Judgment:
1. In these three appeals, arising out of a common Order-in-Original Nos. 5 to 9/2002, dated 7-6-2002 passed by the Commissioner of Customs, the issue involved relates to the enhancement of the value of the goods imported by the Appellants.
2. Shri C. Harishankar, learned Advocate, mentioned that all the three Appellants, namely M/s. Taito Watch Manufacturing Industries, Appellant No. 1, M/s. Rochi Ram & Sons, Appellant No. 3 and M/s. Rajasthan Watch Manufacturers, Appellant No. 2 imported watch cases, watch dials, leather straps, winding knobs and watch hands from M/s. Legend Watch Manufacturers Ltd. (LWM in short), Hongkong; that they filed five Bills of Entry in which the value was declared as per the invoices received from the foreign suppliers; that the goods imported by the Appellant Nos. 1 and 2 were assessed to duty on the basis of the invoice price declared and the imported goods were permitted to be cleared on payment of duty; that the goods imported by the Appellants No. 3 were seized and released on execution of Bond and furnishing of bank guarantee; that subsequently show cause notices dated 4-5-2001 were issued alleging under valuation of the imported goods on the ground that the Revenue had obtained from Hong Kong Customs a copy of the Export Declaration lodged by LWM before the Hong Kong Customs Department in respect of the impugned goods and the value declared by the Appellants was grossly at variance with that declared in the said Export Declaration; that the Commissioner under the impugned order has confirmed the demand of Customs duty and imposed penalties on all the three Appellants, besides confiscating the goods imported by the Appellants and imposed redemption fine, holding that the importers' name, Airway Bill Nos., Invoice Nos. and description of goods as entered in the Export Declarations matched with the invoices filed by the Appellants with Bills of Entry which indicated their intention to evade payment of duty.
3. The learned Advocate submitted that the assessable value of the impugned goods had been enhanced on the basis of price shown in the Export Declaration allegedly filed by M/s. LWM before the Hong Kong Customs Authorities; that there is no allegation contained in the show cause notice nor is there any finding in the impugned order that the Appellants had any collusion with the suppliers of the goods abroad; that only allegation mentioned in the show cause notice that the Appellants had willfully misstated and suppressed the actual values of the imported goods in the invoices and Bills of Entry; that they had declared the prices as mentioned in the invoices and there being no allegation/finding about collusion between the Appellants and the supplier of the impugned goods, extended period of limitation for demanding duty under Section 28 of the Customs Act cannot be invoked in respect of Bills of Entry at serial Nos. 2 to 5 in the Chart given in Para 1 of the impugned order, [that is Bills of Entry Nos. 37, dated 10-4-1997, 634, dated 17-5-96, 38, dated 10-4-1997 and 6461, dated 20-5-1996]. The learned Counsel, further, submitted that none of the situations envisaged in Rule 4(2) of the Customs Valuation Rules, exist and, therefore, the declared transaction value cannot be rejected; that the law on this subject is settled, most definitively, by the judgment of the Supreme Court in the case of Ei-cher Tractors Ltd. v.Commissioner of Customs, 2000 (122) E.L.T. 321 (S.C.) wherein it has been unequivocally laid down that Rules 3(1) and 4(1) of the Valuation Rules mandate acceptance of the invoice value as the transaction value and only after the transaction value is rejected as per the special circumstances contemplated in Rule 4(2), the assessing or adjudicating authority can proceed to resort to alternate methods of valuation; that the Supreme Court in Mirah Exports Pvt. Ltd. v. C.C., 1998 (98) E.L.T.3 (S.C.) has held that in absence of mutuality of interest or special price being given the invoice price had to be accepted. He thus contended that as none of the ingredients mentioned in Rule 4(2) of the Valuation Rule exists in the present matters, transaction value has to be accepted by the Revenue; that even if it were to be assumed that LWM declared a different price in the Export Declaration, that would not constitute a ground to reject the invoice price declared by the Appellants, as it is not one of the considerations enumerated in Rule 4(2) of the Valuation Rules.
4. He also contended that the Export Declaration cannot be made basis for enhancing the assessable value as there is nothing, in the first place, to show that LWM's declaration was true; that signature of the declarant is not clear; the declaration was neither attested nor stamped by the Hong Kong Customs Authorities; the original declaration has not been made available to them as only on attested copy of photostate copy had been supplied to them; no stamp as was to be found on declaration submitted to foreign Customs Authorities, was to be found on the said declaration. He relied upon the decision in the case of Collector of Customs, Bombay v. East Punjab Traders, 1997 (89) E.L.T. 11 (S.C.), wherein the Supreme Court has held that if the authenticity of the photo copies of the documents is suspected, presumption under Section 139(ii) of the Customs Act cannot be raised.
He further contended that no enquiry has been made by the Revenue from the foreign supplier of the goods as to why they had shown the less value on invoices in question. Finally he relied upon the decision in the case of South India Television (P) Ltd. v. C.C., Calcutta, 2001 (136) E.L.T. 243 (T) wherein the Tribunal found force in the Appellants' submissions that there is a possibility of the export declaration price being on the higher side to earn incentive on value and has held that "If that be so, the export declaration cannot be made the basis for enhancing the value".
5. Countering the arguments, Shri S.M. Tata, learned SDR, submitted that in the Export Declaration filed by the foreign supplier with Hong Kong Customs Authorities and obtained from them by the Indian Customs Authorities everything matches with the invoices filed by the Party along with their bills of entry namely party's name, airway bill number, invoice number, description of goods; that only the value differs which clearly establishes the intent of the Appellants to evade payment of duty; that the detailed procedure followed in obtaining documents for the purpose of investigation on the one hand and for booking the offence on the other hand. He relied upon the decision in the case of C.C., Jaipur v. Indian Watch Parts Mfg., 2004 (171) E.L.T.141 (T) = 2004 (62) RLT 728 (CEGAT), the Tribunal has held that the export declaration has to be taken as authentic. He also contended that extended period of limitation is invocable as the value of the goods have been declared by them less with an intent to evade payment of duty.
6. We have considered the submission of both the sides. The learned Advocate has contended that the demand of duly in respect of 4 Bills of Entry (Serial Nos. 2 to 5 in Para 1 of the impugned Adjudication Order) is time-barred as the show cause notice has been issued after the normal period of six months specified in Section 28 of the Customs Act for demanding duty and there has been neither any allegation in the show cause notice nor any finding in the impugned order about there being any collusion between any of the Appellants and the foreign supplier. Section 28 of the Customs Act provides for demanding the duty within 5 years if any duty has not been levied/short-levied or has not been paid/short paid by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the agent or employer of the importer. It has not been controverted by the Revenue that the Appellants had declared the value on Bills of Entry as per the value mentioned in the invoice. The Revenue has not adduced any material or evidence to show that the Appellants had colluded with the foreign supplier to show the less value of the goods. There is also no material to show that they have paid any amount in addition to the price declared in the invoices to their foreign suppliers. Thus in absence of any material to show collusion between the Appellants and the foreign suppliers, the Revenue cannot claim that the Appellants had declared less value of the impugned goods imported under Bills of Entry at Serial Nos. 2 to 5 with an intent to evade payment of duty.
Consequently, the extended period of limitation as provided in Section 28 of the Customs Act cannot be invoked for demanding duty in respect of these Bills of Entry. Accordingly the Appeals filed by M/s. Raj Watch Manufacturers and M/s. Tatio Watch Manufacturers are allowed with consequential relief, if any.
7.1 Regarding Bill of Entry No. 1638, dated 19-11-97, the learned Advocate has contended that the original copy of Export Declaration filed by the foreign supplier has not been given to the Appellants and there is nothing to show that the price declared therein is correct as no statement of him has been recorded. He has relied on a number of decisions including the judgment of the Supreme Court in the case of East Punjab Traders and decision of the Tribunal in the case of South India Television (P) Ltd. On the other hand the learned SDR has argued about the genuineness of the Export Declaration procured from the customs at Hong Kong and has relied upon the decision in the case of Indian Watch Parts Mfg. After considering the submissions of both the sides, we observe that the sole basis for enhancing the assessable value is the Export Declaration obtained by the Customs Authorities in India from Hong Kong Customs of which original copy has not been brought on record. In a similar facts, in the case of South India Television, the Appellate Tribunal has held as under :- ".......we find that the only basis for enhancing the assessable value of the imported goods is the export declaration furnished by the importers/suppliers at Hong Kong. The appellants have strongly contended that it is the photocopies of the said declaration and the signature bearing on them do not reflect upon the authority of the persons signing them and as such the same cannot be made the basis for rejecting the transaction value. As against this, the Commissioner has observed that the said export declarations have been obtained through Hong Kong Customs and as such he has rejected the appellants' contention that this export declaration being only Xerox copies cannot be considered as authenticated documents. We agree with the submissions of the appellants that these Xerox copies of the said documents, even though procured by the Hong Kong Customs and forwarded to the Commissioner for India in Hong Kong which in turn has forwarded them to India; will not make them genuine documents. This was so held by the Tribunal in the case of Indian Optics Pvt. Ltd. v. Commissioner of Customs, New Delhi reported in 2000 (123) E.L.T. 1022 (Tri.) = 2000 (39) RLT 381 (CEGAT)." 7.2 The Tribunal has further observed that there is a possibility of the export declaration price being on the higher side in order to claim higher export incentive and in such circumstances, the transaction value has to be accepted. The Tribunal has also taken note of the decision in the case of Rainbow Gold Products P. Ltd. v. C.C., Hyderabad - '1996 (86) E.L.T. 309 (T) laying down that photocopy of the export declaration without the signature of any Customs officials, without any Customs seal, is not the relevant documents. In view of these decisions of the Tribunal the assessable value cannot be enhanced solely on the basis of such a declaration. The Revenue has to compare the prices with the contemporaneous imports for the purpose of determining the assessable value. Even in the case of Indian Watch Parts Mfg., relied upon by the learned SDR, the Revenue had adduced the comparable import price which was closer to the export declaration which weighed with Tribunal to conclude that this "clearly shows that mis-declaration of value is made in the import invoices rather than in the export declarations." Accordingly we remand the matter for re-determination of assessable value in respect of Bill of Entry No.1638, dated 19-11-97.