Banaras Beeds Ltd. Vs. Collector of Customs - Court Judgment

Excerpt:
1. appellants imported a consignment of arsenic trioxide from china showing invoice price of us $ 305 pmt. the declared price was not accepted by the customs authorities who took note of the fact that there was another import of arsenic trioxide at a price of us $ 550 pmt. the goods were accordingly reassessed on the basis of higher price referred to above. deputy collector while ordering such reassessment also confiscated the goods giving the appellant the option of redeeming them on payment of fine of rs. 25,000/-. he then observed in his order that since there was no proof to show that any underhand payment of differential amount had been made he was inclined to take a lenient view and accordingly, imposed a penalty of rs. 5,000/- under section 112(a) of the customs act, 1962. the order was confirmed by the collector (appeals) leading to the present appeal.2. shri pradeep jain, learned counsel for the appellant states that they had not been able to clear the goods on the loaded value and the goods are still lying uncleared. he pointed out that the material imported is of 98% purity for which the supplier has charged the price as shown in the invoice. he referred to other quotations from the same supplier in respect of higher grades of the same chemical, arsenic trioxide. thus, the quotation dated 18th june, 1993 for arsenic trioxide of 99% to 99.5% refers to a price of us $ 380 pmt, while the same chemical of purity 99.5% and above commands a price of us $ 475 pmt. he pointed out that in the invoice which was relied upon by the department for taking higher value of us $ 550 pmt there is no reference to the purity and grade. that apart, he pointed out that subsequent to the detention and proceedings in the present case there have been a number of imports of the same product in other ports like bombay, nhava sheva and kandla where the concerned authorities had occasion to check the price of such imports and decided to accept such invoice price similar to the subject imports. he also stated that the concerned custom houses had exchanged correspondence with dei in regard to the higher invoice price noticed in respect of imports by a particular importer. such a price would not constitute the price for applying uniformly to other importers who may be importing products of lesser purity also.3. shri t.r. malik, sdr stated in reply that if the bench is so inclined the matter may be remanded to the deputy commissioner for de novo decision to take into account the submissions made by the appellants in their appeal and the instances of imports at other ports.4. we have taken note of the submissions. we find that the appellants have produced certain correspondence they have exchanged with the suppliers around the time of import, which points to the possibility of higher prices being applied for products of higher purity. we have seen the papers submitted by the appellants which refer to a series of imports of this material at other places at prices around us $ 350 and us $ 375 pmt during the subsequent period like december, 1994, january, 1995, etc. the deputy collector's order even while confiscating the goods for alleged declaration of lower value and imposing fine in lieu of confiscation and penalty, admitted that there has been no evidence of any extra payment by them to the supplier. we have also seen some of the bills of entry which were shown to us during the hearing by the learned counsel. in the circumstances, we feel that the subject imports which were effected in the middle of 1993 cannot be held to have been undervalued when the declared price was us $ 305 pmt. we, therefore, set aside the impugned order and allow the appeal.5. at this stage, learned counsel makes a request that direction may be issued to the customs authorities to issue detention certificate. while we are not inclined to accede to the request for issue of such a direction, we feel that the setting aside of the order which contains clear observation about the absence of any evidence regarding surreptitious remittance over and above the invoice price and the direction to accept the invoice price would constitute unconditional acceptance of the declared price. in the circumstances, it will be appropriate for the customs house to consider any request for issue of detention certificate which the appellants may make to them.

Judgment:
1. Appellants imported a consignment of Arsenic Trioxide from China showing invoice price of US $ 305 PMT. The declared price was not accepted by the customs authorities who took note of the fact that there was another import of Arsenic Trioxide at a price of US $ 550 PMT. The goods were accordingly reassessed on the basis of higher price referred to above. Deputy Collector while ordering such reassessment also confiscated the goods giving the appellant the option of redeeming them on payment of fine of Rs. 25,000/-. He then observed in his order that since there was no proof to show that any underhand payment of differential amount had been made he was inclined to take a lenient view and accordingly, imposed a penalty of Rs. 5,000/- under Section 112(a) of the Customs Act, 1962. The order was confirmed by the Collector (Appeals) leading to the present appeal.

2. Shri Pradeep Jain, Learned Counsel for the appellant states that they had not been able to clear the goods on the loaded value and the goods are still lying uncleared. He pointed out that the material imported is of 98% purity for which the supplier has charged the price as shown in the invoice. He referred to other quotations from the same supplier in respect of higher grades of the same chemical, Arsenic Trioxide. Thus, the quotation dated 18th June, 1993 for Arsenic Trioxide of 99% to 99.5% refers to a price of US $ 380 PMT, while the same chemical of purity 99.5% and above commands a price of US $ 475 PMT. He pointed out that in the invoice which was relied upon by the Department for taking higher value of US $ 550 PMT there is no reference to the purity and grade. That apart, he pointed out that subsequent to the detention and proceedings in the present case there have been a number of imports of the same product in other Ports like Bombay, Nhava Sheva and Kandla where the concerned authorities had occasion to check the price of such imports and decided to accept such invoice price similar to the subject imports. He also stated that the concerned Custom Houses had exchanged correspondence with DEI in regard to the higher invoice price noticed in respect of imports by a particular importer. Such a price would not constitute the price for applying uniformly to other importers who may be importing products of lesser purity also.

3. Shri T.R. Malik, SDR stated in reply that if the Bench is so inclined the matter may be remanded to the Deputy Commissioner for de novo decision to take into account the submissions made by the appellants in their appeal and the instances of imports at other Ports.

4. We have taken note of the submissions. We find that the appellants have produced certain correspondence they have exchanged with the suppliers around the time of import, which points to the possibility of higher prices being applied for products of higher purity. We have seen the papers submitted by the appellants which refer to a series of imports of this material at other places at prices around US $ 350 and US $ 375 PMT during the subsequent period like December, 1994, January, 1995, etc. The Deputy Collector's order even while confiscating the goods for alleged declaration of lower value and imposing fine in lieu of confiscation and penalty, admitted that there has been no evidence of any extra payment by them to the supplier. We have also seen some of the Bills of Entry which were shown to us during the hearing by the Learned Counsel. In the circumstances, we feel that the subject imports which were effected in the middle of 1993 cannot be held to have been undervalued when the declared price was US $ 305 PMT. We, therefore, set aside the impugned order and allow the appeal.

5. At this stage, Learned Counsel makes a request that direction may be issued to the customs authorities to issue detention certificate. While we are not inclined to accede to the request for issue of such a direction, we feel that the setting aside of the order which contains clear observation about the absence of any evidence regarding surreptitious remittance over and above the invoice price and the direction to accept the invoice price would constitute unconditional acceptance of the declared price. In the circumstances, it will be appropriate for the Customs House to consider any request for issue of detention certificate which the appellants may make to them.