as also paras 38 and 58 of his order.

4. In para 37 of the order he had stated that the lining material should be usually a thin lustrous material with a smooth surface while in para 54 the Collector's finding is that the material is toothin to be used as lining material. He had also stated in his order (in para 38) that the width ' of the lining material will range from 24" to 54" and using this very criterion of the Collector, the counsel stated that the material imported was within this range of having a width of 44" and yet the Collector in para 58 had observed that the material imported is not having the normal width of the lining material. The width restrictions in the Policy were brought into effect subsequent to the import and cannot be retrospectively applied to the consignment imported by the appellants. Further the reliance placed on cost criterion by the Collector is not a conclusive criterion. While the Collector has also applied the criteria of texture, finish and thickness, he had nowhere indicated what are the norms of these aspects in a lining material. On the contrary the appellants have given the authority of technical experts like Shri Kohli and Dr. Shenoy who nave given their opinion that the material can be used as lining material and the letter of the Textile Commissioner to the Customs, Madras supporting their view. The counsel urged that end-use is irrelevant and cited the case law 1983-ELT-1566(SC) wherein the Supreme Court had held that where there is no reference to the use or adaptation of the article, the basis of end-use for classification under Tariff Entr / is irrelevant. He further relied upon the decision of the Madras High Court in Writ Petition No. 61/75 in the case of Kerala Food Packers Vs.

C.B.E.C., where the Court had held that so long as the goods fall under the description of the goods which could be imported, it should be taken to be covered by the import licence. Regarding the charge of manipulation of the date of shipment in the Bills of Lading the counsel stated that this is of no significance because Bills of Lading date has nothing to do and makes no difference to the validity of the imported goods and as they had produced other valid licences. The Collector himself has given a finding that the appellants were not personally responsible. As regards the import licences produced the Collector had found fault with the appellants for having produced certain licences and having withdrawn them, but it is always open to the importer to produce a valid licence for the clearance of the goods even after the issue of the show cause notice and so long as such a licence is produced and is valid for the import the goods ought to be allowed clearance against such licence. The further discrepancy pointed out by the Collector regarding the dates of transfer of the licences are also not of much significance. The counsel referred to the chart of import licences produced during the argument and claimed that they would be valid to cover the consignments. As regards the charge of under-valuation the counsel pointed out that the charge is mainly based on the Export Declarations filed by the forwarding agent at Japan. In this connection the declaration itself is a photocopy which is not signed by Customs and it has been obtained by the steamer agent from the forwarding agent and the Stevedoring agent. There are no invoices produced based on which the price declaration has been given. The purpose of Export Declaration will be different from the purpose of the invoice as such declaration may be required for obtaining incentive etc. The appellants, on the other hand, have let in the evidence of correspondence with the suppliers and also of other imports of the material about the same kind in India as well as affidavit from the suppliers showing the price at which the goods were supplied to various other buyers. The Collector has not accepted the affidavit on the ground that the original was not produced. During the hearing the appellants applied for the production of the original before the Tribunal which was allowed. They further submitted that several consignments of similar material were imported through Bombay Customs and the Department had accepted the value which were similar to the one quoted by the appellants. The invoices and Bills of Entry relating to such instances were also filed during the hearing before the Tribunal and taken on record. It was stated that these could not be produced before the Collector because the appellants were not in possession of these at that time. The Collector had given a finding that the value arrived at by him was the value under Section 14(l)(a) of the Customs Act but for such purposes value of similar goods at the time and place of import in India has to be established. In this connection the counsel placed reliance on the decision of CEGAT reported in 1986-(23)-ELT-507 that the Department should prove the charge of under invoicing by making necessary investigation at major ports with regard to the price at which goods of like kind and quality were being imported through different ports. It has not been done in this case and reliance has been placed only on Export Declarations filed in Japan.

The appellants have given documentary evidence to show that the price had been arrived at after negotiation over the period from 20-1-83 to 3-3-83.. The correspondence between the supplier and the appellants would show that the price was decided after negotiation and he referred to Vol. 11 of the Paper Book where the letters of offer and acceptance have been furnished. It may be seen therefrom that on 7-4-8.3 the supplier had confirmed supply at 79.00 Japanese Yen; on 19-1-83 proforma invoice was made at 84.70 Japanese Yen per yard, almost at the same price. The Collector has also ignored the prices quoted in the 'Japanese Textiles News' which were filed for similar articles showing the prices were comparable. Further in cases of under valuation the Department has also to show that there has been unauthorised remittances by the importers which is absent in this case. According to the counsel if the export declaration relied upon by the Department is taken away, there is no other evidence to prove the charge of under-valuation. This export declaration is that price declared for the goods in Japan which is not the same as valuation of the goods in India under Section 14(l)(a) of the Act. The export invoices referred to in para 122 of the Order-in-Original have not been produced. The export declarations cannot, therefore, be the basis for not accepting the invoice value. The counsel in this connection placed reliance on the decision of the case reported in 1985-ECR-646 (Rakesh Press) = 19S5(21)-ELT-140 (Tri), 1984-ECR-1727 (Gidwani Imports and Exports) and 1985-(22)-ELT-283 (Automotive Enterprises Vs. Collector of Customs, Bombay). He emphasised that there is no evidence of any unauthorised remittances abroad by the appellants to support the charge of under-invoicing. The counsel also cited certain case law which would show that accepting office copies and copies as evidence has been frowned upon by the Courts. In this connection he cited the judgment of AIR-1958-AP-22 and AIR 1976-Bombay-264. The counsel further urged that in any case where there were two views possible, the benefit of doubt should go to the assessee. A question was also raised by the Bench whether the licences issued to M/s. Adya Industries in respect of a letter of authority was issued to the appellants would be valid for the clearance of goods in view of the fact they have not filed an appeal.

The counsel answered that penalty is a proceeding _in personurn while confiscation is a proceeding in rem. Merely because M/s. Adya Industries have not filed an appeal it does not mean that the importer who has a letter of authority ceases to have any right. He is the, person who has filed the Bills of Entry and is responsible to the Customs Department. He will have a lien on the goods and the Customs have treated him as an importer interms of Section 2 (26) of the Act.

The question of ownership of these goods, according to the counsel, is immaterial as far as the proceedings under the Customs Act are concerned. It is a matter purely between the licence holder and a IA holder. Para 383 of the Hand book on Import and Export Policy states that the provision of Section 147 of the Customs Act will apply. The validity of the import will depend on whether there is a valid licence to cover the import and ownership is not relevant. The counsel finally pleaded that in any event the absolute confiscation of the goods and the quantum of penalty on the appellants was harsh and excessive.

5. The arguments of the Department were putforth by the learned S.D.Rs. Shri. Ajwani and Sh. Doiphode. It was pointed out that Export Declarations filed in Japan relating to the goods clearly show that they are relatable to the consignment imported by the appellants in regard to markings, invoice price etc. Dealing with the documents now filed by 'the appellants namely, the original of the affidavit filed by the Japanese suppliers the SDR submitted that the Collector has specifically required the production of the original but the appellants had not done so but had belatedly come forward with it and because of this very factor of timelag, its evidentiary value is questionable.

Regarding the other documents like Bills of Entry and invoices of other imports, the SDR questioned why these were not produced before the Collector. The Bills of Entry produced were not legible and Exchange Control Copies were not legible to facilitate tracing of related files which is essential as there is indication on the Bills of Entry that in those cases the consignments had been cleared after adjudication. He also pointed out that the imports were not proximate since the imports in one of the Bills of Entry was 25-2-83 whereas the present case it was in November/December 1983. He also drew attention to para 30 of the Order-in-Original which contains an admission of the appellants regarding the Bill of Lading and the date on which the goods were put on board. In para 30, the appellant's reply has been extracted as follows :- "We say that the contracts were on CIF basis and as per the international law on the subject, the title having passed on to us as the purchasers on the date when the goods were handed over to the agents for shipment, the said agents have rightly put the date on the Bills of Lading of March/April, 1983 even though the goods were put on Board in October, 1983." The S.D.R. further pointed out that there was an offer for cross-examination of the witnesses from abroad but the appellants had chosen to waive such cross-examination as brought out in para 31 of the Collector's order. Therefore, they cannot question the admissibility of the documents such as the Export Declarations at this stage. As for the case law cited by the counsel against admission of photo copies in evidence, the S.D.R argued that these were principles to be followed by the Courts and are not relevant for adjudication proceedings where the rigours of the Evidence Act do not apply and in any case the documents have already been admitted in evidence during the adjudication proceedings in which the appellants participated and it is now too late to raise any objection of their validity as evidence. He referred to the CEGAT decision (in para 25) in the case of "Orient Enterprises v.Collector of Customs Cochin" reported in 1986-(23)-ELT-507 regarding acceptability of a statement as evidence in adjudication proceedings.

Relating to the submissions of the appellants' counsel on Section 139 of the Customs Act admittedly are applicable to Court proceedings the S.D.R. pointed out that when the Section required the Courts to presume the correctness of documents it should be more so for the adjudication authorities. Even the Supreme Court had laid down that adjudication authorities can lay down their own, procedures. The documents obtained by the Customs Officers from Japan have all been copies of original office copies except for the Export Declarations and notarised. As regards the question whether the goods are lining material or not, the learned S.D.R. submitted that the definition in the Fairchild's Dictionary of Textiles would show that it is generic term covering many materials and the Collector had found that these are thinner than the outer garment materials and the cost was also an important factor, as the lining material cannot cost as much or more than the main garment material and the Collector has also brought out how lining could not be made out of texturised yarn which is a finding relatable to the cost factor. The certificate produced by the appellants from two textile experts namely, Shri Kohli and Dr. Shenoy, were also not helpful in the sense that they had not indicated whether the material actually imported was being used as a lining material. The Collector has given an elaborate finding as to why these certificates are unreliable. The S.D.R. also wondered how the appellants got hold of the letter addressed to the Assistant Collector of Customs by the Textile Commissione. at Madras in the course of official correspondence and in any case the opinion expressed therein by the Textile Commissioner was not based on any sample from the present consignment. He also noticed that it was an unsigned copy. The S.D.R. referred to the Import Policy wherein it has been laid down in para 325 of the Handbook for the year 1983-8^ that the Customs authorities have the final say in the matter to determine whether the goods are as per the Import licence or not.

The Collector has also personally examined the samples from the imported consignment in the presence of the counsel and samples had also been tested in the Customs laboratory. These samples were also produced before the Tribunal during the hearing. The' Collector has added his observation on inspection of the samples to the other aspects of this material like thickness, width, cost already observed by him and had come to the conclusion that the goods in question cannot be regarded as a lining material which is a valid conclusion.

6. Arguing on the valuation aspect of the case the learned S.D.R. Shri Doiphode pointed that though the value declared before the Japanese Customs in the Export documents differed, a uniform value had been declared in the Bills of Entry and invoices even though there is a difference in variety of the fabrics. He referred to the requirement under Customs Law in Japan cited by the Collector in his order and submitted the FOB rate shown in the Export Declaration is the export price as per Japanese Law based on invoice issued by the consignor to the consignee by a particular vessel. While the quantity and marking and invoice price for 12 Bills of Entry tallied, there is difference in the value declared as in the Export Declarations at Japan and in the Bills of Entry in India relating to vessel s.s. Portoroz. The invoices have main numbers allotted and split up numbers when presented to Indian Customs in which the prices are lower than those shown in the Export Declarations. In view of the fact that the markings, quantity, name of the consignor and consignee, vessels name all tally with the goods imported the value declaration in the Export Declarations as per requirements of Japanese Customs law can validly be taken as value for assessment purposes. Further the copy of the book entitled "Japanese Law and Regulations" concerning customs duty and customs procedures containing the Japanese Customs Law had also been given to the counsel for the appellants for study and preparation of this case.

7. Rebutting the appellants' argument that the Export Declarations .

was unreliable because of shipment from Osaka whereas the documents obtained from Japanese Customs the S.D.R. pointed out that Kobe and Osaka were twin ports and Osaka is indicated as port of shipment. As for the claim by the appellants of the supply of the same goods at similar prices to other buyers only the supplier's affidavit has been produced and the related invoices were never shown. Further the contract dated 20-12-1922 by the Japanese shipper with the Japanese supplier was for 5 crores yards of poly dyed and white material whereas confirmation on the same day show for 3,01,393 yards of 100% polyester lining material which is exactly the quantity imported in the 29 Bills of Entry.

8. As regards the price quotations from 'Japanese Textiles News' as evidence produced by the appellants, the S.D.R. pointed out that this could not be of much help to them as these are prices in Japanese market relating to quotations in Korea and Taiwan; they do not refer to the prices of the present import. Further according to him on reference need be made to such documents as in the present case the related Export Declaration for the same goods in Japan had been found to show a higher price for the goods.

9. As regards the case law cited by the appellants' counsel the S.D.R.pointed out that these are distinguishable from the present case since the Department had conducted a detailed enquiry to bring on record sufficient evidence to discharge the onus on them to prove under-invoicing. It is not necessary that there should always be evidence of unauthorised remittances in such cases which after all is only one piece of evidence of underinvoicing and it cannot be the sole basis to prove underinvoicing. On the other hand, the case of Automobile Enterprises case cited by the appellants would go to support the Department's case; the Tribunal in that case had accepted the evidence of the indenting agents to the Indian buyer offering the goods at a price as basis for assessable value. In the present case also the Department has produced proof of undervaluation for the very same goods. Further in the case law cited in 1983-ELT-2177 - Satellite Engineering Co. v. Union of India - the authorities' reliance on quotations from supplier abroad for establishing a charge of under-invoicing had been upheld and he pointed out that in this case the value declared in Export Declarations is FOB in Japanese Yen and GIF US $ Bombay for the same goods. He also drew attention to the case law 1984-ECR-2191 that the Department is not expected to prove the case with mathematical precision. In the case of Orient Enterprises [1986-(23)-ELT-507] the Tribunal only held that the Department should have made enquiries in other ports whereas here thorough enquiries have been made regarding the under-valuation. Indisputably rnan-made fabrics are banned for import under Appendix 4 of AM 1983 Import Policy and hence the present import which is found to be of man-made fabric and not lining material, there cannot be a contemporaneous import of banned item for which enquiries can be made regarding value. As regards the contention that in inspecting the goods and passing conclusions on his own the Collector having acted as a Judge and witness, the S.D.R. cited case law 1986-(23)~ELT-116 to hold that the Collector was well within his right and to examine the goods and come to his own conclusions.

Rebutting the argument of the counsel for the appellants that the end-use is not relevant, the S.D.R. contended that in this case the very description of the material as lining material shows its use and the use to which it is adopted and hence it is very relevant in this case. The question would be whether the material would be originarily used as lining material. Just because a few may use as lining material, it would not become a lining material. He cited the case of Collector of Customs, Madras Vs. H.K. Shah - AIR - 1963-Madras-399 - wherein there was an opinion on similar goods by the Chief Controller of Imports and Exports as also inspection of the goods imported, by the Collector himself and it was held that the opinion of the Chief Controller of Imports and Exports regarding the previous year's import was irrelevant and that the Customs authorities finding on the inspection of the goods actually imported is final. The learned S.D.R.concluded saying that it was clearly established by evidence on record and by examination of the goods that the material imported was not lining material but man-made fabrics which are banned for import. The licences produced by the appellants are invalid to cover the import of man-made fabrics. The value declared as contained in the Export Declarations for the same goods in Japan was the correct assessable value and, therefore, the charge of under-valuation is also proved.

Regarding the case law cited by the appellants on Rakesh Press and of Gidwani Industries, the learned S.D.R. pointed out that the effect of the decisions was that the onus of proof to establish under-valuation was on the Department and that it should also have been shown that there have been un-authorised remittances abroad whereas in the present case, detailed enquiries have been conducted by the Department to bring on record sufficient evidence to discharge the onus on the Department to prove under-invoicing and as for unauthorised remittances this is only one piece of under-invoicing. He further placed reliance upon the Gujarat High Court decision in the case of Gujarat State Fertilisers Co. Vs. Union of India, reported in 1980-ELT-397-(para 21) to the effect that when actual price is ascertainable, there is no need to make further enquiries regarding the price of like goods in the wholesale market. In this case, on the other hand, the actual price at which the very same goods have been sold to the appellants have been ascertained and, therefore more further enquiries are called for regarding contemporaneous import or. import through other ports.

10. In his reply the learned counsel Shri Habibullah Badsha submitted that as regards the charge of back-dating of Bills of Lading, the Collector had not found the appellants guilty as seen from para 97 of the Collector's order. It is not the case that on the date of import the goods were banned. As regards the issue whether the goods imported are lining material or not the. Policy description in the Import Policy over the years shows that only nylon taffeta coated fabrics were excluded and the width concept for lining material brought about in 1984 cannot be made applicable to the appellants' import which was prior to this amendment of 1984. The material imported is also within the range of width that the Collector himself has laid down for the lining material and his finding that it was not the normal width is, therefore, contradictory. Having accepted the various textile meaning like, Fairchild's Dictionary of Textiles, there was no scope for personal inspection of the material by the Collector and for passing the order based on personal inspection and his own experience. The finding of the Collector is, therefore, biased. Inspection, the learned counsel argued cannot take the place of evidence and in this connection he cited the case of 'Koisam Kumar Singh and Another Vs. State of Manipur - l986-(25)-ELT-l 11. As regards the issue of valuation the learned counsel placed reliance on the case of 'Orient Enterprises Vs. Collector of Customs, Cochin' - lV86-(23)-ELT-507 - wherein it is laid down by the Tribunal that having laid the charge of under-invoicing against the party, the Department ought to have conducted enquiries in other major ports regarding contemporaneous import. No such thing has been carried out by the Department in the present case. As regards the authenticity of the value in the Export Declarations the counsel pointed out that this document had not been signed by the shipper or by the Customs authorities in Japan. Only these two could have spoken for the veracity of the contents of the declarations including its value. There is nothing to indicate whether this enquiry had been made at this source at all. Hence no reliance can be placed on these Export Declarations, more so, when only photo copies have been obtained on a document which had been secured by the Steamer Agents from the forwarding agent and from the Stevedoring agents. The evidentiary value is also questionable. At best it is an incomplete document. The Collector had also erred in his observation that the quantity contracted by the Japanese Shipper with their Supplier in Japan exactly tallied with the quantity imported in the 29 Bills of Entry and that this confirmation in their contract with the supplier and the shipper and had taken place even in advance of the order placed by the appellants on the Japanese shipper. This was erroneous because the quantity shipped in the 29 Bills of Entry was 3,01,393 yds. whereas the order placed by the appellants with the shipper was 3,10,000 yards. Therefore, no adverse inference could be drawn by the Collector. Above all, the very same Customs House had accepted lower value for the same goods as had been shown in the invoices and the Bills of Entry filed as additional evidence before the Tribunal. The counsel pointed out that the Collector had rejected the affidavit filed by the appellants from their shippers stating that they have supplied the same goods at US $ 0.30 to 0.35 per yard CIF to other countries, merely on the ground that the original of the affidavit had not been produced. This document in original was produced before the Tribunal during the hearing. The affidavit itself is a sworn document and is a piece of evidence. The Collector did not ask for the invoices nor did he cross examine the deponent. The contents of the affidavit should have been accepted as true. The Collector ought to have given consideration to the various documents produced by the appellants regarding the correctness of the value declared by them and should have accepted the value declared as assessable value under Section 14(l)(a). Thus there was no case for confiscation of the goods and imposition of personal penalty on the appellants.

12. We have given careful consideration to the submissions made by the learned counsel Shri Habibullah Badsha and the learned S.D.Rs S/Shri Ajwani and Doiphode.

13. One of the charges in the show cause notice is regarding falsification of the dates in the Bills of Lading and in this regard the Collector has given a finding that the appellants could not be held personally responsible for such falsification although he has concluded that they were the beneficiaries of such manipulation as otherwise the period of validity of the licences indicated by them initially in the Bills of Entry would have expired. But since they did indicate that they possessed other licences which would have validity period to cover the imports and since the Custom House had in fact allowed mention of these other licences to come on record, nothing much turns on this controversy.

14. The next issue is whether the goods imported are lining material, or man-made fabrics which are banned for import. The appellants claim that the goods 100% Polyester lining material is in conformity with the description of the item in product group 0.1 of Appendix 17 of ITC Policy AM 1982-83 and also in conformity with the definition of the term 'lining' vide Fairchild's Dictionary of Textiles and Mercury Dictionary of Textile Terms, as observed by Collector in paras 34 and 35 of his order, reproduced below :- "34. The first question is whether the fabrics imported are lining material or fabrics other than lining material. FAIRCHILDS DICTIONARY OF TEXTILES has a definition of lining material and both S/Shri Sharma and Kantawala relied on the same. The definition is as follows and I quote the full text :- 'A generic term for fabrics used to cover inner surface, especially when the inner face employs different material than the outer surface. These include garment linings and those used in mechanical utilities and serve to prevent wear on one side. Linings are produced in a wide range and are generally smooth, Linings are produced in a wide range and are generally smooth, lustrous fabrics made of silk or manmade fabrics and/or mercerised cotton. They may be woven in a plain, twill or satin weave. Formerly principally made with cotton warp and luster wool, alpaca or silk filling.' 35. Both of them also relied on the definition given in the "Mercury Dictionary of Textile Terms" which states that linings are mamly fabrics used for coats, dresses, gowns, mantles, etc. The most important lining material mentioned by this book are, 'Aplaca, Seatrica Twill, Betary, Check Italians, Cotton, Moire, Clissages, tastings, Leavantines, Lustre, Melangs, Moire Silk Rainproof, Serge, Short Brocade, Silk, Rayon, Taffeta, Twills, Union Venetian." They have further produced the opinions in their favour given by Shri Kohli and Dr. Shenoy as also the letter from the Textile Commissioner to Madras Custom House. They have also produced certificates from several persons in the trade like tailoring establishments stating such material is used as lining material. They have putforth the contention that the amendment in the description of the item in Appendix 17 of the Import Policy which came into effect on 21-2-1984 specifying width of 87.5 cm for lining material was subsequent to their imports, and cannot be retrospectively applied. The Collector's findings have also been attacked as being based on his own experience and as being contradictory in certain respects and as being vague in the sense that he has not indicated what should be the criteria of texture, finish and thickness of lining material.

15. Admittedly the definitions of lining material appearing in Fair-child's Dictionary of Textiles and Mercury Dictionary of Textile terms would show that a wide range of materials could come within the purview of definition as lining material. In respect of the certificates from Shri Kohli and Dr. Shenoy it is observed that they had not given their opinions on testing any samples from the imported consignments but have tested shipment samples, as stated by the appellants before the Collector. Shri Kohli's certificate is seen to be recommendatory. He has stated that the material because of its qualities of light weight, easy washability and shrinkage resistance can replace traditional cotton lining and has strongly recommended its use as lining material for jackets of artificial leather, wind-cheaters etc. Similarly Dr. Shenoy has opined that the material because of dimensional stability, fast colour, softness and thinness can be used as ideal lining material especially for polyester dress material. From the above it is clear that these certificates are not of much avail as they do not support an assertion that the material is in fact being Used as lining material.

16. As for the opinion expressed by the Textile Commissioner in the letter to the Madras Custom House the points on which the Textile Commissioner's opinion was sought for from the Custom House are not before us, and also it is not known whether it was with reference to material comparable with that imported. A perusal of the letter shows that the Textile Commissioner has not given any categorical opinion but has gone by the marking on the material and has stated that there are occasions when lining material used for high priced suitings etc. are of a high quality. Clearly one cannot take this as saying that such material is commonly used or is generally bought and sold as lining material. Besides its inherent vagueness the letter cannot also have the stamp of an authoritative pronouncement on the issue, because it has been laid down in the ITC Policy AM 1982-83 in para 222, that in all matters emanating from Export Houses, selling agents, traders, etc.

as well as the interpretation of the Policy proper and the procedure, the persons concerned may address the Chief Controller of Imports and Exports, New Delhi for necessary advice and that any interpretation of the Import Policy given in any other manner or by any person will not be binding in law. The para goes on to say that any interpretation of Import and Export Policy given by the Chief Controller of Imports & Exports will prevail over any other clarification in the same matter given by any other authority. If is not the appellants case that they have sought for and obtained any clarification in this matter from the C.C.I.E.17. The appellants have produced certificates from several units saying such material is used as lining material. But the Custom House had also obtained certificates from some tailoring establishments stating that material is dress material. The counsel for the appellants before the Collector had objected to this on the ground that the persons who gave the opinions had not been shown the goods from the actual consignments.

The Collector had upheld this objection and so, by the same logic, the certificates produced by the appellants cannot also be relied upon. The Collector has also pointed out certain discrepancies in these certificates In paras 42 to 44 of his order which are significant. In the result, the certificates produced have rightly been discarded.

18. The appellants claim is that the description of the item at the material time of import in the Import Policy applicable fully covered the 100% polyester lining material imported by them, as the material is not Nylon or Taffeta coated fabrics which only are excluded. They have further argued that the width criterion specified in the Policy on 21-2-1984 was subsequent to their import and cannot be retorspectively applied. This argument of the appellants is not acceptable having regard to the nature of the amendment which only added the specification that the lining material should be 87.5 cm width (equivalent to 35 inches). But for this aspect, no fundamental change has been made, in the material that is allowed to be imported. The amendment is therefore, clearly clarificatory in nature, as a measure of abundant caution, and to put matters beyond doubt. Such amendments can be retrospectively applied, and this view is supported by the decision of the Supreme Court in 'Maharaja Book Depot' case reported in AIR-1979-SC-180. It has been observed by the Supreme Court In para 7 of the judgment in connection with the fact that the term 'paper' in Item 14 of Schedule I of the Order in question was subsequently enlarged to include specifically 'exercise notebook' and that it would not lead to the conclusion that before such enlargement the term 'paper' did not include 'exercise notebook'. The Supreme Court observed that in their view the amendment and enlargement of the item 'paper' so as to include specifically 'Exercise Note-book' was made ex-majori cautela (from greater caution) to make things abundantly clear and therefore, no inference as regards initial legislative intent can be drawn as had been claimed by the appellants in that case. The Collector has also referred to the width of the material as a criterion having relation to wastage and cost factor although admittedly he had made contradictory observations in laying down the range of width and concluding that the material imported was not in confirmity - vide paras 38 and 58 of the order-in-original. The material imported by the appellants being of 44" width does not conform to the width of 87.5 cm (35") specified in the Policy and hence it would fall outside the purview of lining material appearing in Appendix 17, and, as man-made fabrics its import is banned under Appendix 4 of AM 83 Policy. Consequently the licences against which clearance was sought by the appellants which are issued under Appendix 17, are not valid to cover the import, and hence, for the reasons stated above, the order of the Collector holding the import as unauthorised is upheld.19. The next issue is regarding the valuation of the goods for assessment purposes. The Department's case rests on the Export Declarations filed before Japanese Customs, copies of which had been obtained from the Steamer Agents. The appellants have argued that the Collector was wrong in holding that these are valid in evidence and their contents presumed true by virtue of Section 139(ii) of the Customs Act, 1962. The Section reads as follows :- "139. Presumption as to documents in certain cases. - Where any document (i) is produced by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or (ii) has been received from any place outside India in the course of investigation of any offence alleged to have been committed by any person under this Act, and such document is tendered by the prosecution in evidence against him or against him and any other person who is tried jointly with him the Court shall - (a) presume, unless the contrary is proved, that the signature and every other part of such document ;which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person's handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested; (b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence; (c) in a case falling under Clause (i) also presume, unless the contrary is proved, the truth of the contents of such document." From the above it is clear that Courts are to presume truth of the contents only with reference to documents produced by any person or seized from the custody or control of any person. Therefore, the submission in this regard putforth by the appellants has a lot of force and has to be accepted. However, the contention in this regard of the S.D.R. is that in any case the provisions of Section 139 are applicable to Court proceedings and not to adjudication proceedings which are different and to which the rigorous of the Evidence Act do not apply.

This is a well settled principle and has to be accepted. It is also seen that the copies of Export Declarations have been furnished to the appellants with an opportunity to put-forth their defence. The further objection was that such photo copies would not be valid as evidence, for which certain case laws have also been cited. But these case laws again are of cases before Courts of Law and cannot have application in adjudication proceedings. The appellants have further assialed the Export Declarations on the ground that there had been no cross-examination to prove them, and that they have not been signed by the shipper or by the Japan Customs authorities and that the container number shown therein do not tally with those imported. However it is observed that the Department had offered cross-examination of the steamer agents from whom the Export Declarations had been obtained and the appellants have not chosen to avail of this opportunity. The decision of Orient Enterprises case cited by the appellants shows that in that case the Tribunal had discarded certain telex messages relied upon by the Department for proving under-valuation on the ground that the messages were in the form of typed copies unauthenticated, the source of which was also not forthcoming from the Department, whereas in the present case the material available are photocopies of the Export Declarations and the source from which they were obtained has also been mentioned in the show cause notice. It has now been submitted that non-examination would not give the documents evidentiary value and that the steamer agents were not the right persons who could speak for the contents of the declaration and that it should have been either the Japanese Customs or the shippers. But this argument now made is not of much avail after having missed the opportunity to establish this contention by examining the steamer agents. The other objection is that the Export Declarations have not been signed by the Japan Customs or by Shipper. However it is seen that the Export Declarations bear serial number and the stamp of Japan Customs, and further, even in some copies of other Export Declarations before Japan Customs produced by the appellants, also apart from similar Customs Stamps, no signature of Customs or shipper is seen. It is not the case of the appellants that the copies of Export Declarations are forged or bogus documents. As for the discrepancy relating to container numbers, it is observed that other particulars regarding names of consignor and consignee, destination, marks and carton numbers, and the quantity of material shipped tally with the goods imported. Undoubtedly the Custom House has only obtained photo copies and not originals of the Export Declarations. But it has been stated that these were obtained from steamer agents who had actually dealt with the goods in Japan in the course of export to India, and they have obtained these from the forwarding agents and the stevedors. The forwarding agents had filed the documents and the stevedor comes into possession of the documents during the course of the loading of the goods for exportation. In this context it is pertinent to observe that if the aopellants felt that the copies of the Export Declaration did not relate to their consignments, they could have obtained the correct documents from the shipper which they have failed to do. The Export Declarations have been taken on record and relied upon in the adjudication proceedings. Before the Collector they had only stated that the value declared may have been inflated for incentive purposes. It has also been shown that the FOB value declared in the Export Declarations is in compliance with Article 59(2) of the Cabinet Order under the Japanese Customs Law. Article 68 requires an invoice to be submitted alongwith Export Delcarations.

Although the Export Declarations also contain the CIF value, it is not a requirement specified under law. But it has been shown in the Collector's order that if CIF value is worked out adding freight and insurance to the FOB value declared in the Export Declarations, it approximates to the CIF value declared therein. The appellants have argued that the value mentioned in the Export Declarations before Japanese Customs cannot be accepted for the purposes of assessable value under Section 14(l)(a) of the Customs Act because that cannot be the price prevalent at the time and place of importation and that the Collector has misconstrued Section 14(l)(a) of the Customs Act.

However, it is seen that there is sufficient grounds to conclude that the Export Declarations relate to the goods imported as the quantity, markings and carton numbers tally and the appellants have explained that the description of the goods as Dobbi voil, Dobby Palace, Habutae in the Export Declarations was as per Brussels Tariff Nomenclature and that there is no Tariff Heading separately in the Indian Customs Tariff Act for lining material. The price shown in the Export Declaration is price at destination Bombay of the goods sold to the appellants. When such price itself has been ascertained enquiries regarding contemporaneous import are not called for, and hence the CEGAT decision in Orient Enterprises case is not comparable and in this connection the case law cited by the learned SDR is relevant (1980-ELT-397) in the case of 'Gujarat State Fertilisers Co. Ltd. Vs. Union of India and Ors.' would be applicable wherein it has been laid down while dealing with Section 4(a) of the Central Excises and Salt Act, 1944 that if there is an actual price for the goods themselves at the time and place of sale, that is to be taken as the wholesale cash price. It is also observed that a uniform price US $ 0.35 declared in the invoices covered various types of material like plain fabrics, those with self designs, and those with checks and prints. There is nothing in the correspondence with the supplier to show that the supplier had fixed the same price irrespective of quality which definitely has a bearing on cost.

20. Another reason for accepting the Export Declaration price under Section 14(l)(a) of the Customs Act is that it reflects the price at which goods have actually been sold to the appellants for delivery at Bombay vessel-wise. Section 14 of the Customs Act reads as follows :- "14. Valuation of goods for purposes of assessment. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be :- (a) the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale: For purposes of establishing value under Section 14, price lists of foreign suppliers are considered sufficient as in such a case the price at which goods are offered for sale is indicated which is a requirement under Section 14. In this connection the case law cited by the S.D.R.in the case of 'Satellite Engineering Ltd.' - 1983-ELT-2177 (Bombay) - is of relevance. In that case the Customs authority had penalised the party for undervaluation based on two quotations, received from foreign suppliers quoting the price in India. The "Court held that the authorities were perfectly justified in relying upon the quotation for establishing that the prevalent value for the imported goods was higher. The court observed that it was not necessary for the Department to offer the intending importers at the higher price for cross-examination in the Departmental proceedings as it would be well-might impossible to gather any material in future and the Court observed that the petitioners having been made aware of the. higher quotation it was for them to establish from that material that the value quoted in those quotations was not the proper value. In this case the actual price at which goods have been sold to the appellants for delivery at Bombay shipped by each vessel has been ascertained, and hence its acceptance by the Collector as value under Section 14(l)(a) of the Customs Act is in order.

21. Regarding affidavit of Suppliers regarding supply at the same price to other countries produced by the appellants, Collector rejected it as the original was not produced. The appellants contend that this is erroneous and have produced the original during hearing before the Tribunal. The argument of the appellants that when Collector had himself placed reliance on photocopy of the Export Declarations, he cannot at the same time reject the suppliers affidavit for want of original, has a lot of force and has to be accepted. However, it was not the sole ground on which he had rejected this evidence as he has also observed, "...this price may be that of lining material but not of the textiles shipped as per export declaration." A perusal of the affidavit shows that the description of the goods in the invoice has not been mentioned in the affidavit, which would be relevant for a comparison and also since various kinds of fabrics can be used as lining material. The appellants had produced certain other affidavits from Japanese suppliers to show that the invoice value on their exports were less than the export value declared in the export declarations.

The Collector had observed that significant portions in the Export Declarations had been blacked out and had pointed out certain other discrepancies in para 124 of his order. However, it was stated during the hearing before us that the appellants were not placing any reliance on these. The Collector in his order had also raised the question as to how the exact quantity of fabrics as covered by the 29 Bills of Entry filed by the appellants had been purchased by the Japanese suppliers in advance of the conclusion of the contract itself, and the Collector has from this gone on to draw adverse inference regarding value declared.

The appellants suppliers had entered into contract with Japanese suppliers for 5 million yards on 20-12-1982 and on that very day they have confirmed the order for 3,01,393 yards, which is the quantity imported by the appellants although the appellants' order with suppliers was later in March 1983. Rebutting this conclusion of the Collector the appellants have pointed out, and rightly too, that their contract with the supplier was for 3,10,000 yards, and not 3,01,393.

Further, it is also seen that this point had not been put to the appellants during the adjudication proceedings and hence it cannot validly be raised in the order.

22. The appellants have produced before the Tribunal certain Bills of Entry and invoices of import lining material one of which is that of M/s. Janata Traders, one of the appellants, wherein the Custom House had accepted lower values. These documents were not produced before the Collector as they were not available with the appellants at that time.

But this is strange considering that one of them was that of appellant M/s. Janata Traders who were also party to the adjudication proceedings. The SDR had raised a point that these imports were not about the same time as the present imports which point has not been controverted. Apart from this, it is observed that in all these instances the consignments had been cleared on adjudication and on payment of fine. No copies of the related adjudication orders are available though the learned counsel stated that valuation of the goods was not an issue adjudicated upon in these cases. However, the acceptance by the Custom House of the values in these invoices and Bills of Entry for the earlier import does not ipso facto mean that the values declared for the present import have to be accepted because it is seen that even in the present case the show cause notice initially issued was not specifically for under-valuation which was included in the addendum to the show cause notice issued subsequently. The material for such a charge had been obtained during the enquiries when following up the charge of filing of back-dated Bills of Lading. Viewed in this background the acceptance by the Custom House of values declared for earlier imports of lining material will not advance the case of the appellants.

23. The appellants have submitted that in regard to the goods clearance of which was sought against the import licence issued to Adya Industries with letter of authority in favour of the appellants, their submission is that in terms of Section 147 of the Customs Act they are entitled to clear the goods through Customs and penalty being proceeding unpersonam, the fact that Adya Industries on whom personal penalty has been imposed by the Collector have not preferred an appeal, would not be material. The question of ownership of the goods is one purely between the licence-holder and letter of authority holder. It is, however, found that though the licence issued to Adya Industries had been mentioned as one of the licences, no quantity of the imported material had been specifically allocated for clearance against that licence. The issue is also not material now in view of the finding supra that the licences in the appellants possession are not valid to cover the goods imported.

24. In view of the discussions in the foregoing paras it is held that the goods imported by the appellants are not lining material occurring against product group 0.1, 0.2 under Appendix 17 of the Import Policy AM 1982-83. Hence the import licences produced by them issued under Appendix 17 are not valid to cover the goods. The import is, therefore, unauthorised.

25. It is also held that the value declared in the invoices and Bills of Entry does not represent the correct value for assessment and the value contained in the Export Declarations, being the price at which the goods are actually sold to the appellants, has rightly been accepted as assessable value under Section 14(l)(a) of the Customs Act, 1962.

26. It is further held that the appellants cannot be held to have been personally involved in the falsification of the dates in the Bills of Lading relating to the three vessels and to penalise them on this account is bad in law.

27. The Collector in his order has ordered absolute confiscation mainly for the reason that the items are banned and are under-valued and also having regard to the falsification of the Bills of Lading date relating to the shipment. However, in view of the findings on this aspect of the manipulation of the Bills of Lading date already given in this order, and considering that the goods have remained under confiscation for nearly three years now, there would be a case for allowing the goods to be redeemed on a suitable fine in lieu of confiscation. Considering that the goods are banned items, it will be appropriate to fix 100% of the value of the goods as fine in lieu of confiscation. This value will be the value adopted by the Custom House for assessment purpose under Section 14 of the Customs Act, 1962. For the same reason as stated above for allowing redemption of the goods, a lower penalty would also be called for. Accordingly the penalty is reduced as follows :M/s. East Punjab Traders : From Rs. 10 lakhs to Rs. 8 lakhs (Rupees eight lakhs).M/s. Janata Traders : From Rs. 6 lakhs to Rs. 5 lakhs (Rupees five lakhs).M/s. P.C. Jain and Co. : From Rs. 1.5 lakhs to Rs. 1 lakh (Rupees one lakh) 28.[Order per : M. Gouri Shankar Murthy, Member (J)]. - To our regret, we are unable to agree with our learned brother Venkataramani on the questions as to whether the Revenue proved beyond any shadow of doubt that - (a) the imported goods are not lining material and, consequently, did not answer the description in the licence; or (b) were not imported under I/Licences which were valid and subsisting; or (c) appellants in these appeals had falsified the description of the goods invoice values or dates of shipment; or (d) there has been any misdeclaration on the part of -the appellants either of value or description that would entail confiscation under Section 111 or levy of penalties under Section 112 of the Customs Act, 1962 (hereinafter, the Act for short).

29. Not being goods covered by Section 123 of the Act, the burden rests heavily on the Revenue to prove and establish the aforesaid questions of fact and the benefit of doubt, if any, should, necessarily, go to the appellants in these appeals.

30. The facts had been set forth in sufficient detail by our brother and need not be repeated except to the extent necessary.

31. The third of the aforesaid questions regarding involvement of the appellants in falsification of dates of shipment or dates of the Bills of Lading was negatived by the adjudicating officer, the Collector himself and our brother also holds that "nothing much turns on this controversy. On the second, our Brother has held that the Customs had allowed the substitution of the earlier licences with licences subsisting on the date of import and we agree with him in answering the question in favour of the Appellants.

32. On the first question, i.e., the issue as to whether the imported goods were, indeed, lining material - if we are to discard the opinion evidence [if at all it could be said to be evidence - see 1984(15) ELT 492 (Ram Wadhaya vs. Collector of Central Excise, Meerut) and the cases cited therein] adduced on either side by experts, the Textile Commissioner or actual users (tailoring establishments), in consequence of such opinion being based on examination of material other than samples from the imported goods themselves - an objection upheld by the Collector and concurred in by our Brother - what are we left with? Our construction of the relevant policy and the Collector's own expertise.

33. Could we say on sound principles of construction that the altered criterion relating to width brought into the Policy subsequent to the imports in question was clarificatory and hence retrospective in its applicability? If, originally, the width was not specified at all, and it was so specified subsequently, and there are sufficient words to indicate that such specification of the width was clarificatory or explanatory, declaratory or curative (like e.g. "shall be deemed always to have meant"), it could perhaps, be given a retrospective effect, provided it does not, thereby, create new offences or increase penalties for existing offences, on account of the constitutional restriction in Article 20 of the Constitution of India. If an explanatory Act is passed to supply an obvious omission or an Act purports to clear up doubts as to the meaning of the previous Act for all time using the appropriate words, it could be given a retrospective effect [AIR 1968 S.C. 1336 at 1339 - Keshavlal Jethalal Shah vs. Mohan Lai and AIR 1966 S.C. 1113 - C.I.T. vs. Straw Products]. Even so, no retorspective effect could be given if the Act purports to create an offence or enhances penalties for existing offences retrospectively [AIR 1962 S.C. 1753 - West Remand Electric Distribution Co. Ltd. vs.

State of Madras and AIRState of Maharashtra vs.

K.K.S. Ramaswamy]. The specification of width at 87.5 cm cannot be given a retrospective effect firstly because the intent to give such an effect is not manifest by the use of the appropriate language; and secondly - and this is more important - retrospective effect, if given renders previous imports, offences under the Act entailing confiscation and levy of penalties - one in rem and the other in personum - retrospectively. In the case relied upon by our learned brother (AIR 1979 S.C. 180) an inclusive definition of "paper" in Section 2(a)(vii) of the Essential Commodities Act (1955) came up for construction. On careful scrutiny of the inclusive definition, it appeared that the things mentioned in the inclusive part may not ordinarily be regarded as "paper". Therefore, it was concluded that by the inclusive definition an extended meaning or description is given to the expression "paper". Since an exercise book squarely falls within the dictionary meaning of the word "paper", it was held that there was no necessity to mention it specifically in the inclusive part of the definition. Said their Lordships, "on a true and appropriate construction, therefore, it can be held that within its normal dictionary meaning, the item "paper" as described in Section 2(a)(vii) of the Act and item 13 in Schedule-I to the Regulation order covers an exercise book". It was further held that the mere fact that the description of "paper" was enlarged subsequently so as to include specifically "exercise note book", does not lead necessarily to the inference that, but for such amendment, the legislative intent was to exclude "exercise books" from the expression "paper". The amendment and enlargement of the item "paper" so as to include specifically "exercise book" was made ex majori cautela. This is not, however, a case where we would read the width of the lining material into the relevant policy.

It is not, as if, by virtue of an inclusive definition, the criterion relating to width could be inferred in the relevant policy and that was merely qualified ex abundidi cautela. To our mind that decision has no applicability to the construction of the relevant policy in this case.

Nor did the question of giving a retrospective effect to an act that has the effect of creating ah offence or enhance penalties for an existing offence retrospectively arise for consideration in that case, since, the inclusive definition of "paper" was held by -their Lordships to extend to "exercise books". There is, therefore, no question of creation of an offence by a retrospective amendment of the definition of "paper".

(a) Nor can one overlook the contradictions in the Collector's observations in regard to the requirements of lining material vis-a-vis the conformity of the imported goods with such requirements.

(b) Admittedly, in terms of the relevant policy, trimmings and embellishments including lining and inter-lining materials but excluding nylon taffeta coated fabrics were allowed to be imported.

What then are lining materials? He cites from the authorities - "Linings are produced in a wide range and are generally smooth lustrous fabrics made of silk or man-made fabrics and/or mercerised cotton. They may be woven in a plain or twill or satin weave.

Formerly, principally made with cotton warp and lustre wool, alpaka or silk filling". They may be made of "Alpaca, Beatrice Twill, ...

Silk, Rayon, Taffeta, ....". Their main purpose is to impart a fall and a proper shape to the garment, prevent quick wear and tear (paragraphs 34-35 page 19 of the adjudication order - P. 72 of Vol.

I of paper books). After citing the authorities, the learned Collector observes - "It is usually a thin lustrous material with a smooth surface usually made of cotton, silk, velvet, satin and such other materials".

(c) How did velvet and satin come in although not specifically referred to in the extracts from the authorities cited in paragraphs 34 and 35 of the order? Probably because they are smooth and iustrous.

(d) But then, Shri Sharma (of the Department) says, "lining materials" cannot be costly (Para 36 of - the adjudication order - Pages 72 and 73 of Vol. I of the Paper Books). And he is right and pertinent (Para 37 of the adjudication order - P. 73 of Vol. I of the Paper Books)! Can silk and satin, velvet and alpaka come cheap? They are themselves stuff from which suits are made. If they could also be used as lining material, do they come cheaper for use as lining material than for suits? Do the authorities speak of cheap silk and satin velvet or alpaca? And yet lining material cannot be wider than garment material - that would mean waste and no one would like to waste "costly material". So, are lining materials, necessarily, cheap stuff or costly material? (e) Can silk, or alpaca have finish on one side only? Do the authorities cited speak of finish on one side only for satin etc.

But Shri Sharma says, "the imported goods are finished on both sides and, therefore, they cannot be lining material. And he is correct (Paragraphs 36 and 37 of the order - Pages 72-73 of Vol. I of the Paper Books)! "In fact, they (lining materials) do not require a fine finish" (Para 36 at P. 73 of Paper Book-I). Does it mean silk or alpaca cannot be used as lining material? They are smooth and lustrous - perhaps too much so - and having too fine a finish and that too on both sides.

(f) "The width of the fabric is an important consideration ... the width ranging from 2V to 54" (Para 38 - Page 73 of Vol. I of the Paper Books). But then, the imported material is 44" in width. "This width is not the normal width" (Para 58 of the order at P. 86 of Vol. I of the Paper Books), and the imported material cannot, therefore, be lining material'.

(g) Lining material is thin (Para 37 - Page 73 of Vol. I of the Paper Books). But the imported material is too thin to be lining material (Para 54 - P. 79 of Vol. I of the Paper Books). It is almost as if the thinness required has been exactly laid down in the specifications. Silk and velvet both of which can be used as lining material, are not of the identical thickness.

(h) Shri Sharma, however, emphasized that the imported materials have themselves the characteristics of crease resistance and fall and the Learned Collector dittoes it saying, "it is not necessary for lining material to have properties of crease retention" (Paragraphs 36 and 37 of the adjudication order - P. 73 of Vol. I of the Paper Books). Are man-made fabrics, like e.g. rayon and mercerised cotton fabrics adverted to as lining material in paragraph 34 (Page 72) not crease resistant? It is not as if 100% polyester fabrics cannot be used as lining material, says he in paragraph 43 (P. 75 of the Paper Book-I). Polyester does not have crease resisting properties? How is a fall to be imparted, unless the lining material is itself crease resistant? (i) The initial statement "the imported fabrics are lining fabrics with finish at both sides" (Paragraph 18 - Page 61 of the Paper Books-I, Vol.1) is finally forgotten in the light of his personal experience gained over a period of year, and on account of "the texture, finish, width and thickness" of the material.

(j) Once it is admitted that 100% polyester fabrics can be used as lining material and the goods are polyester fabrics, what is it that renders them unfit for use as such lining material? (i) Their width? - It falls within the range specified (24" to 54")- But, no - their width is'44". It is not the normal width; (ii) Their texture? - Smooth and lustrous - Yes. But, finished on both sides? Lining materials are not. Is it possible that polyester fabrics, alpaca and silk are finished on one side only? (iii) Their thickness? - Thin - but the goods in question are too thin. Are all the goods described in the authorities cited Alpaca, Velvet, Satin, Twill, Rayon and Polyester of identical thickness? (iv) Their crease resistance property? - Unnecessary for lining materials? If 100% polyester can be lining material, can any variety of 100% polyester be non-crease resistant? (k) So much for the Collector's expertise. It is not the Collector's expertise but that of Shri Sharma, who adds to our knowledge of what lining material should be over and above what is contained in the basic authorities accepted by both parties.

35. This being so, could it be said that the Revenue discharged the onus? The answer is obvious. It must, therefore, be held that it has not been proved that the goods in question are not lining material and did not answer the description in the licence or could not have been imported under the relevant policy.

36. The only other issue on which our brother holds against the appellants is the question of misdeclaration of value i.e. question (d) in paragraph 1 supra.

(a) In this context, it is observed that heavy reliance is placed on what were alleged to be export declarations supposed to have been submitted to the Japanese Customs. [Pages 67, 68 & 97 of Vol. III of the Paper Books].

(b) The learned Collector seems to think that they were copies of the original. They were obtained by Shri Sharma while in Japan.

According to the learned Collector, "The copy of export declaration given to him (by M/s. All and Company) is a photo copy retained by the stevedors which was obtained from them by M/s. All and Company and given to Shri Sharma .... The stevedors retained a copy on the file which is the one given to Shri Sharma. Similarly, M/s. Pan Ocean Shipping Co. Ltd., have also handed over the photo copy of the Customs Export Declaration relating to the goods shipped by 'S.S. PORTOROZ'. [Para 65 - P.83 of Vol.1 of the Paper Books]. Again, he says, "these are copies obtained from the Steamer Agents who had actually dealt with the goods at the Japanese end. The forwarding agents had filed the documents and the stevedor comes into possession of the document during the course of the loading of the goods for exportation." [para 121 at pages 108-109 of the Vol.1 of the Paper Books].

(c) In the letter of M/s. All & Company Ltd. dated 24-4--1984 [pp.

24-25 of Vol. III of the Paper Books], it was stated "A copy of the Export Declarations given by Forwarding Agents to Stevedoring Agents at that time and retained by them has been obtained by us and is given to you." Similarly, the Pan Ocean Shipping Co. write to Shri Sharma on 19-4-1984 [p.69 of Vo.111 of the Paper Books] that "Further to the above the following documents in photo copy as available in our records are furnished to you for your information and necessary action -- (i) copy of Customs declaration for the consignment obtained by us from M/s. Fujwara Unyu K.K. (the Stevedors)".

(d) It is not clear to us if the documents at Pages 67, 68 and 97 of Vol. III were precisely the copies obtained from the Stevedors by M/s, All and Co. and Pan Ocean Shipping Company or they were copies got made by Shri Sharma from such copies obtained from the Stevedors. If the latter, they are copies of copies. Even so, a copy compared with a copy made by a copying machine is admissible if it is shown that the copy made by the copying machine was made from the original [Illustration (b) to S.63 of the Evidence Act]. The reason for this is that the accuracy of the first copy being insured by the mechanical process, it is not necessary to compare with the original, which it will be taken correctly to reproduce. If it were true that Pages 67, 68 and 97 were copies made from the copies obtained from the Stevedors, there is no evidence to show that the copies with the Stevedors were made by a copying machine.

(e) It may be that the strict rules of evidence relating to proof are not applicable to departmental adjudications. But that, by itself, does not mean that the probatival value of such evidence as is brought on record is not to be assessed. Similarly, the appellants in these appeals raised no objection to the admission of the export declarations without formal proof. That is not to say that their probative value cannot be questioned. It was in regard to their probative value that the issue of Pages 67, 68 and 97 of Vol.

III being copies of copies arises.

(f) These documents (or the documents from which they were, after all, photo-copied) do not appear to have been signed either by the exporter, the forwarding agent, the stevedor or the Customs officer.

In fact, they do not bear any signature whatsoever. Merely because the strict rules of evidence relating to proof may not apply, we cannot presume that their originals should have been duly signed by the appropriate persons. The Appellants had impugned their veracity all along. The Customs seal affixed on them does not by itself, or coupled with a serial No. and in the absence of a signature of the officer concerned prove their authenticity, or that they were, indeed, prepared and filed and otherwise acted upon. Nor is there any evidence of the maker of the original documents or any one connected with their preparation. True, the steamer agents were offered for cross-examination. But they were hardly the people associated in the preparation of the original export declarations.

Nothing at all can be elicited from them except that they obtained the copies thereof from the Stevedors and delivered them to Shri Sharma. Can they be expected to know why they were not signed? The onus is on the Respondent to establish the facts relied upon by acceptable evidence. Has he discharged that onus before it could shift to the Appellants? It is no answer to say that certain other declarations produced by the Appellants in relation to some other shipments are also not signed, or that the Appellants could have produced the real export declarations, if these were spurious.

(g) One of these copies of the alleged declarations bears the seal of the Customs at Kobe (P.68 - Vol. III of the Paper Books). It bears the date 15-11-1958 (= 15-11-1983). The ship's name indicated therein was "RAYA FORTUNE". However, from the itinerary of that vessel disclosed at P.16 (Vol. III of the Paper Books) in response to an enquiry of the Indian Customs, it would appear that the vessel did not touch Kobe at all. The Collector had adverted to this information in paragraphs 72 and 73 at Pages 87 and 88 of the Paper Book-I. How are the declaration at Kobe and shipment from Osaka reconcilable? There is hardly an attempt to explain.

(h) Admittedly, the respective invoices have to be filed along with the export declarations. (Article 68 of "Japan Laws and Regulations concerning Customs Duties and Customs Procedures" - referred to in paragraph 110 of the order of the Collector (Page 104 of Vol.1). The Collector says that the "invoice is the supporting documentary evidence of the value." It was agreed before us that the particulars of the quantity in square meters and weight in Kilogrammes were furnished in the third column in Pages 67, 68 and 97 - of Vol. III - the so-called export declarations. The invoice numbers and the actual quantity in yards imported ship-wise are set out in Page 6 of Annexure 'A' to the order of adjudication [Page 122 of Raper Book.

I]. The quantity-wise particulars of the Invoices when juxtaposed with the quantities specified in the so-called export declarations at pages 67, 68 and 97 of Vol. III of the Paper Books, do not tally at all.------------------------------------------------------------------Ship's name Quantity in invoices Quantity in Export Declaration at-------------------------------------------------------------------S.S. RAYA GLORY 76,500 yds.

78,177 sq.mts.S.S.RAYA FORTUNE 1,09,654 " 1,12,801 " "S.S.PORTOROZ 1,15,239 " 1,17,766 " "-------------------------------------------------------------------- In each case, the quantity specified in the so-called export declarations in meters is much in excess of the quantity in yards specified in the respective invoices. The aggregate quantity alleged to have been declared was 3,08,744 sq.mts. whereas the aggregate quantity invoiced and imported was no more than 3,01,393 yds.

(i) Not merely this. There were seven Bills of Lading for the goods shipped in RAYA GLORY. They are listed at P.117 of Vol.1 of the Paper Books and their copies are at pages 1-7 of Vol. III (as well as at pp. 29-35). the total weight of the goods in the Bills of Lading was 7,929 Kgs. as compared with 6,359 Kgs. in the so-called export declaration (P.67 of Vol. III); (ii) for the goods shipped in RAYA FORTUNE, there were ten Bills of Lading. They are all listed at Page 118 of Vol.1 and copies thereof are at pp.40 - 49 of Vol. III. The aggregate weight of the goods shipped as per all the ten Bills of Lading comes to 9,124 Kgs. as against this the weight in the so-called Export Declaration (at P.68 of Vol. III) was 8,350 Kgs.; (iii) similarly, there were twelve Bills of Lading for the goods shipped in PORTOROZ. They are listed at Pages 119-120 of Vol.1 and their copies are at pp.71-82 of Vol. III. the aggregate weight in the Bills of Lading would work out to 8,179 Kgs. as against 7,598 kgs. in the so-called Export Declaration at Page 97 of Vol. III. (j) Nor do Pages 67, 68 and 97 of Vol. III contain the container Numbers.

(k) In the premises, they cannot be taken to be the true copies of the export declarations for the imports in question. Nor can any particular therein be taken to be correctly applicable to the goods imported. If neither the quantity nor the weight tally, how can the value be taken to be correctly declared in respect of the goods in question? 38. Nor can the export declarations, even if true, reflect the true value for the purposes of S.14(l)(a) of the Act. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Valuation Rules - not for determining the price at which goods are ordinarily sold at the time and place of importation under S.14(l)(a). One cannot resort to S.14(l)(b) unless the assessable value cannot be determined under S.l4(l)(a) in the first instancy. There is enough authority for this. No reason has been furnished as to why the assessable value could not be determined under S.14(l)(a). On the contrary, an assessable value that could be determined only by resorting to the Rules is made to appear to be the one actually determined/under S.14(l)(a).(Gujarat State Fertilizers Co. Ltd. vs. Union of India) is one upon the construction of S.4 of the Central Excises and Salt Act, 1944, which, it is japparent, is materially different from S.14 of the Customs Act, in that i it speaks of "a normal price at which such goods are ordinarily sold by the assessee" himself rather than "the price at which such or like goods are ordinarily sold" (S.14 of the Act) not, necessarily by the assessee.

40. Once the copies of the so-called export declarations at Pages 67, 68 and 97 of Vol. III are cast aside, there is no other evidence adduced by the Respondent to establish the assessable value of the goods in question or misdeclaration of their value. The onus heavily resting on the Department in relation to these issues cannot be said to have been discharged.

41. On the contrary, the Appellants would appear to have adduced sufficient evidence, admitted by us, to show that the assessable value declared by them corresponded with the assessable value adopted by the Revenue in the case of an import by one of the Appellants themselves.

Before that is rejected out of hand, it has to be seen why that value cannot be adopted for the imports in question. Nor is it proper to reject any such evidence on the ground that the instant goods are not lining material, seeing that such a contention is held by us not to have been established by evidence.

42. In the result, we allow the Appeals, set aside the order in adjudication of the Collector wholly, direct re-assessment of the goods on the basis of their appropriate assessable value in the light of such evidence as may be adduced by either side - excluding, however, the so-called copies of export declarations at Pages 67, 68 and 97 of Vol.

III - within three months of the receipt of this order. No question of contravention of I.T.C., however, survives. In view of the decision of the majority, the Appeals are allowed, the order-in-adjudication of the Collector is set aside and re-assessment of the goods on the basis of their appropriate assessable value in the light of such evidence as may be adduced by either side excluding, however, the so-called, copies of export declarations at pages 67, 68 and 97 of Vol.111 of the Paper book, is directed within three months of the receipt of this order. No question of contravention of I.T.C. survives.