Judgment:
1. This is an appeal against the order of, the lower authorities ordering loading of their values for imports from M/s. Berger, Jenson & Nicholson Group Supplies Ltd., U.K. by 2-1/2% on account of buying commission for the materials supplied by them to the appellants. This decision was communicated in a letter dated 16th January, 1982 after re-examination of their books of accounts by the Assistant Collector of Customs, Valuation Section, Customs House, Calcutta. It was found that M/s. Berger Group Supplies Limited held 39.54% of the equity share capital of the appellants and render service like procuring materials for the appellants as and when desired. When the books of accounts were examined on the previous occasion covering the period 1976-1979, it was found that the suppliers were acting as buying house and were charging a buying commission of 2-1/2% and, it was accordingly decided to load 2-1/2% buying commission to the invoice value for assessment of duty and debit to the import licence. It appears that soon after the initial decision to load the values was taken, the practice of charging the buying commission was dis-continued. The explanation for the change of practice was that the foreign suppliers were acting as "good friends in procuring materials and rendering service other than profit-making." It was found during re-examination of books of accounts that the foreign supplier had also supplied raw-materials for manufacturing activity besides materials for research and development. The appellants however, did not produce the original invoices of the manufacturers before the Customs authorities. Considering that the appellants would have to incur some expenditure for making enquiries and buying the materials abroad and, in view of the relationship in the form of equity shareholding, it was decided to load the CIF value by 2-1/2% from this supplier in lieu of buying commission to arrive at the assessable value under Section 14(1) of the Customs Act, 1962.
2. The Collector of Customs (Appeals), Calcutta, who heard the appellants, has recorded the following in his order : "It is noticed from a number of letters/certificates of M/s. Berger Group Supplies Limited, ... that a buying commission of 2-1/2% was being charged for the goods purchased by the appellants through them: The commission was for arranging shipment by other suppliers or by manufacturers. In a certificate dated 28-8-1981, M/s. Berger Group Supplies stated that all business conducted by Berger Groups and British Paints (India) Limited over the period 1975-1978 were strictly on the basis of sales invoice CIF value. No additional commissions or other charges were levied over and above the invoice CIF quoted value shown. That means though the functions of M/s.
Berger Group Supplies remained the same as before in respect of purchases by M/s. British Paints (India) Limited though the former, no buying commission or purchasing commission was being charged." ... "Although we do not have any foreign manufacturers/suppliers who act as our buying house, on occasions we accept the services of Berger, Jenson & Nicholson Limited Group Supplies in respect of some raw-material items imported. This service is rendered to us by virtue of our association with the U.K. Company." 3. From the above, the Collector of Customs (Appeals) concluded that if the suppliers' activities are based on such considerations as 'association', the presumption is that the two parties are interested in each other's business. The invoice price in such cases is not acceptable under Section 14(1) and the decision to load the invoice price by the amount of buying commission was therefore, correct. He therefore, rejected the appeal.
4. The appellants have assailed the decision of Collector of Customs (Appeals) on the ground that M/s. Berger Group Supplies of U.K. issued sales invoices to the appellants for transactions of outright sale and purchase instead of merely assuming the role of a buying house. It has been claimed that the price charged by the U.K. Suppliers included their service charges and that there was no special relation between the two parties. It has also been claimed that the proceedings before the Assistant Collector were entirely barred by limitation under Section 28 of the Customs Act, and Collector of Customs (Appeals) should have recorded his findings to that effect.
5. Shri P. R. Dastidar, the learned Consultant for the appellants, stated during the hearing that 39.5% shareholding of the U.K. Company in the equity capital of the appellants does not constitute mutual relationship and loading of 2-1/2% of the invoice value had been done on surmises only. He pleaded for setting aside the order of the lower authorities. Shri B.S. Ganu, learned SDR stated that once the Customs authorities decided to include the buying commission in the assessable value as a result of the examination of the books of accounts, the practice of charging the buying commission was discontinued although the services of U.K. Suppliers to the appellants continued to be provided because of their 'association'. He therefore, argued that the invocie value could not be accepted under Section 14(1), unless it was loaded by the amount of commission, which was being charged previously.
6. We have carefully considered the matter and observe that although the U.K. Suppliers have continued to render certain services to the appellants in the matter of making enquiries on their behalf and procure supplies for them, they have dis-continued the practice of charging a buying commission. The appellants' claim that the transactions between the two parties were of outright sale and purchase could have been examined if they had submitted the invoices of the manufacturers from whom raw-materials etc., were procured by the U.K.Company. The claim that the price charged by the U.K. Company included their service charges cannot be verified in the absence of the manufacturers' invoice. 39.5% shareholding of the U.K. Company in the equity capital of the appellants shows mutual interest in the business of each other and especially the relationship which exists between the two. If such a relationship does not exist there was no reason why the U.K. Suppliers would not collect buying commission, which they were collecting in the past. In view of these factors the loading of 2-1/2% on the invoice value by the lower authorities is justified.
7. As regards the plea of limitation, it appears from the letter dated 16-1-1982 of the Assistant Collector that the authorities had decided to make provisional assessment of their imports and this decision was communicated in their letter dated 5-2-1981. Once they had completed re-examination of books of accounts and arrived at the final decision to load the value, the decision to make provisional assessment was simultaneously withdrawn. In these circumstances, there is no force in the plea that the proceedings were barred by limitation under Section