TaxTMI 
TaxTMI 
1998 (7) TMI 321
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.... filed a Bill of Entry dated 20-10-1992 for 20,000 pieces of Balloon Catheters and declared a value of HK $ 5000/- (FOB). These goods were also placed under seizure on the reasonable belief that they had been under-valued. A show cause notice dated 18-5-1993 was issued to both the above mentioned firms as well as Shri Vasudev Moolrajani, Proprietor of M/s. Sagar Electronics and Partner of M/s. Sigma Electronics, proposing confiscation of the Catheters, CKD quartz clock movements and pieces of ECBs fitted with bobbin and coil fitted with chip and crystal included in the CKD clock quartz movements and proposing imposition of penalty for contravention of Section 111(d) and (m) of the Customs Act, 1962. The Collector of Customs, Jaipur, upheld the charges of misdeclaration and under-valuation and confiscated the goods with option to redeem the same on payment of a fine; loaded the CIF value of Catheters to Rs. 14.28 per piece with corresponding duty liability; loaded the FOB price of CKD clock quartz movements and ECBs to US $ 0.55 per piece with duty liability at the rate of 65% + 45% + 5% + 15%; imposed a penalty of Rs. 1 lakh on Shri Vasudev Moolrajani, Rs. 85,000/- on M/s. Sigma El....
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....bserved. Looking to the totality of the facts and circumstances, we allowed the documents to be taken on record subject to certain conditions. The evaluation of the evidentiary valule of the documents was left to be considered during the course of hearing of the appeals. 5. At the stage of hearing of the appeals, the Counsel for the appellants had submitted a written resume giving the details of various items, the action taken by the Collector in respect of them and their submissions in respect of them. A similar chart was also submitted by the DR. After the conclusion of the hearing, both sides requested that they would like to file further written submissions. Accordingly, both sides filed detailed written submissions. 6. We have carefully considered the submissions made by both sides during the hearing as well as in their written submissions. Before we deal with the position relating to individual item(s), we would like to give our findings on the following general issues. 7. The Hong Kong Customs have furnished two reports to the D.R.I., one dated 14-5-1993 and the other dated 8-6-1993. The report dated 14-5-1993 has two annexures. Annexure I relates to ....
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....93 was given to the appellants after the adjudication was over and in the context of High Court proceedings. The second report has also been produced at the appeal stages. It has been submitted on behalf of the Revenue that the report of the Hong Kong Customs and Excise Department is clear, certain, firm and unambiguous and it proved the charge of undervaluation and manipulation resorted to by the appellants beyond any doubt. It has also been submitted that the appellants has not been able to adduce any evidence to the contrary. Reliance has also been placed by the Revenue on the decision of CEGAT in the case of Orson Electronics P. Ltd. v. Collector of Customs, Bombay reported in 1996 (82) E.L.T. 499 (T). 7.2 On the other hand, Counsel for the appellants has urged that the first report was available before the Collector and he still did not utilize it for the purpose of valuing the goods. In fact, the Collector has observed that since the annexures have not been supplied by the Department, he did not take cognizance of the details therein (paragraph 50 of the Collector's order). Further in paragraph 51 of the order, the Collector has stated that "as to what value should be....
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....reports to be taken on record. However, we had left the question of the evidentiary value to be considered at the time of the hearing of the appeal. 7.4 We have carefully considered this aspect of the matter. The aforesaid reports undoubtedly raise suspicion about the correctness of the declared values and the conduct of the appellants. However, at the same time, we notice that in the case of Orson Electronics P. Ltd. (supra), the Department had given copies of the primary material namely export declarations and the export invoices to the appellants and the Department had not claimed any privilege in respect of those documents. There is considerable force in the argument of the Counsel for the appellants that in the absence of primary material, they are being denied the opportunity of challenging the correctness of the reports. We are also faced with another problem. The Collector has specifically stated that he does not rely upon these reports for valuing the goods. The Department has not filed any appeal against this finding of the Collector. On the other hand, even at the appeal stage, it has not been seriously contended that the Department wishes to utilize this informa....
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.... Department that if the goods of the two Bills of Entry are combined together they would become complete clock movements. However, two questions still remain to be considered:-(1) whether the goods have been incorrectly described in each Bill of Entry and are, therefore, liable to confiscation under Section 111(m) of the Customs Act and (2) whether parts of stepper motor are eligible to the benefit of exemption Notification No. 62/88-Cus., dated 1-3-1988 and are leviable to duty at the rate of 30% and not 65% as held by the Collector. The charge regarding misdescription of the goods appears to be based on the premise that in both Bills of Entry the goods should have been described as "CKD Quartz clock movements" instead of "parts of stepper motor" in one Bill of Entry and "components of clock movements" in the other Bill of Entry. We find it difficult to sustain this finding. Under Section 46 of the Customs Act, the declaration has to be made in the Bill of Entry with reference to a particular consignment covered by a particular invoice. In the present case, Bill of Entry No. 000044/92 relates to parts of stepper motor only and if the goods were declared as "clock movements", it co....
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....hold that parts of stepper motors are eligible to the benefit of exemption Notification No. 62/88 (Sl. No. 3). 9.2 As regards, valuation, the entire case of the Department is based on the quotation of M/s. OAM International, which appears at page 24 of the paper book. We notice that this quotation suffers from several infirmities. In the first place, Items 2 and 3 have been blanked out in the copy of the quotation which was furnished to the appellants. However, in the copy of the quotation produced before the Tribunal, Item 2 is not blanked out - only Item 3 is blanked out. Secondly, this quotation does not appear to be relevant as it shows either domestic prices in Hong Kong or prices for export of goods to a country other than India. M/s OAM International is based in Hong Kong and the quotation is addressed to M/s. Engineering Services located in Hong Kong. It is not understood how such a quotation gives FOB prices when apparently it pertains to a domestic sale. It appears that this quotation has been used by the Department not only in the present case but in several other cases. The Tribunal by its Order Nos. 899-900/96-A, dated 13-3-1996 held the quotation to be unrelia....
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....ts conceded that the goods were not eligible to the benefit of Notification No. 208/81-Cus. He, however, claimed exemption from additional duty under exemption Notification No. 339/86-C.E., dated 11-6-1986. For this, he relied upon the judgment of the Calcutta High Court in the case of Fitwell Fastener (India) P. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 50 (Calcutta). Although the appellants had not claimed the benefit of Notification No. 339/86 at the original stage, we extend the benefit of this Notification because the appellants had claimed exemption from additional duty at the original stage though under a different Notification and the exemption is available on merits. 11.1 Concerning valuation, the show cause notice relied upon the price list of Sanko Trading Co. The Collector has observed that "the Department has relied upon the price list of Sanko Trading to only cast doubt upon the invoice price and to show that it is not logically possible for the goods to be valued at 0.25 HK $ each as declared in invoice 92/250, dated 16-9-1992". We fail to appreciate this half-hearted approach. If reliance is placed on this price list, then logically the value....
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.... provides for a reasonable flexibility in the application of the method. But if one looks at the examples, given in Rule 3(3), it would appear that the flexibility is with regard to the definition of similar or identical goods or with regard to the time gap of 90 days. Moreover, even if a flexibility is applied, some adjustment in value on account of flexibility has also to be made. Therefore, we are not satisfied that all the conditions of Rule 7 have been met and that Rs. 14.28 can be taken as a reasonable price under Rule 7 or Rule 8 of the Valuation Rules. We, therefore, set aside the confiscation of balloon catheters. 12. In the result, we set aside the confiscation of CKD quartz clock movements and balloon catheters; uphold the confiscation of electronic circuit boards covered by Bill of Entry No. 000044/92, dated 21-10-1992 with an option to the appellants to obtain release of these goods on payment of a fine of Rs. 1.5 lakhs; proportionately reduce the penalty on M/s. Sagar Electronics from Rs. 15,000/- to Rs. 5000/-; on M/s. Sigma Electronics from Rs. 85,000/- to Rs. 30,000/- and reduce the penalty to from Rs. 1 lakh to Rs. 25,000/- on Shri Vasudev Moolrajani. 1....
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.... a preliminary enquiry and determine the enquiry and determine the validity of the objections to its production, and that necessarily involves an enquiry into the question as to whether the evidence relates to an affair of State under Section 123 or not." "In this enquiry the Court has to determine the character or class of the document. If it comes to the conclusion that the documents does not relate to affairs of State then it should reject the claim for privilege and direct its production. If it comes to the conclusion that the document relates to the affairs of State it should leave it to the head of the department to decide whether he should permit its production or not." "It is that injury to public interest is the reason for the exclusion from disclosure of documents whose contents if disclosed would injure public and national interest. Public interest which demands that evidence be withheld is to be weighed against the public interest in the administration of justice that courts should have the fullest possible access to all relevant materials. When public interest outweigh's the latter, the evidence cannot be admitted. The court will proprio motu exclude evidence the....
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..... The court also should be satisfied whether the evidence relates to the affairs of the State under Section 123 or not; evidence is relevant to the issue and admissible. As distinct from private interest, the principle on which protection is given is that where a conflict arises between public and private interest, private interest must yield to the public interest, therefore, the factors to decide the public interest immunity would include "(a) where the contents of the documents are relied upon, the interests affected by their disclosure; (b) where the class of documents is invoked, whether the public interest immunity for the class is said to protect; (c) the extent to which the interests referred to have become attenuated by the passage of time or the occurrence of intervening events since the matters contained in the documents themselves came into existence; (d) the seriousness of the issues in relation to which production is sought; (e) the likelihood that production of the documents will affect the outcome of the case; (f) the likelihood of injustice if the documents are not produced".' 19. Insofar as the present case is concerned, applying the above principles, we f....
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.... upon honouring the commitment made or assurances given regarding confidentiality of the exchanges and the use to which the information so supplied may be put. The undertaking must, therefore, be allowed to be kept in larger public interest (including interest of justice as well). 21. In the present case, in view of international understanding referred to by the learned DR, the Bench had considered the matter and had accepted the offer of the Department to make available for perusal of the Court, the correspondence indicative of the aforesaid understanding and assurance and the Bench had after perusal, directed filing of affidavit and attestation of the documents by a senior officer (s) of the Department. Learned DR has since filed an affidavit of the First Secretary to the Commission for India, Hong Kong duly verified by him and attested by Assistant Director, D.R.I. and other documents including letters dated 14-5-1993 and 8-6-1993 addressed by Hong Kong Customs (Deputy Head of Trading Standards Investigation Bureau) to the Indian High Commission and the annexed tables duly attested by Additional Director General, DRI, New Delhi. 22. A perusal of these documents s....
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....he purpose of adjudging this case. 25. At the same time, to take care of the principles of the natural justice, I consider that the adjudication order which has been passed without taking them into account and without giving the other side an opportunity to meet the facts disclosed in the findings of the Hong Kong Customs, is required to be set aside and the matter is required to be remanded for de novo consideration in accordance with law. In view of the above position, I consider it premature to go into the more specific issues emanating from the charges in respect of the items imported in the consignments in question at this stage and consider it appropriate to leave it to the adjudicating authority to reconsider the same in the light of above observations. 26. It is ordered accordingly. Sd/- (S.K. Bhatnagar) Dated : 19-12-1997 Vice President POINT OF DIFFERENCE 27.In view of the difference of opinion between  Hon'ble Member (Judicial) and the Vice President, the matter is submitted to Hon'ble President for reference to a Third Member on the following point : - "Whether the matter is requir....