Commissioner of Customs Vs. Shakthi Trading Co. Excise - Court Judgment

Excerpt:
1. nobody is present on behalf of the respondents. accordingly we have heard the ld. dr and have gone through the records.2. as per the facts on record that the appellants filed a bill of entry no. 13815 dt. 6.4.93 for clearances of certain electronic components viz. led displays, crystals and multi-layer pcbs. they enclosed a copy of invoice no. sil-93-3-088 dt. 23.3.93 of the foreign supplier, m/s.sir international ltd., hong kong. the value declared as per invoice was hong kong $ 7218.37 which worked out to rs. 36,088 at 61 paise each for led display, 31 paise for crystal and rs. 5.93 paise each for multi-layer pcb. both the importer and the c.h.a on behalf of the importer have subscribed to a declaration as to the truth of the contents of b/e under section 46(4) of the customs act, 1962.3. on the inspection it was noticed that populated pcbs were imported as against declared multi-layer pcbs. the importers produced a revised invoice from the supplier for honk kong $ 24127.57 alongwith the fax letter dt. 20.4.93 from the suppliers which stated that the populated pcbs were wrongly shipped instead of the multi-layer pcbs due to oversight. further, investigation revealed that the prices declared in the revised invoice were very low and could not be accepted as transaction value. based upon the facts proceedings initiated against the respondents which culminated into an order passed by the assistant commissioner enhancing the assessable value of the goods and confiscating the same with an option to the respondents to redeem them on payment of redemption fine of rs. 50,000. in addition, personal penalty of rs. 20,000 imposed upon them.4. on appeal against the above order, the commissioner (appeals) set aside the impugned order by observing,-- "therefore, it is for the department to show that the appellant has acted dishonestly or consciously or with the deliberate or distinct object or breaching the law. in the absence of any such factors on the part of the appellant, it can be said that 'mens rea' is not established. hence, penalty is not imposable as held by the tribunal in the case of tata engineering and locomotives company ltd., 1991 (35) ecc 61 (t) ; 1991 (56) elt 812. in the present case, it is seen that the appellant had ordered for multilayor pcbs, whereas, the supper had packed and sent populated pcbs instead of multilayor boards. the appellant submitted that they were under a bona fide impression that the consignment sent by the supplier contained only multilayor pcbs. in this regard, the appellant had also produced a letter/fax message from the honk kong suppliers stating that they had sent populated pcbs instead of multilayor pcbs by mistake in packing for which, they sincerely regretted too; therefore, i do not see any valid reason not to relying on this version of the supplier. such mistakes do occur in the course of internal trade/international trade. further, there is no proof to show or any allegation made against the importer as well as the supplier that they have colluded in this matter for the purpose of supplies and under-invoicing. in fact, the appellants have been importing such items since long and no such mistake had happened earlier. in such circumstances, it cannot be said that the action of the appellant is not a bona fide one. in all such cases, 'mens rea' is required to be proved beyond doubt before imposing any penalty. therefore, there is no justification to impose any penalty on the appellant. further, the question of confiscation of the goods and imposing penalty on the importer, does not arise when the transaction value is accepted, as held by the tribunal in the case of international exports inc., 1992 (62) elt 608.5. in the light of the above findings, i held that price declared by the appellant on the basis of the invoice subsequently sent by the supplier indicating the price of led display, crystals, mounted pcbs of total fob value of hong kong $ 24,127.57 shall be taken as "transaction value' and the assessable value be arrived at, and accordingly, duty be demanded at appropriate rate. i, therefore, set aside the order of the lower authority confiscating the goods and imposing redemption fine and penalty on the appellant. since, the goods are still lying with the department and the appellant has been incurring heavy demurrage charges, the assessment as indicated above should be finalised immediately by the proper officer and the goods, be released accordingly. the appeal is, thus, allowed with consequential relief, if any." 6. in their memorandum of appeal revenue has referred to market enquiry showing retail sale price of the product of the item as also the department's expert's opinion in the field of electronics. however, we note that there is no evidence of any contemporaneous imports of the identical goods. local retail sale price and experts opinion cannot be taken up as evidence so as to charge the respondents with the under-valuation of the goods. revenue has also not produced any evidence to show that the transaction value was not correct. in these circumstances we find no infirmity with the view taken by the commissioner (appeals). accordingly, the appeal filed by the revenue is rejected.

Judgment:
1. Nobody is present on behalf of the Respondents. Accordingly we have heard the Ld. DR and have gone through the records.

2. As per the facts on record that the appellants filed a Bill of Entry No. 13815 dt. 6.4.93 for clearances of certain electronic components viz. LED Displays, Crystals and Multi-Layer PCBs. They enclosed a copy of invoice No. SIL-93-3-088 dt. 23.3.93 of the foreign supplier, M/s.

Sir International Ltd., Hong Kong. The value declared as per invoice was Hong Kong $ 7218.37 which worked out to Rs. 36,088 at 61 paise each for LED display, 31 paise for crystal and Rs. 5.93 paise each for multi-layer PCB. Both the importer and the C.H.A on behalf of the importer have subscribed to a declaration as to the truth of the contents of B/E under Section 46(4) of the Customs Act, 1962.

3. On the inspection it was noticed that populated PCBs were imported as against declared multi-layer PCBs. The importers produced a revised invoice from the supplier for Honk Kong $ 24127.57 alongwith the fax letter dt. 20.4.93 from the suppliers which stated that the populated PCBs were wrongly shipped instead of the multi-layer PCBs due to oversight. Further, investigation revealed that the prices declared in the revised invoice were very low and could not be accepted as transaction value. Based upon the facts proceedings initiated against the Respondents which culminated into an order passed by the Assistant Commissioner enhancing the assessable value of the goods and confiscating the same with an option to the Respondents to redeem them on payment of redemption fine of Rs. 50,000. In addition, personal penalty of Rs. 20,000 imposed upon them.

4. On appeal against the above order, the Commissioner (Appeals) set aside the impugned order by observing,-- "Therefore, it is for the department to show that the appellant has acted dishonestly or consciously or with the deliberate or distinct object or breaching the law. In the absence of any such factors on the part of the appellant, it can be said that 'mens rea' is not established. Hence, penalty is not imposable as held by the Tribunal in the case of Tata Engineering and Locomotives Company Ltd., 1991 (35) ECC 61 (T) ; 1991 (56) ELT 812. In the present case, it is seen that the appellant had ordered for MULTILAYOR PCBs, whereas, the supper had packed and sent Populated PCBs instead of MULTILAYOR Boards. The appellant submitted that they were under a bona fide impression that the consignment sent by the supplier contained only MULTILAYOR PCBs. In this regard, the appellant had also produced a letter/fax message from the Honk Kong suppliers stating that they had sent Populated PCBs instead of MULTILAYOR PCBs by mistake in packing for which, they sincerely regretted too; therefore, I do not see any valid reason not to relying on this version of the supplier.

Such mistakes do occur in the course of internal trade/international trade. Further, there is no proof to show or any allegation made against the importer as well as the supplier that they have colluded in this matter for the purpose of supplies and under-invoicing. In fact, the appellants have been importing such items since long and no such mistake had happened earlier. In such circumstances, it cannot be said that the action of the appellant is not a bona fide one. In all such cases, 'mens rea' is required to be proved beyond doubt before imposing any penalty. Therefore, there is no justification to impose any penalty on the appellant. Further, the question of confiscation of the goods and imposing penalty on the importer, does not arise when the transaction value is accepted, as held by the Tribunal in the case of International Exports Inc., 1992 (62) ELT 608.

5. In the light of the above findings, I held that price declared by the appellant on the basis of the invoice subsequently sent by the Supplier indicating the price of LED DISPLAY, CRYSTALS, MOUNTED PCBs of total FOB value of Hong Kong $ 24,127.57 shall be taken as "transaction value' and the assessable value be arrived at, and accordingly, duty be demanded at appropriate rate. I, therefore, set aside the order of the lower authority confiscating the goods and imposing redemption fine and penalty on the appellant. Since, the goods are still lying with the department and the appellant has been incurring heavy demurrage charges, the assessment as indicated above should be finalised immediately by the Proper Officer and the goods, be released accordingly. The appeal is, thus, allowed with consequential relief, if any." 6. In their memorandum of appeal Revenue has referred to market enquiry showing retail sale price of the product of the item as also the department's expert's opinion in the field of electronics. However, we note that there is no evidence of any contemporaneous imports of the identical goods. Local retail sale price and experts opinion cannot be taken up as evidence so as to charge the respondents with the under-valuation of the goods. Revenue has also not produced any evidence to show that the transaction value was not correct. In these circumstances we find no infirmity with the view taken by the Commissioner (Appeals). Accordingly, the appeal filed by the Revenue is rejected.