TaxTMI 
TaxTMI 
1992 (12) TMI 132
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....ssued in the name of M/s. Hindustan Spinning and Weaving Mills. These licences were endorsed as per provisions of paras 175 and 176 of me Import and Export Policy for the period AM 1988-91. The appellants also produced a licence issued in favour of M/s. Al Hamid International permitting the import of goods as per para 215 of Import and Export Policy for the period AM 1988-91. The appellants were served with a show cause notice dated 27-9-1990 wherein it was alleged that the goods were not covered by Sr. No. 377 of Appendix 3; Part-A Import and Export Policy for AM 1988-91 for which the licences produced were valid. It was also alleged that the imported goods being 'consumer goods' were covered under Sr. No. 145 of Appendix 2, Part-B of Import and Export Policy for the period AM 1988-91. It was further alleged that goods weighing 1.160 MT had been imported in excess since on weighment the actual weight of the goods had been found to be 19.640 MT as against declared weight of 18.480 MT. It was stated that the duty attempted to be evaded due to the excess quantity was Rs. 81,796. On the basis of invoices relating to certain imports by other parties, it was also alleged that as against....
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....weight found on actual weighment of the goods could have been due to the variation in the thickness of the material. He argued that enhancement of the assessable value and imposition of penalty was not warranted since the appellants had paid only the invoice price for the goods and the excess weight was without their knowledge. As regards the Collector's finding that the imported goods were 'consumer goods' covered by Sr. No. 145 of Appendix 2, Part-B of the AM 1988-91 Import-Export Policy, Shri Sunder Rajan produced a sample of the imported material and claimed that they could be used only as raw materials for the manufacture of items such as purses, car seat covers etc. He contended that the Collector's finding that the imported goods could be used as car seat covers, sofa covers, simply by cutting was erroneous. He stated that the goods not being ready to use items could not be deemed as 'consumer goods' in terms of definition of the term 'consumer goods' in the Import Policy. In support of his contentions he placed reliance on the following case law:- 1. Mangla Brothers v. Collector of Customs, Bombay - reported in 1984 (15) E.L.T. 151. 2. Basant Export Corporation v. Col....
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....asons Invoices No. 900310A dated 13-3-1990 which covered a quantity of only 3.096 MT was also not relevant. In support of his contentions he placed reliance on the following case law : 1. 1992 (58) E.L.T. 131 (Tri.) = 1991 (37) E.C.R. 647 2. 1991 (51) E.LT. 400 (Tri.) = 1991 (31) E.C.R. 656 3. 1991 (55) E.L.T. 102 (Tri.) = 1990 (29) E.C.R.534 4. 1988 (34) E.L.T. 65 (Tri.) = 1987 (13) E.C.R. 685 The learned consultant argued that on account of the reasons given by him the goods were not liable to confiscation and the appellants were not liable to penalty. 5. On behalf of the Revenue, the learned SDR Smt. Ananya Ray stated that the appellants had admitted that the actual weight of the goods was in excess of the weight indicated in the invoice. She contended that the quantity and value of the goods having been misdeclared by the appellants, they were liable for penalty. As regards, the appellants' claim that goods were industrial raw materials she referred to the Collectors finding that the imported goods were capable of being used in the form of cut pieces as sofa covers and car seat covers. She argued that the goods being capable of use without any processing had t....
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.... of the goods in terms of Section 14(1) of the Customs Act, 1962. In support of her contentions she placed reliance on the Tribunal's order No. C/2115/91-A dated 18-12-1991. In this regard she also referred to the decision of the Bombay High Court in the case of Satellite Engineering Ltd. v. Union of India reported in 1987 (31) E.L.T. 356. She contended that in the face of documentary evidence produced by the Department showing that the international price of the goods at time of importation was much higher, the onus had shifted to the appellants to prove that the invoices relied upon by the Department did not represent the international price of the goods at the time of importation and this could have been done by them by producing the relevant price lists of the foreign suppliers. In support of her contentions she placed reliance on the Tribunal's decision in the case of Globe Engineering Works v. Collector of Customs reported in 1988 (38) E.L.T. 471. 6. In his reply, Shri Sunder Rajan stated that it was not open to the Revenue at this stage to refer to Rule 3(b) of Interpretative Rules to the Customs Tariff since in the impugned order the adjudicating authority had not applie....
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....d to be deemed as 'consumer goods' covered by Sr. No. 145 of Appendix 2, Part B of AM 1988-91 Import Policy. On these grounds, it was held that the Import Licences produced by the appellant were not valid for the goods in question. As against this, the appellants case is that "Flocked PVC sheet in Rolls" have to be deemed as covered by the licences in question since they were raw materials which would require processing before being put to use for meeting human needs. We are, however, not impressed by the Department's stand. On inspection of the samples of the goods produced by Shri Sunder Rajan, we had found that "PVC Flocked Sheet in Rolls" had the appearance of soft leather and it is commonly used for the manufacture of products such as handbags, purses, car seat covers, parts of shoes etc. Evidently, the finding of the Collector that the imported material can be put to use as sofa covers or table cloth merely by cutting it in pieces of the required shape is erroneous. The material being in the nature of soft leather in running length would necessarily have to be subjected to processes such as cutting and stitching by heavy duty sewing machines for converting it into items such ....
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....guage defines it as follows: "Goods, such as clothing and food, which are made for the consumer and are not intended to be used in further production." From the above definitions of the expressions 'raw material' and 'consumer goods' it is clear that the contention of the appellants to treat the blank cassette tapes as raw material is not at all tenable. For all practical purposes these are finished products, can be sold off-the-shelf of a shop for consumers who wish to tape any visuals either from a VCR belonging to them or from a professional studio. We find no substance in the appellants' argument that these tapes when they are imported cannot be used as such. On the same analogy tea leaves, which are undisputably consumer goods cannot be used as such. These have to be boiled and mixed with sugar and milk before these can be consumed. Even when these tapes are imported by a manufacturer of video cassette recorders, the tapes would be treated as finished components and not as 'raw material'. In the present case the goods have been imported by export houses whose main activities have nothing to do with the manufacture of VCRs. Further, these export houses are under no obliga....
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....rovisions of Import and Export (Control) Act, is not sustainable. 10. The next question to be decided is whether the imported "PVC Flocked sheets in Rolls" would be classifiable under Heading 39.21 as "Other sheets of plastics (PVC)" or they have to be deemed as 'Articles of plastics and other materials' falling under sub-heading 3926.90. 11. The two competing Headings of the Customs Tariff are reproduced below: Heading No. Sub-Heading No. Description of goods 39.21 Other plastics, sheets, film, foil and strip, of plastics. - cellular: 3921.11 of polymers of styrene 3921.12 of polymers of vinyl chloride 3921.19 of other plastics 3921.90 Others 39.26 Other articles of plastics and articles of other materials of heading Nos. 39.01 to 39.19 3926.10 Office or School Supplies 3926.2 Articles of apparel and clothing accessories (including gloves) 3926.30 Fittings for furniture, coach work or the like 3926.40 Statuettes and other ornamental articles 3926.90 Others 12. It is seen from the i....
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....question could not be classified under Heading 39.21 since they were not composed entirely of plastic. In this regard they have placed reliance on the Supreme Court decision in case of Geep Flash Light Industries v. Union of India (supra). We find that in the decision relied upon by the appellants, the question that came up for consideration before the Supreme Court was whether plastic torches would fall under Item No. 15A(2) of the Central Excise Tariff which covered only plastic materials of different shape and form such as tubes, rods, sheets etc. The Court's finding that plastic torches were covered by the residuary Item 68 and not by Item No. 15A(2) of the erstwhile Central Excise Tariff is of no relevance to the issue before us which involves the determination of the classification of the imported 'PVC Flocked Sheets in Rolls' under the Schedule to the Customs Tariff Act, 1985. 16. Another point raised by Shri Sunder Rajan is that the goods being in the form of rolls have to be treated as distinct from sheets of 'other Plastic' materials covered by Heading 39.21. In this regard the learned consultant has placed reliance on the Madras High Court decision in the case of Prec....
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....ot be classifiable under Heading 39.21 has to be rejected. 18. It has been contended by the appellants that the imported goods are classifiable under Heading 39.26 which covers "Other articles of plastics and articles of other materials of Heading Nos. 39.01 to 39.14". In our view, there is no force at all in the appellants claim, since on a simple perusal of the items covered by various sub-headings of Heading 39.26 it follows that the heading covers only articles which have been produced out of plastic materials such as office or school supplies, apparel, fittings for furniture, ornamental articles, statuettes etc. The imported goods have admittedly to be worked upon to produce various articles of plastics. Hence, in the state in which they have been imported they have to be categorised only as 'plastic material'. On the question of the distinction between 'plastic materials' and 'articles of plastics' we consider it desirable to refer to the following extracts from para 3 of the decision of the Hon'ble Supreme Court in case of Deep Flash Light Industries v. Union of India and Others (supra): "Petitioner is admittedly manufacturing plastic torches. It is contended on his be....
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.... the assessable value in terms of Rules 3 and 4 of the Customs Valuation (Determination of the Price of Imported Goods) Rules, 1988 since none of the circumstances listed in Rule 4 on the basis of which the 'Transaction Value' could be rejected were in existence. The appellants have also claimed that the imported goods and the goods covered by the invoices which formed the basis for the alleged under-valuation were not comparable; on account of the difference in the time of imports, quality and quantity of the goods imported and the origin of the goods. In order to examine these points we consider it desirable to reproduce below the relevant provisions of Section 14 of the Customs Act, 1962: "SECTION 14. Valuation of goods for purposes of assessment - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of internatio....
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....uld also be relevant in this connection is that of the Bombay High Court in Union of India v. M/s. Glaxo Laboratories [1984 (17) E.L.T. 284 (Bombay)]. At page 280 it is observed that - "no arguments are raised, nor is, the respondent doubting the right of the department to take into account the international price of the disputed goods for the purposes of customs duty." This was with reference to the fact that the respondent (M/s. Glaxo Laboratories) had paid customs duty on the international market price but wanted the licence to be debited with reference to the CIF value which was the actual value under the contract between them and the seller. With reference to these facts it had been observed at page 291 that "this actual price of supply which we would assume is a genuine price in that deal can vary from the international market price which is the value for the purpose of customs taxation". Therefore these judgments make it abundantly clear that the agreed price between the parties, though genuine, would not be the concluding factor with reference to assessment for customs duty since under Section 14(1)(a) duty will have to be levied on the deemed value, which is defined ....
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....n declared as US $ 1675 PMT. This value is also found to be more or less comparable, to those stated in the invoices for goods of Japanese origin. The importers have stated that as far as the first invoice No. 11691/89 dated 27-01-1989 is concerned, this is one year old and cannot be treated as contemporary import. However, as far as the second invoice is concerned, it is dated 23-12-1989, which is around me same time of import in the subject cases and therefore that argument will not be applicable to this invoice. The importers, subsequent to the personal hearing, forwarded one copy of Bill of Entry relating to import of M/s. EM VEE International and stated that the invoice value has been accepted in this case and therefore the invoice value in their case should also be accepted. However, it is observed that the invoice value in that case come to more than US $ 1756 PMT while in the subject case declared value is US $ 950 PMT. Therefore, it is seen that according to importers own admission there is earlier instance of accepted value of US $ 1756 PMT. However, in the Show-cause Notice, Taiwanese origin goods is proposed to be enhanced on the basis of Taiwan origin goods. Therefore,....
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....ts have not filed the usual shipping documents such as packing list and certificate of origin. The goods having been charged on weight basis, it is evident that the price was not influenced by factors such as shade, grade, thickness etc. Further, even though a contract for the import of a quantity of over 200 Tonnes has been produced, the quantity actually imported is only about 18 Tonnes. For these reasons and having regard to the fact that on appellants' own admission 'PVC Flocked Sheets' are capable of being used as raw materials for the manufacture of various products such as, purses, bags, sofa covers etc. we find no force at all in the appellants contention that the imported goods and the goods covered by the invoices relied upon by the Department are not comparable with reference to factors such as dimension, country of origin, end-use etc. 24. It is thus seen that there is wide difference between the price at which the appellants have imported the goods and the price at which such or like goods were being sold or offered for sale at the relevant unit in the course of international trade. It is evident that by arranging for an invoice from a party in USA in respect of goo....
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....not warrant the enhancement of the value since the excess weight could be due to the variation in the thickness of the material. Since the goods have been charged by the supplier on weight basis, their assessable value has necessarily to be determined by taking into account the actual weight of the goods. Hence, we reject the appellants plea that the assessable value of the goods would continue to be the 'Transaction value' even when the quantity of goods with reference to weight has been found to be in excess of the invoiced quantity. 27. As regards the question whether the appellants are liable to penalty on account of the actual weight of the imported goods having been found to be in excess of the declared weight, we consider it desirable to refer to the following extracts from the decision of the Hon'ble Bombay High Court, in the case of Satellite Engineering Ltd. v. Union of India - reported in 1987 (31) E.L.T. 356. "We now deal with the charge that the appellants mis-declared the weight of the third consignment. The appellants accepted the fact that there had been such mis-declaration, but they pleaded, on the facts which they placed before the Collector, that it was an....