Full Judgment
2. Briefly, the facts of the case are that M/s. Associated Industries, Calcutta, had imported 7.029 M.Ts. of Stainless Steel Tubes/Pipes non-magnetic quality valued at 5060.88 @ 720 per M.T. per s.s.
Bengal Progress Rot No. 295/85, Line No. 54. The Bill of Entry was filed on the 4th November, 1985. On receipt of the Bill of Entry, query slip was issued to the appellants for submission of certificates etc., and the appellants were asked to get the goods examined at the docks.
After the examination of the goods at the docks, the Bill of Entry was re-submitted alongwith the query slip. On scrutiny of documents and Bill of Entry, it was found that there was under valuation of the goods as per packing list filed by the appellants. Out of 9 packages containing 7.029 M.Ts. of pipes, 3.270 M.Ts. packed in 7 cases were stated to be W/No. 1.4876 type Stainless Steel Tubes of uniform size of O.D. 25 mm and wall thickness 3 mm. The chemical composition of these tubes was as follows:- As per chemical composition, these pipes were basically high nickel alloy tubes. Though for the purpose of assessment these were assessable as Stainless Steel Tubes for excess percentage of NI and Chromium content the price of similar nature of goods were always higher than the non-magnetic type of stainless steel. These goods with its composition resembled Incoly Alloy Tubes.
3. Accordingly, it appeared that M/s. Associated Industries had mis-declared the value, and the nature of the goods, in the documents submitted for clearances of the same and thereby attempted to defraud the Government of revenue of Rs. 8,71,332.04. A show cause notice was issued to the appellants to the effect that why the subject goods should not be confiscated under Section lll(d) and (m) of the Customs Act, 1962 and why penal action should not be taken against them under Section 112 of the Customs Act, 1962 and the goods imported by the appellants were not covered under REP Licence.
4. In reply to the show cause notice vide their letter dt. 7-3-86, the appellants requested for inspection of the documents relied upon in framing the charges in the show cause notice. The time and date for inspection of the documents was fixed on 24-3-86 at 4.30 p.m. The appellants did not come for the inspection and vide their letter dt.
22-4- 86, they stated that the references of invoices regarding the importation of similar goods related to different type of goods which were made-to-order. For valuation of goods, the appellants submitted that the goods were in mixed sizes and quantity out of the surplus stock supplied by a dealer/stock holder and in the international market, the surplus goods were always sold at a cheaper price. It was also contended that the price was negotiated by correspondence in the case of normal trade, and there was no fixed international price for surplus/mixed goods and the price may vary within certain limit from consignment to consignment. For the Import Licence, the appellants contended that the goods were surplus goods of mixed quantity, size and gauge and they were new goods and could not be considered as disposal goods in terms of para 358(1) of the ITC Hand Book 1984-85. The disposal goods are normally sold by auction or by inviting tenders on as-is where-is basis. Whereas in the normal course, the transaction was made of international trade by negotiation and could not be considered as disposal goods. It was also contended by the appellants at the time of personal hearing that the quantity and quality referred to in the show cause notice were small and different and specific products were sold at 1/10th of the price when the goods were in cut pieces.
5. The Ld. Collector of Customs did not accept the contention of the appellants and had ordered that the goods should be assessed at 3690.00 per M.T. and for other types of tubes packed in two bundles it was ordered to be assessed @ 2215.00 per M.T. He had ordered the confiscation of the goods under Section 111(d) and (m) of the Customs Act, 1962 but gave an option to redeem the goods on payment of a fine of Rs. 40,000/- in lieu of confiscation and also imposed a penalty of Rs. 20,000/-under Section 112 of the Customs Act, 1962.
6. Being aggrieved from the aforesaid order, the appellants have come in appeal before this Tribunal. Sh. N.C. Sogani, Ld. Consultant who has appeared on behalf of the appellants has reiterated the contentions made in the appeal memorandum and argued that the goods imported are in the nature of raw-material and the value is not much. He further argued that the pipes were not in regular length and even the Collector himself has accepted that the goods were not comparable. Sh. Sogani furhter argued that the criteria adopted by the Revenue i.e. raw material plus manufacturing cost were not correct in law. Sh. Sogani stated that the disposal goods were always cheap. He has referred to para 358(1) of the relevant Hand Book. In respect of his argument, he has referred to the judgment of the Bombay High Court in the case of Abdul Wahid v. Union of India and Others reported in 1981 (8) E.L.T.936 where the Hon'ble Bombay High Court has held that the expression "disposal goods" occurred in sub-clause (iii) of Clause 5 of the said order must be read in the context of expression" new goods used therein". Expression "disposal goods" is used in contradistinction to "new goods". Once it is found that the goods imported were new goods, then the mere fact that they were not of uniform type or size, was not sufficient for coming to the conclusion that they were "disposal goods". Sh. Sogani argued that the goods imported by the appellants are not disposal goods and has argued that the appellants had declared the value at Rs. 84,594.73 whereas the assessed value was Rs. 3,40,868.86 and the difference was at Rs. 2,56,274.13. He has argued that the declared value of the goods has to be debited to the licensee and stated that the licence filed by the appellants fully covers the imported goods as per their declaration. He has relied on the judgment of the Hon'ble Bombay High Court in the case of Union of India and Others v. Glaxo Lab. Ltd. reported in, 1984 (17) ELT 284 where the High Court has held that c.i.f. value had to be debited to the licensee. Sh.
Sogani argued that the penalty should not have been levied and the levy of fine in lieu of confiscation is also not called for. He has pleaded for the acceptance of the appeal.
7. Sh. S. Krishnamurthy, Ld. SDR who has appeared for the respondent stated that the goods imported by the appellants are "disposal goods" and the cut pieces cannot be considered as "new goods". He has argued that the valuation method adopted by the adjudicating authority was correct in law and has, therefore, pleaded for the dismissal of the appeal.
8. We have heard both the sides and have gone through the facts and circumstances of the case. The goods imported by the appellants were not in cut pieces. The length was 10 ft. and above. The appellants' contention that the price of the goods was less because of the fact that they were cut pieces and were from surplus stock, cannot be accepted. As per the chemical composition, the pipes are absolutely of high nickel alloy tubes. The Ld. adjudicating authority has referred to similar type of tubes imported by M/s. Hein Lehman (I) Ltd., Faridabad-6 vide Bill of Entry No. I 906 dt. 25- 9-84 was found at Rs. 93,470.20 viz. 6,444.26 per M.T. c.i.f. and M/s. Usha Industries were found at 8041.01 per M.T. vide invoice No. 12702 dt. 23-10-85 from Sandwich Sweden and price of similar Stainless Steel tube of similar composition cited by Larsen & Tourbro Ltd. Sundergarh vide Invoice No.11455/054 dt. 30-9-85 was found at 4,677.10. He has also referred some more invoices on the issue valuation.
9. We agree to the findings of the lower authorities that raw-material plus manufacturing cost critera was correct. The value adopted the adjudicating authority for the tubes @ 3,690.00 per M.T. and @ 2,215.00 per M.T. for other types of tubes packed in two bundles was correct. Accordingly, we confirm the findings of the Collector on the point of valuation. The Ld. Consultant had referred to a judgment of the Hon'ble Bombay High Court in the case of Union of India v. Glaxo Laboratory (supra). The actual c.i.f. price could be debited to the licence provided it was a bona fide price though not acceptable for the purpose of assessment of customs duty under Section 14 of the Customs Act. Here the value, which the appellants declared was approximately 1/5 or 1/3 of the fair international price of the goods, so much price difference could not conceivably be had by bona fide price negotiations. We do not consider that totally unreal price has to be debited to the import licence just because the appellants declared it as the c.i.f. value of the goods. It is true that no proof of extra remittance is forthcoming. But by its very nature, evidence of extra remittance can be had only in a rare case because there are numerous subtle and indirect ways of making the extra remittance to the foreign suppliers. In view of this discussion we also confirm the findings of lower authority as to violation of I.T.C. Regulations. We feel that the fine and penalty imposed are excessive. To meet the ends of justice, we reduce the fine in lieu of confiscation from Rs. 40000/- to Rs. 20000/-(Rupees twenty thousand only) and penalty from Rs. 20000/- to Rs. 10000/- (Rupees ten thousand only). Except for this modification in the order, the findings of the lower authority are confirmed and the appeal is rejected.