1. These appeals arise out of the order of Collector of Customs and Central Excise, Trichy. Under the impugned order, the appellants have been penalised for the reason that the value declared by the appellants in respect of the goods imported was not acceptable and the learned lower authority has determined the value under Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and the appellants had been charged with mis-declaration of the value and the goods valued at Rs. 1,15,52,520/- have been confiscated under Section lll(m) of the Customs Act, 1962 and allowed redemption on payment of redemption fine of Rs. 25,00,000/- and a penalty of Rs. 10,00,000/- has also been imposed on the appellants. A further duty has been-demanded in respect of the value found in excess of the declared value as this value was not covered under EPCG licence produced by the appellants for the purpose of concessional rate of duty. In that case the goods were confiscated and allowed the same to redeem on redemption fine of Rs. 10,00,000/- and demanded duty on the value of Rs. 45,12,480/- not covered by EPCG licence made on merits as appropriate rate without extending the benefit of notification for concessional assessment under EPCG scheme. A penalty of Rs. 5,00,000/- is also imposed on the appellants.
2. After hearing both the sides, the operative portion of the order was announced in the open Court viz. 'Appeals allowed with detailed order to follow'.
3. The goods involved in these two appeals are Auto Coner Schlafhorst Winders Model 138 GRUCX 60 Spindles, Air Splicer, Uster W3 clearers, 5 Degree Cones' - 2 Nos and "Auto Coner Schlafhorst Winder Model 107 60 Spindles, Air Splice Uster Clearer, year 1969" - 1 No. The price declared by the appellants is US $ 20,000 CIF for each Auto Coner and were covered by the invoice issued by M/s. Republic Textile Equipment Company of South Corolina, USA. The year of manufacture of the machine as per the documents is 1986. A Chartered Engineer's Certificate was also filed showing the year of manufacture as 1986. It was noticed by the Customs authorities that a similar machine as imported by the appellants of 1985 model had earlier been imported vide Bill of Entry dated 7-8-1995 and in respect of which the value of US $ 80,000 had been declared. The following is set out in Para 18 of the learned lower authority's orders in this regard : "As it came to the notice of the Department that in August, 1995, an import of two numbers of 60 Spindle Schlafhorst Auto coners of 1985 make model 138 CRUCX had taken place through Tuticorin Port vide B.E. No. 87/7-8-1995 filed in Customs House, Tuticorin supported by an invoice price of USD 80,000 C&F, the department entertained a reasonable doubt regarding the correctness of the value declared by the importers M/s. Neo Intex Mills Ltd. in the instant case." The show cause notice was therefore issued to the appellants on the reasonable belief as to the mis-declaration of the value and provisions of Sections ll(m) and 112(a) were invoked in taking penal action in the matter. The authorities, it has been stated in the show cause notice sought to enhance the value of each machine imported to US $ 80,000 in terms of Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The appellants made various pleas before the learned lower authority as to how the appellants' price was acceptable and they also produced evidence in support of their pleas that the value declared by them is the value under Rule 4 of the Valuation Rules as aforesaid. The learned lower. authority however rejected the evidence produced by them and has held that since there was a clearcut evidence of similar import having taken place at a price of US $ 80,000 CIF per machine, the same has to be taken as the correct transaction value and therefore ordered enhancement of the value and passed order confiscating the goods and also demanded duty as well as penalised the appellants for the importations covered by the two Bills of Entry in question.
4. The learned Advocate for the appellants has pleaded that the appellants had imported the goods for setting up 100% export oriented unit for the manufacture of yarn under EPCG Scheme. The goods he has pleaded had been imported against the licence issued under para 38 of the Export and Import Policy 1992-97 with an export obligation for export of the goods valued at four times the CIF value of the goods allowed import within a period of 5 years from the date of issue of the licence. The total value of machinery allowed import under the licence was US $ 15,23,000/- and in the list of items allowed importation, the goods imported are one such item i.e. 6 Nos. of Auto Coners with total CIF value of US $ 1,20,000/-. He has pleaded that the appellants have been funded by the IDBI by way of loan to the extent of Rs. 400 lakhs.
He has pleaded that the appellants negotiated the purchase of the second hand machinery for importation against the licence with the dealer in America who has a standing of over 60 years in the business of sale of second hand textile machinery. He has pleaded that the appellants negotiated with the suppliers for the sale of full range of the machinery for the manufacture of yarn for export purposes and thereafter the goods were imported at the negotiated price and invoiced for the purpose. He has pleaded that the appellants also obtained Chartered Engineer's Certificate showing the residual life of the machinery and also the prevailing price for the second hand machinery for export from USA. He has pleaded that before the issue of the licence the appellants' application for import of the machines was required to be cleared by the Standardisation, Testing and Quality Certification Directorate (STQC) in the Department of Electronics, Government of India in terms of para 25 of the Export and Import Policy vide App. 1A.V of the Handbook of procedure (Vol. 1). He has pleaded that STQC is a high powered committee functioning under the Chairmanship of the officer of the rank of Additional Secretary to the Government of India comprising of experts. He has pleaded that for the purpose of importation the functions assigned to the STQC is technical evaluation of applications and related documents for reasonableness of purchase price before it and wherever necessary, after seeking expert opinion including those of the experts from abroad. He has pleaded, after this Committee has satisfied itself about the correctness of the price of second hand machinery it is only then a certificate of reasonableness of the price as indicated for importation is issued. In the present case, he has pleaded, that the said Committee issued necessary certificate accepting the price as declared by the appellants for importation of these machines. He has pleaded the certification by this Committee is not a mere formality. The Committee being a high powered Committee, have access to expert opinion, they examined the documents submitted by the appellants and only after satisfying themselves taking into consideration the nature of the goods and the price as obtained, then only approved the appellants price for the purpose of issue of the licence. He has pleaded that the constitution of the Committee as authorised by the Director General, STQC, an officer (Department of Electronics) was one Director and 2 Additional Directors. He has filed a copy of the document captioned "Import of Second-hand Capital Goods - Certification of Reasonableness of Purchase Price" showing the administrative structure of the Committee and the persons authorised to issue the certificate of reasonableness of purchase price for import of second-hand capital goods. He has pleaded that this Committee after examination of the material placed before them by the appellants and after their own scrutiny and verification issued the certificate. He has pleaded that this Committee vide their certificate dated 14-9-1995 has certified as under : "Based on the information and supporting documents/evidences supplied by you in connection with the import of second-hand capital goods as indicated in the enclosure (duly endorsed), it is hereby certified that the declared purchase price of US Dollars 15,23,000.00 (US Dollars Fifteen Lakhs twenty three thousand only), of items being imported, having a residual life of 07-15 (Seven-Fifteen) years, is reasonable." He has pleaded the list attached to the certificate also included the goods under import and the value of the same as declared by the appellants in the Bill of Entry has also been duly certified. He has pleaded that this certification by the Committee is a pre-requisite before issue of the licence in respect of import of capital goods where the value involved is over Rs. 100 crore. He has pleaded that the licence is issued only after the certification by the Committee. He has pleaded based on the certificate, the licensing authorities issued the licence. He has pleaded that the appellants had imported the items covered by the licence as certified by the STQC. that the total value of US $ 15,23,000 CIF. He has pleaded that the Customs authorities have accepted the value of all the other items as imported except those of the Coners in question now under clearance. He has pleaded that in support of the price the appellants had also filed the Chartered Engineer's Certificate which also shows that the price declared by the appellants was reasonable. He has pleaded that the appellants after the objection was raised by the authorities filed further evidence to show that the price declared by the appellants was a correct price and therefore it should be accepted as the transaction value for assessment for this under Rule 4 of the Valuation Rules framed under Section 14 of the Customs Act, 1962. He has pleaded that the appellants produced from the manufacturers of the machine proforma invoice and the value of the new machine as per this proforma invoice dated 3rd April, 1986 is US $ 1,09,864.00. He has pleaded that if the depreciation over the new machine is taken into consideration for a period of 10 years even at the rate which is allowed in respect of cars imported into India by the Customs authorities, the appellants price arrived at would be still found to be the correct value. He has further pleaded that the appellants had also produced copy of the letter from the suppliers of the machine in USA namely M/s. Republic Textile Equipment Company, South Carolina dated December 18,1995 wherein they set out as under : "The prices at which we have invoiced for M/s. Neo Intex Mills Limited, Madurai, India for all the equipments including Autoconers are all current and quite reasonable. In the same price, I can supply to anyone.
All these prices were fixed and negotiated with their Joint Managing Director who visited us and inspected the machinery as early as May 1995 and kept in our warehouse." He has pleaded that the appellants had also produced evidence of the price of equivalent machine supplied by M/s. Padmatex Ltd. manufactured in India having the same model as imported by the appellants. He has pleaded that the price of the machine manufactured in India as per the copy of the invoice produced by them to the authorities dated 27-12-1990 is Rs. 49,20,000/-. He has pleaded that this invoice shows the clear particulars for excise purposes also. He has pleaded the depreciation is taken into consideration for the purpose of the machines of 1990 model the value of the same goes to just over Rs. I0 1/2 lakhs. He has pleaded that in view of the corroborative evidence produced by the appellants in support of the value declared by .them, the learned lower authority should have accepted the value under Section 14 of 1962 as representing the transaction value. He has pleaded that the learned lower authority has brushed aside the evidence produced by the appellants without any acceptable reason. He has pleaded about the offer of the manufacturer of the machine namely Schlarhorst has been held by the learned lower authority as merely an offer and therefore could not be accepted as indicative of the actual value of the machine. He has pleaded that the learned lower authority has gone on to observe that the price shown in this offer for the machines produced by them were US $ 1,09,864 and US $ 11,6000 and the learned lower authority has observed that the price being adopted by the Department was only US $ 80,000 which is lower and therefore it does not help the case of the appellants. He has pleaded that the learned lower authority should not have compared the price of the new machine as set out in the offer, which the learned lower authority has observed as an offer which showed the price of the new machine and should have actually compared with the price declared by the appellants, after allowing depreciation over a period from the date of invoice. He has pleaded that therefore the reasonings of the learned lower authority in this regard in Para 25 which is reproduced below for convenience of reference, is totally unacceptable in law: "A scrutiny of the above documents submitted for consideration by the importers would show that the 'price summaries' referred to at (i) and (ii) above are prima facie and at best only in the nature of offers. The offer prices indicated therein at the rate of USD 109,864 and USD 1,16,000 (both FOB ex-works) are in any case only much more than the C&F price of USD 80,000 per machine at which a physical import has taken place. Besides, there is considerable difference between the mode of depreciation as worked out normally by the department (extending depreciation at 16% for the first year, 123% for the second year, 10% for the third year and 8% for the later years subject to a maximum depreciation of only 70%) and the one worked out by the importers at 27.82% which reduces the value to abysmally low figures of USD 5631 and 22,727 in respect of the two offers cited. Even these two reduced figures claimed by the importers as indicative of the current prices do not tally with each other; the latter being nearly four times the former. In view of the above, these offer prices do not merit any consideration." In regard to the quotation for the indigenously manufactured machine of the same model, the learned lower authority has discarded as merely discussing that this quotation is for indigenous machine and he has not considered this piece of evidence. The learned lower authority's findings in this regard are reproduced below for convenience of reference: "The third piece of evidence relied upon by the importers is the price of PADMATEX Autoconer, which is obviously of indigenous manufacture and locally sold. I am unable to place much credence on this piece of evidence for the same reasons as stated above especially when there is a price on record of a comparable SCHLAFHORST autoconer imported at around the same period as the goods currently under import." He has pleaded that the appellants invoice value would not have been rejected by the learned Collector unless it could be shown by him as to how the appellants transaction did not pass the muster of the parameters as set out under Section 14 of the Customs Act, 1962. He has pleaded that under Section 14, the invoice value is required to be accepted in case the goods are [sold] in the ordinary course of business for imports into India in the course of international trade where the sellers and the buyers have no interest in the business of each other and the price is the sole consideration. He has pleaded that the appellants transactions for import of the goods was in the ordinary course of international trade and nothing has been shown to say that the transactions as entered by the appellants was not so. He has pleaded that there is also no allegation or any evidence nor there is any finding of the learned Collector that the suppliers of the goods and the appellants had any interest in the business of each other. He has also pleaded that there is nothing on record to show nor any evidence produced nor there is any finding in regard to the supply of the goods that price was not the sole consideration. The appellants have paid the amount for the importation as set out in the invoice.
Therefore he pleaded that in terms of Sub-rule (4) of Customs Valuation Rules, 1988 the invoice value should be taken to be the transaction value as it satisfies all parameters set out under Rule 4 of the Valuation Rules. The said rule for convenience of reference is reproduced below: '4. Transaction value. - (1) The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules.
(2) The transaction value of imported goods under Sub-rule (1) above shall be accepted: (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the-geographical area in which the goods may be resold; or (b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of Sub-rule (3) below.
(3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price.
(b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time - (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, Quantity levels, adjustments in accordance with the provisions of Rule 9 of these rules and cost incurred by the seller in sales in which he and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this Sub-rule." He has pleaded that the learned lower authority has not entered any finding with reference to the parameters set out in Para 4 that any one of these parameters had not been satisfied. He has pleaded that the learned lower authority while rejecting the appellants value has not given any reasons as to how in terms of Section 14 of [Customs Act] read with Valuation Rules as above,the value could not be accepted in terms of Rule 4 of the Valuation Rules. He has pleaded that the learned lower authority has merely gone by the fact that since goods of the same description had earlier been cleared through Tuticorin port and the value of the same declared as US $ 80,000 the value of the appellants' goods should be also taken to be the same for customs purposes. He has pleaded that the importation of the goods relied upon by the learned lower authority for enhancing the value no doubt has been stated to have been imported from USA but the same were invoiced from UK. He has pleaded that the circumstance of the import of these two goods therefore could not be taken to be similar to these of the appellants' importation. The appellants had imported from a dealer who had long standing in this business and who is located in USA where from these goods are imported. He has pleaded that the said supplier in his letter dated December 18,1995 addressed as "TO WHOM IT MAY CONCERN" has clearly stated that the price at which he has invoiced the goods to the appellants were correct and quite reasonable and that at the same price the goods could be supplied to any one. He has also pleaded that these prices are negotiated. He has pleaded that the learned lower authority has not adverted to this letter nor made any enquiries with the said suppliers' independently or through Government channels in this regard to verify the veracity of the suppliers' statement and the price at which the goods were supplied to the appellants. He has pleaded that the appellants had made enquiries with the person who invoiced the goods in respect of the earlier import and in reply to the enquiry the said supplier had merely stated that they had received the enquiry for the goods and stated that they have various machines to offer and that the details could not be sent for a few days due to festive holidays.
He has pleaded that the said supplier had not furnished any information in this regard. He has pleaded that the authorities should have verified the basis on which the earlier import was made at a higher price and which is clearly over-valued. He has therefore pleaded that taking into consideration the circumstances of the earlier import, the value of the goods of the appellants could not be enhanced. He has therefore pleaded that the value of the earlier import could not be accepted as no verification as such in regard to the same was done by the authorities as to the correctness of the same. He has pleaded therefore that the same could not form the basis for enhancing the value in the case of the appellants.
5. The learned SDR for the Department has pleaded that the earlier importation made reflects the correct price and in as much as the same machines had been imported at a higher price, there was no reason that the same price could not be accepted. He has pleaded that the earlier machine imported was second hand and the appellants' machine imported was also second hand and the price was comparable and therefore the earlier value of the machines as recorded for the earlier import has been rightly adopted for the basis for valuation of the present machine.
6. We have considered the pleas made by both the sides. We observe that the sole ground on which the value has been enhanced by the learned Collector is that similar machine imported earlier was invoiced at US $ 80,000 and the appellants price it has been held therefore was highly under-valued and the value of the goods therefore in terms of Rule 8 of the Valuation Rules had to be US $ 80,000. We observe that in a case where similar goods have been imported at a higher price earlier, the authorities on noticing the subsequent import at a lower price have reasons to entertain a doubt as to the correctness of the value of the subsequent import. When such a situation exists what is required to be done is that the authorities should investigate the circumstances of the import made earlier and also of the subsequent import and should ascertain as to the basis of the price of the earlier import and that of the subsequent import before arriving at any conclusion as to which of the two prices for the goods reflects the correct price in terms of Section 14 of the Customs Act, 1962 and whether the invoice value in terms of the criteria laid down under Rule 4 of the Valuation Rules framed under Section 14, of the earlier import or the latter import reflects the correct transaction value for customs purposes.
7. In regard to the earlier import nothing has been brought on record to say that any investigation was done in regard to the correctness of that value and the basis on which the value of US $ 80,000 represented the correct value in terms of Section 14 read with Rule 4 of Valuation Rules. Except that this value was accepted by the authorities, nothing else is on record to show as to on what basis this value was taken to be represent the correct value. Just because the value at which the goods have been imported is higher does not by itself constitute a reason for that the value invariably to be taken as the correct value under Section 14 of Customs Act read with Rule 4 of the Valuation Rules framed thereunder. At the same time it is also incumbent on the authorities to examine the basis of the price for the subsequent import which is lower to as certain whether in terms of the documents produced and the circumstances put forth the same can or cannot be taken to be the correct transaction value. In the present case the importation has been made under Export Promotion Capital Goods Scheme under the Export & Import Policy 1992-97 under Chapter VI and the machineries and the value of the machineries as imported was required to pass the muster of the High Powered Committee constituted for the purpose in terms of Export & Import Policy as set out in Para 38 read with Para 40 of the Export & Import Policy 1992-97 and the procedures laid down thereunder.
The said paras are reproduced below for convenience of reference :Import on "38. Capital goods (including spares upto 20% of the CIF value of the concessional capital goods) may be imported at a concessional rate of customs duty. duty according to the conditions given in the table below subject to an export obligation to be fulfilled over a period of time.
The period for fulfilment of export obligation shall be reckoned from the date of issue of the import licence: DUTY EXPORT OBLIGATION PERIOD The export obligation shall be on FOB basis. However, in the case of zero duty imports, the licence holder may apply for fulfilment of the export obligation by exporting 4 times the CIF value of the capital goods on NFE basis within a period of 8 years. The provisions of paragraph 138 of this Policy shall apply for calculating the export obligation on NFE basis.Conditions 40.
Import of capital goods under the scheme shall be subject tofor import of Actual User condition till the export obligation is completed.capital Both new and second hand capital goods may be importedgoods.
under the scheme. In the case of import of second hand capital goods, the importer shall furnish to the Customs at the time of clearance of goods, a self declaration to the effect that the second hand capital goods being imported have a minimum residual life of 5 years in the prescribed form as given in Appendix XI of Handbook of Procedures (Vol. 1). However, if the CIF valueof second hand capital goods is Rs. 1 crore and above the importer shall produce a certificate from any one of the Inspection and Certification Agencies, including all their branches, as specified in Appendix XIA of the Handbook of Procedures (Vol. I) certifying the residual life of the capital goods and that the purchase price as reflected in the CIF value is reasonable. In the case of zero duty imports, the minimum residual life of the second hand capital goods shall be 10 years. The licensing authority may also specify, in individual cases such terms and conditions as may be considered The procedure for grant of licence for import of second-hand machinery under Export Promotion Capital Goods Scheme is set out in Chapter VI of Handbook of Procedures under the Export and Import Policy for 1992-97.
In Para 100 sub-para (ix) among the pre-requisites for issue of licence the following is set out: 'In the case of import of second hand capital goods, the applicant shall furnish a declaration as given in Appendix XI read with paragraph 40 of the Policy. In addition, if the CIF value of second hand capital goods being imported is Rs. one crore and above, he shall also produce a certificate from any one of the Inspection and Certification Agencies, including all their branches, as specified in Appendix XIA of this Handbook certifying the residual life of the capital goods and that the purchase price as reflected in the CIF value is reasonable' This Committee which has been designated as Standardisation, Testing & Quality Certification (STQC) constituted by the Government of India as set out in Appendix XIA of Handbook of Procedures examined the appellants' case with reference to the documents and information furnished by the appellants and issued necessary certificate for the machines to be imported for the value as indicated for each machine.
The function of this Committee is to technically evaluate the application and their related documents on the reasonableness of the purchase price for importation. It is therefore to be presumed that the Committee had the knowledge with them about the price of similar machines for the purpose of importation and they after examining the appellants' case were of the considered opinion that the price was declared by the appellants for importation was the correct price. This certificate by the High Powered Committee constituted by the Government of India for the specific purpose of certifying the reasonableness of the price as declared cannot be lightly brushed aside and unless a basis on facts could be laid due consideration and regard will have to be given to the certification done by the Committee. The learned Collector in this regard on a plea by the appellants that the value has been certified by the STQC in Paras 20 and 21 has observed as under : "From the above, it is evident that the certification as to the reasonableness of the declared purchase price was done by the said authority of the Department of Electronics, Government of India on the basis of the information and supporting documents/evidences supplied to them by the importers inconnec-tionwith the import of the second-hand capital goods in question. In other words, no independent evidence relating to import of similar/comparable machinery as has been pointed out by the Customs House, Tuticorin was obviously made available to the said authority when the classification has been done.
As regards the importer's claim regarding the Commerce Ministry having certified/accepted the value, it is the importers' own admission in their reply to the show cause notice that on the basis of Chartered Engineer's certificate and on the strength of STQC's Certificate of reasonableness of price, the DGFT accepted the prices (invoices) and issued the EPCG licence. Here again, the Chartered Engineer's certificate is a document only produced by the importers and the other document viz. Certificate from STQC as already found earlier, is one based on the documents/evidences supplied to the Department of Electronics by the importers themselves. These do not refer to any evidence relating to import of such/similar machinery on a comparable footing." The Collector has rejected the plea of the appellants as seen from the above, merely on the ground that the Committee has only done verification of the documents produced by the appellants and therefore in the absence of any other document they accepted the price as contained in the document produced by them and since the Customs House has got additional information in regard to the price of a comparable machine and the same was not available the authorities could not have therefore approved the price as given in the documents produced. We are not able to appreciate this logic. We observe that the High Powered Committee constituted for the specific purpose of technical evaluation and certification of purchase price of the capital goods to be imported has to be taken to be having the necessary expertise and having access to the information about the valuation of different kinds of the machines being imported and it is expected that for this important function they were performing, they would have taken into consideration the prices of similar machines and would have also taken into consideration the circumstances of the import and the nature of the documents produced before them before certifying the price as certified by them. It cannot be taken to be a rubber stamp committee who just approve the price based on merely the documents as produced before them. This certificate therefore has to be considered as a relevant piece of evidence while considering the appellants' plea. In case the learned lower authority felt that certain additional evidences having a bearing on the price as in the present case by way of another import required to be taken note of the learned lower authority should have referred the matter to the said Committee for their opinion and also for necessary action by them for corrective steps. We find from the records that this was not done. In a case where a statutory committee has been assigned a function it is necessary to have the opinion of the said committee in case there is any doubt or there is a circumstance of doubt regarding what has been certified by them. This not having been done, the price as certified by the Committee cannot be discarded easily. It is observed that the appellants had produced Chartered Engineer's Certificate along with documents submitted to this Committee. The learned Collector has not cast any doubt about the veracity of the Chartered Engineer's Certificate on the basis of which the import of the other second hand machineries covered by the same certificate as such have been allowed import. The Chartered Engineer has certified the approximate value of the machine as also the residual life of the machines and also the year of manufacture of the same.
Further the appellants on the doubt being raised by the authorities in regard to the valuation have produced a letter from the suppliers that they were prepared to sell the machines at the same price to any one.
No enquiry has been made by the learned lower authority in regard to the veracity of this statement of the suppliers. It is observed that necessary enquiries should have been made through governmental channel and through the investigating agencies in regard to the existence of the suppliers as such and also as to the standing in the trade as claimed by the appellants for over 60 years as also in regard to the averment that they were prepared to sell the machines to any one at the same price. The appellants also have filed proforma invoices of the manufacturers showing the price of machines when new and this the learned lower authority has merely discarded by saying that these were only proforma invoices. It is observed that the appellants have tried to support their case through the persons who are directly connected with the machines and have come on record as to what was the price of individual machine when new and what would be the price of the machine at the time of importation after depreciation on the same was allowed.
It is seen that there is no reason as to why the proforma invoice should be discarded out of hand unless it is found to be a bogus or merely a solicited document. The learned lower authority has not cast any doubt on the veracity of these documents. The appellants have also produced the invoice of similar machines manufactured indigenously which carries the particulars for Central Excise purposes and have shown that if that value is taken into consideration the price of the machines imported as declared by them is quite reasonable. The learned lower authority has again discarded this piece of evidence out of hand by stating that this being the price of indigenous machines and therefore we need not go into this piece of evidence.
We observe that where a doubt is cast on the value declared by the appellants, any piece of evidence which has a bearing and which in the present case in our view is so should be taken note of unless the same is found to be bogus or manipulated. Rule 8 of Valuation Rules does bar looking into the price structure of similar models of machines manufactured in India. It is in our view a relevant consideration for arriving at the price on the basis of best judgments. Based on the evidence as on record we find particularly in the back ground of the certificate regarding the value by the Governmental Committee i.e. STQC that the price declared by the appellants has to be taken as reflective of the transaction value. There is no allegation that there is any relationship other than normal business one between the suppliers and the appellants, and that the price was not the sole consideration nor there is any evidence that any extra remittances has been made by the appellants for the goods in question. The learned lower authority's sole reliance on the value of the goods imported by another importer cannot form a basis for enhancing the value unless it could be shown that price taking into consideration the price of the new machines and also various other parameters was not reflective of the correct transaction value. As mentioned earlier nothing is on record to show that how the price of the earlier importation can be taken to be reflective of the transaction value. No investigation has been shown to have been done by the authorities in regard to the said importation.
The appellants have the right to test the basis of the price of the other machines which is imported at a higher price. The Department has not come on record in this regard. The said supplier in respect of the enquiries made by the appellants, vide their communication dated 22-12-1995 merely stated that he has various machines to offer and that he could not send the details. It would have been worth while for the authorities to have addressed themselves as to whether the price declared in the case of the earlier import were genuine. It is pertinent to note that in that case while the import was from USA the invoice was raised from UK. The authorities should have examined this relevant circumstance and examined how the price shown in the invoice raised in UK was arrived at and also why the invoice had to be raised by somebody in UK. No enquiries were caused to be made with the U.K.party who raised the invoice for the machine imported earlier. In any case it was incumbent on the part of the learned lower authority before rejecting the appellants' invoice price of the machines imported by the appellants to have enquired as to what was the price of the new machines in 1986 or even at the time of importation and then work out as to what could be the price for the machines supplied for 1986 model machines taking into consideration the condition of the machines. The learned lower authority has not addressed himself to these aspects. In this background therefore merely because one importation has been made at a higher price cannot form the basis for enhancement of the value of the machines of the appellants who has produced evidence in support of the value declared by way of certificate issued by the statutory authority, the High Powered Committee constituted by the Government of India and it is further backed the same by producing other evidence by way of proforma invoice for 1986 model machines and also similar machines manufactured in India. In view of the above, taking into consideration the evidence on record we hold that no valid basis has been laid for enhancing the value as done by the learned lower authority and we therefore give the appellants the benefit of doubt and set aside the order of the learned lower authority enhancing the value and also levy of penalty on the appellants and also confiscation of the goods. We therefore allow the appeals of the appellants with consequential relief.