TaxTMI 
TaxTMI 
2007 (12) TMI 113
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "Sun Computers" in the import documents and that the imported goods were of international standard. On comparing prices of similar goods as the imported ones, it was observed by the authorities that the prices declared were much lower than the corresponding prices declared by Sun Micro Systems, Bangalore, First Computers, Chennai and Wipro Infotech, Chennai. Prices were also lower than the corresponding international prices. In view of the mis-declaration of value and suppression of brand and model of the imported goods as well as suppression of import of certain goods, declared prices appeared to be not acceptable as transaction value. As prices of contemporary imports of similar/identical goods were not available, the assessable value could not be determined under Rules 5 and 6 of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 (CVR). As the relevant data were not available, the values could not also be determined under Rule 7 and 7A of the CVR. It appeared that the assessable value could be determined only by resorting to Rule 8 of CVR. 2. In respect of Sl. Nos. 1, 6, 7, 10, 11 and 12, the lowest of the contemporane....
X X X X Extracts X X X X
X X X X Extracts X X X X
....goods in India; it was not certain whether the price of imported goods or of indigenous goods were being compared for assessment of impugned goods. Had the goods compared been imported goods, the importers were not furnished the related documents to establish its comparability. Even in respect of goods set out in the table there were wide differences in price. The goods tabulated had been taken piecemeal. It was unclear how they were comparable. The price of complete system was adopted for appraising imported goods which were parts. Wipro Infotech and First Computers being their competitors their evidence could not be relied upon. It was already found that no price of contemporary imports of similar or identical goods were available. Therefore the comparison attempted was arbitrary. The shipping documents had shown brand names of the goods and declared value could not be rejected on the charge of suppression of brand name. The Department had failed to establish that the transaction value was declared incorrectly. The shipping documents had carried the brand names and statement to the contrary was obtained from Alex Mammen under coercion. Shri Alex Mammen had submitted that the supp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rices quoted by M/s. First Computers were not furnished to them to enable them ascertain the exact product configuration and the nature of parts; that the basis on which the declared value had been rejected was erroneous and opposed to the basic tenets of valuation. The value declared was transaction value paid for the goods. No evidence showing receipt of extra commercial consideration was available with the department. 4. The 'processors' had been supplied as compliment as there was no market for "Spark II processors" which had become obsolete. They were not aware of the supply of processors, as they had been supplied without their ordering for them. The current value of these processors was US $ 30-40 each and they accepted this liability. They had only imported parts and not complete systems. First Computers had furnished a quotation and not a record of concluded transaction. The proposed appraisement following the price list, in the absence of technical characteristics of those items was opposed to principles of valuation contained in Customs Valuation Rules. They relied on various case law to argue that no penalty could be imposed on them and that the goods were not liable....
X X X X Extracts X X X X
X X X X Extracts X X X X
....other board, CD Rom "Processor" (processor not declared) 11 Keyboards and Mouse Keyboards and Mouse 12 ATX E 250 Cabinet with power supply and Motherboard Enterprise 250 Cabinet with power supply and Motherboard 13 6.5K Cabinet with Power Supply modules Enterprise 6500 Ultra spare driven Cabinet with power Supply modules He found that the importer had not declared the brand and model of the goods imported. He found that M/s. Wipro Infotech, Chennai and First Computers Chennai had imported the following items and their prices were as follows Table D S. No. Description of the imported goods identified during examination Prices of Sun Micro systems, Bangalore (in US$) Prices of Ms. First Computers, Chennai. Prices of M/s. Wipro Computers, Chennai (in US$) Import prices as per B/E No/date (in US$) (FOB) International Price (in US$) (FOB) 1 Sun Brand cabinet with power supply and mother board Ultra spare driven Ultra 60 elite 3D 100 1000 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....clare processors. For these reasons he rejected the declared value as transaction value. He found that there were no contemporaneous imports of similar/identical goods. So Valuation Rules 5 & 6 could not be resorted to. For want of relevant data Rule 7 & 7A also could not be resorted to. Therefore, value had to be determined under Rule 8 of CVR. He found that in respect of items at Sl. Nos. 1, 6, 7, 10, 11 & 12 of the tables, prices of Sun brand computers and parts imported by M/s. First computers, Chennai or M/s. Wipro Infotech Chennai, were the least. He observed that "Even though the goods covered in the relied upon Bills of Entry are not fit to be considered as identical/similar goods for determining the value under Rules 5 & 6 of CVR, 1988 on account of the fact that the goods were procured/supplied in assorted manner without revealing the source of procurement of supply, since the brand and technical parameters of the goods were found to be comparable with the goods under import, I get guided by the value of the goods in the Bills of Entry relied upon in the show cause notice while determining the value using reasonable means under Rule 8 of the CVR, 1988." Moreover, the Bill....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ds have been taken against the impugned order. The charge of suppression of brand name of the imported goods was incorrect as the internationally accepted codes for the systems manufactured by multinational companies such as ULTRA of Sun Micro Systems and P270 for IBM were declared. The Commissioner allowed himself to be guided by the opinion of the competitors of the importer namely Wipro Infotech and First Computers. Examination of the goods by the representatives of the competitors was conducted in the absence of a representative of XC. The request of the importer to cross-examine the experts of Wipro and First Computers had been turned down. The Commissioner had accepted the value of items at Sl. No. 2, 3, 4, 8, 9 and 13 even though brand and model of these goods were not declared. At the same time goods at Sl. Nos. 1, 5, 6, 7, 10 and 11 were treated as offending goods and their declared value rejected for non-declaration of brand name. Non-declaration of "flat screen" in respect of Sl. Nos. 5, 6 and 7 (monitors) did not constitute a serious omission/suppression to warrant rejection of transaction value. Whereas monitors had to carry brand name, the international practice wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... from manufacturers who also sell the same goods in the spare market. Commissioner has found that the imported goods are assorted items. They are not complete systems. These lack parts required to make complete systems and would be sold after cannibalising. Or missing parts would be fitted in the incomplete systems. For these reasons the Commissioner could not find the impugned goods to be identical or similar to those imported contemporaneously or otherwise. However, he described the same as identical and adopted prices of items imported by some other importers. This we find is not consistent with the valuation provision 8. The Commissioner rejected the transaction value of a few items on the ground that the importer had not declared the brand name of the computer parts in the Bill of Entry. On examination it was found that the brand name 'SUN' was not declared in respect of the items cabinet with power supply and motherboard. However, it is the importer's contention that it had declared the description as U 60 and that Ultra 60 was known in the computer trade to be 'SUN' brand. The next two items mentioned at Sl. Nos. 6 and 7 of the table in respect of which the transaction va....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of 296MH3 capacity and the item compared was of 400 MH3 capacity. Such claim was not limited this item. The Commissioner rejected these claims as not backed by documentary evidence. However, the appellants had sought cross-examination of the representatives of First Computers, Chennai and Wipro Infotech, Chennai who were consulted on the comparability of the impugned goods to those imported by First Computers and also as regards valuation. We find that it was not proper that the Commissioner denied cross-examination of these technical personnel. The importer had also expressed their grievance that the technical characteristics of the goods whose prices were referred to assess the impugned goods were not disclosed to them. The findings of the Commissioner are considerably weakened by these infirmities. In fine we find that the Commissioner rejected the transaction value without adequate and acceptable legal justification. Presence of P2 and P3 processors along with the Ultra 60 computer parts, we find, is insufficient to consider that description of this item was mis-declared. We find the argument of the appellants that these were components of outmoded systems which apparently did....