TaxTMI 
TaxTMI 
1991 (4) TMI 269
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....000 pcs. of Cool Beam Type 12V 50W 38 and 10,000 pcs. of Tubular Type 220/240-1000W halogen lamps. On 21-10-1989, the supplier forwarded Sales Contract. On 30-12-1989, the appellants opened a letter of credit of US $ 4,160 in favour of the supplier through the Corporation Bank. On 23-2-1990, the appellants raised an Invoice No. 9004028B. On 14-3-1990, the goods were shipped. On 10-4-1990, the Bill of Entry was filed. 3. On 14-6-1990, a show cause notice was issued proposing to enhance the value of goods to 4,01,854 on the basis of two documents, viz. Price Lists of M/s. Profit Gain Development Co. Ltd. and the Price Lists of M/s. Chinatrack Development Ltd. and a telex reply to the inquiry made by the Department by the supplier. In the show cause notice, it is also proposed to confiscate the goods under Section 111(d) and (m) of the Customs Act. It is also proposed to levy a penalty under Section 112 of the Act. On receipt of their reply and on hearing the appellants' counsel, the Collector adjudicated the matter and passed the impugned order. The Collector while enhancing the value held as follows: "I find that the Department has got an offer for sale of such goods as are th....
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....e time being in force..... 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 ordinary 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 international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale: Provided that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under Section 46, or a shipping bill or bill of export, as the case may be, is presented under Section 50; (1A) Subject to the provisions of sub-section (1) the price referred to in that sub-section in respect of imported good shall be determined in accordance with the rules made in this behalf;" 6. Customs Valuation (Determination of Price of Imported G....
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.... value on the basis of a telex reply which is an offer for sale of such goods at a higher price from the same supplier. 11. The telex reply obtained by the Department from the supplier reads as follows "TUNGSTEN HALOGEN LAMPS (240V. 1000W 190MM) USD 1.21 APC FOB CHINA COOL BEAM HALOGEN REFLECTOR LAMPS (12V. 50W. 38.6x5.31) USD 2.20/PC FOB CHINA" THANKS FOR YOUR TELEX DATED MAY 15. I QUOTE U OUR BEST PRICE : (1) TUNGSTEN HALOGEN LAMP (240V 1000W 190MM) CIF CALCUTTA USD 1.4166/PC (2) COOL BEAM UNSTEN HALOGEN (12V 50W(38) 45MM G X53 CIF CALCUTTA USD 2.408/PC AWAITING FOR YOUR EARLY REPLY B/RGS." 12. Immediately when the appellants were confronted with the telex reply of the supplier, they have written seeking clarification and the letter reads as follows : "We wish to inform you that the above consignment of Halogen lamps has since arrived at Madras Port. But we are unable to clear the same as our Customs Authorities are raising objection regarding the prices at which the Halogen Lamps have been invoiced. The Customs Authorities have provided to us a copy of the offer sent by your Macau Deptt. by telex on 15-5-1990 (copy enclosed). We request you to pleas....
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....mported by the appellants are not supported by quality certificate and there is no replacement guarantee. In other words, if the appellants place an order for the import of 4000 Halogen lamps and out of which 1000 are destroyed or damaged during transit, then the importer cannot ask for replacement and he is paying the value of 4000 lamps for the import of 3000 lamps. He is taking a risk. Secondly, there is no quality certificate accompanying the goods which means the quality may be either inferior or superior. In the import by the appellants, a risk is involved. Whereas in the telex reply it is categorically stated that the price quoted in the said reply is loaded with replacement guarantee, which means if 1000 lamps are destroyed during the transit, the importer is entitled to ask the supplier to send another 1000 Halogen lamps. In other words, the importer is paying the value of 4000 lamps for the import of 4000 lamps and there is no loss involved. It is also stated that the price referred to in the reply relates to goods where the quality is tested and certified and loaded with commission of agents. From the above, it is clear that there is a material difference in the conditio....