PravIn R. Shah Vs. Collector of Customs - Court Judgment

Excerpt:
1.1 the appellant herein, a non-resident indian came on 1-11-1978. he filed two baggage declaration forms on 6-11-1978 comprising several electronic items in respect of his unaccompanied baggage. the goods were examined on 9-11-1978. the customs authorities assessed the value of the goods at rs. 72,950/- cif. no import licence for importation of these goods was produced. since in respect of both the baggage declaration forms the appellant had declared the contents as personal clothes, foodstuffs and books, there appeared to be a prima facie case of misdeclaration rendering the goods liable to confiscation 111(d) read with section 111(m) of the customs act, 1962. a show cause notice dated 10-11-1978 was issued to him. in his written explanation dated 30-11-1978 the appellant stated that.....

Judgment:
1.1 The appellant herein, a non-resident Indian came on 1-11-1978.

He filed two baggage declaration forms on 6-11-1978 comprising several electronic items in respect of his unaccompanied baggage.

The goods were examined on 9-11-1978. The Customs authorities assessed the value of the goods at Rs. 72,950/- CIF. No import licence for importation of these goods was produced. Since in respect of both the baggage declaration forms the appellant had declared the contents as personal clothes, foodstuffs and books, there appeared to be a prima facie case of misdeclaration rendering the goods liable to confiscation 111(d) read with Section 111(m) of the Customs Act, 1962. A show cause notice dated 10-11-1978 was issued to him. In his written explanation dated 30-11-1978 the appellant stated that he brought with him only one tape recorder with several accessories absolutely for his personal use and not for resale. He further stated that he was not aware that these items could not be brought as personal baggage or required an import licence. He requested that the items may be allowed under Tourist Baggage Re-export facility. On due adjudication, items at S. Nos. 12 to 17 of the inventory valued at Rs. 430/- were confiscated under Section 111(d) of the Customs Act with an option to the appellant to pay a fine of Rs. 400/- in lieu of confiscation and clear the same for home consumption. The remaining goods i.e. at S. Nos. 1 to 11 valued at Rs. 72,522/- were absolutely confiscated. A penalty of Rs. 20,000/- was imposed on the appellant under Section 112 of the Customs Act. This order was passed by the Additional Collector of Customs, Air Cargo Complex, Sahar, Bombay.

1.2 The appellant thereafter resorted to the remedies of appeal and revision application against the order-in-original, as aforesaid.

1.3 In revision application, the Government modified the order and allowed re-export of the goods against payment of fine and reduced penalty. It may be mentioned at this stage that the appellant had been contesting against the valuation adopted by the Customs authorities and had been insisting that the invoices produced by him should be taken in support of the valuation of the goods. Since the Govt. of India by its order in revision allowed re-export of the goods as per the prayer of the appellant against payment of fine and reduced penalty, as against the original order of absolute confiscation of the goods, no authoritative view on the valuation of the goods came to be crystallised in the course of the earlier proceedings right upto the order-in-revision, despite a dispute having been set up by the appellant.

1.4 In the meanwhile, the appellant was able to obtain an import licence for the said goods. Despite issue of the import licence of the said goods, the Asstt. Collector in view of the order-in-revision did not agree to release the goods against the licence and insisted on re-export of the goods and reimportation of the goods against the import licence. Accordingly, eleven items were re-exported in December, 1981 and again reimported during March 1982 vide bill of entry cash No. 1008 dated 2-5-1982.

1.5 On assessing the same goods on re-importation, the Asstt.

Collector without giving any reason and without issuing any speaking order ignored the now available evidence of price, namely the invoices dated 25-10-1978 and 28-10-1978 produced by the appellant, showing the total price at Dirham 15015, assessed the goods to duty on the basis of the earlier highly inflated price assessed by the Customs authorities at the time of first importation in an arbitrary manner. The Asstt. Collector, however, gave a depreciation of 25%.

1.6 The appellant did not accept the aforesaid assessment made by the Assistant Collector and submitted a refund claim on the ground of excessive high valuation, exchange rate as applicable to the date of bill of entry filed on reimportation and for claiming higher depreciation. The refund claim was rejected by the Deputy Collector by his order dated 18-7-1983, though as alleged by the appellant, the Dy. Collector accepted the invoice price as FOB price of the goods in question.

1.7 On appeal, the Collector (Appeals) by the impugned order rejected the appeal, as alleged by the appellant herein, on an entirely new ground that the valuation and exchange rate had to be taken into consideration as prevailing on the date of presentation of the bill of entry cash No. 1008 dt. 12-5-1982 in terms of Sections 14 & 15 of the Customs Act. Hence this appeal before the Tribunal.

2. Learned consultant, Shri P.R. Dastidar submits that in the peculiar facts and circumstances of the case, the Customs authorities themselves at the original level have taken the valuation of the goods as fixed by them on the date of the first importation of the goods in November 1978. The date of valuation of the goods was never challenged by the department. The appellant alone, however, had been challenging the arbitrary method of valuing the goods in the face of the evidence of invoices produced by him and genuineness of which had never been challenged at any stage by the said authorities. The learned consultant, therefore, submits that on the authority of Bombay High Court's judgment in the case of Santosh Gupta v. UOI -1990 (48) E.L.T.210 the invoices produced by the appellant ought to have been accepted in the absence of any other evidence for the price adopted by the Customs authorities. He has submitted that the departmental officers have not produced any evidence whatsoever in support of their arbitrary valuation of the goods in November, 1978. He, therefore, submit that the invoice price should be accepted and the exchange rate as applicable in 1978 should also be accepted since the date of valuation i.e. in November 1978 has been accepted by the authorities themselves while adopting the valuation in respect of the instant goods, as made by them in November 1978.

2.1 On the question of depreciation, learned consultant has submitted that nearly four years had passed between the first importation and the second importation. The goods in question are electronic items. These were stored with Customs authorities in unsuitable condition in their godown subjected to heat and dust. Further, electronic items because of advancing technology suffers obsolescence at a faster rate than other goods. In view of the aforesaid submissions, learned consultant has prayed for a depreciation of 50% on the invoice value as against 25% allowed by the authorities below.

4. Learned JDR, Shri K.K. Dutta, reiterates the findings of the lower authorities.

5. We have carefully considered the pleas advanced from both sides. We find sufficient force in the pleas of the learned consultant that the Customs authorities themselves have taken November 1978 as the basis for valuing these goods. Therefore, this basis as regards time of evaluation could not be changed by the lower appellate authority on the basis of which the said authority has rejected the appeal of the appellant. We also agree with the learned consultant that the department has not produced any evidence whatsoever for fixing the valuation of the goods at over Rs. 70,000/-. Genuineness of the invoices produced by the appellant had not been challenged by the department in any manner whatsoever. In the circumstances, we agree with the learned consultant that the valuation of the goods has to be made on the basis of the invoices produced by the appellant. Since the appellant himself has taken the view that these invoices have to be treated as FOB value in the absence of any indication in the invoices, the valuation may be done by treating the invoice value as FOB value to arrive at the CIF value for the purposes of assessment but department may make, as per its practice, a suitable addition by way of sea freight and insurance as percentage of FOB value.

5.1 Having regard to the overall facts and circumstances of the case, we also find sufficient force in the pleas of the learned consultant that the higher percentage of depreciation is called for in this case.

The appellant's prayer for 50% depreciation from the cost price of the goods would be a reasonable one.

6. In short, we allow the appeal as per the prayers made in the appeal memo and as discussed above.