1. These appeals arose out of the order of the Commissioner of Customs, Mumbai. In the impugned order, the Commissioner rejected the invoice value, determined the assessable value of the goods as Rs. 18,64,176/- and the duty to be paid on the goods as Rs. 10,73,051/-. He confiscated the goods under Section 111(d) & (m) and allowed them to be redeemed on payment of a fine of Rs. 23,20,335/-. He further imposed penalties of Rs. 8,71,547/- on Shri Qazi Shabbir Mustafa under Section 114A/112(a) and an equal amount on Shri Arif Haji Gaffar under the same sections of the Customs Act.
2. These appeals are filed by both the above mentioned persons.
According to the Commissioner's findings, Shri Arif Haji Gaffer is the defacto importer who actually placed the order and was to gain financially from the import. The other person has only lent his name on receipt of some remuneration from Shri Arif. M/s. S.S.M. Traders is owned by Shri Kazi Shabbir Mustafa on record.
3. The consignment described as electrical and electronic goods was sought to be cleared by M/s. S.S.M. Traders from the custom. The goods were declared to be of Chinese origin. The port of shipment is Dubai.
On examination, the consignment was found to contain goods made in various countries such as Hungary, Japan, Taiwan, Germany, Korea, England etc. Due to these discrepancies and mis-declaration of the country of origin, the goods were seized by the customs. During the course of investigation, it was revealed mat Shri Kazi Shabbir Mustafa, the proprietor of M/s. S.S.M. Traders, is not the real owner of the goods, but Arif is. In the impugned order, the Commissioner rejected the invoice value and proceeded to determine the value of the goods in accordance with the Customs Valuation Rules, 1988. He determined the value of some of the goods under import under Rule 5 of the said Rules.
Rule 5 speaks of contemporaneous price of imported goods. In all, he determined the value of 8 items contained in the consignment on the basis of contemporaneous prices. He gave details of the bills of entry under which similar goods were imported. Thus the Commissioner determined the value of the 8 items as Rs. 9,22,540/-. In regard to the rest of the items he found no contemporaneous imports. He therefore proceeded to determine the value in terms of Rule 6A and 7(1). Local market enquiries were made to ascertain the prices at which these goods were sold in the market. After applying the deductive method, the assessable value of the subject imported goods is determined. The market inquiries were done in the presence of panchas. The assessable value was determined to be Rs. 9,41,635/- for these 18 items. The Commissioner, on the basis of the value of contemporaneous imports and market inquiries, came to the conclusion that the assessable value of the total consignment is Rs. 18,64,176/- and the duty payable is Rs. 10,73,051/-.
4. On some of the goods under import, country of origin is not indicated. He confiscated such goods under Section 111(d) read with Section 117 of the Trade & Merchandise Marks Act, 1958.
5. The Commissioner rejected the transaction value on the ground that the country of origin was mis-declared. He argued that the goods can be reassessed and penal action can be taken if the examination of the goods revealed that the declaration made by the importer was found to be false. He rejected the appellants' arguments that the invoice value cannot be rejected if the provisions of Rule 4(2) of the Valuation Rules are satisfied. He observed that the decision of the Supreme Court in the case of Eicher Tractors 2000 (122) ELT 321 does not come to the rescue of the appellants, as in the present case there is a mis-declaration whereas in the above mentioned case the situation is not of mis-declaration. He also rejected the plea that the department is bound to accept the invoice value when it is not alleged that extra payments were made over and above the invoice value. He found that for the purpose of valuation and classification, it is not necessary to establish whether any extra remittance has been made to the supplier.
In a case whether there is no mention of the brand, model No. size, capacity etc. of the items under import, the invoice value can be rejected. Incomplete description of the goods under import would give a handle to the department to reject the invoice value. The Commissioner rejected the evidence produced by the appellants before him in the form of bills of entry where similar goods of Chinese origin were cleared accepting the value as declared, on the ground that in respect of these goods the items are not of Chinese origin.
6. The appellants argued before the Commissioner that the department cannot arrive at the value of the present consignment on the basis of values indicated in the contemporaneous bills of entry as even in those bills the value was loaded by the customs. The Commissioner met with this argument, stating that even in those cases the goods were mis-declared and the importers paid the duly on the loaded values, in addition to fine and penalty. The appellants before him alleged that the market inquiries were not done properly inasmuch as the inquiries were made without showing the samples of the imported goods to the shopkeepers. One of the panchas has clearly stated that the inquiries in the market were made without showing the samples of the imported goods to the shopkeepers. He also rejected the receipts/invoices submitted before him by the advocate, indicating the prices at which similar goods were sold in the market on the ground that the invoices do not bear the printed names and addresses of the shops nor did they indicate the full description of the goods such as brand name, model no. etc.
7. He confiscated part of the goods under Section 111(d) on the additional ground that the provisions of the Trade and Merchandise Marks Act were violated inasmuch as the goods did not indicate the name of the manufacturing country.
8. While determining the M.O.P. the Commissioner followed the following formula. M.O.P. = wholesale prices - loaded cost x 100 divided by CIF value. He arrived at the margin profit of 652.16% of CIF and therefore imposed a fine of Rs. 23,20,335/-.
10. The learned counsel for the appellants basically relied on the decision of the Tribunal in the case of Kumar Associates 1993 (65) ELT 500 to say that under valuation has to be proved by the department, and in the present case the department has not led any evidence to prove that any extra remittance was made in respect of the goods under import. He relied on the decision of the Tribunal in the case of O.K.Industries v. CC, 1988 (37) ELT 207 to argue that the department did not consider evidence produced by the appellants in the form of bills of entry to show that similar goods were imported at the same prices at which the goods in question were imported. He also cited the decision in the case of Spices Trading Corporation v. C.C. 1998 (104) ELT 665 to say that the department is prohibited from adopting the value of stray instances of import to reject the transaction value, ignoring other attending circumstances. He also argued that enhancement of the value based on investigation in respect of some other imports is not sustainable.
11. We have carefully considered the submissions made by the learned Advocate and submissions made by the learned DR.12. On the issue whether the department can compare the value declared by the appellants in respect of some of the goods (8 items) with the value arrived at by the department in some other contemporaneous imports, we find that the Commissioner has given reason as to why such comparison is correct. In a situation where the goods were found to be mis-declared by other importers also, there is no reason as to why the loaded value in those imports cannot be compared with the declared value of the present consignment to arrive at the correct value. We therefore find no reason to interfere with the Commissioner's finding insofar as he re-determined the value of 8 items referred to in the adjudication order. The declared value of these goods is Rs. 2,21,114/-. The Commissioner, on the basis of contemporaneous imports, arrived at a value of Rs. 9,22,540/-. He arrived at the duty liable to be Rs. 5,37,919/-. We accept this finding of the Commissioner.
13. In respect of other goods contained in the consignment under import where no contemporaneous imports were found, the Commissioner determined its value on the basis of market inquiries under Rule 6A & 7(1) of the Valuation Rules. The appellants contend that no reliance can be kept on the market inquiries for the following reasons: (a) The panchnama does not indicate the names of the sellers or shops with whom the alleged inquiries were made.
(b) The appellants also have produced evidence of actual local purchase supported by invoices which show the prices mentioned in the panchnama are totally false.
(c) While conducting the market inquiries, the officers did not carry the samples of the imported goods but only carried the descriptions of the items.
(d) No actual purchases were made at the time of market inquiries.
So the prices shown in the panchnama are not the prices at which the goods are bought and sold.14. We observe that the Commissioner has not met with these contentions in the impugned order properly. He says that it is not necessary that the names of the shops when the market inquiries are conducted in the presence of witnesses. This is not acceptable. The purpose of conducting market inquiries is to determine the prices at which the goods are sold in wholesale. If the name of the shop itself is not given where such goods are supposed to be sold, it is difficult to accept that inquiry has been made in accordance with the Rules. He rejected the purchase bills submitted by the appellants on the ground that they do not bear the name of the seller printed on the invoices, their telephone number or the sales tax numbers. He also referred to the variation in the version of one of the panchas Shri Ghatge and brushed them aside, as minor variations and they do not hit the core issues. He says that it is unrealistic to expect a witness to be a human tape-recorder. He further says that technical flaws committed in the panchnama will not make it lose its evidentiary value. For one thing the officers did not carry the samples of the imported goods with them while conducting the market inquiries. They were only describing the goods in question to the shopkeepers with whom inquiries were made to ascertain the wholesale prices. In such cases it is not possible to find out whether the officers and the shopkeepers are referring to the same goods. Further the shopkeepers' names and addresses are not even indicated. The Commissioner rejects the evidence tendered by the appellants showing the prices at which similar goods are sold on the ground that the invoices do not have printed names of the shopkeepers.
It is not understood how different standards can be adopted by the Commissioner in this regard. We therefore conclude that the values determined on the basis of market inquiries and the deductive method followed by the Commissioner has to be set aside. In the absence of any other evidence, the declared value has to be accepted. The declared value of the goods where contemporaneous imports were not noticed is Rs. 1,38,238/-. This value is accepted.
15. The next question is whether some of the goods on which no country of origin is given are liable to confiscation under Section 111(d) read with the provisions of Trade & Merchandise Marks Act. We uphold the Commissioner's contention that they are liable to confiscation under Section 111(m) as there is a mis-declaration in respect of material particulars of goods under import.
16. The Commissioner imposed penalties on both defacto importer and the dejure importer Section 114A of the Customs Act. We observe that Section 114A can be invoked against the person from whom the duty is demanded. The Commissioner in his order also mentioned Section 112(a) while imposing penalties on both the persons involved. This is not clear from his order as to the person whom he considers as the importer. We, however, find that the goods are imported by M/s. S.S.M.Traders, the proprietor of which is Shri Kazi Shabbir Mustafa. He is liable to pay duties and therefore the penalty under Section 114A on him is sustainable. Shri Arif is the behind scene operator. He caused the import of goods which are liable to confiscation. He therefore is liable for penalty under Section 112(a) of the Customs Act.
17. In view of what has been discussed above, we pass the following order: (a) The value of the goods is determined to be Rs. 10,60,778/- as against the declared value. The duty payable has to be calculated on the basis of the above mentioned assessable value.
(b) The confiscation of the impugned goods under Section 111(d) & (m) is upheld. The redemption fine is reduced to Rs. 5,00,000/- (c) Penalty on Shri Kazi Shabbir Mustafa is reduced to Rs. 2,00,000/-