United Traders India and ors. Vs. Cc - Court Judgment

Excerpt:
1. all these three appeals arising out of a common order in original no. 167/2001 dated 19.9.2001 are filed by the appellants challenging the order in original whereby the original authority had enhanced the value of air conditioners imported vide four bills of entry nos. 30521, 30524, 30118 and 30974 to us$ 350/pc under rule 8 of the cvr 1988 and also ordered confiscation of the goods with option to redeem the same on payment of a fine of rs. 60,00,000. bank guarantee executed by the importers has also been ordered to be enforced to appropriate the duty and penalty amount. a penalty of rs. 1,00,000 has also been imposed on the appellants company. the commissioner has also imposed personal penalty of rs. 25,000 each on the other appellants.2. this is the second round of appeal before the tribunal as the matter was once remanded back for de novo consideration vide cegat order nos.2301 to 2305 dated 30.10.98 by which the adjudicating authority was dirtied to supply documents sought for by the appellants and then pass an order after affording opportunity of being heard.3. after hearing both the sides, the operative portion of the order allowing the appeals was pronounced in the open court on 7.3.2003.4. the brief fact of the case are that the appellants have imported 384 numbers of air conditioners, vide four bills of entry noted above in the month of june 1997. the goods were supplied by m/s. best suppliers ltd. hong kong and unit price was declared as us$ 274-05 cif and the goods were sought clearance against special import licence no. 2405537 dated 14.2.97 under cth 841510 attracting customs duty @ 40% + 2% + 30%. based on intelligence gathered, the dri took up these imports for investigation and the unit price of the imported item was ascertained as us$ 352, as certified by the manufacturer, fuzitsu general company ltd., japan. as a follow up action proceedings were initiated by issue of show cause notice which culminated in the order of adjudication which order was set aside and on de novo adjudication, the present impugned order came to be passed as aforesaid. the appellants challenge the present impugned order on the following grounds: (a) the value of the goods were arbitrarily enhanced on the basis of concocted price list and also the certificate of the manufacturer collected by the dri, bombay besides the evidence of bill of entry no. 7861 dated 19.8,97 and invoice no. exp. 48 of some other importer, as noted in the order impugned. (b) there is difference between the price offered for sale by the foreign supplier by fax and the price paid by the importer after negotiation. the offer addressed to one m/s. label & garments co. ltd. cannot be relied upon as the name and address of that company was not available and the so-called offer was also not signed. the fax message of offer was also interpolated to read as "general brand air conditioners for indian market". (c) the price as us$ 352 cif bombay mentioned in the certificate dated 20.9.97 of fujitsu general limited does not specifically indicate whether it is per piece or not. (d) bill of entry no. 7861 dated 19.8.97 and invoice no. exp. 48 for the identical goods imported by m/s. riddhi impex, ahmedabad relied upon by the department was not enclosed with the show cause notice.5. shri a.k. jayaraj, learned counsel appearing for the appellants while reiterating the grounds of appeal submitted that the two documents without any address produced by the dri, bombay and relied upon by the department cannot be relied upon for the simple reason that those documents are not relatable. he further submitted that on the other hand, the appellants have produced all the documents like sales confirmation, invoice bill of entry in support of their claim. he has also submitted that the department is bound to accept the invoice value declared by the importers unless the department is able to prove that there was mutuality of interest between the seller and the buyer and the price is not the sole consideration and in support of this plea, he has relied upon the judgment of the hon'ble high court of bombay in the case of uoi v. mahindra & mahindra ltd., 1991(34) ecc 1 (bom.) : 1991 (55) elt 15 (bom.) wherein it was held that customs authorities are bound to accept the invoice value unless mutuality of interest between the supplier and payment of additional consideration is proved. further he submitted that in the present case, the quantity is not comparable nor is the time of import. as regards imposition of personal penalty on the other two appellants he has pleaded that the charges against them have not been proved and that they were in no way privy to the commission of the alleged offence by the importers. in the circumstances he prayed for setting aside the impugned order and allowing all the three appeals.6. shri a. jayachandran, learned dr appearing for the revenue defended the impugned order and sought for dismissal of the appeals. he has invited our attention to the finding portion of the impugned order wherein the commissioner has dealt with each plea raised by the counsel for the appellants before him and the commissioner has passed a well reasoned order and the same needs to be sustained.7. we have considered the rival submission and gone through the case records. we observe that in this case the commissioner has relied upon the price and quantity of an import of 96 pieces of identical goods made in august 1997 through the bombay port with the price and quantity of 384 pieces in the present case. neither the quantity of the goods are comparable nor the period of import. it is common knowledge that when a higher quantity is purchased, quantum of discount offered normally is higher and discounts also varies for a variety of reasons.we further observe that it is not the case of the revenue that there was flow of any extra consideration to the importers to reject the transaction value declared by the appellants. as rightly pointed out by the learned counsel for the appellants, a fax message showing offer of price made by the supplier cannot be taken as the price actually paid by the importers. the offer purported to have been made by the supplier to a company without its address cannot also be relied upon to reject the transaction value declared by the importers. in view of what has been stated above, we are of the considered view that in the present case there was no reason to reject the transaction value declared by the importers. so far as appeals of the other appellants are concerned, when the charge against the importers themselves have not been proved, the charges against the co-accused also do not survive.8. in these facts and circumstances, the impugned order is set aside and all the three appeals are allowed with consequential relief, if any. before parting with this case we would also like to observe that the commissioner has not mentioned the section under which the two appellants viz. a. bhagat and naresh uppal have been penalised, in the order portion of the impugned order.

Judgment:
1. All these three appeals arising out of a common order in Original No. 167/2001 dated 19.9.2001 are filed by the Appellants challenging the order in original whereby the original authority had enhanced the value of Air Conditioners imported vide four Bills of Entry Nos. 30521, 30524, 30118 and 30974 to US$ 350/pc under Rule 8 of the CVR 1988 and also ordered confiscation of the goods with option to redeem the same on payment of a fine of Rs. 60,00,000. Bank guarantee executed by the importers has also been ordered to be enforced to appropriate the duty and penalty amount. A penalty of Rs. 1,00,000 has also been imposed on the appellants Company. The Commissioner has also imposed personal penalty of Rs. 25,000 each on the other appellants.

2. This is the second round of appeal before the Tribunal as the matter was once remanded back for de novo consideration vide CEGAT Order Nos.

2301 to 2305 dated 30.10.98 by which the adjudicating authority was dirtied to supply documents sought for by the appellants and then pass an order after affording opportunity of being heard.

3. After hearing both the sides, the operative portion of the order allowing the appeals was pronounced in the open Court on 7.3.2003.

4. The brief fact of the case are that the appellants have imported 384 numbers of Air Conditioners, vide four Bills of entry noted above in the month of June 1997. The goods were supplied by M/s. Best Suppliers Ltd. Hong Kong and Unit price was declared as US$ 274-05 CIF and the goods were sought clearance against Special Import Licence No. 2405537 dated 14.2.97 under CTH 841510 attracting customs duty @ 40% + 2% + 30%. Based on intelligence gathered, the DRI took up these imports for investigation and the unit price of the imported item was ascertained as US$ 352, as certified by the manufacturer, Fuzitsu General Company Ltd., Japan. As a follow up action proceedings were initiated by issue of show cause notice which culminated in the order of adjudication which order was set aside and on de novo adjudication, the present impugned order came to be passed as aforesaid. The appellants challenge the present impugned order on the following grounds: (a) The value of the goods were arbitrarily enhanced on the basis of concocted price list and also the certificate of the manufacturer collected by the DRI, Bombay besides the evidence of Bill of Entry No. 7861 dated 19.8,97 and Invoice No. Exp. 48 of some other importer, as noted in the order impugned.

(b) There is difference between the price offered for sale by the foreign supplier by fax and the price paid by the importer after negotiation. The offer addressed to one M/s. Label & Garments Co.

Ltd. cannot be relied upon as the name and address of that company was not available and the so-called offer was also not signed. The fax message of offer was also interpolated to read as "General Brand Air Conditioners for Indian Market".

(c) The price as US$ 352 CIF Bombay mentioned in the certificate dated 20.9.97 of Fujitsu General Limited does not specifically indicate whether it is per piece or not.

(d) Bill of entry No. 7861 dated 19.8.97 and Invoice No. Exp. 48 for the identical goods imported by M/s. Riddhi Impex, Ahmedabad relied upon by the department was not enclosed with the show cause notice.

5. Shri A.K. Jayaraj, learned Counsel appearing for the appellants while reiterating the grounds of appeal submitted that the two documents without any address produced by the DRI, Bombay and relied upon by the department cannot be relied upon for the simple reason that those documents are not relatable. He further submitted that on the other hand, the appellants have produced all the documents like sales confirmation, invoice Bill of entry in support of their claim. He has also submitted that the department is bound to accept the invoice value declared by the importers unless the department is able to prove that there was mutuality of interest between the seller and the buyer and the price is not the sole consideration and in support of this plea, he has relied upon the judgment of the Hon'ble High Court of Bombay in the case of UOI v. Mahindra & Mahindra Ltd., 1991(34) ECC 1 (Bom.) : 1991 (55) ELT 15 (Bom.) wherein it was held that Customs authorities are bound to accept the invoice value unless mutuality of interest between the supplier and payment of additional consideration is proved. Further he submitted that in the present case, the quantity is not comparable nor is the time of import. As regards imposition of personal penalty on the other two appellants he has pleaded that the charges against them have not been proved and that they were in no way privy to the commission of the alleged offence by the importers. In the circumstances he prayed for setting aside the impugned order and allowing all the three appeals.

6. Shri A. Jayachandran, learned DR appearing for the Revenue defended the impugned order and sought for dismissal of the appeals. He has invited our attention to the finding portion of the impugned order wherein the Commissioner has dealt with each plea raised by the Counsel for the appellants before him and the Commissioner has passed a well reasoned order and the same needs to be sustained.

7. We have considered the rival submission and gone through the case records. We observe that in this case the Commissioner has relied upon the price and quantity of an import of 96 pieces of identical goods made in August 1997 through the Bombay Port with the price and quantity of 384 pieces in the present case. Neither the quantity of the goods are comparable nor the period of import. It is common knowledge that when a higher quantity is purchased, quantum of discount offered normally is higher and discounts also varies for a variety of reasons.

We further observe that it is not the case of the Revenue that there was flow of any extra consideration to the importers to reject the transaction value declared by the appellants. As rightly pointed out by the learned Counsel for the appellants, a fax message showing offer of price made by the supplier cannot be taken as the price actually paid by the importers. The offer purported to have been made by the supplier to a company without its address cannot also be relied upon to reject the transaction value declared by the importers. In view of what has been stated above, we are of the considered view that in the present case there was no reason to reject the transaction value declared by the importers. So far as appeals of the other appellants are concerned, when the charge against the importers themselves have not been proved, the charges against the co-accused also do not survive.

8. In these facts and circumstances, the impugned order is set aside and all the three appeals are allowed with consequential relief, if any. Before parting with this case we would also like to observe that the Commissioner has not mentioned the Section under which the two appellants viz. A. Bhagat and Naresh Uppal have been penalised, in the order portion of the impugned order.