TaxTMI 
TaxTMI 
2008 (9) TMI 353
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.... Electro Acoustics Private Limited and M/s. Modern Radio House. Goods belonging to these appellants also stand confiscated; penalties stand imposed on the importers and on Shri H. Thakur. 2. Heard both sides. 3.1 Relevant facts, in brief, relating to Appeals Nos. 795 to 798 are as follows: (a) M/s. Modem Radio House, a Partnership firm, M/s. Studio System inc, a Proprietaty firm and M/s. Sara Electro Acoustics Private Limited, are basically run by Shri Haresh Thakur, either in his capacity as power of Attorney holder, or as proprietor or as Director. (b) They are into import of professional grade audio equipments. (c) Premises of the above importing firms and connected premises were searched on 21-7-1997 and thereafter and documents including price list of various overseas manufacturers and trading companies were recovered. Certain goods lying in the godown were detained with the direction not to dispose of the goods. However, the said goods were found missing and Shri Haresh Thakur claimed that he had no knowledge about the whereabouts of the goods so detained. On follow up, the premises of CHA, M/s. M.H. Khan was searched on 21-10-1997. The residential premises of ....
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....ily and based on unreliable documents. In respect of imports under 18 bills of entries, demand has been confirmed mostly based on TASCAM price lists of 1-11-1996 and 1-4-1997, price lists of Modern House (which did not refer to any effective date), another price list relating to April 1997 giving prices of some goods in Yen. Reliance has also been placed on proforma invoice dated 9-6-1997 of Kelmark system and the price list of dated 1-4-1997 of M/s. Ultra Studio Lab. (d) He submits that in respect of Customs Appeal Nos. 795 to 798 substantial amount of demand i.e. Rs. 61,98,755/- was based only on price lists without being substantiated by any other evidence. (e) He submits the price list alone cannot be the sole evidence for the purpose of enhancing the transaction value declared by the importer. The price lists are basically a reference point and the actual transaction values are arrived at after negotiation between the buyer and the seller. The prices so negotiated and arrived at will depend upon several factors such as the commercial level of purchase, terms of payment, the nature of trade relationship (i.e. of long term or a case of stray purchase) and such other releva....
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....and only on failure of the importers to do so, the Department could rely on other mode of valuation under Rule 8. 5.1 Learned DR reiterated the findings of the Commissioner and drew our attention to the following points. 5.2 The price lists which were relied upon have been recovered from the premises of the importers only. The appellants have not cooperated in the investigation. 5.3 In most of the cases, there is very wide variation between the import price declared by them and the prices found in the pricelists. For example in bill of entry 571123 the price declared price was only 55 US$ as against the price of the item which was 500 US$ as found in the price list. Similarly in the bill of entry No. 553809 dated 2-7-97 as against the value of 689 US$ in the proforma invoice, the price declared was only US$ 60. Value declared in respect of some of the system is even lower than the value of some parts contained in the system. 5.4 An importer by name M/s. Setron has imported as per the price list of TASCOM Japan from Japan. 5.5 Learned DR relies on the decision in the case of Vimal Enterprises Limited reported in 2001 (129) E.L.T. 123 (Tri.-Bom.), wherein the valuation....
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....er and the seller and that the said invoices were manipulated. They submitted that the invoices represent the true transaction value and the evidence which the department has produced in the form of price list were not proof of transaction and evidence of contemporaneous imports were necessary to reject the transaction value. They had quoted certain judgments in their favour in this regard as detailed in the written submission as above. Before taking up each bill of entry for further discussion and the evidences which the department has brought for rejecting the transaction value, I would like to take note of certain facts which have been brought in great details in the show cause notices. (ii) The investigation has during the course of the search of the premises of the notices have unearthed certain documents, scrutiny of which is very important at this stage. In respect of bill of entry No. 571123 dt. 27-8-97, the investigation found out that the imports were made from M/s. Ultra Studio Lab, USA at declared value of US$ 55 whereas the price list of the same supplier dt. 1-4-96 reflected the items at US$ 500 per pc. The price list was also recovered from his premises and he onl....
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....t relevant to take note of para 6 of the notice wherein it is stated that the stock of goods lying in their godown for which Sh. Haresh Thakur has given an undertaking to the effect that said stock of goods will not be sold, transfer or disposed off without the prior permission of the customs authorities whereas when the investigating officers visited the premises on 17-11-97 they found that Sh. Haresh Thakur could not produce the goods as per the said list. This act of Sh. Haresh Thakur also revealed his mala fide all along. 21. Under Clause (a) of section 14(1) of the Customs Act, 1962 the value has to be assessed on the price at which such or like goods are ordinarily sold or offered for sale i.e. in the ordinary course of trade usually to the usual extent. Rule 4(2) of Customs Valuation Rules, 1988 provided that the transaction value of the goods under import should be accepted if the sale is in the ordinary course of trade under fully competitive conditions and it does not involve any abnormal discount or reduction from the ordinary competitive price. Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 is directly relatable to Section 14(1....
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....nd premises of the notice". 7.2 We find that the Commissioner has, for confirming substantial part of the demand, merely relied on the price lists. The price lists or quotations are subject to negotiations. It is common knowledge that the discount from the printed price lists is a trade practice throughout the world. Even in the solitary case relied by the Department to show that the price lists has been acted upon as in the case of import by Setron from M/s. Ultra Studio Lab, we find that the price quoted as per price list dated 1-4-97 for digital audio tape deck was 51,000 Yens and for the same item the price declared in the price list dated 1-11-1996 is US$ 520 and the import price for 10 sets in Yen was @ 45,000 Yen. In other words there has been a discount from the listed price. It was claimed on behalf of the appellant that their level of imports of the digital audio tape deck (DA 20) is much higher than those imported by M/s. Setron. 7.3 The Commissioner has held that the prices of a particular import cannot be raised based on prices of imports of comparable goods at a later date. However he has adopted the prices in price lists dated 1-11-1996 and 1-4-1997 for several....
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....e importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the department on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importers to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of "deemed value". Therefore invoice price can be disputed. However, it is for the Dep....
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....f the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these Rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India". If the phrase "the transaction value" used in Rule 4 were not limited to the particular transaction then the other rules which refer to other transactions and data would become redundant. 14. It is only when the transaction value under Rule 4 is rejected, that under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent rules. 20. Mirah Exports Pvt. Ltd. along with other importers had imported bearings at high rates of discount. The declared value was rejected by the Customs Authorities on the basis of the price list of the vendors. This Court set aside the decision of the respondent Authorities accepting the argument....