Full Judgment
The appellants herein filed a Bill of Entry No. 126, dated 27-2-1987 for clearance of a consignment of ball and roller bearings at the ICD, New Delhi. Along with the Bill of Entry, they submitted various documents including the Invoice dated 13-10-1986 of M/s. Ashwin R. Swali of England, Bill of Lading dated 25-11-1986 and the Certificate of Origin dated 17-11-1986. Subsequently, they also submitted copy of the Import Licence dated 5-7-1985 and Proforma Invoice dated 10-7-1986. As per the Invoice, the goods were 1368 pieces of assorted bearings of different brands and the value declared was Pound * 1988.50 cif (Rs. 38648/-). The goods were examined, and the description and the quantity were found in order except that in respect of one brand, the number of bearings was found to be 88 instead of 100, thereby indicating a \ shortage of 12 pieces. The goods were found to be unused and new. The comparison of the invoice value with the records of prices for similar goods indicated that the invoice price was on the lower side and hence the Department proposed to enhance the value to Rs. 1,78,211.00 cif for certain brands. For 4 other brands in respect of which comparable prices were not available, the Department proposed proportionate enhancement as it appeared that these brands were also under-invoiced. Further since the goods were purchased by the importers/appellants as a stock clearance deal, they were treated as disposal goods and hence the Licence submitted was not held to be acceptable for the imported goods in terms of Condition No. 3(iii) under Section 5 of the Import Control Order 1955 which stipulates that the goods, for the import of which a Licence is granted, shall be new goods other than disposal goods, unless otherwise stated in the Licence. For these reasons, it appeared that the importation was unauthorised and the goods liable to confiscation. The appellants waived the issue of show cause notice and requested for personal hearing. The adjudicating authority upheld the charge that the goods imported are disposal goods and hence were not covered by the Licence submitted by the appellants and confiscated the goods with an option to redeem the same on payment of a fine of Rs. 25,000/-.
The charge of under-valuation was also confirmed and the goods were assessed at Rs. 1,48,726/-. In addition a penalty of Rs. 5,000/- was imposed upon the appellants. Hence this appeal.
3. Appearing on behalf of the appellants, Shri G.L. Rawal, learned Counsel first draws our attention to the relevant portion of the impugned order ; on the nature and condition of the goods viz,, that they are unused and new. In particular, he refers to paragraphs 5 and 6 wherein the Collector, upon examination of the goods, has categorically opined that all the bearings were found new, though of old stock. He submits that once the goods are found to be new, they cannot be treated as disposal goods in view of the judgment of the Hon'ble Bombay High Court in the case of Abdul Husein Mohammedallhy, Master v. Union of India and Ors. reported in 1981 (8) E.L.T. 936 (Bom.). He, therefore, submits that the goods were validly imported under cover of REP Licence dated 22-11-1985 at Sl. No. 1 of the list attached thereto which admittedly covers ball and roller bearings of specific diameter.
4. On the question of valuation. of the goods, learned Counsel submits that invoice price is to be accepted as comparable prices relied upon by the Department are the current prices while the imported goods were manufactured in 1972-73 and sold as a stock lot. Besides, there are guidelines for giving 60% discount while the adjudicating authority extended discount of only 20%. The list price relied upon by the Department were also not disclosed to the appellant and hence on this score alone, the impugned order relating to valuation is vitiated.
Further in regard to some of the items admittedly, even the list price was not available. The learned Counsel, therefore, submits that the adjudicating authority should have accepted the declared price and should not have loaded the price particularly when the declared price in the Bills of Entry No. 127 and 128 filed on the same date i.e., on 27-2-1987 for identical goods have been accepted.
5. Replying to the contentions raised by the learned Counsel for the appellants, Shri Vipin Handa, learned SDR submits that even though the physical examination of the goods revealed that they were unused and new, in the face of the admission made by the appellants that the goods are stock lot, the adjudicating authority has rightly treated them as disposal goods, requiring specific inclusion in the Licence. In this connection, he refers to paragraphs 4,5,6,13 and 14 of the impugned order which contains the discussion regarding physical examination of the goods and the requirement of the Licence coverage. On the aspect of valuation, SDR submits that the Collector's comparison with the list price is not illegal and the Department was not required to furnish list price to the appellants, as they had waived the requirement of show cause notice. He, however, fairly submits that for 8% of the total consignment, there is no market enquiry but the proportionate, enhancement of value in respect of this quantity is justified.
5A. We have carefully considered the submissions of both sides. We find that in order to ascertain the actual condition of the goods, the same were examined by the adjudicating authority. His report is reflected in paragraph 5 of the impugned order which is as under : "It was observed that most of the bearings were in retail packings.
A number of bearings were either in sealed plastic envelops or wrapped in brown papers and the rest (which do not constitute major quantity, but a small percentage) were loose-packed together in 2 card board cartons. The retail packings were also soiled/stained and bore signs of long storage. Similarly, wrapping papers for other bearings were old. Except for a few bearings which showed the year manufacture as 1978, the other bearings did not indicate the year of manufacture. However, a number of packets/ papers containing bearings were also opened at random and it was observed that all these bearings were in absolute prime condition without any damage or stain. The same was the condition of loose bearings also. In other words, all these bearings were found new -though of old stock and could be used straightaway without any servicing or oiling except perhaps in respect of the loose/opened bearings." It was observed again in paragraph 6, he has held that "bearings are new in so far as their condition and use were concerned" and this is reiterated in paragraph 14 of the adjudication order. The Hon'ble Bombay High Court in the case reported in (supra), has held that the expression "disposal goods" occurring in Clause 5(3)(iii) of the Import Control Order must be read in the context of the expression "new goods" used in the same clause and that the expression "disposal goods" is used as "contradistinction to new goods", the High Court held that once the goods imported are new then the mere fact that they are not of uniform type and size is not sufficient to warrant the conclusion ! that they are disposal goods and the authorities below had proceeded on wrong assumption that they are of a mixed variety and purchased in a stock lot. In the present case also, we notice that the Department has sought to equate bearings purchased in stock lot, with the disposal goods, in spite of the fact that bearings were unused and new, as far as their condition and use were concerned. Hence, following the ratio of the Bombay High Court judgment (supra) which has since been followed by the Tribunal in the case of Mirah Dekor v. Collector of Customs, New Delhi reported in 1988 (35) E.L.T. 357, we set aside the finding that the goods are disposal goods requiring specific inclusion in the Licence and hold that the goods have been validly imported in terms of REP Licence dated 22-11-1985. We also see force in the contention of the Learned Counsel that invoice price is to be accepted particularly when, for similar imports, the invoice values have been accepted earlier and also when the list price relied upon by the Department was not disclosed to the appellants. In the case of Sippy Pramod Steel Alloys P. Ltd. v. Collector of Customs, Madras,- 1990 (45) E.L.T. 444 (Tri.) acceptance by the Customs House of the importers' declared value for similar goods was one of the circumstances considered as relevant for accepting the invoice value declared for the disputed goods. In the case of Vellore Rotter Flour Mills P. Ltd. v. Collector of Customs reported in 1991 (56) E.L.T. 659, the Tribunal has held that when a doubt exists about the correctness of the invoice price, the authorities should undertake investigation into the matter by at least asking the importers to explain the discrepancy instead of rejecting the invoice price straightaway. In this case, there is no dispute that the list prices were not disclosed to the appellants Even though the appellants waived the issue of show cause notice, we are of the opinion that this is not sufficient ground for the Collector to dispense with the requirement of putting the appellants on notice as to contemporary prices of comparable goods. For both these reasons set out above, we hold that the invoice value has to be accepted and set aside the enhanced valuation arrived at by the adjudicating authority.
6. In the light of the above discussion, we set aside the impugned order and allow the appeal with consequential relief, if any, due to the appellants.