| SooperKanoon Citation | sooperkanoon.com/5158 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Delhi |
| Decided On | Sep-04-1989 |
| Reported in | (1990)(30)LC193Tri(Delhi) |
| Appellant | Collector of Customs |
| Respondent | Skefko India Bearing Co. Ltd. |
Collector of Customs, Bombay, on 24th July, 1985 and the Collector of Customs, Bombay, had presented these appeals in the Registry on the 8th day of October, 1985. In terms of the provisions of Sub-section (4) of Section 129-D, the same are being treated as appeals and are registered with the Registry as appeal Nos. C/1925/85-A, C/1926/85-A and C/1927/85-A.2. M/s. Skefko India Bearing Co. Ltd. have also filed the above captioned appeals being aggrieved from the order passed by the Collector of Customs, Bombay. M/s. Skefko India Bearing Co. Ltd. had requested that the issue involved in the four appeals filed by them is similar to the review applications filed by the revenue and as such the same may also be heard along with them. In the interest of justice, we club the above captioned four appeals with the review applications filed by the revenue. The above captioned three review applications emerge from the same order-in-original and the same are being disposed of by this consolidated order.
3. Notices of hearing were sent to the parties. Shri V.M. Doiphode, the learned SDR has appeared on behalf of the revenue. Shri K.M. Desai, Sr.
Advocate and Shri B. Parikh and Raj Darak Advocates for M/s. Skefko Bearing Co. Ltd. and Shri V. Lakhsmi Kumaran, Advocate for M/s. Mirah Exports Pvt. Ltd. have appeared. Nobody has appeared on behalf of M/s.
Punjab Bearing Traders and as such we proceed to decide the same on merits.
The above captioned three appeals emerge from the order passed by the Central Board of Excise and Customs, New Delhi, which is challenged before us by the three review applications which are being treated as appeals. Para No. 6 from the Board's order dated 7th June, 1985 is reproduced below :- "6. The Board, therefore, under powers vested upon it under Section 129(d)(1) of the Act directs the Collector of Customs, Bombay to make an application to the Customs, Excise and Gold (Control) Appellate Tribunal for setting aside the order of the Additional Collector of Customs and remand the case back for de novo examination and adjudication OR the Appellate Tribunal exercise the powers to amend or modify the order of Additional Collector of Customs with a view to rectify any mistake apparent by the facts on record. The Appellate Tribunal may be further requested to pass such order as may be deemed fit, legal and proper for determination of points relating to appropriate increase in assessable value of the goods under Section 14 of the Act, recovery of consequential difference in duty and imposing fine in lieu of confiscation of the goods under Section 111(d) of the Act read with Section 3(2) of Imports and Exports (Control) Act, 1947 as also under Section 111(m) of the Act and imposition of Personal Penalty under Section 112 of the Act on all the parties charged in this regard in the relevant show cause notice." 5. Brief facts of the case are that M/s. Mirah Exports Pvt. Ltd., Bombay had imported 24 consignments of "SKF" brand ball bearings type Nos. 6201, 6201/Z. 6201/ZZ, 6202/Z/6203, 6203/Z, 6203/ZZ. The imports were effected on the basis of orders booked by indenting agents M/s.
Skefko India Bearing Co. Ltd. at the instance of one of their canvassers, namely, M/s. Punjab Bearing Traders. The bearings have been supplied by M/s. SKF, Italy/Germany, two of the overseas suppliers of M/s. Skefko India Bearing Co. Ltd. All the 24 bills of entries were filed by the clearing agents M/s. M.A. Sadrani CHA 11/357 on behalf of the importer. The said bills of entries were noted during November, 1982 and January, 1983 and presented to the dealing assessing group in August, 1983 for the purpose of assessment and clearance. The clearances of the bearings were sought against 22 import licences. On or about 22nd June, 1983 pursuant to certain information, the officer of the Enforcement Directorate carried out searches at the following premises :- (i) M/s. Skefko India Bearing Co. Ltd., M.G. Memorial Building, Netaji Sub-hash Road, Bombay-400 002.
(ii) M/s. Associated Bearing Co. Ltd., Hoechest House, Nariman Point, Bombay-400 021.
(iii) Shri Kishan Chand, 74 Somerset House, Bhulabhai Desai Road, Bombay.
During the course of search, certain documents were taken over by the Enforcement Directorate. The said documents were scrutinised by the officers of the Department for possible violation of the provisions of the Customs Act, 1962 and copies of certain documents which were found useful and relevant were obtained from the Enforcement Directorate. On the basis of the scrutiny of those documents, a show cause notice dated 31st May, 1984 was issued. The show cause notice alleged that: "(a) That M/s. Skefko India Bearing Co. Ltd., cater to three categories of importer viz. (i) OEM's/AU's (ii) Canvassers and (iii) Skefko's own import.
(b) The OEM's/AU's could obtain all types of bearings for their requirement by obtaining indents/booking orders directly with M/s.
Skefko India Bearing Co. Ltd. The trade segment (stock and sale) if they are other than the approved canvassers of M/s. Skefko India Bearing Co. Ltd., could obtain their indents and have their orders booked with M/s. Skefko only at the instance of the approved canvasser. The canvassers themselves can book their order with M/s.
Skefko in case they import by themselves.
(c) That each canvasser has been given preference to canvass for a specific type/types of bearings and other canvassers are offered the same type/types when the particular canvasser is not in a position to canvass for the total quantity offered to him.
(d) That M/s. Punjab Bearings Traders have been given the monopoly to canvass for bearing type Nos. 6201, 6202, 6203, including Z, ZZ, RS and 2RS shields and these bearings are being booked by the trade segments (stock and sale) with M/s. Skefko India Bearings Co. Ltd., at the instance of M/s. Punjab Bearing Traders.
(e) That M/s. Skefko imported only those type of Bearings which normally are allotted to a particular canvasser/canvassers, but when the canvasser is either not able to fulfil the bookings or which though confirmed by him, the importer is not able to fulfil the complete order due to certain reasons.
(f) That the Central Office of the Overseas Suppliers had furnished M/s. Skefko India Bearing Co. Ltd., with a price list for the year 1981 and 1982. The said price list which is a price list for India, indicate the unit price of various types of Bearings manufactured and exported by the Overseas Suppliers in U.S. Dollars. The said price lists also indicate the following abbreviations, the full particular thereof being as under :PLT - Price list type (in our case, export price list to India)UC - Unit code (Meaning the number of pieces for which the list price is applicable) indicated are definite. For other codes the prices listed are indicative only).T.C. - Transfer in Company (i.e. SKF manufacturing unit producing the item).
(g) The said price list does not indicate any reduction in prices to any particular category of importers which inter alia mean that irrespective of the category of importer (OEM/AU, Trade or Skefko) the price applicable is one and the same and there is no need to make a reference to Overseas suppliers for any price negotiations.
(h) At the behest of M/s. Punjab Bearing Traders, M/s. Mirah Exports (P) Ltd., has been issued with indents for bearings Nos. 6201, 6201Z, 6201ZZ, 6202Z, 6203, 6203Z, 6203ZZ In July, 1982 and September, 1982.
Out of the above indents a part quantity was imported by M/s. Mirah Exports (P) Ltd., and covered by the said 24 consignments. The remaining quantity which though supposed to be imported by M/s. Mirah Exports were ultimately imported by M/s. Skefko India Bearing Co. Ltd., on their own account.
(i) The following OEM/AU importer has also imported similar bearings, the details of which are as under :1. M/s. Laxmi 6201 US $ 1.70 April 1982 Machine Works2. M/s. H.M.T. 6201 US $ 0.82 Oct. 1982 6202Z US $ 0.95 -do-3. M/s. Lohia 6203 ZZ US $ 1.20 September, 1982 Machine4. M/s. Larsen 6203ZZ US $ 1.14 October, 1982. and Toubro (j) That M/s. Skefko Bearings have been permitted by the Central Office of the Overseas supplier to offer a discount upto 20% max. on unit price. However, this discount is to be exercised by them with extreme restraint and not as a normal routine discount.
(k) That in restricting the booking by trade segment for bearing Nos. 6201, 6202, 6203 including shields through Punjab Bearings Traders Ltd. India, there appears to be a special relation between Punjab Bearing Trading and M/s. Skefko India Bearing Co. Ltd., in the import of bearing Nos. 6201, 6202, 6203 including shields and that therefore, the import of bearing Nos. 6201, 6202, 6203, including shielded bearings by M/s. Mirah Exports (P) Ltd. and Skefko Bearing Co. Ltd. the offer for sale at the relevant time and place of import is not ordinary and there appears to be a special relation between the overseas suppliers and the importers through the media of M/s. Skefko India Bearing Co. Ltd. and Punjab Bearing Traders.
(l) Among the documents taken over from the Enforcement Directorate is copy of "Fixation of Price value objection of 1983" prepared by M/s. Skefko India Bearing Co. Ltd. The said documents inter alia indicate import of bearings known as P.S. items and non P.S. items by OEM/AU's canvassers and M/s. Skefko India Bearing Co. Ltd. vide letter No. SG-33/83-A dated 20-7-1983 this Customs House has asked M/s. Skefko India Bearing Co. Ltd. to submit documents pertaining to PS 83 items. Though this document has been prepared by M/s. Skefko India Bearing Co. Ltd., themselves, so far they have not submitted any documents or given any clarification in respect of the same. As on 26-3-1983 M/s. Punjab Bearing Traders have been accounted for an order stock worth Rs. 9.21 lacs of P.S. items and with the price level base of P.S. items 100 it is indicated that the import of Bearing on account of M/s. Punjab Bearing Traders is 48.7% of the price level. In the absence of any clarification it is presumed that imports on account of M/s. Punjab Bearing Traders are at 48.7% of the price list. As the import of bearings by M/s. Mirah Exports (P) Ltd. is also accounted against Punjab Bearing Traders (P) Ltd. It is apparent that M/s. Mirah Exports had imported bearing No. 6201, 6202, 6203 included shielded bearings at 48.7% of the price list.
(m) The import by M/s. Mirah Exports (P) Ltd. is as per indents dated July 1982 and September 1982. The price list applicable for sale to M/s. Mirah Exports is therefore P/L No. 8102 dated 15-2-1981 valid till October 1982. The unit price of the Bearing No. 6201, 6202, 6203, included shielded bearings indicated in the said P/L 8102 are as under :Bearing No.Unit Price Bearing No. Unit Price US$ US$ (n) As against the above said unit price M/s. Mirah Exports have effected imports at unit prices as under :6201 DM 0.81 6201 Z DM 0.81 6201 D.M.0.81 US $ 0.34 3. On this basis the department has charged the parties mentioned above that: (a) M/s. Mirah Exports Pvt. Ltd. have misdeclared the value for bearing No. 6201, 6202, 6203, including shielded Bearings in each of 24 bills of entry, which mis-declaration have rendered all the 24 imports liable for action under Section 111(m) of the Customs Act, 1962. The extent of under-valuation and consequent amount of duty sought to be evaded in respect of each of the 24 consignments are indicated in the enclosed Annexure 'C' which form an integral part of the notice.
(b) In respect of the goods, so undervalued to the extent as indicated in Annexure 'C' no import licences have been produced. In the absence of any import licence in respect of such goods in each consignment, such goods have apparently become liable for action under Section 111(d) of the Customs Act read with Section 3(2) of the Imports and Exports (Control) Act, 1947.
(c) M/s. Mirah Exports Pvt. Ltd., Punjab Bearing Traders and Skefko India Bearings Co. Ltd. have done or omitted to do certain act, which acts of commission have rendered the goods liable for confiscation, (i) M/s. Mirah Exports Pvt., (ii) Punjab Bearing Traders, (Hi) M/s. Skefko India Bearing Co. Ltd., have thus become liable for action under Section 112 of the Customs Act, 1962.
4. The respondents ibid were therefore asked to show cause to the Collector of Customs, Bombay as to why: (1) The goods detailed in Annexure 'A' to the show cause notice (i.e. covered by the said 24 Bs/E) should not be confiscated under Section 111(d) of the Customs Act, 1962 read with Section 3(2) of the Imports and Exports (Control) Act and also under Section 111(m) of the Customs Act.
(2) Penal action should not be taken against them under Section 112 of the Customs Act, 1962. Their written explanation with documentary evidence if any which they rely upon should be submitted within 10 days of receipt of the show cause notice.
5. In reply to the show cause notice, the importers put forward the following arguments :- (a) The importers were not aware of any price list in use by Skefko, the local agents of suppliers.
(b) The quantity being imported is about 5 lakh pieces of each type therefore reduced prices have been given by the suppliers.
(c) The imports by M/s. Crompton Greaves, Mahindra and Mahindra and Jay Engg. Works who have been importing quantities from 10,000 to 50,000 pieces have been at similar prices.
(d) A discount of 20% of the price list is available at the discretion of the local agents.
(e) Even the Government undertakings like BHEL, Hindustan Tele Printers, and other public limited companies have been offered discounts ranging from 50% to 70%.
(f) The price level of 48.7% of the price level applicable to Punjab Bearing in "Fixation of the price value objective of 1983" has not been appropriately relied by Skefko, the local agents.
(g) The invoice prices are favourably comparable with similar bearings from other countries like USSR, Romania, Czechoslavakia and Japan.
(h) The invoice price and the landed cost of the bearings favourably compared with the local prices of similar bearings being manufactured locally.
In reply to the show cause notice the local agents M/s. Skefko have put forward the following arguments :- (a) The importers M/s. Mirah Exports Pvt. Ltd., are not required to pay any amount over and above the invoice prices.
(b) The prices charged in the invoice are in consistence with the pricing policy of the company.
(c) They have listed different types of customers viz. OEM, replacement users and dealers. The prices to these customers are determined after acceptance of the prices by the suppliers, after taking into consideration certain factors such as competitive prices, quantity, value, business potential of the customer, price level offered to customer in the past and the exchange rate.
(d) The exchange rate difference has caused variation of approximately 27% over their prices in 1981-82 for US $ when compared with the exchange rate applicable to DM. (e) The local agent have a discount upto 20% and for any higher discount prices have to be accepted for each import by supplier.
(f) M/s. Punjab Bearing are one of the canvassers for SKF for imported bearings and they placed their indent on behalf of Mirah Exports during July 1982 and the indents were accepted at prices which are shown in the invoices.
There is no evidence whatsoever to show that each canvasser has been given preference to canvass for specific type of bearings. They have listed the procedure for import by canvasser in view of import licences and L/C opening facility. They have however stated that if the business does not exceed Rs. 25 lakhs, the canvassers were not entitled to any commission.
(g) They have denied that the prices as indicated in the price list are the prices at which offer for sale is to be made to any customer. They have brought out the meaning to the code CP or L of the price list and have emphasised that these are subject to prevailing pricing policy.
(h) They have stated that the quantity which is supplied to firms which have been quoted in the show cause notice are supplied from Singapore and are small quantities. Whereas bearings imported by other importers are listed in page 23/24 of their reply. They have stated that the import prices should be taken into consideration which are obtained after due negotiation." The importers M/s. Mirah Exports (P) Ltd. and the indenting agents M/s.
Skefko India Bearings Co. Ltd. both had contested the issue of the show cause notice. There were personal hearings before the learned adjudicating authority and the learned adjudicating authority had accepted the contentions of the respondents and dropped the charges made in the show cause notice and the said show cause notice was dropped and had further ordered that the consignments in question be assessed on their invoice values.
5A. The revenue being not satisfied with the order passed by the Additional Collector of Customs, Bombay has come in appeal before the Tribunal.
6. Shri V.M. Doiphode, the learned SDR who has appeared on behalf of the revenue, has reiterated the facts. He has pleaded that the last date of hearing before the adjudicating authority was 4th February, 1985 and the adjudication order is dated 19th April, 1985. Shri Doiphode has stated that Skefko India Bearing Co. Ltd. were the indenting agents of M/s. SKF Overseas Bearings Division, Sweden, and Punjab Bearing Traders were their canvassers for M/s. Skefko India Bearing Co. Ltd. vide letter dated 11th May, 1982. The orders were placed by the canvassers M/s. Punjab Bearing Traders in July, 1982, and in turn Skefko India Bearing Co. placed with SKF Bearings Division, Sweden, and at the time of placing of the orders, there was in existence a price list No. 8102 dated 15th February, 1981 and bearing Nos. 6201, 6202 and 6203, 6201Z, 6201ZZ and similar other bearings were operating in the price list. The foreign suppliers after the receipt of the order placed by the indenting agents had duly acknowledged the order and after the arrival of the consignments, invoices were issued in favour of the importers, M/s. Mirah Exports and the rate of commission was 3%. In the price list there was no indication of any kind of discount. The 20% discount was discretionary and the same was not admissible under Section 14 of the Customs Act, 1962. More than 20% discount was given by SKF and the respondents call it as a special discount. The learned SDR further argued that the price at which the goods were sold to the respondents after giving a discount of 20% could not be called a price at which the goods were ordinarily sold. Shri Doiphode argued that discount was not admissible and the question arises whether there can be different prices under Section 14 of the Customs Act, 1962. He has also referred to the letter appointing M/s.
Punjab Bearing Traders as canvassers, which appears on page 200 of the respondents' paper book. Shri Doiphode has referred to the various documents incorporated in his paper book. Shri Doiphode has argued that under Section 14 of the Customs Act, 1962 there cannot be a special price. In particular, he has referred to the pricing policy of the respondents which appears on pages 103 and 104 of the paper book. The pricing policy of the company was where the maximum of 20% discount was not sufficient to meet the competitive situation, the indentors were to refer to the Overseas Supplying Company requesting a special net price, and this could lead to a number of prices being issued at the same time depending on the circumstances and the availability of the product at the time of offering or the noted delivery date. Shri Doiphode has argued that the respondent himself has accepted the same. He has also referred to the various observations made by the adjudicating authority in his order and has also referred to the statement of Shri P.R.Khanna, Sales Manager which appears on page 105 of the paper book. Shri Doiphode has argued that the discount given by Skefko India Bearing Co., indenting agent, is a special discount and is at their discretion and the price charged by the indenting agent was not the normal price.
It was a special price. The learned Additional Collector has mentioned this special discount as a quantity discount. Shri Doiphode has argued that this discount is not a quantity discount. Many other factors are involved. The order was placed by M/s. Punjab Bearing Traders, the canvassers, the goods have been imported by Mirah Exports and the value of the invoice cannot be different value under Section 14 of the Customs Act, 1962, and the SKF never claimed that for the equivalent price the same price was charged from others. The costing which has been done by the Addl. Collector in his order is not relevant. He has also argued that the realtionship of M/s. Mirah Exports, the importers with others was not important. He has further argued that while passing the adjudicating order, the learned Addl. Collector should have considered all the seized documents. The same has not been done. He has further stated that the presumption under the law is that the seized documents were the correct documents. He has referred to para No. 10 of the Additional Collector's Order which deals with the documents. Shri Doiphode has argued that indenting agent had created a monopoly for its canvassers M/s. Punjab Bearing Traders, and in support of his argument he has referred to the letter written by M/s. Skefko India Bearing Co.
Ltd. addressed to Punjab Bearing Traders which appears on page 200 of the paper book. He has referred to the letter dated 22nd June, 1982 addressed to Mr. Ulf seized from the premises of M/s. Associated Bearings which appears on page 173 and 174 of the respondents' paper book, and the said letter has been discussed on internal page 16 of the order-in-original where there is a reference to the monopoly imports by Vohra, and in the letter itself there is a mention that the goods are to be sold at throw away prices and the respondents objected to the admissibility of this letter on the ground that the same was not seized from the office premises of the appellant. The letter was not signed and whether there was any reply to the said letter and the writer of this letter should have been examined. He has also referred to pages 183, 186, 187 and 192 of the respondents' paper book which relates to SKF distribution net work and on page 192 there is a mention that the remaining five canvassers who account for over 70% of the import bearing business of this segment got preferential prices. He fairly stated that these documents are not signed. He has referred to the internal page 17 of the order-in-original. Sub-para 6 where it is mentioned that on pages 23, 24 and 25E for bearing 6202 where Punjab Bearing have got lower prices for 41,285 pieces and 88,650 pieces than for Vohra and Mehta (page 24) for 1,00,000 pieces @ Rs. 3.62. Shri Doiphode has argued that these documents were seized from the premises of M/s. Associated Bearing Co. Ltd., Bombay and trade unions, and these documents have to be accepted and this clearly reflects the price at which the bearings were sold to them. He has argued that the respondents have offered different prices and profits for Vohra and Vohra and Punjab Bearing Traders. In support of his argument, he has referred to page 171 of the paper book. This is page 40 of the file 'B' of the seized papers and page 172 deals with the special prices vs.
market prices. He has also referred to pages 175 to 182 which is co-ordination between ABC and Skefko and page 33 of the seized file 'B' and a mention of the same is also in the order-in-original. This clearly shows that there was a complete co-ordination between ABC and Skefko. On page 179 of the respondent's paper book there appears integrated marketing policy of the company which is from file 'B' page 29 (seized documents). Shri Doiphode has argued that there is also charge of mis-declaration. He has referred at length to the pricing policy of the respondent and has argued that the discount given by the respondent is not quantity discount and under Section 14 of the Customs Act, there cannot be multiplicity of the prices. He has further argued that commission and discount are different.
7. Shri Doiphode has argued that the price list of the Skefko India Bearing Co. Ltd. is the exclusive price list. He has referred to internal page 32 of the order-in-original para 18. Shri Doiphode states that it has to be seen whether the quantity discount is admissible or not. He has referred to pages 32 and 35 of the order-in-original. He has argued that it is to be seen whether there was special relationship between the seller and the buyer/indenter (canvasser in this case). He has referred to paras (a), (b) and (c) of internal page 37 of the order-in-original. He has argued that the adjudicating authority has not applied its mind correctly, and there is a special relationship between the supplier and the buyer. He has pleaded that no kind of special discount or quantity discount is admissible under Section 14 of the Customs Act, 1962, and has also referred to Section 30 of the Old Sea Customs Act. He has again referred to page 103 of the respondent's paper book which is the pricing policy of the respondent. He has also referred to the provisions of Section 4 of the Central Excises and Salt Act, 1944 and has argued that the concept of charging different prices is not prevalent under the Customs Act, though the same was admissible under old Section 4 of the Central Excises and Salt Act. It was so held by the Madras High Court in the case of Sharada Silicate and Chemical Industries v. Collector of Central Excise, Coimbatore and Anr. reported in 1979 ELT J-20. He has referred to another judgment of the Patna High Court in the case of Pradip Lamp Works v. Union of India and Ors.
reported in 1977 ELT J-130 and has laid special emphasis on paras 4 and 7 of the said judgment and in para 7 the Hon'ble High Court had held that "There cannot be one wholesale cash price for one party and other for another party for the same period. Ordinarily, the wholesale cash price has to be the same irrespective of the contractual rate. It, as an objective fact, has to be determined by the authority under the Act.
The wholesale cash price for the goods should be the same for the general trade as well as for the bulk purchasers. Shri Doiphode has argued that in the matter before the Tribunal reduction in price was on account of different considerations. He has argued that the sale policy has to come from the supplier and the prices for the purposes of valuation have to be adopted in the line of the price list No. 8102 dated 15th February, 1981. Shri Doiphode has argued that the order passed by the Additional Collector of Customs be set aside and the matter be remanded for de novo examination and adjudication or the Tribunal may exercise its powers to amend and modify the order of the Additional Collector of Customs. He has also pleaded that the respondents should be directed to pay differential excise duty. Fine in lieu of confiscation should also be imposed and personal penalty under Section 112 of the Customs Act, 1962 may also be imposed. Shri Doiphode has argued that full reliance can be placed on the seized documents. In support of his argument, he has referred to the judgment of the Kerala High Court in the case of Kollatra Abbas Haji v. Government of India and Ors. reported in 1984 (15) ELT 129 (Kerala), where the High Court had held that the burden of proof lies on the person who denies the genuineness of his signature or any statement contained in the document. Shri Doiphode has argued that full reliance has to be placed on the documents seized. Shri Doiphode in support of his over-all arguments has also referred to the following judgments : -Macneill & Magor Ltd., Calcutta v. Collector of Customs, Calcutta.Oswal Woollen Mills Ltd. v. Collector of Customs, Bombay and Ors.
(3) 1983 (14) ELT 2177 (Bombay) - Satellite Engineering Ltd. v. Union of India and Ors.
(4) 1987 (31) ELT 356 (Bombay) - Satellite Engineering Ltd. v. Union of India and Ors.General Marketing & Manufacturing Co. Ltd. v. Collector of Customs, Madras.Automotive Enterprises v. Collector of Customs, Bombay. Shri Doiphode has pleaded for the acceptance of the appeals.
8. Shri K.M. Desai, Senior Advocate, Shri B. Parikh and Shri Darak, Advocates have appeared on behalf of M/s. Skefko India Bearing Co. Ltd. Shri Desai, the learned senior advocate, who has appeared on behalf of the respondent, has stated that for the proper appreciation of the legal position, the provisions of Section 14 of the Customs Act, 1962 have to be analysed and he has stated that time and place of importation is very important. He has argued that one cannot stick to the price list and the same can always be revised. He has stated that there is no interest of business with exporter, and the importer and invoice value is the correct price, and the same is normally accepted, in case the revenue chooses not to accept the same, the burden of proof is on the revenue to prove that invoice price is not the correct price, and the revenue has to discharge the burden of the same. In support of his argument, he has referred to the judgment in the case of Babcock Venkateshwara Hatcheries (P) Ltd. v. Collector of Customs, Bombay reported in 1985 (20) ELT 335 (Tribunal) where the Tribunal had held that the onus of proving mis-declaration regarding the price mentioned in the bill of entry is on the department and this onus can be discharged only on proof of proper facts which would discredit the price mentioned in the bill of entry and not on the basis of mere suspicion and surmise. The total evidence, in the instant case, would suggest that the price had been agreed upon between the parties after normal negotiations and that such a price would, therefore, be the ruling price in the international market at the relevant periods. The charge of mis-declaration regarding the value was, therefore, not established. He has also referred to the following judgments :- (a) Bharat Industrial Engineering Corporation Order Nos. 1077 and 1079 dated 29th December 1980 of the CBEC. (b) M/s. Goyal Dresses, Madras Order No. 19/82 dated 18th January, 1982 of the CBEC.He has pleaded that different prices can be charged from different class of customers. In support of his argument, he has referred to the judgment of Sharada Silicate and Chemical Industries, Coimbatore v.Collector of Central Excise, Coimbatore and Anr. reported in 1979 ELT J-20 where the Hon'ble High Court of Judicature at Madras had held that : "If different prices charged from different customers are based on very rational commercial basis for giving more liberal trade concession to one customer against the other and are solely motivated by trade considerations such price charged from each of its customers, should be taken as the assessable value under Section 4 of Central Excises and Salt Act." He has pleaded that under Section 46(1) of the Customs Act, 1962, the importer has to file a bill of entry in the prescribed form.
This section does not use the word 'value'. In the bill of entry column No. 9 means assessable value. Shri Desai has pleaded that the Addl.
Collector had accepted the value as real assessable value and the declaration in the bill of entry by the importer was merely to the effect that the bill of entry was in accordance with the invoice and the assessable value is arrived at as invoice value plus rate plus commission etc. Thus invoice price is prima facie the assessable value and under Section 17 of the Customs Act, the department can assess the duty at a different rate. Shri Desai, the learned senior advocate, has pleaded that in some other matter there was importation of goods from Rumania and the department had accepted the value in that case. He has further argued that the price determined on the basis of trade practice has been recognised in various decisions of the Tribunal and two different prices offered under two different circumstances have been accepted. He has referred to the following judgments :-Mangala Brothers v. Collector of Customs, Bombay "We have heard both the parties at great length. We agree with the learned advocate for the appellants that the Department has not been able to put forth any strong grounds in support of their case. The lower authorities have relied on the invoice dated 25-6-1981 issued by M/s. Esquire (Electronics) Ltd. We observe that this invoice covers only 100 pieces of National Video Cassette Tapes E-180. There is a lot of force in the argument advanced by Shri Nankani that it is extremely unfair to the appellants to appraise their price for National Cassette Tapes E-180 with reference to the value charged for a consignment of 100 pieces as against the consignment of the appellants where 4500 units of the same article have been imported.
With regard to the National Tapes E-120, we find that some enquiries seem to have been made with parties in Bombay, but there is no firm offer, not to speak of an actual importation, at a price other than the one shown in the appellants' invoice. We also agree with Shri Nankani that comparison of prices indicated in the invoice dated 25-6-1981 is unrealistic because the appellants have imported goods directly from Japan whereas the invoice dated 25-6-1981 covers goods which were first imported in Hong Kong and thereafter imported into India. It is quite natural that when some goods come via a third country, their value is bound to be higher for various reasons which were mentioned by Shri Nankani in the course of his arguments. As regards the respondent's reliance on Malhar Corporation, U.SA.'s letter dated 14-8-1981, we agree with Shri Nankani that his document has insignificant evidential value. It is neither an indent nor an invoice. It can at best be treaded as a letter of offer to interested parties for supply of the goods mentioned in the said letter. Furthermore, we are dealing with goods imported from Japan.
The letter from Malhar Corporation refers to shipments from U.S.A. Shri Sunder Rajan is not able to tell us whether the Custom House has come across even a single importation of the goods mentioned in Malhar Corporation letter at the prices indicated therein at any port in India. As regards the quotations (vide annexures to the letter dated 21-9-1982 sent by the Commission for India, Hong Kong to the Deputy Collector of Customs, Bombay) we do not think they support the department's case in any way. They are telex messages exchanged between parties and the quotations contained in the said telex messages have not been correlated with any actual importations made into India at prices mentioned in these messages. Taking the documentary evidence as a whole, we are of the view that the Department has been unable to satisfy us that the appellants resorted to under-valuation. While we are inclined to agree with Shri Sunder Rajan that proving a case of undervaluation is difficult we have to go by the evidence and the same produced by the Department is not sufficient to pin down a serious charge like under-valuation raised against the appellants."Gordon Woodroffe & Co. (Madras) Pvt. Ltd., Madras v. Collector of Customs, Madras Where the Tribunal had held that: "There was nothing unusual in the supply of some quantity of tungsten ore at a fixed price and some quantity at the formula price. Since the Department has produced no evidence to show that the other Indian importers of tungsten ore, who contracted for the goods at about the same time, had paid any different price, nor there was any evidence on record to indicate that the Department doubted the bona fides of the transaction or the fixed price obtained by the appellants was not a price at arm's length, they were not justified in escalating the contracted price of US $ 129.50 for the smaller consignment of 60 M.T."Weston Electroniks Ltd., New Delhi v. Collector of Customs, Bombay "The onus to prove the charge of under-valuation against the appellants was on the Customs House and the evidence relied upon by them, as contained in the adjudication order, is not at all sufficient to discharge that onus. There is no cogent, evidence on record to prove that there is any special relationship between the appellants and the foreign supplier. Similarly, no evidence has been adduced by the lower authorities to show that Hitachi brand tubes, imported by the appellants, are superior to other brands, with reference to which the valuation of the appellants goods has been made. The appellants have given cogent reasons as to why the grounds for holding them guilty of mis-declaration of value cannot be sustained in law. The entire adjudication has proceeded on grounds which lack any force. Therefore, the appellants' contention that the correct assessable value of the goods is as declared by them in the relevant import documents, is accepted." Shri Desai has argued that trade practice and commercial consideration are very important. Shri Desai had also filed written arguments. He reads the written arguments. Shri Desai has pleaded that the revenue wants to adopt assessable value for the purpose of assessment for the bearing imported by replacement users, and that the same value should be adopted in this case. He has referred to pages 121, 122 and 138 which pertain to analysis of imports by customer segments in 1981, January, 1982 to 30th January, 1983. He has pleaded that in the instant case there is only one importer and invoice price is the prima facie assessable value and the quantity is very material for the selling price. The burden is on the revenue. The revenue has to bring another canvasser on record for proving the same. He has pleaded that for the promotion of sales special discount has to be given. He has referred to the circular letter dated 28th January, 1981 which appears on page 72 of the paper book where it is mentioned that "Please note that the lists shall be used only in order to gain such business that cannot be obtained normally --new business." Similar is the position of the circular letter dated 22nd January, 1981 which appears on page 73 of the paper book. Shri Desai has pleaded that there is sufficient circumstantial evidence on record that the invoice price was the correct price. He has pleaded that 20% discount has been given and fairly stated that there is no mention of discount in the price list and in the pricing policy of the company of the respondents, larger discount was to be allowed where the quantity of the importation was much more. In support of his argument, he has referred to a note by Mr.
H. Tully, Director on his visit to India which appears on pages 96 and 97 of the paper book. He has referred to the provisions of Section 14 of the Customs Act, 1962 and has also referred to the provisions of Sections 17 and 46(1) of the Customs Act. He has referred to para 17 of the order-in-original. At page 30 of the order-in-original the adjudicating authority has observed that: "I, therefore, find that the policy of selling additional volumes at higher discounts is totally within the ambit of the expression "in the course of international trade" of Section 14 ibid. It also does not by itself constitute any special interest between the seller and the buyer in the business of each other." He has pleaded that the invoice price is based on the pricing policy which is incorporated in the letters and telexes received from SKF Bearing Division, Sweden. He has argued that the department has got no contemporaneous evidence and as such invoice value has to be accepted. In support of his argument he has referred to the judgment in the case of Maheshwari Trading Corporation v. Collector of Customs, New Delhi reported in 1987 (29) ELT 739 (Tribunal) and judgment in the case of Gordon Woodroffe & Co. (Madras) Pvt. Ltd., Madras v. Collector of Customs, Madras reported in 1983 ELT 2380 (CEGAT) where it was held that in respect of a single buyer two different prices for two different consignments if based on commercial consideration was permissible. There can be different classes of customers based on well recognised commercial considerations and different classes would be entitled to invoice the goods at a different price. Shri Desai has stated that the allegations in the show cause notice are incorrect and in support of the same he has referred to internal pages 2, 3 and 4 of the reply to the show cause notice which appears on pages 33, 34 and 35 of the paper book. He has referred to SKF Distribution Net Work for Replacement Sector (seized file 'B' pages 18, 19 and file 'E' page 20 appearing on pages 186, 187 and 199 of the paper book). He has referred to the seized documents file 'E' pages 20, 23 and 24 appearing on pages 197, 198 and 199 of the paper book. He has pleaded that the seized documents are unsigned and the documents have been seized from the co-respondent and no reliance should be placed on the same. Shri Desai has argued that the judgment cited by the learned SDR in the case of Kollatra Abbas Haji v. Government of India and Ors.
reported in 1984 (15) ELT 129 is not applicable in the respondent's case, as one of the respondents from whom the documents were seized was a co-respondent. Moreover, this is the judgment of the Kerala High Court which is not binding on the Delhi Tribunal. He has pleaded that the seized documents are unsigned and there are no comments by the senior officers. These documents cannot be looked into and relied upon by the revenue. He has pleaded that the price list and price levels are two different things. He has referred to page 28 of the paper book which deals with the price level order as on 26th March, 1983 and the respondents do not rely on this price level, and this price level calculation is by the Sweden Company, and the respondent cannot explain the same. The revenue has relied on the price level and it is for the department to prove what price level means. Shri Desai has argued that the exporter and the importer/indenting agent are not related persons and the allegation of the department that canvasser is the monopolist is also not correct. He has referred to the judgment of the Tribunal in the case of Collector of Customs, Bombay v. Maruti Udyog Ltd., Gurgaon reported in 1987 (28) ELT 390, where the Tribunal had held that: "Mere holding of 26% equity shares by Suzuki in Maruti and proportional representation of Suzuki in Board of Directors of Maruti not amounting to mutuality of interest." He has also referred to another judgment of the Tribunal in the case of Albright Morarji and Pandit Ltd., Bombay v.Collector of Central Excise, Bombay reported in 1987 (28) ELT 539 (Tribunal) where the Tribunal had held that: "There was no material to show that the appellants' company had any interest in the business of M/s. D.M.C. Co. Ltd., and vice-versa. The fact that M/s. D.M.C. held 30% shares in the appellants' company and two of the directors in both the companies were common, will not go to establish that they are related persons." The said judgment was based on the Supreme Court judgment in the case of Union of India and Ors. v. Atic Industries Ltd. reported in 1984 (17) ELT 323 (SC). Commenting on the judgments cited by the learned Senior Departmental Representative, he stated that Pradip Lamp case reported in 1977 ELT 130 is not applicable to the facts of the present case, as the same is an excise matter. The wholesale cash price cannot be equated with three types of prices on commercial consideration. The judgment in the case of Macneill and Magor Ltd. v. Collector of Customs, Calcutta reported in 1987 (27) ELT 129 (Tribunal) is also not applicable as the said judgment relates to penalty and not to valuation price and penalty was levied on the charge of under-invoicing. He has also stated that the following judgments cited by the learned SDR are not applicableOswal Woollen Mills Ltd., Ludhiana v. Assistant Collector of Customs, Bombay and Ors.
(2) 1983 (14) ELT 2177 (Bombay) - Satellite Engineering Ltd. v. Union of India and Ors.
(3) 1987 (31) ELT 356 (Bombay) - Satellite Engineering Ltd. and Anr.
v. Union of India and Ors.
Shri Desai lastly stated that the commercial consideration is on the basis of the international trade. He has pleaded for the dismissal of the revenue's review applications which are being treated by the Tribunal as appeals.
9. Shri V. Lakshmi Kumaran, the learned advocate who has appeared in respect of appeal No. C/1926/85-A on behalf of M/s. Mirah Exports (P) Ltd., states that M/s. Mirah Exports Pvt. Ltd. is the actual importer.
He has stated that in terms of provisions of Section 14 of the Customs Act, 1962, fair international transaction value has to be taken and fairness has to be agitated with each transaction. He has pleaded that provisions of Section 14(1)(b) of the Customs Act, 1962 are not applicable. The invoice price has to be accepted. He has referred to the judgment of the Hon'ble Supreme Court in the case of A.K. Roy and Anr. v. Voltas Ltd. reported in 1977 ELT J-177. He has referred to pages 126 and 127 of the paper book and states that the price of bearing type 6202Z is DM 0.84 and on page 127 the price of the same in the case of Vora and Vora, Bombay is US $ 0.46 and 1 $ is equal to 0515 Mark (DM). He has pleaded that the price is almost the same. He has referred to the judgment of the Andhra Pradesh High Court in the case of Jay Engineering Works Ltd., Hyderabad v. Government of India and Ors. reported in 1982 ELT 378 (A.P.). He has also referred to Tribunal Order No. 155/88-A dated 12th February, 1988 in the case of Controller of Stores, Bombay v. Collector of Customs, Bombay where it was held that fair transaction value under Section 14(1) of the Customs Act should be accepted. He has also referred to another judgment in the case of Prembhai Chhibabhai Tangal v. The Union of India and Ors.
reported in 1987 (13) ECR 1109 (Bombay). Lastly he has referred to the judgment of the Supreme Court in the case of Hindustan Steel Ltd. v.State of Orissa reported in 1978 ELT (J159). Shri Lakshmi Kumaran further states that his other arguments are the same which have been put forth by Shri Desai, the learned senior advocate.
10. Shri B. Parikh, the learned advocate who has appeared in appeal Nos. C/1473/87-A, C/2426/87-A, C/2435/87-A and C/2472/87-A, states that the facts are similar. The only difference is that Skefko India Bearing Co. Ltd. himself is the importer and the goods are similar as in appeal No. C/1925/85-A. He has pleaded that his arguments are the same which were advanced by Shri Desai, the learned Senior Advocate in these appeals. The only difference is that Skefko India is the appellant and the Collector had adopted the value on the basis of the price list No.8102 dated 15-2-1981 and he had allowed 20% discount. He has pleaded that appeal Nos. C/1925/85-A, C/1926/85-A and C/1927/85-A filed by the revenue should be dismissed and the appeals filed by M/s. Skefko India Bearing Co. Ltd. should be allowed.
11. Shri V.M. Doiphode, the learned SDR who has appeared on behalf of the appellant states that Section 14 of the Customs Act, 1962 does not permit the allowance of special discount in any way. Once a price is available, highest price has to be taken. He has argued that the plea of the respondents of quantity discount before the Tribunal has been taken for the first time and it is to be seen whether the quantity discount is allowable under Section 14 of the Customs Act or not. Shri Doiphode has stated that while coming to a conclusion, totality of the circumstances has to be seen. He has referred to page 82 of the respondents' paper book which is a telex from SKF Goeteborg. It relates to additional volume sales spherical roller bearings. He has pleaded that the additional volume sales plea is an after-thought. Shri Doiphode has stated that the bearings have been sold at throw away prices. Shri Doiphode has argued that the learned senior advocate in his arguments has stated that the seized documents could not be relied upon, but nowhere the appellant has contradicted the same. He has referred to the respondents' paper book pages 171 and 173 which are 1981 imports of SKF bearings and a letter addressed to Shri Ulf, dated 22nd June, 1982. He has also referred to page 57 internal page 26 of the reply to the show cause notice. He has also referred to the statement of Shri Khanna which appears on page 115 of the respondents' paper book. He has pleaded that Pradip Lamp case is fully applicable in the case of the revenue. He has also referred to the following judgments :-Auto Lamps Ltd., Delhi v. Collector of Central Excise, New Delhi.
(2) 1987 (31) ELT 356 (Bombay) - Satellite Engineering Ltd. and Anr.
v. Union of India and Ors.
He has argued that SKF Sweden is a related person of Skefko India Bearing Co. Ltd. as 39.8% shares are held by the Sweden Company. Shri Doiphode has argued that the appeals filed by the revenue may be allowed and the four appeals filed by M/s. Skefko India Bearing Co.
Ltd. may be dismissed.
12. We have heard both the sides and have gone through the facts and circumstances of the case. In the matter before us, Skefko India Bearing Co. Ltd. are the indenting agents of SKF Bearing Division, Sweden and Punjab Bearing Traders are canvassers and Mirah Exports Pvt.
Ltd. are the importers. The orders were placed in July, 1982 by Punjab Bearing Traders, the canvassers with Skefko India Bearing Co. Ltd. and SKF further placed order with the exporter, namely, SKF Overseas Bearing Division, Sweden. The orders were for ball bearing type Nos.
6201, 6202, 6203, 6201Z, 6201ZZ, etc. The respondents had filed the bills of entries, and in support of the valuation copies of the invoices were also filed. On or about 22nd June, 1983, pursuant to certain information, the officers of the Enforcement Directorate carried out the searches at the following premises :- (i) M/s. Skefko India Bearing Co. Ltd., M.G. Memorial Building, Netaji Sub-hash Road, Bombay - 400 002.
(ii) M/s. Associated Bearing Co. Ltd., Hoechest House, Nariman Point, Bombay-400 021.
(iii) Shri Kishan Chand, 74, Somerset House, Bhulabhai Desai Road, Bombay.
During the course of search, certain documents were taken over by the Enforcement Directorate. Among the other documents seized was the price list No. 8102 dated 15th February, 1981 which was also signed by the respondents vide covering letter FM 138 dated 8th September, 1983 of the revenue's paper book. During the course of investigation, SSIB of the Bombay Customs House had summoned Skefko India Bearing Co. Ltd. and Shri P.R. Khanna, Sales Manager and the statement of Shri Khanna was recorded under Section 108 of the Customs Act, 1962. It appears that Skefko India Bearing Co. Ltd. was the sole indenter in India for SKF Overseas Bearing Division representing sales of SKF on principal to principal basis. During the course of arguments, the learned SDR, Shri V.M. Doiphode has stated that SKF Overseas Bearing Division are holding 38.8% shares of SKF. Shri P.R. Khanna has stated that the price list which has been supplied to the Customs is the only price list which is operative for pricing policy for booking of the indents from customers in India and the Skefko India does not have any other price list issued by SKF for export from other markets. The issue to be decided in the present appeals is whether the invoice price is acceptable or not. The valuation has to be accepted in terms of provisions of Section 14 of the Customs Act, 1962. Section 14 of the Customs Act, 1962 is reproduced below :- "14. Valuation of goods for purposes of assessment - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be - (a) the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale : (Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50); (b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf.
(2) Notwithstanding anything contained in Sub-section (1), if the Central Government is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods and where any such taiff values are fixed, the duty shall be chargeable with reference to such tariff value.
(ii) ascertained in such manner as the Central Government may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in the Foreign Exchange Regulation Act, 1973 (46 of 1973).
A simple perusal of Clause (a) of Sub-section (1) of Section 14 will show that in determining the value for the purposes of assessment the following have to be seen : (1) The price at which such or like goods are sold or offered for sale, for delivery at the time and place of importation or exportation.
(3) The seller and the buyer have no interest in the business of each other.
(4) The price is the sole consideration for the sale or offer for sale. In the matter before us, the respondents have laid great emphasis on the invoice price and have argued that the invoice price is the correct price and the respondents have laid great emphasis on the plea that the invoice price was based on the pricing policy which is incorporated in the letters and telexes received from SKF Overseas Bearing Division, Sweden. It has also been contended by the respondents that no canvasser including Punjab Bearing Traders has no monopoly to import any particular type of ball bearing and the invoice price must be considered, prima facie as the deemed value.
The revenue has the right to reject or revise it, but the burden of proof for rejecting the invoice price is on the department and the department must have adequate and sufficient reasons in rejecting the same. In support of their arguments, the respondents had relied on the following cases :-Mangla Brothers v. Collector of Customs, Bombay.Gordon Woodroffe & Co. (Madras) Pvt. Ltd. v. Collector of Customs, Madras.Weston Electroniks Ltd. v. Collector of Customs, Bombay.
(4) 1987 (29) ELT 739 - Maheshwari Trading Corporation v. Collector of Customs, New Delhi.
Shri Desai, the learned sernior advocate, has argued that in case the invoice price is not acceptable, then the assessable value must be based on the price at which the goods of same or similar kind and comparable quality are sold to the independent importers similarly placed. He has also laid emphasis on the following points :- (d) The mere fact that there is a single buyer for a particular category is not a ground for rejecting the invoice value and for a single buyer two different prices for different consignments are permissible if based on commercial consideration. Negotiated price on commercial considerations should not be rejected. Shri Desai, the learned Senior Advocate, further pleaded that the documents seized by the department are unsigned documents and no reliance should be placed on them.
13. On the other hand, Shri Doiphode, the learned SDR on behalf of the appellant agitated that in custom importation matters the price is governed by provisions of Section 14 of the Customs Act. Shri Doiphode, on the other hand, stated that there is a gross under-valuaton in the price of the bearings even to the extent of 75% which is unheard. He argued that the value as per the price list should be adopted for the purposes of assessment in terms of Section 14 of the Customs Act. He relied on the following judgments :-Macneill & Magor Ltd., Calcutta v. Collector of Customs, Calcutta.Oswal Woollen Mills Ltd. v. Collector of Customs, Bombay and Ors.
(3) 1983 (14) ELT 2177 (Bombay) - Satellite Engineering Ltd. v. Union of India and Ors.
(4) 1987 (31) ELT 356 (Bombay) - Satellite Engineering Ltd. v. Union of India and Ors.General Marketing & Manufacturing Co. Ltd. v. Collector of Customs, Madras.
(6) 1985 (22) ELT 283 - Automotive Enterprises v. Collector of Customs, Bombay.
We have perused the price list No. 8102 dated 15th February, 1981 and also the covering letter written by Skefko India Bearing Co. Ltd. dated 8th September, 1983 where they have forwarded the said price list.
Apparently this fact shows that the respondents do not doubt the genuineness of the price list at all. Shri Desai, the learned senior advocate for the respondent had repeatedly referred to the pricing policy of the company. In our view, we cannot place any reliance on the pricing policy of the respondent company's foreign supplier. The Tribunal in the case of Macneill & Magor Ltd., Calcutta v. Collector of Customs, Calcutta reported in 1987 (28) ELT 318 had held that: "If in an abstract case it could be shown that a published list price of the goods was available that the importers in general were importing the said goods at that listed price and that one particular importer declared on importation a price which was more than 100% lower than the listed price, there would indeed appear to be a very heavy onus shifted to that importer to explain how he got such a low price.
Under-invoicing and over-invoicing in the course of international trade are, like other present day white collar economic offences, sophisticated jobs. One does not get a direct and positive evidence like bogus invoices or documents relating to extra remittances just for the asking. Therefore, the appellants' proposition that just because no bogus invoice or other evidence of extra remittance had been discovered, confiscation, on the charge of mis-declaration under Section 111(m) and penalty proceedings could not be initiated against them, cannot be accepted." Relevant extract from the said judgment is reproduced below :- "Reverting to the quantum of proof required, if in an abstract case it could be shown that a published list price of the goods was available, that the importers in general were importing the said goods at that listed price and that one particular importer declared on importation a price which was more than 100% lower than the listed price, there would indeed appear to be a very heavy onus shifted to that importer to explain how he got such a low price.
While minor variations would not call for imposition of fine and penalty, a difference of more than 100% would appear to show the motive of the importer of which the authorities would be justified in taking a due notice. Under-invoicing and over-invoicing in the course of international trade are, like other present day white collar economic offences, sophisticated jobs. One does not get at direct and positive evidence like bogus invoices or documents relating to extra remittances just for the asking. Such evidence becomes available only rarely and that too when raids and searches are conducted on receipt of specific information. It is neither possible nor desirable to organise raids and searches in every case where the declared price is found to be appreciably low, particularly when other independent evidence, such as the published catalogue price coupled with the price actually charged in previous similar importations, can be adduced. The final conclusion, of course, must rest on the peculiar facts and circumstances of each case. We, therefore, do not accept the appellants' first proposition that just because no bogus invoice or other evidence of extra remittance had been discovered in their case, confiscation and penalty proceedings cannot be initiated against them." 14. Shri Desai, the learned Senior Advocate, had argued that Macneill & Magor Ltd., judgment is not applicable in the present matter, as in that matter the observations of the Tribunal were in respect of penalty. We do not find any force in that argument. Our views are further fortified by the following judgments : (1) 1988 (37) ELT 70 - Bird & Co. (Pvt.) Ltd. v. Kalyan Kumar Sen Gupta.Babcock Venkateshwara Hatcheries (P) Ltd. v. Collector of Customs, Bombay.
"Agreed price though genuine would not be conclusive for determining the assessable value."Oswal Woollen Mills Ltd., Ludhiana v. Asstt. Collector of Customs, Bombay and Ors. reported in 1984 (18) ELT 203 had held that "in terms of provisions of Section 14(1) of the Customs Act, 1962, the value has to be assessed on the price at which such or like goods are ordinarily sold or offered for sale. The word 'ordinarily' according to Shorter Oxford Dictionary means "usually, commonly". According to the Websters Third New International Dictionary, it means, "in the ordinary course of events usually, to the usual extent, moderately in a common place without distinction." In the instant case, according to the suppliers, the usual price of the machine was US $ 34000 and they charged the price of US $ 28000 from the petitioners, (as the value of the machine) by granting the special discount of 20% as a special case. Since the special discount was not admissible under the Customs Valuation Rules, 1963, therefore, the value of the machine was assessable to duty at $ 34000 and not at $ 28000 under Section 14(1) of the Customs Act, 1962 read with Rule 8 of the Customs Valuation Rules, 1963." The Tribunal in the case of General Marketing & Manufacturing Co. Ltd. v. Collector of Customs, Madras reported in 1987 (27) ELT 344 had held that "Where the goods were sold through exclusive dealer and the indents for imports were placed by buyers through exclusive dealer who added their buying commission, lower price charged to said dealer not deemable as the price at which goods ordinarily sold or offered for sale and, hence, not the assessable value." The Tribunal had further held that: "Commission paid by buyers to exclusive dealer part and parcel of assessable value, and not post-importation charge." In the case of Consolidated Coffee Ltd., Pollibetta v. Collector of Customs, Bombay, reported in 1986 (24) ELT 429 (Tribunal), the Tribunal had held that; Deemed value of imported goods neither actual value nor invoice price not price at which goods capable of being sold but price at which such goods, ordinarily sold or offered for sale, i.e., market price, at time and place of importation and in the course of international trade does not signify invoice price. Para No. 5(c) and 5(e) to (k) are reproduced below :- "(c) the deemed value of imported goods, where duty is to be levied ad valorem is, in terms of Section 14 of the Act, not their actual value, the invoice value or the price at which they are capable of being sold. It is, on the contrary, the price at which such goods are ordinarily sold or offered for sale at the time and place of importation, i.e., the market price at the time and place of importation [Clause (a) of Section 14 of the Act] and where it is not so ascertainable, its nearest equivalent determined in accordance with the Customs Valuation Rules, 1963 [Clause (b) of Section 14 of the Act]. This was so even in terms of Section 30 of the Sea Customs Act (1978 ELT 260 - Vacuum Oil Company v. Secretary of State - wherein it was laid down that it was the "price current for staple articles, the amount of which, if not a subject of daily publication in the press, is easily ascertainable in appropriate circles") and no conceptual change had apparently resulted in the provisions as whole, notwithstanding, perhaps, the intent of doing away with it to bring the provisions more in accord with those of GATT. The price at which goods are ordinarily sold at the time and place of import cannot be anything other than the market price ruling on or about the date of import at the place of import; (e) the expression " in the course of international trade" merely means and signifies the movement of goods from abroad into India and has also a reference to a period of time during which the movement is in progress pursuant to or connected with trade and commerce with other countries, following the ratio of the Hon'ble Supreme Court in AIR 1953 S.C. 333 (State of Travancore v. S.V.S. Factory) while construing "in the course of import of goods into or export of the goods out of India." The expression "in the course of international trade" does not, in any case, signify the invoice price in the case of the import in question; / (f) This is not to say that the invoice price becomes, altogether irrelevant. It furnishes the basis in terms of Rules 4(A), 5, 6 and 8 of the Customs Valuation Rules, 1963; (g) this was the purport of our decisions in 1984 (15) ELT 137 at 145 [O.E.N. (India) Ltd. v. Collector of Customs & C.E.]; 1985 ECR 973 (Maheshwari Trading Co. v. Collector of Customs, New Delhi); judgment in Appeal No. 1021 of 1980-A - 1985 (22) ELT 283 (Tribunal) (Automotive Enterprises v. Collector of Customs, Bombay); judgment in Appeal No. 1418/83-A (Allena Impex Pvt. Ltd. v. Collector of Customs) and(Tribunal) (Rakesh Press, v. Collector of Customs, Bombay) (h) to the same effect was the decision of the Calcutta High Court in I.L.R. (1976) 2 Calcutta (Bird & Co. v. K.K. Sen Gupta) when it was observed on a construction Section 14(a) that "the price at which a particular seller enters into a contract with a particular buyer does not necessarily reflect the price at which such goods are sold at the tune and place of exportation in the course of international trade." It was further held that what is to be taken as the basis of valuation is the price at which such goods or like goods are ordinarily sold at the time add place of exportation and not the contract price of sale in question; (i) nor does it follow that the invoice price is the assessable value in terms of Section 14(a), just because the buyer and seller have no mutual interest in the business of each other. The expression "where the seller and buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer of sale" is more a description of a price at which the goods or like goods are ordinarily sold - i.e., a market price which even conceptually excludes any price agreed upon on account of mutual business interests and necessarily implies that the price is the sole consideration; (j) in the facts and circumstances of the case, it has necessarily, to be held, as conceded by the Respondent, that the assessable value for the goods in question cannot be determined in terms of Clause (a) of Section 14 of the Act, since the price at which such or like goods are ordinarily sold at the time and place of importation, i.e.
market price for such imported goods is unascertainable; (k) it is, therefore, in terms of Section 14(b) of the Act and the Customs Valuation Rules, 1963, that the assessable value has to be deterimined." 15. In view of the legal position discussed above, we are of the view that the invoice price cannot be accepted in the matter before us, especially when price list No. 8102 dated 15th February, 1981 which appears from pages 89 to 93 of the respondents' paper book. We are of the view that 20% discount is the normal discount.
16. We also do not find any force in the respondents' contention of quantitative discount in view of the judgment of the Tribunal in the case of General Marketing & Manufacturing Co. Ltd. v. Collector of Customs, Madras reported in 1987 (27) ELT 344 (Tribunal). Relevant extract from para No. 5 of the said judgment is reproduced below :- "5. ...The position in reality, as admitted before us by the appellants, was that all other buyers of Spare Parts had to place their indents on General Motors through the appellants only and the price paid by those all others was increased by 18% when the appellants added that much amount as their buying commission. In a nutshell, the actual position was that the lower import price was available only to the appellants. In a situation like this, when every other importer of Spare Part had to pay 18% higher price, the lower price available to the appellants alone could not be said to be the price at which the goods were ordinarily sold or offered for sale. It is the character of the marketing pattern which determine as to which was the price ordinarily charged and not the fact whether there were more sales at the lower price and lesser sales at the higher price or vice versa. In other words, it is the nature of the transaction which is more important rather than the relative quantum of goods sold." 17. In view of the above discussion we set aside the impugned order and direct the revenue authorities to fix the value as mentioned in price list No. 8102 dated 15th February, 1981 less 20% discount. During the course of arguments, Shri Desai, the learned senior advocate, had argued that no reliance should be placed on unsigned documents. As already discussed above, the genuineness of the price list is not doubted by the respondents. Neither side has placed any material on record as to the margin of profit. We are of the view that there is violation of provisions of Section 111(d) and 111(m) of the Customs Act, 1962. We direct the Collector of Customs to fix the quantum of fine and penalty keeping in view the gravity of the offence and the margin of profit.
The facts of the above said four appeals filed by M/s. Skefko India Bearing Co. Ltd. are similar to appeal Nos. C/1925/85-A, C/1926/85-A, C/1927/85-A filed by the Collector of Customs, Bombay. In view of our observations in the above paras, we do not find any justification in interfering with the order passed by the Collector of Customs, Bombay.
We uphold his findings and dismiss the appeals.