TaxTMI 
TaxTMI 
1995 (10) TMI 98
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..... 10,000/- on the Director of Company. Duty has been ordered to be paid on the ascertained value of Rs. 42984.59 and the differential duty of Rs. 389438.40, if the importer chooses to clear the goods on payment of redemption fine. Aggrieved by this order, the company and its Director, have preferred these appeals. 2. The facts in these appeals are that the importers clearing agent filed a home consumption Bills of Entry No. 1792 dated 29-6-1990 on behalf of the importer for clearance of 14 packages said to contain Rubber Hoses. The detailed particulars of the consignment are as follows : "1. Name of the Supplier : M/s. Techno Chemie Kessier & Co., G.M.B.H., P.O. Box 1227, D-6367, Karben 1 2. Country of origin : West Germany 3. Description of goods : 3420 Meter Rubber Hoses of different quality (4 SP DH 6, 12, 16, 20, 4 SPS DH 25, PL-7 DH 10 & PS - 8 DH 20) 4. Invoice No. & Date : NR 8363 - R - 18690, dated 23-4-1990 5. Name of the vessel : M.V. Tiger Sea 6. Rot No. & Line No. : 395/90, Line No. 5 7. Total CIF Value : Rs. 289425.12 (Insurance Rs. 1100/-) 8. Total Invoice value : DN 28645.10 C & F i.e. Rs. 288325.12 C & F (DM 9.9350 = Rs. 100) ....
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....e of latest shipment by `CONTI' was also obtained from the same importer wherein the name of the manufacturer/supplier was shown as `CONTI TECH'. Therefore, on physical examination of the goods in the dock, the department presumed that `CONTI' as the original manufacturer of the goods since the wording `CONTI' was found embossed on the rubber hoses. Thus, the importers were alleged that they had grossly undervalued the goods with an intention to evade huge amount of Customs duty. In view of special relationship between buyer and seller and the very high prices found in the price list of the manufacturers themselves the declared transactional value under Rule 4 of the Valuation Rules, 1988 was not accepted and it was alleged as to why the assessment should not be done under subsequent rules. In this regard, the comparative prices available for import of identical goods from M/s `CONTI' which against the following invoices which was compared against declared value as given below was compared to show the extent of undervaluation : Quan- tity Type Declared value C & F Total decla- red value C & F Value available from `CONTI' price list (C.I.F.) Value as per in-voices of `CONTI' ....
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....lue as detailed above was demanded. Hence, a show-cause notice dated 26-10-1990 was issued to the appellants. The importers vide their reply dated 11-3-1991 contesting the departments' allegations and submitted as follows : "1. That they are a registered SSI unit engaged in manufacture of Hose Assembly. They import bare hoses and sell those after adding suitable indigeneous fitments. 2. That the department has not been able to make out a case against them since mere doubt, a surmise or apprehension cannot take away the genuineness of the invoice which is well settled in view of several CEGAT judgments. 3. That there is no evidence of clandestine remittance of foreign exchange over and above the invoice price. 4. That the department has failed to make necessary investigations at the major ports to ascertain the prevailing price of identical goods and also ignored to follow the prescribed norms under Section 14 of Customs Act, 1962 read with Customs Valuation Rules. 5. That they are not aware of any relationship between CONTI & TCH. However, TCH may be marketing products of CONTI since these practices are adopted through out the world. For example Reckitt & ....
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....-6-1985 was also relied which M/s. Techno Chemie wrote to M/s. Indo Industrial Services that they had received their letter dated 30-3-1985 through M/s. Continental Cummi-Werke Ag, Hanhover. On these correspondences, the ld. Addl. Collector has held that it clearly established that both Chemie which is raising invoices showing prices less than the prices of the parent company, M/s. Continental. He has also relied on the written reply dated 11-3-1991 and held that it showed that the technical comparison of products manufactured by M/s. Techno Chemie with that of M/s. Continental price to give a view that the product manufactured by M/s. Continental is superior product and that is why the word `CONTI' is embossed on the hose alleged to be manufactured by M/s. Techno Chemie. He has observed that "Nowhere has it been proved that the present consignment is inferior as that it is not having the quantity the hoses manufactured and marketed by M/s. Continental. Therefore, he has ordered that the value indicated in the invoice be loaded to the extent to bring it to the level of the invoice value of M/s. Continental. He has also found that in respect of the item having type number 4SP DN, in....
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....ed that Rule 4(d) had been invoked and Rule 4(d) deals about related person. As the appellants are not related person, in terms of Rule 2(2), the Transaction Value in terms of main Rule 4, cannot be rejected. He also submitted that the price lists relied were all irrelevant, for the reason, the invoice compared is that of the year 1988, while the present import is of 1990. The quantity imported also varies and so also the specification. He also submitted that the Addl. Collector cannot compare the imports of Germany with those of USA imports, which is not permissible as only contemporary imports of comparable goods, from same place are required to be relied and not of incomparable goods of different countries. He argued that the Addl. Collector has loaded the prices in respect of two items, despite no proof of undervaluation having been placed by department. He submitted that the price had gone down in 1990 compared to 1988 in view of competition from Japan and USA. He also submitted that the department has not explained under what provision of law they had order for overvaluation and that there is total non- application of mind in this case. Ld. Advocate relied on the judgment of ....
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....ndia and carrying on independent business in India. The supplier M/s. Techno Chemie by their letter dated 8-5-1990 had advised M/s. Indo Indl. Services to contact M/s. Hydro Krimp A.C. Pvt. Ltd., Calcutta for Hoses as they represented them, on M/s. Indo Indl. making enquires of the product. This letter merely indicate that Hydro Krimp, the importer is merely an agent or a person dealing or selling in the goods manufactured by Techno Chemie. It does not imply that M/s. Techno Chemie and M/s. Hydro Krimp, the importer, are related persons or being one and the same. Therefore, the conclusion drawn by ld. Addl. Collector on this point is totally erroneous and without any application of mind and it deserves to be quashed as unsustainable. Further, it has to be observed that even if for arguments sake, it is to be held so, even then the transaction value alone has to be accepted. As Rule 2(f) defines, `transaction value' to mean the value determined in accordance with Rule 4 of these Rules. Rule 2(2) defines a person to be a "related" person only if they fall within (i) to (viii) as stated therein. It refers to: (i) Officers, Directors of one another's business (ii) legally recog....
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....pellant is a related person of the supplier and that the transaction value alone has to be accepted in this case. Now we are required to look into the question of undervaluation. The supplier's invoice is dated 23-4-1990. This is being compared with the invoice dated 16-6-1988 of Continental issued to M/s. Indo Industrial Services. 4 SP, DN 16's unit price of the supplier in this case is 9.10 as against 14.40. The quantity is 200 m, as against 80 m. The 4 SP DN 20 quantity is 409 m and unit price of supplier is 10.25 as against Continentals 320 m at 17.10 DM. The allegation is that both the supplier and Continental being same and subsidiary company, the prices and goods being comparable, the price of 1988 should be taken as the price of 1990. This is a totally erroneous approach of the ld. Addl. Collector. Rule 5 states that the value of imported goods shall be the Transaction Value of identical goods sold for export to India and imported at or about the same time as the goods being valued. The provision being clear the comparison has to be between the goods imported at or about the same time and not of import preceding two years ago, as the market price keep fluctuating. It is no....