1987 (7) TMI 94 - HC - Customs

Court upholds under-valuation findings, remands weight mis-declaration issue for detailed reconsideration.

The court upheld the findings of under-valuation and the reassessment of the value of imported goods at lb0.430 per Kg. However, it remanded the issue of ... Customs valuation - Penalty - Natural justice Issues Involved:1. Under-valuation of imported goods.2. Mis-declaration of weight of imported goods.3. Validity of evidence and cross-examination rights.Detailed Analysis:1. Under-valuation of Imported Goods:The appellants imported fluorescent starter switches and declared their value based on a price of lb0.15 per Kg, as per their purchase agreement with Kupfer. The Customs authorities issued a show cause notice, alleging under-valuation based on quotations from Elmore and Chance, which indicated a price of lb0.429 and lb0.430 per Kg, respectively. The Collector of Customs, upon investigation, found that the appellants and Kupfer had business interests in each other, and the tubing was sold as obsolete stock at a clearance price. Consequently, the declared price could not be accepted under Section 14 of the Customs Act. The Collector reassessed the value at lb0.430 per Kg and imposed fines.The appellants contested this decision, arguing that the price of lb0.15 per Kg should be accepted. However, the court noted that the price was influenced by factors other than the market value, such as the need to clear obsolete stock. The court also rejected the appellants' reliance on a certificate from Chance quoting lb0.340 per Kg, due to their business relationship with Kupfer and preferential treatment.The court upheld the authorities' decision to accept the price of lb0.430 per Kg as the assessable value, noting that the appellants had failed to provide a catalogue price and that the quotations from Chance and Elmore were credible.2. Mis-declaration of Weight of Imported Goods:The third consignment had a declared weight of 8,030 Kgs, whereas the actual weight was found to be 10,037 Kgs. The appellants acknowledged the discrepancy but claimed it was an innocent mistake, supported by letters from their suppliers explaining the error. The Collector imposed a penalty of Rs. 27,000/- for the mis-declaration of weight.The court found that neither the Collector nor the appellate and revisional authorities had adequately considered the appellants' explanation. The learned single judge assumed the Collector's rejection of the explanation based on the penalty imposed but did not find explicit reasoning in the Collector's order. The court emphasized the need for a speaking order showing application of mind to the appellants' plea.The court remanded the matter to the Collector for reconsideration, instructing him to hear the appellants and pass a detailed speaking order on the issue of mis-declaration of weight.3. Validity of Evidence and Cross-examination Rights:The appellants argued that the evidence based on quotations from undisclosed inquirers should be invalid unless the inquirers were made available for cross-examination. The authorities and the learned single judge rejected this argument, noting that the appellants had access to the quotations and could verify the prices from Chance and Elmore. The court agreed with this view, stating that the denial of inquirers' names did not prevent the appellants from challenging the quoted prices.The court also dismissed the learned judge's observation that the appellants had maneuvered to secure a favorable price from Chance, noting that there was no evidence to support this claim.Conclusion:The court upheld the findings of under-valuation and the reassessment of the value at lb0.430 per Kg. However, it remanded the issue of mis-declaration of weight to the Collector for reconsideration, emphasizing the need for a detailed and reasoned order. The appeal was allowed to this extent, with no order as to costs.