1995 (10) TMI 98 - AT - Customs

Tribunal overturns Customs order, finding importer not related to supplier. Error in price comparison. Appeals allowed.

HYDROKRIMP AC PVT. LTD. Versus COLLECTOR OF CUSTOMS, CALCUTTA

HYDROKRIMP AC PVT. LTD. Versus COLLECTOR OF CUSTOMS, CALCUTTA - 1996 (81) E.L.T. 162 (Tribunal) Issues Involved:1. Confiscation of goods under Section 111(m) and 111(d) of the Customs Act, 1962.2. Imposition of penalties and redemption fine.3. Determination of the value of imported goods.4. Relationship between the importer and the foreign supplier.5. Alleged undervaluation of goods.Issue-wise Detailed Analysis:1. Confiscation of Goods under Section 111(m) and 111(d) of the Customs Act, 1962:The Additional Collector of Customs ordered the confiscation of goods for declaring a lower C&F value of DN 28,645.10 compared to the ascertained value of 462984.59 under Section 111(m) of the Customs Act, 1962. He also ordered that if the import licence did not fully cover the goods, the remaining goods would be confiscated under Section 111(d) of the Customs Act. The importer was given the option to redeem the goods on payment of a fine of Rs. 3 lakhs.2. Imposition of Penalties and Redemption Fine:A penalty of Rs. 20,000/- was imposed on the company and Rs. 10,000/- on the Director of the company. The duty was ordered to be paid on the ascertained value of Rs. 42984.59, with a differential duty of Rs. 389438.40 if the importer chose to clear the goods on payment of the redemption fine.3. Determination of the Value of Imported Goods:The department alleged that the importer undervalued the goods to evade customs duty. The goods were examined, and it was found that the marking 'TCH' (Techno Chemie) and 'CONTY' were present on the hoses. The department presumed a relationship between the two German firms and alleged undervaluation based on comparative prices available for identical goods from 'CONTI'. The Additional Collector compared the declared values with those from 'CONTI' and other sources, concluding that the goods were undervalued.4. Relationship between the Importer and the Foreign Supplier:The department relied on correspondence and documents to establish a relationship between the importer (M/s. Hydro Krimp A.C. Pvt. Ltd.) and the foreign supplier (M/s. Techno Chemie), which was a subsidiary of M/s. Continental. The importer contested this, stating they were not related persons as defined in Rule 2(2) of the Customs Valuation Rules, 1988. The tribunal found that the importer and the supplier were not related persons, and the transaction value should be accepted as per Rule 4 of the Customs Valuation Rules.5. Alleged Undervaluation of Goods:The department alleged undervaluation based on price comparisons with 'CONTI' and other sources. The importer argued that the department did not provide sufficient evidence of undervaluation and that the prices had decreased due to market competition. The tribunal noted that the department failed to prove undervaluation with specific and cogent evidence and that the comparison with prices from different years and countries was not permissible.Conclusion:The tribunal found that the department did not establish that the importer was a related person of the supplier and that the transaction value should be accepted. The comparison of prices from different years and countries was deemed erroneous. The tribunal set aside the order of the Additional Collector of Customs, allowing the appeals with consequential relief.