Full Judgment
The appellant imported consignment of LCD Watches, Calculators, Parts of Calculators etc. vide WR Bill of Entry No. 159565 dated 14.5.2004 from M/s. Shenzhen Hezhan Industrial Development Co. Ltd. Guangdong, China. 100% examination was conducted by the officers of the Customs and DRI officers on 4.6.2004. On examination the following goods were found:Sl.
Description Quantity UnitTotal (InNo. (In pcs.) Price US$)1.
LCD Watches (Wrist Watch, Logo-Adidas) 5000 0.502,500.002.
LCD Watches (Wrist Watch, Logo-Adidas) 25000 0.358.750.003.
Calculator (CITIZEN) Model-CT-300) 2000 0.651,300.004.
Calculator (CITIZEN) Model-CT-300) 1600 0.851,360.005.
Calculator (CITIZEN) Model-CT-580) 10860 1.0010,860.006.
Calculator (CITIZEN) Model-CT-600) 480 1.65 792.007.
Calculator (CITIZEN) Model-CT-612) 480 1.85 888.008.
Calculator SKD (Back Cover) (CITIZEN) (CT- 28000 0.102,800.009.
Calculator SKD (Front Panel W/PCB) 35000 0.5017,500.0010.
Calculator SKD (Back Cover & Accessories) 25000 0.134.550.0011.
Calculator Cover with manual for CT-500 35000 0.103,500.00 3. It was alleged by the Revenue that data of contemporaneous imports of identical/similar items as available in the database made available by the Directorate of Valuation, Mumbai (hereinafter referred to as "DVD") indicated that the declared values of the items imported in the subject consignment, except for the items at serial numbers 1 and 2 of the invoice, are much lower. It was further alleged that the subject goods were declared to be unbranded on the bill of entry and whereas the invoice disclosed neither the brand name nor the model nos. of the calculators imported; on physical examination the goods have been found to be of citizen brand, having specific model nos. It was further alleged by the Customs that the relevant details of the subject goods have been suppressed in the imported documents and the goods have been declared as unbranded on the bill of entry with intent to avoid correct determination of the assessable value. According to the Department the description and the value of the subject goods appeared to be misdeclared, the subject goods appeared liable for confiscation also under Section 111(m) of the Customs Act, 1962 and the importer appeared liable for penalty under Section 112 of the Customs Act.
4. The importer vide a letter dated 7.7.2004 requested for waiver of a formal show cause notice and prayed for an opportunity of personal hearing before finalisation of the case. The Advocate appeared before the Commissioner of Customs on 22.7.2004 and stated that their invoice value should be accepted in the light of their submissions made in the personal hearing and goods should be assessed on that basis. The Revenue proposed the rejection of invoice value and redetermination of value for assessment by the Commissioner by a formal letter dated 26.7.2004. The appellant was again given personal hearing on 18.8.2004 and he submitted that the declared value should be accepted and there being no case of misdeclaration, the goods are not liable for confiscation nor is penalty imposable on the importer in view of their submissions in the matter. In their written submission the appellant submitted that their supplier is a Govt. Company of China.
5. After hearing the appellants the Commissioner rejected the invoice submitted by the importer and re-determined the assessable value of the subject goods after taking into consideration the DOV data related to contemporaneous of similar goods after considering the quantity discount. He also confiscated the goods imported however he gave an option to the importer to redeem the same on payment of fine of Rs. 6.5 lacs. He also imposed a penalty of Rs. 1.5 lacs on the importer.
Against this order the appellant has come to the appeal to this Tribunal.
6. Heard Shri S.K. Mehta, Advocate for the Appellant. He submitted that the appellant has imported 11 items as mentioned above. In respect of item Nos. 1, and 8 there were no dispute of any nature. Customs authorities disputed the valuation of the goods covered item Nos. 3, 4, 5, 6, 7, 9 and 11. Imports under Sl. Nos. 9, 10 and 11 were in the SKD condition which on assembly alongwith battery could make a complete calculator. The appellant imported the goods from the Govt. Company of China. The Advocate further submitted that the DRI started an investigation in this case. They withheld the imported goods for a year and after 100% examination of the goods, DRI authorities released the bill of entry to the assessing authority for the purpose of assessment and release without making any case as to valuation or misdeclaration.
However, the assessing authority started a fresh investigation and raised a valuation dispute on the basis of data complied by the Director of Valuation. When the hearing on valuation took place on 2.7.2004 where the duty calculation chart was relied upon by the Customs, the matter centered on the valuation dispute only. There was no charge of misdeclaration at that stage. After hearing was over the appellant received a notice dated 26.7.2004 that a case of misdeclaration has to be made out as make and model no. of the calculator were not mentioned in the bill of entry. The appellant has contested the allegation of misdeclaration. He submitted that in the invoice as well as in the bill of entry model No. CT is mentioned. CT is known abbreviation of Citizen. Imported Goods were apprised and assessed on 100% examination after making proper inventory. Brand citizen and model No. flashes on the top of every packet. DRI authority did not make out any case of misdeclaration in respect of brand or model no. or valuation. Word 'unbranded were mentioned in the bill of entry for compliance of the provisions of Rules framed under Standards and Measures Act, 1976. All the consumer goods are required to be branded under the said Rule by the importer before or at the time of import of the goods. The Commissioner of Customs, Calcutta has also issued a circular that such 'branding' could be done at port before clearance. Only for the said limited purpose word 'unbranded' was mentioned in the bill of entry. In the bill of entry 'CT' was mentioned which meant 'citizen'. The Advocate further submitted that in the DOV data supplied by the Department wherein in respect of which model number and make have been given but these entry retain a column 'unbranded' herein. There are five cases in the DOV Data supplied by the Department wherein together with citizens brand entry records unbranded. The Advocate submitted that in case Techno Marketing reported in 2004 (91) ECC 659 (T): 2004 (164) ELT 113 it has been held that if the brand name and model no. can be seen from the goods itself the allegation of non-mentioning of model no. and brand are not relevant, 2004 (91) ECC 659 (T) : 2004 (164) ELT 113 (Tri-Del).
7. As regards the valuation is concerned the Advocate submits that they have imported a bulk consignment, which comprised of 35000 Pcs. of CT-500 in SKD condition. Their valuation is disputed on the basis of import of about 200-500 Pcs only. This can be seen from the DOV data supplied by the Department to them. He further submitted that transaction value of 35000 pieces of CT-500 calculators in SKD condition cannot be rejected on the basis import of 800 pieces as they are not in comparable quantity. In this regard he refers Tribunals order in A.D. Jayaveerapandia Madas & Sons, 2003 (54) RLT 333. The Advocate submits that under the valuation rules it has been mentioned that lowest of the valuation found as and by way of contempreous (sic) import is to be taken. In DOV data supplied to them value shown in no.
of cases is much less as compared to the value declared by them. The Advocate relies on the Hon'ble Supreme Court's judgment in Eicher Tractors Ltd. case reported in 2000 (72) ECC 673 (SC): 2000 (112) ELT 321 (SC) wherein it has been held that transaction value cannot be rejected unless exception as of time, place of import or relationship is made in the order and in the absence of such allegation transaction value cannot be rejected. There is nothing in the order who shows application of exceptions provided under the Rule 4 (1) of the Valuation Rules. In absence of such exception transaction cannot be rejected. The Tribunal has taken the similar view in the case of Radha v. Company reported in 2003 (156) ELT 810 and Cannon Steel (P) Ltd. reported in 2003 (89) ECC 669 (T): 2003 (156) ELT 972. The Advocate further submits that Commissioner of Customs did not make any assessment or quantification of duty as to which value he is adopting.
He draws our attention to "I direct the rejection of the invoice submitted by the importer and re-determination of the assessable values of the subject goods taking into consideration the DOV data related to contemporaneous import of similar goods after considering the quantity discount discussed hereinbefore under Rule 6 read with Rule 8 of the Customs Valuation Rules, 1988." He submits that in five cases as seen from the DOV Data Value Ranges from Rs. 18.36 to Rs. 32.37 whereas they have imported 35,000 pieces of citizen CT-500 in SKD condition which comes to Rs. 30 per piece which is higher than the above value referred in DOV data. In respect of two models CT 600 and CT 612 there is no dispute. He submits that declared value should be accepted and goods should be released accordingly. As far as import of watches are concerned, there is no allegation nonetheless goods have been confiscated without any reason.
8. Heard Shri K. Sanyal, Ld. JDR who reiterates the findings of the Commissioner.
9. We have heard both the sides. We find that there are two types of charges against the appellant. One of misdeclaration in the description of goods and other of under-valuation. As regards the misdeclaration the findings is that the goods as declared as non-brand whereas they have found to be branded. It is on record the DRI officers investigated the matter for quite some time. The imported goods were subjected for 100% examination by DRI officers and no charge was made. Even at the initial stage the Department do not make any charge of misdeclaration and only allegation was of under-valuation. The charge of misdeclaration was raised midway to adjudication proceedings. This is an admitted fact the model no. "CT" was mentioned in the bill of entry.
It has been held in Techno Marketing case referred to above that when model no. of goods declared and packing given the indication of the brand no penalty is imposable. It is also fact that DOV data relied by the Department also show imports whereas alongwith brand citizen entry also records unbranded. This appears more as trade practice as reflected from the DOV data as discussed above. The importer have explained that unbranded was retained in the bill as entry to satisfy the provisions of Standard and Measures Act which require the importer to brand all the consumer goods before or at the time of import. The Commissioner of Customs had issued a circular that such branding could be done at port before clearance. We find that when model no. and brand are clearly visible on examination, no finding of misdeclaration can be arrived at was made conceal the same by writing unbranded in the bill of entry cannot be constitute on the part to conceal the identity of the goods.
10. We find that an examination of Customs clearance which is a part of procedure the brand engraved on the goods is clearly visible in these circumstances writing of unbranded in the bill of entry losses importance and cannot be termed as wilful misdeclaration on the part of importer so as to invite any penal action against them or confiscation of the goods in view of Tribunals decision referred to above.
11. As regards the valuation, we find that the Hon'ble Supreme Court in their judgment in Eicher Tractors Ltd. referred to above as held that transaction value cannot be rejected unless exception, as of time, place of import or relationship is made in the order and in absence of such allegation transaction value cannot be rejected. There is nothing on record to show that such transaction is not correct between the buyer and the seller as such in acceptance, especially in and every money to the seller are discard the transaction value.
12. In Eicher Tractors Ltd. case it has been held by the Apex Court that as follows: "It is true that the Rules are framed under Section 14(1A) and are subject to the conditions in Section 14(1). Rule 4 is in fact directly relatable to Section 14(1). Both Section 14(1) and Rule 4 provide that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularized in Rule 4(2)." It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules." 13. It has been held in Mirah Exports Pvt. Ltd. case reported in 1998 (59) ECC 219 (SC) : 1998 (98) ELT 3 (SC).
"The legal position is well settled that the burden of proving a charge of under-valuation lies upon Revenue and Revenue has to produce the necessary evidence to prove the said charge. "Ordinarily the Court should proceed on the basis that the apparent tenor of the agreements reflect the real state of affairs" and what is to be examined is "whether the revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price." [See: Union of India v. Mahindra & Mahindra "Thus, it is not unusual for a foreign supplier to give a higher discount to an importer who is importing a much larger quantity and merely because such a discount has been given by the supplier it cannot be said that there has been any under-valuation in the invoice." "Section 14 of the Act prescribes that valuation of goods for the purpose of assessment has to be made at the price at which such goods 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. In the present case neither has it been alleged nor has any material been produced to show that Mirah Exports and the foreign suppliers have any interest in the business of each other.
14. The Commissioner opinion that only 10% discount could have be given as against based upon his personnel view which does not carry any legal weightage and not upon any legal evidence or export opinion.
15. In A.D. Jayaveerapandian Nadar & Sons 2003 (54) RLT 333 CEGAT has held that: "Assessable value-Section 14 of Customs Act, 1962-Garlic-Transaction Value-Comparable goods-declared value of US$ 400 per MT enhanced to US$ 565 per MT on basis of one consignment of 22 MTs imported one month earlier - present import being of 1078.30 MTs out of ordered quantity of 1500 MTs, stray import of 22 MTs at higher price to be ignored as not being at the same commercial level (quantity)-lower transaction value for bulk purchase acceptable - appeal allowed." 16. In Kailash Enterprises, 2003 (88) ECC 86 (T): 2003 (155) ELT 548 (Tri-Chen.) has held that: "Valuation (Customs)-Contemporaneous import-Import relied on by Department being of a much lesser quantity (100-200 flasks) from various countries whereas quantity involved in this import being of 500 flasks, imports not comparable and not to be relied upon-Transaction value acceptable, there being no mutuality of interest and flow of any consideration to importers-Section 14 of Customs Act, 1962 read with Rule 4 of Customs Valuation Rules, 1988.
The lower authority has relied upon five importation made at different part in July 2002 and August 2002. The quantity imported in those cases ranged from a mere 60 flasks to 200 flasks whereas the quantity imported in the present case is 500 flasks. The countries from where those importations have been made are not found in the order impugned and so also the port from where those goods have been shipped. There can be no doubt that in terms of quantity imported and place of import in all those cases there can be no comparison with the import in the present case. The appellants have stated that they had informed the supplier that the price quoted by the supplier was not workable in India, and it was after negotiations with the supplier that the price has been agreed upon and sales confirmation had been received from the supplier. No doubt the discount in the present case works out to 76%. But it has to be viewed from the fact that the quantity involved is also bulk and much larger and certainly not comparable with the quantity and country from where the goods have been imported. It is not the case of the Department that there was mutuality of interest and flow of any consideration to the importers to reach the conclusion that the transaction value declared by the importers should be rejected.
Therefore, transaction value to be accepted." 17. In Radha v. Company case 2003 (156) ELT 810 (Tri-Mum) has held that: "Valuation (Customs)-Transaction value-Rejection of-reasons for not accepting the declared value not furnished by lower authorities-Reliance on 'market weekly and public ledger' holding that in absence of information relating to import of similar or identical goods, the value cannot be determined under Rule 5 or 6 of Customs (Valuation) Rules, 1988 not accepted-Declared value to be accepted in total absence of anything to even cast doubt on the transaction value-Section 14 of Customs Act, 1962.
Valuation (Customs)-Transaction value-Rejection of-No allegation or finding that the invoice does not represent actual price at which the goods was sold-Enhancement of value not justified-Section 14 of Customs Act, 1962. The ratio of Supreme Court judgment in Richer Tractors Ltd. v. CC, 2000 (72) ECC 673 (SC): 2000 (122) ELT 321 (SC) that unless any of the exceptions contained in the proviso under Rule 4(1) of Customs (Valuation) Rules, 1988 is shown to apply, the transaction value must be accepted, will apply to the facts of the case." 18. In the present case we do not find any allegation of any relationship between buyer and as such in absence of price agreed between the two is acceptable is especially when there is no contemporaneous price of the quantity imported in this case.
19. It is well settled legal proposition that to adopt the value of the other goods the same should be contemporaneous in all respects. The quantity imported in the present case is much larger than given in the DOV data cannot be called contemporaneous import as their major lesser quantity than the made by the Appellant.
20. The allegation of under-valuation by discarding the transaction value is required to be proved by revenue based upon affirmative and strong legal and not upon surmises evidence as held by the Hon'ble Apex Court in the case of Mirah Export Pvt. Limited. Discount are known to have seen (sic, been) given by international competition and aggressive sales policy. The Hon'ble Apex Court in Basant Industries case has held that comparison of invoice and other importer is not conclusive proof of under-valuation. Lower transaction after negotiation with the seller is acceptance. In the absence of any evidence the price agreed upon between the buyer and the seller is acceptable especially when there is no contemporaneous price of such huge quantity available. In view of above, the order passed by the Commissioner is set aside with consequential relief to the appellant.