Full Judgment
towards the technical assistance and since the respondents had been permitted to use the trade-mark name 'Xerox', the invoice value of the goods imported by the respondents from their foreign collaborator (M/s.
Rank Xerox)/their associates was proposed to be loaded by 2% under Rule 8 (relating to best judgment assessment) of the Customs Valuation Rules, 1963 read with Section 14(1)(b) of the Customs Act, 1962. The respondents gave their reply. The Assistant Collector was not satisfied and by issue of his further letters on 8.4.1986,20.5.1986 and 26.6.1986 called for further documents and explanation. There is a statement made in the Order-in-Original of the Assistant Collector that the appellants did not furnish many of the documents asked for. On adjudication of the matter, the Assistant Collector ordered 20% loading for capital equipments and machinery and 13% loading for components imported by the respondents. In appeal, the Collector (Appeals) totally set aside the loading for capital equipment and machinery and reduced the loading for components to 1% only. The department is now in appeal before us against the order of the Collector (Appeals). Prayer of the appellant Collector is to remand the matter to the Collector (Appeals) since, it is pleaded, the Collector (Appeals) heavily relied on additional evidence without putting it to the department and thereby violated Rule 5 of the Customs (Appeals) Rules, 1982.
2. The Learned Representative of the department elaborated this ground saying that the Collector (Appeals) relied on the following additional evidence :- (i) The certificate dated 25.9.1986 from M/s. Fuji Xerox Co. Ltd., Japan, stating that the prices charged for components destined to Modi Zerox India (i.e. Respondent Company) were those charged to M/s. Rank Xerox, U.K.; (ii) Letter dated 19.9.1986 from M/s. AJR Machinery & Equipment, U.K., stating that their selling price ito Modi Zerox included the cost of testing and inspection done by M/s. Rank Xerox Ltd. and that they had paid M/s. Rank Xerox separately for all services including testing and inspection supplied by them The Learned Representative, of the department stated that both the above documents came into existence after the Assistant Collector had already passed the Order-in-Original on 12.8.1986 and yet the Collector (Appeals) straightaway relied on them without giving opportunity to the department to examine them and rebut them and without passing a reasoned order for admission of the additioinal evidence as specifically required in Rule 5 of the Customs (Appeals) Rules, 1982.
The Learned Representative of the department suggested that since the additional evidence related to factual aspect, it would be preferable to remand the matter to the Assistant Collector so that the facts could be verified properly.
3. The respondents opposed the department's prayer for remand. They pleaded that after proposing a loading of 2% in the show cause notice, it was not open to the Assistant Collector to order 20% and 13% loading. They argued that the impugned order-in-appeal passed by the Collector (Appeals) had not done any substantial injustice to the department since the 1% loading ordered by him was within the limit of 2% proposed in the show cause notice. The Collector (Appeals) arrived at the figure of 1% on the basis of - (i) 0.7% as the cost of transmitting the respondents' purchase orders, as admitted by respondents themselves; (ii) 0.3% as service commission/profit of M/s. Rank Xerox for processing and transmitting the respondents' purchase orders.
The Collector (Appeals) ordered no loading for capital equipment and machinery since these came from third parties and not from M/s. Rank Xerox. In the circumstances, the respondents argued, there would be no justification to order a remand just for the sake of the Collector (Appeals) not observing some Rule of procedure.
4. In a brief rejoinder, the Learned Representative of the department stated that Rule 5 of the Customs (Appeals) Rules, 1982 was a statutory requirement; it was not merely a Rule of Procedure but concerned the right of the other party to examine and rebut the evidence sought to be used against it. In addition to the components the import of capital equipments for the respondents was also organised by M/s. Rank Xerox and M/s. Rank Xerox rendered inspection and testing services for the machinery. But the Collector (Appeals) totally set aside the loading for capital equipment and machinery on the basis of the additional evidence at item (ii) of paragraph 2 above. This had caused substantial prejudice to the department's case and the Collector (Appeals) passed his order without giving the department a chance to examine and counter the additional evidence. During the arguments before us both sides also referred to Tribunal's order in the case of Collector of Customs v.Maruti UdyogLtd. [1987 (28) E.L.T. 390 (Tribunal)] which, they stated, was on issues similar to those involved in the present case.
5. On careful consideration, we find force in the department's plea.
Justice should not only be done but should also appear to be done. Rule 5 of the Customs (Appeals) Rules, 1982 was not merely a rule of procedure or just a technical requirement; it concerned a vital aspect of principles of natural justice. When the department was deprived of their statutory right to examine and rebut the additional evidence sought to be used against them, substantial prejudice was caused to the department's case. It was not a trivial thing as stated by the respondents.
6. We, therefore, accept the department's plea, allow this appeal, set aside the impugned order-in-appeal and remand the matter to the Collector (Appeals) for a fresh decision after due compliance with the rules. The Collector (Appeals) is directed to pass the fresh order within 4 months from the date of receipt of this order of the Tribunal.