TaxTMI 
TaxTMI 
1994 (9) TMI 190
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 31-12-1990, the second appellant filed a Bill of Entry through their authorised Clearing Agent, M/s. Loknath Shipping & Clearing Agency for clearance of the goods declared as 118.10 M/T high density Polyethylene Resin in the Bill of Entry/Invoice. Since the grade was not mentioned and the Clearing Agent did not produce original documents at the time of filing the Bill of Entry the Assistant Collector of Customs sent goods to the Appraiser for examination of the goods with specific direction that the goods to be examined in the presence of A.C. (Docks). In the meanwhile on 3-1-1991, a case was detected by the Special Investigation Branch wherein 16 M/T Polyamide was sought to be cleared by the second appellant in the guise of High Impact Polystyrene. According to the Department on two previous occasions, the same Importer had cleared 210 M/T Acrylonitrile Butadiene Styrene (ABS) granules covered under Appendix-2, Part-B of the Import Policy against provisional duty bond and after clearance on test of samples, the goods were found to have been misdeclared as High Impact Polystyrene involving duty evasion of over Rs. 75 lakhs. Hence the detailed investigation started with reference ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Customs Act, 1962, a penalty of Rs. 10 lakhs was imposed on the Importer and of Rs. 7 lakhs 50 thousands on the supplier. However, he gave an option to the Importer to redeem the goods on payment of redemption fine of Rs. 5 lakhs subject to the condition that the goods are re-exported after following the prescribed procedure (including submission of no objection certificate from the Reserve Bank of India), alternatively, the Collector agreed to allow release of the goods on payment of redemption fine to another importer provided such Indian Importer was agreeable to pay the duty on goods on the assessed value of U.S. $ 1200 per M/T without any objection and in that case redemption fine was however reduced to Rs. 2,50,000/-. On filing the supplementary affidavit by the supplier in the pending Writ Petition before the Calcutta High Court, the Hon'ble High Court as per the Matter No. 465/91, dated 18-7-1991 passed the order by giving directions to both sides while desposing of the Writ Petition and the relevant said order is as follows :- "(1) Mr. P.K. Chakraborty, Assistant Collector of Customs Appraisement Group-II, Calcutta, will advertise for sale of the goods in two loca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pellate Authority. If the petitioner is successful, the Collector shall make over the entire amount covered by the fixed deposit receipt together with accrued interest thereon to the petitioner within 7 days of appellate order. If the petitioner is unsuccessful and the appeal is dismissed, the Collector will be at liberty to encash the fixed deposit receipt and appropriate the proceeds thereof together with all interest thereon toward its claim against the petitioners, and refund any excess to the petitioner 7 days after, the appellate order has been communicated to the petitioner or his Advocate on record." Accordingly both Supplier and Importer have come before us by way of these appeals. 3. The appellants were represented by Shri L.P. Asthana and Smt. Archana Wadhwa, learned Advocates respectively and the Department was duly represented by Shri A.K. Singhal, learned JDR. 4. Sh. L.P. Asthana, learned Counsel appearing on behalf of the supplier, submitted that the contract of sale of goods was entered into between the Supplier and the second appellant on 5th September, 1990 with reference to the previous enquiry made by the second appellant in the middle of Augu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of goods in the normal course and on knowing through the Banker that Importer had refused to retire the documents, they had approached the concerned authorities either to allow them to sell the goods to other Indian buyer or to allow reshipment of the goods to safeguard their interest. He said that prices for HDPE were lower in August as well as in early September, 1990 and prices were raised upto 20th December, 1990 due to gulf war and as soon as war was over prices have fallen as can be seen from the evidence placed on record and same was accepted by the Adjudicating Authority. He said that there are four types of HDPE but since the grade was not specified by his Supplier and in the absence of direct contact with the manufacturer non-mentioning of grade cannot be construed as misdeclaration to discard transaction value. Further there has been no importation of identical goods at the time of shipment of the goods at Calcutta port, but the Collector compared with various imports of different types/grades of the goods from different countries which have no relevance in determining the assessable value. For instance, prices of the goods of Japanese origin, and of other European count....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mporter has not been discussed except making some observations in page 3 of the order that he was involved in importing and misdeclaration of high quality of polyamide. But these charges were false and there is no clear finding on these charges since the proceedings are still pending. She said that the appellant instructed the Bank to return the documents to the Supplier even before the proceedings were initiated by the Department as he was unable to honour the contract due to paucity of funds since his financiers backed out. Since the Importer is no longer interested in the goods and abondoned the goods, penalty cannot be imposed on him. She also referred to the order of the Tribunal (Order No. A/271 to 273/92-NRB, dt. 13-6-1992) in the case of M/s. Savithri Electronics Co. in support of her contention. She submitted that even if assessable value is determined on higher side, ignoring the date of contract, the penalty cannot be imposed on the Importer since he has abondoned the goods. 6. Shri A.K. Singhal, learned JDR appearing for the Revenue, submitted that it is a clear case of misdeclaration of the goods since grade as well as country of origin was not mentioned and it....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled a Bill of Entry with an intention to clear the goods but on knowing the detailed investigation in this case and further it was detected that he was involved in other imports in evading to the tune of Rs. 75 lakhs, he backed out and instructed the Banker to return the document without specifying any valid reason. He said that this type of habitual offender should be punished severelly and no lenient view is called for and accordingly the Department was justified in imposing penalty of Rs. 10,00,000/- (ten lakhs). 7. We have considered the rival submissions and perused the records. It was contended on behalf of the appellants that prevailing market price on the date of contract is to be taken into consideration while determining the assessable value since they have entered into contract on 5th September, 1990, for the sale of goods, relying upon the decision in the case of Sneha Traders Pvt. Ltd. v. Collector of Customs [1992 (60) E.L.T. 43 (Calcutta)]. Hence the first point to be considered in this case is whether contract was genuine. We are not convinced with the arguments advanced on behalf of the appellants that the third party cannot go into question of validity of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tract, offer, and acceptance supported by consideration. In fact quotation or price list itself is not an offer but it invites the prospective buyers to make offer. When once offer is given to the offeree if it is accepted same should be communicated to the person who made an offer. In the instant case the letter dated 5-9-1990 cannot be considered as an acceptance in the absence of reference to the offer and if it is treated as an acceptance from the Supplier it remains as an acceptance against the Supplier but not against the Importer since it was not communicated and nothing to show same was consented by both sides on 5-9-1990. There is nothing on record that agreement was enforced in a court of law. It is not even the case of the parties that contract was enforceable and they have taken legal steps for enforcement of the agreement. In the normal course the Supplier would have filed a suit against the Importer in a Court of law for enforcement of agreement for the recovery of the amount or for specific performance of the contract. Not even a legal notice was issued for discharge of contract nor placed such documentary evidences on record. Instead of filing a suit for specific pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rade. This is a clear case of misdeclaration of description of the goods as it was rightly observed by the Collector in the order. Since there has been misdeclaration of the description of the goods, the declared price cannot be said to be the transaction value and the Department was right in discarding the invoice value and resorted to determine the value under Section 14(1A) read with Valuation Rules. 8. Next question arises whether sufficient evidence was brought on record by the Department and adopted the Valuation Rules in sequence in determining the assessable value. It is well settled that the burden lies on the Department not only in bringing sufficient evidence on record, but also the same should be disclosed to the other side for rebuttal while determining the assessable value. In the order the Collector observed that prices were considerably lower upto early September but there was steady increase upto December, 1990 in respect of Blow Moulding grade in the international market and the same is supported by quotations published in the International Magazine Chemical Week in respect of wholesale international price od HDPE Blow Moulding grade in the U.S. and Europe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ercially interchangeable with the goods being valued having regard to quality, reputation, grade etc. Since the Adjudicating Authority has not given specific reasons with reference to Rule 6 before resorting to Rule 8, we are of the view that this issue requires reconsideration. In applying the transaction value under Rule 5 or Rule 6 of the Customs Valuation Rules, 1988, the transaction value should be at the same commercial level and in substantially the same quantity as the goods being valued. We, therefore, direct the Jurisdictional Collector to examine and consider the assessable value of the goods in the light of above observation and taking into consideration of the evidence adduced by the appellants in this regard and to pass an appropriate order in accordance with law after giving one more opportunity to the appellants. The appellants may make use of this opportunity to adduce evidence if any with reference to similar imports at the relevant point of time. 10. As regards imposition of penalty under Section 112 of the Act, having regard to facts and circumstances of the case and particularly taking into consideration that they have misdeclared the description of the....