TaxTMI 
TaxTMI 
2000 (2) TMI 90
X X X X Extracts X X X X
X X X X Extracts X X X X
....stigation under Article 226 before the High Court at Gujarat. The writ petition was disposed of by directing the DRI to complete the investigation and issue the show cause notice within two months. 3.Raids were conducted at office and factory premises of the respondent No. 1 by the DRI and several documents recovered. Statements of the Managing Director, the Director and Assistant Manager as well as the clearing agent of the respondent No. 1 were recorded under Section 108 of the Customs Act, 1962 (referred to as the 'Act'). 4.The TDMs were seized. The respondent No. 1 appears to have filed a Second Writ Application in the High Court at Gujarat challenging the seizure of the TDMs. The High Court directed the provisional release of the TDMs against security. The goods were accordingly released but the investigation continued. 5. On the basis of the documents recovered and statements under Section 108, a detailed show cause notice was issued to the respondents on 15th June, 1990 alleging inter alia that the respondent No. 1 was liable to pay the difference of duty in respect of the TDMs calculated at the rate of S $ 343.45 per set instead of S $ 250.00 as well as alleging co....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ld be ameliorated by directing respondent No. 2 to accept the import licence within two weeks from today and respondent No. 2 shall proceed with the matter in accordance with law. This petition is disposed of in the above terms. Notice is discharged. No costs." 10. As far as appeal before the Tribunal was concerned, on a difference of opinion between the two members as to whether the order of the Collector should be upheld or not, the matter was referred to a third Member. The third Member concurred with the view that the order of the Collector in so far as it assessed the value of the TDMs at Singapore Dollar 343.45 was wrong. Consequently, the imposition of differential duty was set aside. On the question of the violation of the Import Control Order, the Tribunal acted on the basis of the High Court order and the concession of the departmental representative that the issue was one which the "original authority" would have to look into and decide and remanded the matter back to the Collector with liberty granted to the parties to produce any fresh evidence before the adjudicating authority in this connection. In view of this order, the penalty imposed by the Collector on the re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cated document. 16. A letter of credit was established by respondent No. 1 through the Bank of India in favour of M/s. Mohan Impex for supply of "Electronics components for VCRs, viz. Tape Deck Mechanisms as per order No. TC-80-004, dated 5-1-1989". 17.It is not in dispute that till 21-3-1989, TDMs were covered by Open General Licences (OGL) under the Import and Export Policy of April, 1988 to March 1991. By public notice dated 21-3-1989 the Import and Export Policy was amended by removing TDMs from the list of items covered by OGL. Therefore, the import of TDMs after 21-3-1989 required a licence in terms of clause 3 (1) of the Control Order. The public notice, however, allowed certain imports of TDMs without licence subject to the fulfilment of conditions detailed in paragraph 4 of the notice, as under : "In respect of raw materials, components and consumables taken out of Open General Licence in terms of this Public Notice import under Open General Licence by eligible importer shall not be permitted except to the extent of irrevocable letters of credit already opened and established before the date of this Public Notice for which shipments are made within a period of nin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....elevant to the issue of valuation. After the issuance of the Public Notice, there was a purported fall in the declared value of TDMs from S $ 343.50 to S $ 250.00 per set. Yamato is a Japanese concern. Yet on 17-5-1989 Yamato is alleged to have given a fresh proforma invoice to the respondent No. 1 quoting the price in Singapore Dollars per set instead of quoting the price in yen. As said by the Collector "Due to the change in the Import Policy, the importers had a special interest in ensuring that the unit price was brought down so that the quantity of import could be increased." That this dramatic "fall" in value of the TDMs did not reflect the real value of the TDMs is borne out by the evidence both documentary and oral. 20-A.At the outset it is clear that if the shipment by Yamato was pursuant to the fabricated order dated 5-1-1989 placed on it, the value declared by it cannot be accepted as genuine. [See Collector of Customs, Calcutta v. Sanjoy Chandiram 1995 (77) E.L.T. 241 (S.C.) = 1995 (4) SCC 222).] Therefore the value of the TDMs would have to be determined according to the law applicable. 20-B.Section 14(1) of the Act provides for valuation of goods for purposes....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder Section 108 of the Act. [See in this connection : Naresh J. Sukhawani v. Union of India [1996 (83) E.L.T. 258 (S.C.)] The respondent No. 1's Director and Assistant Manager confirmed before the DRI in their statements under Section 108 of the Act that the TDMs which were sent by Yamato were the same as those for which the orders were placed on M/s. Mohan Impex. The Assistant Manager of the respondent No. 1 stated that the order with M/s. Mohan Impex was subsequently "transferred" to Yamato and not that a fresh order was placed. Even the Managing Director of respondent No. 1 had this to say : "I also state that whatever item was entered into contract with M/s. Mohan Impex for the L/C opened with them in January, 1989 remained same (but for the make) - even in our fresh contract with Yamato Japan. Thus, there is no material change in our fresh contract with M/s. Yamato." 24.Now, the TDMs supplied by Yamato bore no marking and the order on M/s. Mohan Impex did not mention the model. Interestingly, the clearing agent of the respondent No. 1 in his statement under Section 108 said : "On the basis of common experience, it is stated that it is a fact that though importer had ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that respondent No. 1 had effected many shipments of the same TDM (4 to 5 shipments) earlier. 28. The Collector, in the circumstances narrated, correctly determined the value of the TDMs supplied by Yamato to be "such or like" the goods for which the order was placed on M/s. Mohan Impex within the meaning of S.14 (1) of the Act. 29. The finding of the Collector is also justifiable under Section 14(1A) of the Act. Section 14(1A) provides for the determination of the price in accordance with rules made in this behalf subject to the provisions of sub-section (1). The rules which have been framed in this connection are the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as the Valuation Rules). 30.Rule 3 of the Valuation Rules provides for the determination the method of valuation and states that: "For the purpose of these rules:- the value of imported goods shall be the transaction(i) value; If the value cannot be determined under the provisions of(ii) clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these rules." 31. Rule 4 sub-rule (2) provides that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n of a licence subsequent to the import. According to the respondents the appellant should not be allowed to raise the issue because the appellant had participated in the proceedings before the Commissioner after the remand and that the hearing was proceeding. 37. We accept the submission of the respondents, not on the ground put forward but because the appellant's representative before the Tribunal had conceded that the issue should be decided by the original authority in terms of the order of the High Court. Nevertheless, we would like to clarify the scope of the issue before the adjudicating authority. 38. It is not clear on what basis the High Court was persuaded to allow the import licence to be produced subsequent to the importation of the goods. However in directing the matter to be proceeded with in accordance with law, it is clear that the High Court did not decide finally whether the licences could, at all, be relied upon by the respondent No. 1 for avoiding their liability for contravention of clause (3) of the Control Order. The adjudicating authority will, therefore, have to decide (i) whether in law, a licence subsequently produced in respect of items already im....