| SooperKanoon Citation | sooperkanoon.com/9787 |
| Court | Customs Excise and Service Tax Appellate Tribunal CESTAT Mumbai |
| Decided On | Jul-23-1996 |
| Reported in | (1997)(91)ELT382Tri(Mum.)bai |
| Appellant | Commissioner of Customs |
| Respondent | Metalman Pine Mfg. Co. Ltd. |
2.1 Respondents Metalman Pipes Mfg. Co. Ltd. caused the import of 3469.870 M.T. of Prime Hot Rolled Coils confirming the specifications SAE 1008, declaring the total value at DM 19,60,476.56 at the rate of DM 565/- per M.T. and sought clearance thereof by filing five separate Bills of Entry. Clearance in respect to Bill of Entry No. 835 dated 2-11-1989, for 482.034 M.T. was sought against four transferable REP licences, on payment of duty, which initially was for home consumption, but subsequently converted in warehousing Bill of Entry, the clearance under the other four Bills of Entry was claimed, without payment of duty and under Import and Export Pass Book Scheme, against three DEEC Pass Books, and three licences, issued in their favour. The said respondents also produced five invoices all dated 15-9-1989, from Heyk-ing Limited, Hong Kong, which indicated the price charged at DM 565/- per M.T. CIF, and the said party was shown as suppliers of the goods, though the goods had been shipped from an Italian Port direct to Bombay.
2.2 The Appraising Group however felt the declared value to be on the lower side, as import of similar items from other countries were higher, and also because one party Zenith Ltd. had caused import at DM 867.30 per M.T. on vide invoice dated 7-11-1989 from M/s. Ilva SPA Italy, who were also the party from whom the subject goods were actually procured, some enquiry was initiated, where the importers submitted that the material of Italian origin was available at cheaper rate as compared to goods procured from other countries. Pending further enquiry, the goods were cleared on provisional basis.
2.3 During the investigation, it was revealed that the importers had initially placed order for supply of 3000 M.T on directly to M/s. Ilva SPA, through their Indian Indenting Agents M/s. M.A. Hoosein Brothers, Bombay at the rate of DM 850/ per M.T. and Letter of Credit for the same was to be opened by Heyking Limited, Hong Kong, and M/s. K.M.Housein had booked the said order with their principals M/s. Sider Exports, Geneva, and Letter of Credit was accordingly opened by Heyking Limited, where the agreement was that Heyking would issue invoice to Metalman Ltd. for DM 898.00 per M.T. by adding their commission etc.
The shipment of the goods was to be effected on or before 31-8-1989.
The shipment was however, effected after the agreed date, and hence Metalman Ltd., claiming that the terms of agreement were not complied with, informed the indenting agents, and directed Heyking Limited not to retire the documents. The investigations revealed that subsequently fresh negotiations were conducted and accordingly revised price was agreed at DM 787.00 per M.T. and fresh set of invoice was drawn, which were retired, and payment at that rate was done to the suppliers by Heyking Limited, who, however, drew the Invoices in favour of Metalman Ltd. for DM 565.00 per M.T. During the investigations, Heyking Ltd. reportedly disclosed that Metalman had agreed to reimburse them for DM 222.00 in other way, but also disclosed that no such extra payment was done till then.
2.4 Search was carried out at the premises of Indenting Agent M/s. M.A.Hoosain & Bros, at Bombay and at the premises of Metalman Ltd. both at Indore and Bombay and the documents in relation to the correspondence in this regards, as detailed in the show cause notice, were seized.
2.5 Statements of the persons concerned were recorded. Mr. Vijay Soni, the Director of Metalman Ltd., while agreeing to placement of the order through M/s. M.A. Hoosain & Bros, at the rate of DM 850.00 per M.T., stated that because as per the said order, the shipment was to be effected before 31-8-1989, which was duly established to have not been done, the said contract was terminated and subsequently they entered into contract for supply of the same material with Heyking Ltd., Hong Kong, at DM 565.00 and had opened the Letter of Credit in favour of Heyking Ltd. who had also issued invoices to that effect, and payment had been made accordingly. He denied to have either agreed or paid the balance amount by any other mode and manner. He contended that by the time the initial contract came to be terminated, the price of the subject material in the International Market was crushingly coming down. Statements of Mr Vinod Kumar Jatia, the brother of Mr. Rajkumar Jatia, the Director of Heyking Ltd., Hong Kong and reportedly looking after the business interest of Mr. Rajkumar Jatia, in India, was also recorded, where as Mr. Rajkumar Jatia, made his stand clear vide his letter dated 11-11-1992, taking the stand that they were merely financiers and not the suppliers of the goods and had issued the invoices, because of the arrangements for payment of balance amount by other means.
2.6 On completion of the investigation, the show cause notice proposing enhanced value at the rate of DM 850.00 per M.T. and consequential proposed confiscation and imposition of penalty, was issued.
3. The ld. adjudicating authority after conduct of the proceedings, however came to the conclusion that there was no evidence to indicate that Metalman Ltd. had ever agreed to the price at DM 785.00 per M.T.or that they, by some way or the other, paid or even agreed to reimburse Heyking Ltd. for the differential amount at DM 220.00 per M.T. and that actual payment was made at DK 565.00 per M.T. and hence the allegation of misdeclaration as to value of the goods imported was not sustainable. He also noted that the importers Metalman Ltd., the holders of DEEC Pass Book had already fulfilled the export obligation by causing export of their product, upto the value of Rs. 3,52,80,278/- and as such the dispute as to the valuation would even otherwise, have no significance. He therefore dropped the proceedings.
4. The said order has been reviewed by the Central Board of Excise and Customs, who have directed for filing of the application vide Section 129D(1) of the Act and accordingly these appeals have been filed.
5.1 Shri K.M. Mondal, the ld. SDR, has submitted that the main allegation in the show cause notice, is in relation to undervaluation of the goods and liability to confiscation vide Section 111(d) of the Act and the point as to importability under duty exemption or fulfilment of export obligation are virtually non issue here. He also clarifies that Section 111(d) is sought to be invoked only because, if the value of the goods is enhanced as contended by the department, then the goods imported exceed the value limits in the licences. He submits that the goods become liable to confiscation vide Section 111(m) of the Act, if they do not correspond in respect of the value, and referring to Section 2(41) of the Act, submits that the value in relation to any goods means the value fixed in respect thereof under Section 14(1) of the Act and then submits that the value of the goods would be the price at which the goods of the like nature are ordinarily sold or offered for sale. Pleading that this aspect has been totally overlooked by the adjudicating authority, he has referring to the averments in the pleading that the department has brought on record the evidence, in the nature of initial agreed price at DM 850.00 per M.T., the correspondence from M/s. M.A. Hoosain and Bros, in relation to renegotiation for the price, as also the actual payment at the rate of DM 785.00 to the Italian manufacturers M/s. Ilva SPA Italy, by Heyking Limited, in addition [to] evidence of contemporary import by Zenith Limited from the same manufacturers during the same period at DK 867.30 per M.T. and has submitted these evidences have not been considered, even for the purpose of rejection. He has however clarified that it was not his submission that the matter, in such circumstances, ought to go back for reconsideration and has pleaded that when the evidence is very much available, the same ought to be considered here and appropriate decision be given.
5.2 The ld. SDR has then pleaded that Heyking Limited were merely the financiers who had opened the Letter of Credit on behalf of Metalman Limited and were to charge some commission. Their capacity therefore, could be that of only an agent, and referring to Para 120(1) of the Hand Book of Procedure AM 1988-91, he has submitted that such an agent could not have issued any invoice, and issuance of such an invoice was a clear design to under value the goods. He has further pleaded that documents recovered from M/s. M.A. Hoosain & Bros, showed issuance of invoices by the manufacturers and suppliers, which proved the correct transactional value. Referring to the Supreme Court judgment in Commerce International v. Collector -1995 (77) E.L.T. 20 (SC) the ld.SDR has pleaded that the manufacturers' invoice should be accepted for the purpose of valuation. Challenging the plea raised by Metalman Limited of Heyking Limited being the supplier of the goods, the ld. SDR has pleaded that there is no evidence of Metalman Ltd. having placed any order with them and on the contrary documents recovered from M/s.
M.A. Hoosain & Bros, prove the placement of order directly by Metalman Ltd. And clearly indicates that Heyking Ltd. were mere financiers. He also submits that the contract allegedly entered into between Heyking Ltd. and Metalman Ltd. besides being back dated, is the one factually improbable as they had never accepted their status as the suppliers.
5.3 Referring to the import by Zenith Ltd., which is also from M/s.
Ilva SPA Italy, the ld. SDR has pleaded that contemporary imports, provided important criteria to ascertain the value. For this, he relies upon the decision of the Tribunal in Shyam Antenna Electronics (P) Ltd. v. Collector -1994 (55) ECR 497 (Tribunal).
5.4 The ld. SDR has however emphasised and reiterated that issue for determination here is one of correct valuation, and for that, the provision of Section 14(1) of the Act have to be implemented, which has not been done and has pleaded that in view of the evidence adduced by the department, the value ought to be revised to DM 850.00 per M.T. and in any case, the same cannot go below DM 787.00, which has actually been paid to the manufacturers.
5.5 Pleading that all the respondents also become liable to penalty, the ld. SDR has pleaded that the other respondents have abetted Metalman Ltd. in lowering down the value, presumably to bring the value within the licence limit and the fact that Metalman Ltd. have fulfilled their export obligation, could not be a factor when the provisions of Section 112 of the Act stand attracted.
5.6 The goods, in the submission of the ld. SDR, though duly imported have been undervalued attracting the provisions of Section 111(m) of the Act, and if properly valued, exceed the value limit of the licence, making that portion of import unauthorised and hence provision of Section 111(d) also stand attracted and hence order for confiscation also should be passed.
6.1 Mr. M.M. Jayakar, the ld. Advocate for Metalman Ltd. and their Director Mr. Vijay Soni, has referred to various documents recovered by the department from M/s. M.A. Hoosain & Bros, as also from Metalman Ltd. and has pleaded that by the default on the part of the foreign suppliers in shipment of goods within the time specified, which was the essence of the said contract, the initial contract for supply of the goods at the rate of DM 850.00 per M.T. had already stood frustrated and hence fresh negotiation had taken place. Referring to the letter dated 4-10-1989, addressed by Metalman Ltd. to Heyking Ltd., he has pleaded that while re-negotiating, Metalman Ltd. offered to purchase the goods at DM 565.00 per M.T. from Heyking Ltd. which they vide their letter dated 6-10-1989, accepted and pursuant thereto, a predated contract, was sent by Heyking Ltd., bearing dated 15-7-1989. According to the ld. Advocate, this documentary evidence has clearly established the fresh deal between Metalman Ltd. and Heyking Ltd. for the goods already shipped by the foreign manufacturers, to Bombay, under the Letter of Credit opened by Heyking Ltd. and documents were to be transacted only through their bankers. The ld. advocate has pleaded that it was open for Heyking Ltd. to negotiate the deal with any other party, as they were in custody of the documents and the documents were to be transacted according to their order but they chose to offer the goods to Metalman Ltd. at reduced price of DM 565.00 per M.T.presumably to arrest further loss as the market was going down. In his submission Heyking Ltd., with execution of the documents referred to above, could not excuse themselves by pleading them to be the agents for Metalman Ltd. Referring to the averment of Mr. Rajkumar Jatia, Director of Heyking Ltd. the ld. Advocate has pleaded that the department has got investigation done by Enforcement Directorate and it is established that no extra remission has been effected.
6.2 The ld. Advocate has then submitted that the appellants having already fulfilled the export obligation, there is no loss to the State Revenue, and has pleaded that the negotiated value ought to be accepted as the correct for valuation purpose. In his submission import by Zenith Ltd. could not be taken as the standard as it is not clear when the agreement was entered into. He also submits that these appellants had also produced evidence of imports during the said period and even going by the story advanced by the department, the manufacturers themselves have accepted the lower price of DM 787.00 evidencing downward trend in the price and if the import by Zenith Ltd. is accepted as the standard, the same indicates upward trend. In his submission, these two aspects are self-contradictory leading to show that import by Zenith Ltd. cannot be accepted as the standard and in absence of any other evidence, even for the purpose of Section 14 of the Act, the contracted price has to be accepted.
7. Mr Kamal Parshurampuria, the ld. Advocate appearing for Heyking Ltd. and their Director Rajkamal Jhatia, and his brother Vinod Jhatia, has pleaded that, besides the fact that Vinod Jhatia is no way concerned in any act of undervaluation, so far as Heyking Ltd. is concerned their rate was no more than that of mere financiers and that they have never agreed or acted as the suppliers. About issuance of Invoice he has submitted that they had already invested money and had to retrieve them and hence were compelled to act in a way as desired and directed by Mr.
Soni of Metalman Ltd. The ld. Advocate has also referred to the documents and correspondence, and has pleaded that they are being falsely implicated as the persons involved.
8. Considering the submissions, the main issue for consideration is what ought to be the value of the goods imported, whether it could be DM 850.00 or DM 787.00 or DM 565.00 per M.T.9. The ld. adjudicating authority has held that the value could be DM 565.00 per M.T. and has, for that purpose, assigned the reasons which have been briefly referred to earlier.
10. Going by the documentary evidence, coupled with the admissions from various parties, it comes out as an established fact that initially Metalman Ltd., placed an order with M/s. M.A. Hoosain & Bros, for supply of 3000 M.T. of Prime Hot Rolled Coils at the rate of DM 850 per M.T. and then increased the quantity required to 3500 M.T. with price remaining the same, Heyking Ltd. offered to be the financiers and ultimately agreement was reached mat for the said import, Heyking Ltd. be the financiers for Metalman Ltd. and should open the Letter of Credit in favour of the suppliers. It also transpires, that the time was made an essence of the contract, and accordingly the shipment was to be effected by 31-8-1989. Though the shipment of the entire quantity was effected and the date of shipment was shown as 31-8-1989, the enquiry made by Metalman Ltd. revealed that the shipping documents were fabricated and shipment was made after the agreed date. It is evident from the records that Metalman Ltd. vide their letters dated 1-9-1989, informed Heyking Ltd. not to get the letter of credit encashed, and specifically mentioned that any such payment would not be acceptable to them. The correspondence that has taken place between Heyking Ltd. and Metalman Ltd. bears testimony that Metalman Ltd. had, by virtue of the suppliers not having complied with the terms of contract, had rescinded the contract, and directed Heyking Ltd. not to make the payment at UM 850.00 per M.T. and retire the documents. This aspect is further evident from the letter dated 19-10-1989 from M/s. M.A. Hoosain and Bros, to Sider Exports, Geneva through whom the supply was made. The said letter also mentions about some fresh proposal about the price.
From the documents produced, it is clearly established that the initial contract for supply of subject goods at the rate of DM 850.00 per M.T.has stood terminated. The fact that ultimate payment is also not made at the rate of DM 850.00 per M.T. further corroborates this position.
11. It appears that subsequently, some fresh negotiations have commenced, and as is evident from the letter from M/s. M.A. Hoosain and Bros, dated 19-10-1989 the "customer" had proposed the purchase at the rate of DM 720.00 per M.T., and M/s. Sider Exports, Geneva, vide their FAX message dated 24-10-1989 offered the price at DM 785. There is no letter or any other mode of confirmation from Metalman Ltd. that the deed was finalised at DM 785.00 per M.T.12. At the same time, the documentary evidence collected during the investigation, shows that vide letter dated 4-10-1989 Metalman Ltd. have written to Heyking Ltd. "Looking to the present international market, we can accept this material at the rate of DM 565 per M.T. CIF Bombay inclusive of interest for 160 days" and have added that "If our offer is acceptable to you, you can send us a formal contract to enable us to do the needful." This letter is replied by Heyking Ltd. on 6-10-1989, where expressing displeasure over the approach of Metalman Ltd., they have mentioned "Under the circumstances, we call upon you to support your bid alongwith a confirmed and irrevocable Letter of Credit because we are not sure whether or not, you will open the Letter of Credit even if we accept your bid for 565 DM per M.T. Letter of Credit should be opened on our bankers CREDIT AGRICOLE". Alongwith the said letter, they have enclosed a contract, with a post script in the letter, mentioning "As desired a fresh contract on negotiated rates and dated prior to the date of shipment is enclosed." The contract enclosed bearing dated 15-7-1989, starts with the words "We feel pleased to herewith confirm sale of the following detailed goods to you". The price per M.T. is shown as DM 565.00 and the port of shipment is shown as any European Port. The evidence shows that Metalman Ltd. have opened Letter of Credit, with State Bank of Indore vide their application dated 9-10-1989 in favour of Heyking Ltd. 13. Significantly thus, the correspondence between Heyking Ltd. and Metalman Ltd., in respect to fresh negotiations for purchase at DM 565.00 per M.T., which concluded by letter of acceptance dated 6-10-1989, is prior to letter from M/s. M.A. Hoosain to Sider Exports, dated 19-10-1989, when they mention that the "customers say they are prepared to accept material and honour documents at today's market price which is DM 720 per M.T. CANDF Bombay". There is no allegation that the correspondence between Metalman Ltd. and Heyking Ltd. is fabricated one. The same is actually seized when the search was carried out at the premises of Metalman Ltd. and manipulation for the purpose of creating defence at a later date, cannot be suspected, Heyking Ltd., who at this juncture do not side with Metalman Ltd., do not challenge the authenticity of those documents.
14. Together with this, there is no evidence of Metalman Ltd. having confirmed the price at DM 785.00 per M.T. as offered by M/s. Sider Exports.
15. The evidence establishes the fact that Metalman Ltd. have made the payment at DM 565.00 per M.T.16. At the same time, however, it is established that the manufacturers have received the price at DM 785.00 per M.T. from Heyking Ltd. 17. Heyking Ltd. as well as the department have pleaded that Heyking Ltd. were merely the financiers and agents for Metalman Ltd. Though the same appears to be true in relation to the contract as initially entered into, at the rate of DM 850.00 per M.T., there seems to have been some change brought out in the relationship between Heyking Ltd. and Metalman Ltd., subsequent to rescinding of the said contract.
Except the contention raised by Mr. Rajkumar Jatia in his letter dated 11-11-1989 to the Appraiser SIIB, there is no evidence showing that Metalman Ltd. had agreed to fixation of price at DM 785.00 per M.T. The payment at that rate is made after the fresh Invoices were issued by M/s. Sider Exports despatched on 27-10-1989. Significantly, by that time the correspondence duly referred to and partially reproduced earlier where Metalman Ltd. have proposed purchase of material at DM 565.00 per M.T., and Heyking Ltd. have 'accepted' the bid "of 565.00 DM" was already entered into. Thus, contract between Metalman Ltd. and Heyking Ltd. had come into existence by 6-10-1989. If that was the fate accomplie, it remains unexplained as to how, Heyking Ltd. acting as an agent for Metalman, make the payment at DM 785.00 per M.T. Further, if they were mere agents providing financing to Metalman, why should they enter into "fresh contract" by "accepting the bid", and issue invoices as also packing lists for the consignments. With both the buyer and seller being disclosed, Heyking Ltd., if they were acting merely as the agents, could have excused themselves by not retiring the documents by stating that their principals namely Metalman Ltd., had instructed them accordingly. Oral version of Mr. Rajkumar Jatia, which nowhere gets any support from any other documentary evidence, has, in the light of the documents available, to be viewed as not acceptable one. The correspondence and execution of documents, subsequent to cancellation of the contract initially agreed upon, clearly go to corroborate the version given by Metalman Ltd., namely, they had contracted to purchase the subject goods for DM 565.00 per M.T.18. The adjudicating authority has considered this aspect and based on the concept of negotiated price, came to the conclusion that the valuation is correctly declared as DM 565.00 per M.T., and viewed from that angle, there could be no justifiable ground to interfere with the said order.
19. Here, the allegation is of undervaluation, and provisions of Section 111(m) of the Act have been sought to be invoked, coupled with another allegation that on proper valuation, the goods imported exceed the value limit of the licence, resulting into liability to confiscation also under Section 111(d) of the Act.
20. Section 111(m) of the Act, provides for confiscation of any goods which do not correspond in respect of value or in any particular manner. The said provision is neither linked with any duty liability nor is it confined to only dutiable goods, and as such, even for the goods imported under DEEC Scheme, the said provisions stand attracted.
21. Section 2(41) of the Act, provides that the value in relation to any goods, means the value thereof as determined in accordance With the provisions of Sub-section (1) of Section 14 of the Act. Though Section 14 read by itself, appears to have been enacted for the purpose of determining the value of the goods for the purpose of Customs Tariff Act, or any other law for time being in force whereunder a duty of customs is chargeable", reading it in conjunction with definition of word "value" as given in Section 2(4) and again referring to the provisions of Section 111(m) of the Act, where goods not corresponding in respect of value with the declaration made, has been rendered liable to confiscation, for the purpose of Section 111(m) also, the provisions contained in Section 14(1) have to be made applicable.
22. As per Sub-section (1) of Section 14 of the Act, the value of the goods is the one at which such or like goods are ordinarily sold or offered, in the course of international trade, where buyers and sellers have no interest in business and price is the sole consideration.
23. Ordinarily, the price negotiated between two parties in the [ordinary] course of business i.e. the negotiated price, has to be accepted unless some evidence is adduced to show that the negotiated price is not the correct one. Here, the negotiated price, which also happens to be the price actually paid, is DM 565.00 per M.T., and with negativing the contention that, the price actually paid by the importer is DM 787.00 per M.T., with an understanding that the documents may show price at DM 565.00 per M.T. and balance of DM 222.00 per M.T.would be paid by other means; the negotiated price of DM 565.00 per M.T. as accepted by the adjudicating Collector, should be upheld as the correct. Here, however, some circumstances, and documents are brought on record, which call for some consideration, which appears to have been not expressly discussed by the adjudicating authority.Commerce International v. Collector (supra) held that for the purpose of valuation under the Customs Act, the invoice issued by the seller may not be accepted as the correct, and invoice from the manufacturers would be the proper evidence. The Tribunal have, in Shyam Antenna Electronics (P) Ltd. v. Collector (also supra) held that if the contemporary imports are at higher price, then negotiated lower price should not be accepted particularly when the other import is from the same manufacturer.
25. As is evident from the averments in the show cause notice, the department has procured invoice dated 7-11-1989 from manufacturers M/s.
Ilva SPA, Italy who are also the manufacturers of the subject goods, where the price charges is DM 867.30 per M.T. From the documents seized from M/s. M.A. Hoosain & Bros., there is a copy of telex message sent on 17-6-1989 from M/s. M.A. Hoosain & Bros, to M/s. Sider Exports, where besides referring to the order from Metalman Ltd., some mention is also made in relation to order for 5000 M.T. of HR Coils by Zenith.
The price agreed however is not mentioned. This may lead to show that both the orders, namely initial order from Metalman Ltd. and the order from Zenith Ltd. may have been simultaneously placed.
26. Simultaneously, it is also on record that the actual price paid to the manufacturer for the subject goods is DM 787.00 per M.T., with initial price agreed to be at DM 850.00 per M.T.27. Applying the provisions of Section 14(1) of the Act, in determining the value, these two factors have also to be borne in mind. The ld.adjudicating authority however does not appear to have given any specific finding or the reasons which have weighed with him.
28. This may call for an order of remand, if some further probe is called for. The only challenge here, however, is that the evidence duly adduced is not duly appreciated. The Tribunal having powers to re-appreciate the evidence and came to its independent conclusion even on factual position, and when remand for such purpose, when the documents are available on record, is discouraged, by the judicial forum, the said course, is not adopted, and instead, due scrutiny of the said evidence is undertaken.
29.1 The first set of evidence, is the Invoice issued by M/s. Ilva SPA, Italy dated 17-11-1989 in favour of Zenith Ltd., for supply of material at DM 867.30 per M.T.29.2 Though the invoice is dated 17-11-1989, a reference to placement of the order, by Zenith Ltd. is found in the telex sent by M/s. M.A.Hoosain and Brothers to M/s. Sider Exports on 17-6-1989. There is nothing to show that the said reference is to a transaction other than the one reflected in the invoice produced. The obvious presumption therefore, is that the order placed by Zenith Ltd. during the same period when initial order was placed by Metalman Ltd. which was for supply at the rate of DM 850 per M.T.29.3 Even when Metalman Ltd. had placed an order at the rate of DM 850 per M.T. Zenith Ltd. had agreed to pay at DM 867.30 per M.T. and difference though marginal at Rs. 17.30 per M.T., does assume significance when comparable price has to be ascertained, in view of the fact that even the department has not alleged that there was an understanding even when negotiating the price initially negotiated by Metalman Ltd., to undervalue the goods.
29.4 Further, the department, even now, does not plead that the value of the goods ought to be assessed at either DM 867.30 or even at DM 850.00 per M.T. and have simply claimed enhancement of value to DM 787.00 per M.T. which obviously is lower by DM 80.30 to what is allegedly paid by Zenith Ltd. 29.5 This factor raises yet another issue as to whether the department has really intended to place reliance on the invoice in favour of Zenith Ltd. as the basis for enhancement in value or have just made a passing reference to that. The averments in the show cause notice indicate the later position. That however may not be taken as a ground for summarily reject the submissions that have now been raised.
29.6 It however remains a fact on record, that enhancement is not claimed to the extent of the price paid by Zenith Ltd. Nor it is the claim from the department that value be raised to DM 850.00 per M.T.29.7 This also leads to show that the department has tacitly accepted that subsequently prices had been going down in the International Market. This tacit admission also makes the invoice value for Zenith Ltd. as the one which cannot be taken as a standard one for attracting provisions of Section 14(1) of the Act.
29.8 As indicated earlier, there are reasons to believe that placement of the order by Zenith Ltd., was during the same period as placement of initial order by Metalman Ltd. Even the suppliers have accepted that subsequent thereto, the prices in the International Market have gone down and have themselves agreed to reduce the price to DM 787.00 per M.T. i.e. going down by DM 65.00 per M.T. Such reduction is not shown to be under any compulsion, and hence could be taken as the one on account of normal market variation. This also leads to show that the price paid by Zenith Ltd. was not reflecting the prevailing market condition.
29.9 The prices, initially agreed to by Metalman Ltd. and Zenith Ltd. were the negotiated and contracted price and because of the breach of the terms of contract in case of Metalman Ltd., they could rescind the contract. It is very probable that Zenith Ltd. having had no such opportunity to rescind the contract, may have been obliged to pay the contractual price, notwithstanding the subsequent fall of price in the International Market. This is just a probability but it assumed significance in the set of circumstances prevailing here, and no evidence on record, nor statement from any responsible person from Zenith Ltd. is available to rebut the same.
29.10 Taking all these circumstances into consideration, the invoice in favour of Zenith Ltd., does not provide an adequate criteria to reassess the valuation keeping in view the provisions contained in Section 14(1) of the Act.
30.1 The next set of evidence is the payment made by Heyking Ltd. for the subject goods to the Italian suppliers/manufacturers which is at DM 787.00 per M.T. The evidence gathered as well as the statement of Mr.
Jhatia, shows that such a payment is made. The question that requires to be answered is whether, that can prove the prevailing International Market price.
30.2 The entire story put forward by Heyking Ltd. is held as not worthy of any credence, and it therefore remains unexplained as to why they made such a payment, even when, they were instructed not to make such payment which they were bound to follow if they were merely the agents for Metalman Ltd. With the transaction for sale at DM 565.00 per M.T.entered into between them and Metalman Ltd. having been duly held, based on clear documentary evidence, to be an independent transaction, and the plea of underhand dealing for balance amount of DM 222.00 per M.T. is held as not proved, in absence of any other probable explanation, it is not possible to take the said price as the one prevailing market price for the purpose of Section 14(1). On the contrary, their agreeing to sell the goods to Metalman Ltd. at the reduced price may even justify agreeing to the proposition that International Market price were consistently showing downward trend. If it was otherwise, Heyking Ltd. could have, instead of persisting Metalman Ltd. in taking the goods, and for that, agreeing to whatever, according to them, were unreasonable demands, would have straightaway negotiated with other party and sold the goods at the then prevailing market price, if they were higher than DM 565.00 per M.T. During the course of hearing the matter, the ld. Advocate for Heyking Ltd. was confronted with this aspect, and he could not provide any plausible explanation.
30.3 The price allegedly paid by Heyking Ltd. to Italian manufacturer/supplier, therefore, in view of the circumstances prevailing here, cannot be accepted as the standard for assessment under Section 114(1) of the Act.Commerce International v. Collector (supra) laid down that preference ought to be given to manufacturers invoice and the Tribunal have in Shyam Antina Electronics (P) Ltd. v.Collector (also supra), laid down that contemporary imports ought to be considered. Here however, the department having themselves not pleaded for assessment at the price allegedly paid by Zenith Ltd., have made a tacit admission of the said price as not the correct International price, and for what is discussed earlier, even otherwise, on factual appreciation, the said price does not reflect the correct price, and hence, on factual position, the ratio of the said decisions cannot stand attracted.
32. Thus viewing the evidence in context of the provisions contained in Section 14(1), there is no convincing evidence as to contemporaneous import at the higher value, and whatever evidence that is adduced does not provide adequate data.
33. Viewing from that angle also, there appears no ground to interfere with the negotiated price, and to order for any enhancement in value of goods imported, and thus also, the order does not call for any interference.