TaxTMI 
TaxTMI 
1989 (6) TMI 199
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....1.25 mm 4. VOLTA-RIVER SP/14, 15-1-1985 0.4 mm to 1.25 mm 3. From the packing list of each of the aforesaid four consignments it appeared that there were the following discrepancies in the consignments : Name of the Vessel Remarks NADIA DM 520 3 out of 79 bundles contained sheets of thickness 0.6 mm i.e. only 3.8% of the total goods were of thinner variety (page 81 to 81-A in the paper book) 50% to 70% Range FAETHON DM 520 5 out of 64 bundles contained sheets of thick ness of 0.6 mm i.e. only 8% of the total goods were of thinner variety -do BAARN DM 520 6 out of 73 bundles contained sheets with thickness 0.6 mm or below i.e. only 8.22% of the goods were of thinner variety (page 72 to 72D in the paper book) -do- VOLTA RIVER DM 520 None of the sheets were of thickness 0.6 mm or below i.e. all the sheets contained total bags (page 86 to 86B of the paper book) - do - 4. Customs through DRI had some intelligence according to which there was manipulation by the importers in respect of the value of the goods. They made enquiries, recorded statements and issued show cause no....
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....lector to decide on the prejudice or otherwise caused to the defence. He argued that the documents were relevant and were relied upon by the Department. It was, in the interest of justice in accordance with the principles of natural justice obligatory on the Collector to allow inspection of these documents. Specifically the grievance of the appellants is that the following 4 documents were not disclosed to them : 1. Invoice No. 653 dated 31-12-1984 of M/s. Possehl in favour of Noordin for DM 709/-per MT CIF; 2. Correspondence between M/s. Possehl and M/s. Uni Tej & Co., Bombay; 3. Investigation report received from the West German Customs Authorities; 4. Invoice No. 639 dated 15-12-1984 of M/s. Possehl in favour of Noordin for DM 800 PMT CIF, Bombay. 7. We must also place on record that Shri Nankani, while repeatedly pleading that the non-supply of the documents was a clear violation of the principles of natural justice, equally he repeatedly submitted that the matter should not be remanded to the Collector. What he wanted wa....
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....and from the appellants nor can a case be made out on the basis settled law." After hearing both sides extensively on the question we are satisfied that at one time or the other the Department made the documents available to the appellants. Therefore, we propose to dwelve no more on this aspect. 9. The Department's allegation is that in each case the appellants under-valued the goods as mentioned in paragraph 5 supra. The appellants have an elaborate explanation in their defence. Before we proceed to examine this explanation we refer to the arrangements made by the appellants for import of the goods. In all these cases the exporter is a West German Firm Possehl. The goods are in the first instance said to be consigned to P.M. Noordin and Company (hereinafter referred to as Noordin) of Singapore. Noordin in turn invoices the appellants for the goods. The goods themselves come directly from West Germany to Bombay. The documents are made out in the name of Noordin and notified party are the appellants. The invoice price of Possehl to Noordin and Noordin's to the appellants are as follows : Possehl to Noordin Noordin to Appellants Volta-River DM 759 DM 55....
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....e shipped would charge at the agreed price but would reduce the same proportionately if the mix was not as per the agreement and letters of credit opened by Noordin would be realised in full and credit notes and fresh contracts issued to Noordin. 12. As mentioned earlier the appellants made elaborate arguments about the non-observance of the principles of natural justice during the course of passing the impugned order. However, in view of what we recorded earlier and in view of the fact that the Customs directly or indirectly disclosed all their documents, and also in view of the vehement request by the appellants for not remanding the matter we do not enter into detailed examination of this ground. 13. Coming to individual matters, it is a submission of the appellants in respect of shipment of Nadia (Appeal No. C/1969/88-A) that only 3 out of 79 bundles of sheets are of thinner variety. They plead that the description of the goods, shipping marks, contract No. and letter of credit number are all irrelevant because the price is to be determined on the basis of the thickness. They also submitted that as per the agreement between Noordin and M/s. Possehl the price would be dete....
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....hould be accepted, like goods have been imported by other independent importers (contemporary imports by various parties pages 291 to 299 of the paper book). Shri Nankani also pleaded that the appellants and Noordin and Possehl are not notably interested and that the Customs have not been able to show any contemporary import at higher prices than those declared by the appellants. Shri Nankani also referred to some imports to Pakistan from Possehls (pages 300 to 312) to plead that the value should be assessed as declared by the appellants. The learned Advocate submitted that in respect of Baarn and Faethon the adjudicating officers did not refer to the invoices of the contemporary imports submitted by the appellants along with the reply to the show cause notice. In respect of Volta-River Shri Nankani argued that the Additional Collector wrongly invoked Rule 8 of the Customs Valuation Rules without discarding Rule 3. However, the Additional Collector did not give any reasons for doing so. Shri Nankani also submitted that the defective M.S. sheets is a class of goods by itself and the price of such goods can be compared. For all these reasons the learned Advocate pleaded that the decl....
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.... correspondence or documents relating to the transactions except those appended to the bills of entry. He made the point that in spite of the very complicated nature of the imports and the high amounts involved the genesis of the transactions was not shown by the appellants by way of documents relating to enquiries, clarifications, correspondence, finance arrangements, etc. etc. He recalled the course of investigations undertaken by the Department and submitted that during the course of the said search the Department seized invoice No. 640 dated 15-1-1985 issued by M/s. Possehl as also the letter of credit No. GDA 242984 opened through Indian Overseas Bank, Singapore and the packing list of M/s. Possehl along with a note from Shri N.N. Mehta (Father-in-law of Shri Sunil Mehta, Proprietor of Mehta Impex). Shri Sunil Mehta admitted the authenticity of the documents. In this context he made a reference to the statement of Shri Sunil Mehta extracted in show cause notice pertaining to the importation by Volta-River. The learned Representative argued that in reply to the show cause notice the appellants claimed that Shri N.N. Mehta, Father-in-law of Shri Sunil Mehta deliberately misguide....
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....01 (Tapega)] and 222, 223 (for Madan Lal Shah). He submitted that the orders stipulate "Declassified material particularly in unpacked lots can be inspected prior to shipment and be examined in view of the terms and conditions of the contract and that once the goods are supplied FOB, they have to be considered being in accordance with the contract and the suppliers cannot be held responsible for any possible further claims". Shri Sunder Rajan argued that there is no averment by the appellants about the inspection of the goods prior to shipment. If inspection took place there could be no question of any credit note. He further submitted that the goods imported appear to be in accordance with the contract in the sense that the goods were in fully assorted condition with varying width and thickness and also confirmity to the specifications and limits indicated in respect of thickness, width, length and weight per bundle. Referring to the stipulation about each bundle being limited to 2-6 tonnes per bundle, Shri Sunder Rajan submitted that if such a requirement was there, each bundle should be considered of thicker variety. Therefore, the assorted block should have referred the dimensi....
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....ter dated 20-12-1984 from Possehl to Noordin (page 345) wherein Possehl expressed the inability of the Mill to supply assortment of thinner and thicker material as per contract. This letter also referred to credits having been extended to the appellants in respect of Faethon (Appeal No. 630 and 1969/88-A) and Nadia. The learned Representative submitted that by that time 4 shipments had already taken place and that in respect of Baarn and Volta-River invoice was made at the higher price even though the inability to supply the goods was known to Possehl. Shri Sunder Rajan pointed out that when Possehl knew that the goods could not be supplied according to the contract where was the need for issuing invoice at a higher price and later resorting to credit notes to adjust the price. He submitted that the entire evidence was only manufactured evidence, brought into existence at a later date just to be advanced as defence for the appellants. In this context Shri Sunder Rajan referred to the various documents sent by the German Customs to DRI. Shri Sunder Rajan submitted that in respect of Tapega the invoice and bill of lading were both dated 24-11-1984 but in the letter dated 26-11-1984 (....
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....nts and the Collector determined the value of the goods at DM 735 per metric tonne C & F, confiscated the goods and imposed penalties. Shri Sunder Rajan submitted that the appellants did not file an appeal against this order and the reasons were, in this case, quite clear to the effect that there was no ground on which the appellants could fight out. The learned Representative argued that the same pattern as prevailed in Tapega prevails in respect of all the 4 matters also and even though the Customs could not lay their hands on all the documents they had enough documents to prove their case in respect of all of them. 30. Shri Sunder Rajan submitted that the Department has established undervaluation by producing documentary evidence which was supplied by German Customs and with the other documents seized in Bombay. Therefore, the charges against the appellants are proved beyond reasonable doubt. In this context he referred to a judgment of the Tribunal in the case of Tara Art Printers v. Collector of Customs [1985 (20) E.L.T. 358] and submitted that as there is documentary evidence available the licences should be ordered to be debited to the full value and not the declared valu....
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....her-in-law on account of harassment of his wife. This defence could have been created just to show that the transactions are independent. In that case, the appellants should have established before us the genuineness of the arrangements with Noordin. After all, a firm in Singapore, even if it is neutral, does not enter into an arrangement with an Indian Company without any properly drawn out agreement which should be beneficial to both parties. No such agreement has been placed before us or before the Bombay Customs at any time. We observe that if the relationship between Shri Sunil Mehta of the appellants and Shri N.N. Mehta of Noordin were so strained as to lead to issue of legal notices a cosy arrangement like the one between those two would not have been possible even in the best of circumstances. However, these observations do not lead to any conclusion one way or the other. 33. Before we proceed further we would like to refer to the repeated assertions of Shri Nankani that the Collector relied on various documents which were not disclosed to the appellants. In the initial stages, the Department took the ground that these documents being privileged documents the appel....
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....he appellants the reduction in prices was on account of the supplier being unable to ship the goods as per the contract. We do not know what is the contract in each case. If the appellants could show the details of the goods they ordered, the details of goods sent, and had they cogently explained how the shipped goods were lower in value we would have examined the facts. However, here there is no such information. What they produced before us were only specifications. Though lakhs of rupees worth of goods were imported, there are no documents, relating to enquiry, offer prescription, acceptance, renegotiations, etc., produced before us. All the deals were effected almost misteriously. We say so because one would expect that when the goods are being imported, the importer would try to find out the best, cheapest and main reliable supplier and would protect himself by entering into correspondence and agreements. This is not the case here. 36. These circumstances indeed create suspicion, which is not enough. But the circumstances do not end there either. These further circumstances transform the suspicion into reasonable belief that all is not well with this importation. These circ....
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....eresting observation, also relating to this affidavit of Mr. Nakhoda is that according to this document Mr. Nakhoda forwarded correspondence and credit notes to Mehta Impex through Standard Chartered Bank, Singapore. The appellants' case is that they were invoices at the lower values and the credit notes were issued to and realised by Shri Noordin. We do not know what happened to the credit notes said to have been sent to Mehta Impex. This discrepancy seems to have originated in the confusion of the already confused system of documentation. 38. Another interesting aspect relates to the system of invoicing. Noordin goes on opening letters of credit for prices ranging DM 700 to 800, and supplies are made and within a day or two of the shipment credit notes are said to be issued. We note that Possehl is not the manufacturer but is a supplier. They obtained the goods and shipped them. Why do they not encash the letter of credit for the actual amount only? To all questions during the course of hearing the learned Advocate for the appellants merely stated that when a letter of credit is opened the entire amount should be recovered. Even if it was so, there is no reason why the supplie....
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....f the goods and that the credit notes were only an afterthought. The appellants' pleas that the goods were supplied cheaper to some parties in Pakistan remained unsubstantiated. In any event once there is an invoice which is reliable there is no question of arriving at a different value based on some other imports at some other place. In view of the factual position we hold that the invoices recovered by German Customs are the true invoices and reject the appellants' arguments to the contrary. 43. As a result we uphold the findings of the Collector of Customs in all the 4 appeals insofar as the value is concerned. 44. The next question is whether there was a shortfall in the licences. In respect of two shipments (Volta-River and Faethon) there is no finding of any shortfall. In respect of Baarn and Nadia there is alleged to be a shortfall of Rs. 4,82,063/- in the licences on debiting them with the ascertained value. In this case we are adopting the invoice value, on the basis of the genuineness. Debiting that value to the licences will be in consonance with the judgment in Glaxo Laboratories (supra). The licences were correctly debited with the ascertained value of the import....