Manorama Sewing Machines Pvt. Vs. Collector of Customs - Court Judgment

Excerpt:
1. the appellants herein imported 89 pieces of used motors and 4128 pieces of pvc bags of v belts under bill of entry dated 7-8-1990. the value of the goods was declared as rs. 16,870/-. on first check the goods were valued by the concerned appraiser at around rs. 85,000/-. on re-examination they were valued by a committee of two appraisers at rs. 46,608/- (rs. 21,300/- for the used motors and rs. 25,308/- for v belts). the invoice value was not accepted by the department and the charge of undervaluation was confirmed. the goods were confiscated for import in contravention of para 5(3)(iii) of the import (control) order, 1955 read with section 3 of imports and exports act, 1947 on the ground that the rep licence produced by the importer did not cover old and used goods brought as disposal items. the importers were given an option to redeem the goods on payment of a fine of rs. 25,000/-, a personal penalty of rs. 20,000/- was also imposed for undervaluation.hence this appeal.2. we have heard both sides and carefully considered their submissions and perused the records.3. the order does not disclose any basis for either the first valuation of the goods by the department at rs. 85,000/- or the subsequent reduction to rs. 46,608/- which as rightly pointed out by shri r.k.jain is nearly 50% of the original departmental valuation. the charge of under-valuation is not supported by any evidence and the basis for the charge also is not disclosed in the order. we accept the contention of shri r.k. jain that the burden of proving under-valuation has not been discharged by the department in this case and we set aside the charge of under-valuation. regarding the itc violation it appears from the order that the importers waived the issue of show cause notice and were also put on notice regarding confiscation of the goods for violation of itc regulations as the party produced rep licence of june 1989 at the time of personal hearing and we, therefore, see no force in the submission of the learned consultant that the importers were not put on notice regarding alleged contravention of itc regulations. the department is correct in contending that the rep licence produced cannot cover the goods imported as import of old and used goods brought as disposal items are not permitted under itc regulations. accordingly we uphold the charge of itc violation and the consequent confiscation of the goods. however, in the facts and circumstances of this case and with particular regard to our finding that the invoice price, of the goods has to be accepted, we reduce the redemption fine from rs. 25,000/- to rs. 8, 000/-, and the personal penalty is reduced from rs. 20,000 to rs. 2,000/-. the appeal is disposed of in the above terms.

Judgment:
1. The appellants herein imported 89 pieces of used motors and 4128 pieces of PVC bags of V belts under bill of entry dated 7-8-1990. The value of the goods was declared as Rs. 16,870/-. On first check the goods were valued by the concerned Appraiser at around Rs. 85,000/-. On re-examination they were valued by a Committee of two Appraisers at Rs. 46,608/- (Rs. 21,300/- for the used motors and Rs. 25,308/- for V belts). The invoice value was not accepted by the Department and the charge of undervaluation was confirmed. The goods were confiscated for import in contravention of Para 5(3)(iii) of the Import (Control) Order, 1955 read with Section 3 of Imports and Exports Act, 1947 on the ground that the REP licence produced by the importer did not cover old and used goods brought as disposal items. The importers were given an option to redeem the goods on payment of a fine of Rs. 25,000/-, A personal penalty of Rs. 20,000/- was also imposed for undervaluation.

Hence this appeal.

2. We have heard both sides and carefully considered their submissions and perused the records.

3. The order does not disclose any basis for either the first valuation of the goods by the Department at Rs. 85,000/- or the subsequent reduction to Rs. 46,608/- which as rightly pointed out by Shri R.K.Jain is nearly 50% of the original Departmental valuation. The charge of under-valuation is not supported by any evidence and the basis for the charge also is not disclosed in the order. We accept the contention of Shri R.K. Jain that the burden of proving under-valuation has not been discharged by the Department in this case and we set aside the charge of under-valuation. Regarding the ITC violation it appears from the order that the importers waived the issue of show cause notice and were also put on notice regarding confiscation of the goods for violation of ITC Regulations as the party produced REP licence of June 1989 at the time of personal hearing and we, therefore, see no force in the submission of the learned Consultant that the importers were not put on notice regarding alleged contravention of ITC Regulations. The Department is correct in contending that the REP licence produced cannot cover the goods imported as import of old and used goods brought as disposal items are not permitted under ITC Regulations. Accordingly we uphold the charge of ITC violation and the consequent confiscation of the goods. However, in the facts and circumstances of this case and with particular regard to our finding that the invoice price, of the goods has to be accepted, we reduce the redemption fine from Rs. 25,000/- to Rs. 8, 000/-, and the personal penalty is reduced from Rs. 20,000 to Rs. 2,000/-. The appeal is disposed of in the above terms.