Judgment:
1. This is an appeal filed by the Revenue being aggrieved with the Order-in-Appeal, dated 30-9-1986, passed by the Collector of Customs (Appeals), Madras. The respondents are M/s. Southern Sea Foods Pvt.
Ltd., Madras (hereinafter referred to as the 'SSF'). The matter relates to the Customs' valuation. It was alleged in the show cause notice, dated 25-11-1985 that SSF, their Indenting Agents and their Adviser had collectively acted in collusion and had mis-declared the value of the consignment of the goods imported. The Collector of Customs (Appeals) had held that on the basis of the evidence relied upon the Department, there was no justification for either enhancing the value of the goods imported for assessment to customs duty, or for imposing any fine.
2. M/s. SSF had imported Mild Steel Galvanised Low Carbon Defective Sheets in Coil form ('sheets' for short) from M/s. K. Tarnura & Co., Osaka, Japan (Japanese suppliers) vide Bill of Entry, dated 20-8-1985, at the port of Madras. The sheets were imported through M/s. S.N. Sinha & Co. (Impex) Pvt. Ltd., Bombay (Indenting Agents). On the basis of the documents recovered from the Indenting Agents and the statement of Shri S.N. Sinha, Managing Director of the Indenting Agents' Firm, it was alleged that the sheets imported had been under-valued. The Dy.
Collector of Customs, Madras enhanced the declared value of Rs. 1,39,030.60 by Rs. 78,097; and imposed a redemption fine of Rs. 40,000/-. No penalty was however, imposed on any one -neither on the importers - SSF, nor on the Indenting Agents or the importers' Advisers, although show cause notices had been issued to all of them.
The Collector of Customs (Appeals) set aside the order passed by the Dy. Collector of Customs, Madras. The Revenue in their appeal had pleaded that the invoice value in this case did not constitute the value under Section 14(1)(a) of the Customs Act, 1962, and that the additional sums as reflected in two separate debit notes were includible in the declared value. The respondents have filed cross objections.
3. The matter was heard on 7-6-1996 when Mrs. Ruchira Pant, SDR for the appellants/Revenue stated that in the show cause notice, dated 25-11-1985 reliance had been placed on the debit note recovered from the premises of the Indenting Agents, and the statement of the Managing Director of the Indenting Agents' Firm. She pleaded that the order passed by the Dy. Collector of Customs was based on records and investigations, and that the Order-in-Appeal of the Collector of Customs (Appeals), Madras was not maintainable.
4. In reply, Shri N.C. Sogani, Consultant submitted that the debit note relied upon did not relate to the respondents. Referring to the copy of the debit note supplied to them, he stated that the particulars as contained in the said debit note did not tally with the particulars of the consignment imported by the respondents. The statement of Shri S.N.Sinha, Managing Director of the Indenting Agents' Firm was recorded with reference to such a debit note which did not relate to the respondents. There was nothing in his statement to show that any additional sums had been paid by the respondents. He pleaded that the declared value could not be discarded on the basis of un-related documents and statement recorded with reference to such un-related documents. The respondents had not paid anything more than what is reflected in their declared invoice. The Dy. Collector of Customs had not made any inquiries about contemporaneous imports. There was no suppression and there was no mis-declaration by them. Statement of Shri S.N. Sinha was not on their behalf. The ld. Consultant pleaded that the Collector of Customs (Appeals) had correctly analysed the facts and there was no ground to interfere with his order.
5. We have carefully considered the matter. The sheets in question were imported from Japan during August, 1985. For the import of the said goods, Indent No. 1339, dated 3-6-1985 was placed by the Indenting Agents on the Japanese suppliers on behalf of the SSF. The price quoted in the Indent was Yen 56000 per M.T., CIF Bombay. The Japanese suppliers confirmed this price under their sale Contract No.KTS-774-85, dated 24-6-1985. The Letter of Credit had been opened on 14-6-1985 for the amount at this rate of Yen 56000 per M.T. CIF. It is also seen from the Invoice No. KTS 774-85, dated 3-8-1985 that the price at which the goods were sold was mentioned as Yen 56000 per M.T.There was nothing suspicious about the valuation, and the first show cause notice dated 17-9-1985 was issued only for the Import Trade Control (ITC) Violations. No ground was taken that there was any under-declaration of the value. It is seen that subsequently on 3-10-1985 a copy of the debit note No. KTD-202/SN/85, dated 30-8-1985 was recovered by the Directorate of Revenue Intelligence (DRI) Officers from, the premises of the Indenting agents, and a revised show cause notice was issued on 25-11-1985 alleging, in addition, under-valuation also.
6. The case of the Revenue is based on the copy of the debit note referred to above bearing No. KTD-202/SN/85, dated 30-8-1985 of the Japanese suppliers, recovered from the premises of the Indenting Agents, The respondents have contended that this debit note did not relate to them and was a mistake on the part of the Japanese suppliers and subsequently they had recalled the said debit note from the Indenting Agents. On scrutiny of the copy of the debit note, it is seen that the various entries therein do not tally with the particulars of the import under consideration. In the debit note, there is no reference to any imports or to the goods. The Indent number originally read by the Customs authorities was '1888'. Subsequently, after issue of the show cause notice, it was amended to read '1339'. The actual contract amount in the debit note was shown at the rate of Yen 56500, and the invoice amount had been shown as Yen 48000. The actual amount in the invoice in question was Yen 56000 per M.T. It was also indicated that the balance had been used in In-dent-1885. There is no explanation with regard to this Indent No. 1885. The quantity imported in the present proceedings were 49.48 M.T. while quantity shown in the debit note is 58.650 M.T. The original of the debit note was not available and only a photostat copy was on record.
7. Reliance has also been placed on the statement, dated 3-10-1985 of Shri S.N. Sinha, Managing Director of the Indenting Agents' Firm. The respondents had contended that the statement by Shri S.N. Sinha was not given on their behalf and that on the basis of his statement, the respondents could not be penalised. They have also submitted that there is nothing in that statement that anything more than what was to be paid according to the invoice, was paid to the foreign suppliers. The statement of Shri Sinha was with reference to the debit note recovered from his premises. As is obvious the particulars in the debit note did not tally with the particulars of the import in question. Shri Sinha had stated that the correct value of the goods imported was higher than the one shown in the invoice. On this basis alone, the declared value could not be rejected. The relevancy of the debit note with reference to which the statement of Shri Sinha was recorded, is not established.
No investigations had been made as to what should be the value for Customs purposes under Customs law. As the debit note did not contain particulars of the present import, adoption of its value without any verification may not be proper. No other basis had been given by the Dy. Collector, Customs to adopt the value shown in such a debit note.
8. As regards the controversy about the bill of exchange for US $ 1980.04, the respondents had submitted that indent was placed on CIF basis, the Letter of Credit, dated 14-6-1985 was opened accordingly; the Bill of Lading, dated 3-8-1985 bears the endorsement "freight pre-paid" and that the Japanese suppliers had realised the invoice value after the shipment. They had received the intimation regarding bill of exchange on 18-10-1985. The bill of exchange was said to have been raised on 24-9-1985 much after the import formalities had been completed. The goods had already been received in August, 1985. They have advised their Bank for the rejection of the bill of exchange. The contract being CIF, the question of payment of freight did not arise.
They had submitted that no payment of this amount had been made.
9. We find that while demanding customs duty and imposing redemption fine the Dy. Collector, Customs, had observed that there was no mis-declaration on the part of the SSF, no conspiracy on the part of the Indenting Agents and no positive role had been played by the Adviser to the Importers. No penalty was imposed on any of them.
10. The Collector of Customs (Appeals), Madras had observed that there was no evidence on record to show that any amount other than what was indicated in the Invoice was actually paid by the respondents (appellants before him), either through normal banking channels or otherwise; no attempt had been made to compare the impugned invoice value with contemporary imports by other parties. He held that there was no justification in either enhancing the value for assessment, or imposing a fine.
11. In view of the analysis made by us above, we do not find any infirmity in the order passed by the Collector of Customs (Appeals), Madras. There is no basis for interfering with the order passed by him.
Accordingly, appeal filed by the Revenue is rejected. Cross objections filed by the respondents are also disposed of in the above terms.