Aum Enterprises Vs. Collector of Customs - Court Judgment

Excerpt:
1. this appeal is directed against the order passed by the collector of customs, madras enhancing the value of imported goods from singapore $ 0.53 per piece cif (about rs. 4) to us $ 0.73 per piece fob (about rs. 17), confiscating the goods under clauses (d) and (m) of section 111 of the customs act, 1962 but permitting redemption on payment of fine of rs. 80,000/- and rs. 50,000/- respectively on the two bills of entry and levying penalty of rs. 30,000/- and rs. 20,000/- respectively.imported goods are covered by two invoices. bills of entry are dated 3-12-1990 and 4-1-1991. quantities covered are 14,000 pieces and 19,000 pieces respectively. declared value was singapore $ 0.53 per piece cif.appellants produced manufacturers invoice dated 10-12-1990 to the supplier for 14,000 pieces showing the price of singapore $ 34 fob. the goods were of chinese origin. the appellants supplier is at singapore.the collector found suspicious circumstances surrounding the manufacturers invoice as well as the appellants invoices and rejected the transaction value. he relied on three other invoices of what he regarded as "contemporaneous imports" at the value of us $ 0.96 cif and us $ 0.73 cif and adopted the lower of the two prices. on the enhanced price, licence was found to be inadequate. thus there was misdeclaration of value and non-coverage of licence.2. shri t.r. malik, sdr submits that the manufacturers invoice dated 10-12-1990 is defective for the reason that the currency in which the price is expressed is not indicated. this submission is partly correct.against the column "unit price" and "the amount" dollars are mentioned without indicating whether it was singapore $ or us $ but below that, the line reads "total singapore dollars four thousand seven hundred sixty only". reading the invoice as a whole, it is clear that the price is mentioned in singapore dollar. manufacturers invoice dated 10-12-1990 relied on by the appellants shows invoice no. 0811 and the customs house had in its possession another invoice dated 9-7-1990 issued by the same supplier to another party in madras for 1000 pieces.the invoice no. is mentioned as d 4334. this, according to the collector, would show that the invoice number was lesser in the case of the later invoice and the invoice number was larger in the case of the earlier invoice. this was referred to in the show cause notice. in reply to the show cause notice, it was pointed out that the manufacturers invoice dated 10-12-1990 relied on by the appellants was issued by the manufacturers sister concern in singapore to a supplier in singapore. in other words, it was a local invoice. however, the invoice relied on by the department was issued by manufacturers sister concern to the importer at madras. explanation offered by the appellant was that while one was a local sale and the other was export sale and, therefore, in all probability, two sets of invoice books were being maintained and, therefore, the discrepancy in the invoice numbers.prima facie,the explanation appears to be acceptable. the collector did not consider this explanation. he should have considered the same and if he felt any doubt about it, he could have verified from the manufacturers sister concern their explanation for the apparent discrepancy. thus we find that both the grounds urged before us as casting suspicion about the manufacturers invoice are unacceptable.3. we now turn to the three alleged contemporaneous invoice relied on by the department. the dates, quantity, supplier's station and price per piece were as follows:date quantity supplier's station price per piece----- -------- ------------------ ----------------9-7-1990 1000 singapore us $0.96 cif9-7-1990 200 singapore us $0.96 of the three invoices, first two invoices were 5 or 6 months prior to the subject invoices and the quantities were very small (1000 and 1200) compared to the quantities imported by the appellants (33,000) and, therefore, they do not have much relevance in deciding whether the transaction value is genuine or not or in determining the ordinary price in international trade at the time and place of import. the third invoice was 9 to 10 months prior to the subject invoices and the suppliers were not from singapore as in the case of the appellants but from hongkong. on account of these two aspects the third invoice also loses its significance. thus we find that there can be no genuine suspicion about the manufacturers invoice relied on by the appellants which would support the transaction value declared by the appellants and the three invoices relied on by the department cannot really be acted upon in the present case. if transaction value is accepted, the licence produced by the appellant would cover the import of the goods.in these circumstances, the impugned order, to the extent it relates to confiscation, redemption fine and penalty, cannot stand.4. appellants pleaded before the collector that they were entitled to the benefit of notification no. 62/88-cus. and the collector held against on the ground that the notification would apply only if the importer was an actual user. we have perused the copy of the notification. the notification does not restrict the benefit thereunder to actual user. however, since the duty on the transaction value, which is accepted by us, is less than the duty prescribed in the notification, appellants cannot derive any advantage therefrom.

Judgment:
1. This appeal is directed against the order passed by the Collector of Customs, Madras enhancing the value of imported goods from Singapore $ 0.53 per piece CIF (about Rs. 4) to US $ 0.73 per piece FOB (about Rs. 17), confiscating the goods under clauses (d) and (m) of Section 111 of the Customs Act, 1962 but permitting redemption on payment of fine of Rs. 80,000/- and Rs. 50,000/- respectively on the two Bills of Entry and levying penalty of Rs. 30,000/- and Rs. 20,000/- respectively.

Imported goods are covered by two invoices. Bills of Entry are dated 3-12-1990 and 4-1-1991. Quantities covered are 14,000 pieces and 19,000 pieces respectively. Declared value was Singapore $ 0.53 per piece CIF.Appellants produced manufacturers invoice dated 10-12-1990 to the supplier for 14,000 pieces showing the price of Singapore $ 34 FOB. The goods were of Chinese origin. The appellants supplier is at Singapore.

The Collector found suspicious circumstances surrounding the manufacturers invoice as well as the appellants invoices and rejected the transaction value. He relied on three other invoices of what he regarded as "contemporaneous imports" at the value of US $ 0.96 CIF and US $ 0.73 CIF and adopted the lower of the two prices. On the enhanced price, licence was found to be inadequate. Thus there was misdeclaration of value and non-coverage of licence.

2. Shri T.R. Malik, SDR submits that the manufacturers invoice dated 10-12-1990 is defective for the reason that the currency in which the price is expressed is not indicated. This submission is partly correct.

Against the column "Unit Price" and "the amount" dollars are mentioned without indicating whether it was Singapore $ or US $ but below that, the line reads "Total Singapore Dollars Four Thousand Seven Hundred Sixty Only". Reading the invoice as a whole, it is clear that the price is mentioned in Singapore Dollar. Manufacturers invoice dated 10-12-1990 relied on by the appellants shows Invoice No. 0811 and the Customs House had in its possession another invoice dated 9-7-1990 issued by the same supplier to another party in Madras for 1000 pieces.

The Invoice No. is mentioned as D 4334. This, according to the Collector, would show that the invoice number was lesser in the case of the later invoice and the invoice number was larger in the case of the earlier invoice. This was referred to in the show cause notice. In reply to the show cause notice, it was pointed out that the manufacturers invoice dated 10-12-1990 relied on by the appellants was issued by the manufacturers sister concern in Singapore to a supplier in Singapore. In other words, it was a local invoice. However, the invoice relied on by the Department was issued by manufacturers sister concern to the importer at Madras. Explanation offered by the appellant was that while one was a local sale and the other was export sale and, therefore, in all probability, two sets of invoice books were being maintained and, therefore, the discrepancy in the invoice numbers.

Prima facie,the explanation appears to be acceptable. The Collector did not consider this explanation. He should have considered the same and if he felt any doubt about it, he could have verified from the manufacturers sister concern their explanation for the apparent discrepancy. Thus we find that both the grounds urged before us as casting suspicion about the manufacturers invoice are unacceptable.

3. We now turn to the three alleged contemporaneous invoice relied on by the Department. The dates, quantity, supplier's station and price per piece were as follows:Date Quantity Supplier's station Price per Piece----- -------- ------------------ ----------------9-7-1990 1000 Singapore US $0.96 CIF9-7-1990 200 Singapore US $0.96 Of the three invoices, first two invoices were 5 or 6 months prior to the subject invoices and the quantities were very small (1000 and 1200) compared to the quantities imported by the appellants (33,000) and, therefore, they do not have much relevance in deciding whether the transaction value is genuine or not or in determining the ordinary price in International trade at the time and place of import. The third invoice was 9 to 10 months prior to the subject invoices and the suppliers were not from Singapore as in the case of the appellants but from Hongkong. On account of these two aspects the third invoice also loses its significance. Thus we find that there can be no genuine suspicion about the manufacturers invoice relied on by the appellants which would support the transaction value declared by the appellants and the three invoices relied on by the Department cannot really be acted upon in the present case. If transaction value is accepted, the licence produced by the appellant would cover the import of the goods.

In these circumstances, the impugned order, to the extent it relates to confiscation, redemption fine and penalty, cannot stand.

4. Appellants pleaded before the Collector that they were entitled to the benefit of Notification No. 62/88-Cus. and the Collector held against on the ground that the notification would apply only if the importer was an actual user. We have perused the copy of the notification. The notification does not restrict the benefit thereunder to actual user. However, since the duty on the transaction value, which is accepted by us, is less than the duty prescribed in the notification, appellants cannot derive any advantage therefrom.