Collr. of Cus. Vs. Milano International (India) - Court Judgment

Excerpt:
1. respondents are engaged in manufacture and export of garments. by letter dated 27-11-1990 they requested the assistant collector of customs, foreign post office, new delhi, to release and deliver 18 parcels addressed to them and consigned from japan. the parcels were found to contain yano 56da, 52 cms metal zippers of japanese origin.they submitted nine invoices for the total number of 7931 zippers. the invoice value was japanese yen 6 per piece. the total declared value was rs. 8317.00 on the basis of data relating to comparable imports, after show cause notice and personal hearing, the additional collector determined the value as japanese yen 56.79 per piece and arrived at the total value of rs. 64,993.00. the duty on the enhanced value was rs. 82,180.00 the show cause notice also proposed confiscation of the goods and imposition of penalty. by the order impugned in this appeal, the additional collector dropped the proposal of confiscation and imposition of penalty. being aggrieved by this aspect of the order, the collector of customs has filed the present appeal. we have heard shri m. ali, jdr and shri o.c. sharma, export manager of the respondents.2. as against the declared value of japanese yen 6 per piece f.o.b. the additional collector fixed the value as japanese yen 56.79 per piece f.o.b. the respondents have not challenged the valuation aspect, as evidently they are not aggrieved by it. this will show that the goods were valued at about l/9th of their real value. it is not as if the respondents are not persons not conversant with the value. respondents are engaged in the garment manufacture and export business. they must certainly have been aware of the real value of the goods imported. it is, therefore, clear that the misdeclaration was deliberate.3. in response to the show cause notice, respondents submitted that they had an order for export of garments worth us $ 3,41,000.00 to the buyer in japan, that the price agreed on was of garments without fittings, that the buyer insisted that fittings like metal zippers to be supplied by him free of cost must be fitted to the garments before export to which the respondents had agreed and it was on this basis that the consignment was sent by the japanese buyer. it was also pointed out that in due course the respondents would be exporting the manufactured garments fitted with zippers. the additional collector referred to this defence and noticed that the respondents would get back the duty drawback at the time of re-export and in view of the enhancement of value, dropped confiscation and penal action.4. we do not find any justification in dropping the proposal for confiscation under section 111(m) of the customs act, 1962 and imposition of penalty under section 112 of the act.5. the respondents' representative submitted that they received zippers free of cost on the insistence of the japanese buyer, that the buyer was not required to reimburse the duty paid so that duty had to be paid by the respondents from their pocket, and that the particular transaction ended in a loss. the agreement between the respondents and the buyer is not before us. the respondents' representative states that the agreement is silent in regard to the duty liability on the zippers.we will assume for the purpose of this discussion that the respondents would not be entitled, under the contract, for reimbursement of the duty. that being so, it would be in the interest of the respondents to depress the value so as to depress the duty liability also. as we have pointed out earlier, it is not as if the respondents were strangers to this trade and would be aware of the ordinary price of these goods in international trade. in these circumstances, the contention urged by the respondents before us that they had no responsibility in showing a low invoice price in the invoice prepared by the buyer does not impress us. the circumstances clearly lead to the inference that knowing the ordinary price in the international trade, the price was deliberately depressed with a view to evade duty. we are told that the goods had already been cleared on payment of duty. therefore, the question of confiscation does not arise.6. in the circumstances mentioned above, the additional collector of customs should have found this to be a fit case to impose penalty on the respondents. non-imposition of penalty in a glaring case of deliberate mis-declaration of value as in this case is inconsistent with law. in the circumstances referred to above, penalty of rs. 25,000.00/- is imposed on the respondents under section 112 of the act.the appeal is allowed as indicated above.

Judgment:
1. Respondents are engaged in manufacture and export of garments. By letter dated 27-11-1990 they requested the Assistant Collector of Customs, Foreign Post Office, New Delhi, to release and deliver 18 parcels addressed to them and consigned from Japan. The parcels were found to contain Yano 56DA, 52 cms metal zippers of Japanese origin.

They submitted nine invoices for the total number of 7931 zippers. The invoice value was Japanese Yen 6 per piece. The total declared value was Rs. 8317.00 On the basis of data relating to comparable imports, after show cause notice and personal hearing, the Additional Collector determined the value as Japanese Yen 56.79 per piece and arrived at the total value of Rs. 64,993.00. The duty on the enhanced value was Rs. 82,180.00 The show cause notice also proposed confiscation of the goods and imposition of penalty. By the order impugned in this appeal, the Additional Collector dropped the proposal of confiscation and imposition of penalty. Being aggrieved by this aspect of the order, the Collector of Customs has filed the present appeal. We have heard Shri M. Ali, JDR and Shri O.C. Sharma, Export Manager of the respondents.

2. As against the declared value of Japanese Yen 6 per piece F.O.B. the Additional Collector fixed the value as Japanese Yen 56.79 per piece F.O.B. The respondents have not challenged the valuation aspect, as evidently they are not aggrieved by it. This will show that the goods were valued at about l/9th of their real value. It is not as if the respondents are not persons not conversant with the value. Respondents are engaged in the garment manufacture and export business. They must certainly have been aware of the real value of the goods imported. It is, therefore, clear that the misdeclaration was deliberate.

3. In response to the show cause notice, respondents submitted that they had an order for export of garments worth US $ 3,41,000.00 to the buyer in Japan, that the price agreed on was of garments without fittings, that the buyer insisted that fittings like metal zippers to be supplied by him free of cost must be fitted to the garments before export to which the respondents had agreed and it was on this basis that the consignment was sent by the Japanese buyer. It was also pointed out that in due course the respondents would be exporting the manufactured garments fitted with zippers. The Additional Collector referred to this defence and noticed that the respondents would get back the duty drawback at the time of re-export and in view of the enhancement of value, dropped confiscation and penal action.

4. We do not find any justification in dropping the proposal for confiscation under Section 111(m) of the Customs Act, 1962 and imposition of penalty under Section 112 of the Act.

5. The Respondents' representative submitted that they received zippers free of cost on the insistence of the Japanese buyer, that the buyer was not required to reimburse the duty paid so that duty had to be paid by the respondents from their pocket, and that the particular transaction ended in a loss. The agreement between the respondents and the buyer is not before us. The respondents' representative states that the agreement is silent in regard to the duty liability on the zippers.

We will assume for the purpose of this discussion that the respondents would not be entitled, under the contract, for reimbursement of the duty. That being so, it would be in the interest of the respondents to depress the value so as to depress the duty liability also. As we have pointed out earlier, it is not as if the respondents were strangers to this trade and would be aware of the ordinary price of these goods in international trade. In these circumstances, the contention urged by the respondents before us that they had no responsibility in showing a low invoice price in the invoice prepared by the buyer does not impress us. The circumstances clearly lead to the inference that knowing the ordinary price in the international trade, the price was deliberately depressed with a view to evade duty. We are told that the goods had already been cleared on payment of duty. Therefore, the question of confiscation does not arise.

6. In the circumstances mentioned above, the Additional Collector of Customs should have found this to be a fit case to impose penalty on the respondents. Non-imposition of penalty in a glaring case of deliberate mis-declaration of value as in this case is inconsistent with law. In the circumstances referred to above, penalty of Rs. 25,000.00/- is imposed on the respondents under Section 112 of the Act.

The appeal is allowed as indicated above.