Directorate General of Valuation Central Board of Excise & Customs Government of India

CESTAT Order Nos. 68-69/2004-NB(A),dt. 06-02-2004

2004 (171) E.L.T. 141 (Tri.-Del.)
Justice K.K.Usha,President and Shri C.N.B.Nair,Member (T)

Final Order Nos. 68-69/2004-NB(A),dated 6-2-2004 in Appeal Nos. C/177 & 248/2003-NB(A)

Valuation (Customs) – Under-valuation – Misdeclaration of value – When issuer of invoice indicates one value for goods in invoice and another value in export declaration, Customs authorities fully justified in holding in -voice value to be not the transaction value-Manufacturer’s invoices or other documents to support value shown in import invoices, also not produced – Comparable import price, though for a later period, found to be closer to export declaration than the price declared in import invoices showing that misdeclaration of value made in import invoices rather than in export declaration- Section 14 of Customs Act,1962. [paras 6,8,9]

Appeals allowed


Collector v. East Punjab Traders­ – 1997 (89) E.L.T.11 (S.C.) – Distinguished……….[Paras2,3,9]

Commissioner v. Multimetal Ltd. – 2002(144)E.L.T.574(Tri.-Mumbai)-Relied on ……. [Paras 3,9]

Manohar Rajaram Chhabria and Orson Electronics v. Collector- 1997 (93) E.L.T.A133 (S.C.)

Referred……………………………………………………………………………[Para 3]

Md. Abdul Halim v.Commissioner-2001 (130) E.L.T.842 (Tribunal)- Distinguished ………[Para5]

Multimetal Ltd..v.Commissioner-2003 (151)E.L.T.A309 (Tri.- Mumbai)- Referred ………..[Para3]

Orson Electronics v.Collector-1996 (82) E.L.T.499 (Tri.- Del.) – Relied on …………… [Para3,9]

Rainbow Gold Products Pvt. Ltd. v. Collector –1993 (86) E.L.T.309 (Tribunal)

Distinguished……………………………………………………………….. [Para5]

Ram Khazana Electronic v. Commissioner-2003 (156)E.L.T.122 (Tribunal)- Relied on ……[Para9]

South India Television (P) Ltd.v.Commissioner- 2001 (136) E.L.T.243 (Tribunal)

Distinguished……………………………………………………………….. [Para5]

Union of India v. Jain Shudh Vanaspati Ltd. – 1996 (86)E.L.T. 460(S.C.) – Relied on….[Paras 4,10]


Uttam Mohanlal Jain v.Commissioner – 2000 (124) E.L.T.661 (Tribunal)

- Distinguished……………………………………………………………….. [Para5]

Weston Components Ltd.v.Commissioner- 2000 (118)E.L.T.199 (Tribunal)- Relied on ……[Para9]

REPRESENTED BY : Shri S.M.Tata, SDR, for the Appellant.

Shri C.H.Sankar, Advocate, for the Respondent.

[Order per : C.N.B.Nair, Member (T)].- Both these appeals of the Revenue relate to issue of valuation of watch parts imported from Singapore Traders at Jaipur. Appeal No.C/177/03-NB(A) relates to the import of 4000 pieces of assembled watch movements by M/s. Indian Watch Parts Manufacturer, Jaipur in June,1995. The value of the consignment was declared to the Customs authorities at HK $ 10,000 and the goods were assessed and cleared at that value. Subsequent investigation showed that the foreign supplier had declared a F.O.B. value of Rs.HK $ 36,000 for the same consignment under their export declaration filed before the Hong Kong Customs. In Appeal No.C/248/03-NB(A) M/s. Rochi Ram & Sons, Jaipur had imported a consignment of 53,000 pieces of watch- cases with metal band (bracelet) in August, 1994. The value of this consignment was declared to Custom at CIF US $ 27, 878 i.e. Rs. 8,79,551/-. Later investigation showed that, for the same goods, the foreign supplier had declared a value of HK $ 2,38,500 (Rs. 9,73,080/- as F.O.B. value). Based on the differences in the value declarations to the Indian Customs and Hong Kong Customs, proceedings were initiated against the importers alleging that the importers have misdeclared values and have evaded customs duty. Apart from these differences in declared values, the value of other imports of identical goods was also relied upon. The notices proposed to recover the duty short levied and to impose penalty on the importers. The Adjudicating Authority / Appellate Authority dismissed the proceedings. The present appeals are directed against those orders.

What prevailed with the lower authorities in passing their order was that there appeared to be no evidence of payment of higher amounts for the imports than the amounts declared in the import invoices and it has been held that in such cases value shown in the invoices were to be taken as transaction values. The orders also held that copies of export declarations obtained by the Directorate of Revenue Intelligence cannot be accepted as the basis for valuation of the goods. The lower authorities have relied on the decision on the Apex Court in the case of Collector v. East Punjab Traders-1997 (89) E.L.T.11 (S.C.) and several decisions of this Tribunal. In the case of Indian Watch Parts Manufacturer, the Commissioner (Appeals) has also held that the proceedings were hit by limitation inasmuch as no appeal had been filed within the statutory time limit against the order of assessment and the clearance of the goods in June,1995.

The Revenue’s contention is that the material on record in the present case clearly supported its case that the value declared by the importers were false. It is being pointed out that the supplies were from traders and the importers had failed to make available manufacturers’ invoice to support the sale prices. The discrepancy between the prices in the export declarations and import invoices pointed only to under-declaration of value in the import invoices inasmuch as import of identical goods and the price quotation also showed that the value mentioned in the export declarations were the correct value for the transaction. The Revenue has also pointed out that the decision of the Apex Court in the case of East Punjab Traders was not applicable to the facts of the present case inasmuch as that case related to obtaining of some document by a visiting officer abroad, while in the present case customs authorities of Hong Kong had made available to their counterparts in India, statutory customs declaration filed before the Hong customs. It is being pointed out by Revenue that the statutory records of another customs jurisdiction deserve to be accepted. During the hearing of the cases, learned SDR has pointed out the legal position was no more in doubt inasmuch as the Apex Court had dismissed [1997 (93) E.L.T.A133 (S.C.)] appeal against this Tribunal’s decision in a similar case [1996 (82) E.L.T.499 Orson Electronics Pvt.Ltd. v. Collector of Customs, Bombay.] Revenue has also pointed out that lack of evidence about payment of higher amount was no ground for holding against the Revenue. This submission is made relying on the dismissal of Appeal [2003 (151) E.L.T. A309] against CEGAT order No. 2640/2001-WZB/C-II, dated 17-10-2001 in the case of Commissioner of Customs, Mumbai v. Multimetal Ltd., reported in 202 (144) E.LT.574 (Tri.-Mumbai)].

The Revenue has also pointed out that the decision regarding limitation in the case of M/s. Indian Watch Parts Manufacturer is clearly erroneous inasmuch as the Apex Court has held in Union of India v. Jain Shudh Vanaspati-1996 (86) E.L.T.460 (S.C.) that non-filing of appeals against clearance orders was no ground for holding proceedings under Section 28 of the Customs Act to be illegal.

During the hearing of the case, learned Counsel for the respondent importers submitted that in several proceedings [South India Television (P) Ltd.v.Commissioner of Customs, Calcutta- 2001 (136) E.L.T.243], [Rainbow Gold Products Pvt.Ltd. v.Collector of Customs, Hyderabad-1996 (86) E.L.T.309],[Uttam Mohanlal Jain v.Commissioner of Customs, Nhava Sheva-2000 (124) E.L.T.661] and Md. Abdul Halim v.Commissioner of Customs, Calcutta-2001 (130) E.L.T.842] the Tribunal had held that case of undervaluation cannot be sustanined based on the photocopies of export declarations obtained from abroad.

We have perused the records and have considered the submissions made by both sides. The orders of lower authorities have accepted that the invoice prices represented transaction values in the two cases and that, two cases and that, under the Customs Valuation Rules, transaction value should constitute assessable value. From the material on record, we are of the view that the authorities were not correct in reaching this finding. The import invoices are documents issued by Hong Kong Traders. Export declarations before Hong Kong Customs were also filed by the same foreign suppliers. No explanation whatsoever has been offered by them as to why two different values are being shown in the different documents. They have also not made available manufacturer’s invoices or other documents to support the value shown in the import invoices. Comparable import price through for a later period, is found to be closer to the export declaration than the price declared in the import invoices. That clearly shows that misdeclaration of value is made in the import invoices rather than in the export declarations. This would appear to be motivated by the fact that Indian import duties were very high during the relevant period.

Confronted with the difference in the two values, one of the importers, M/s. India Watch Parts Manufacturers, offered the explanation that the imported goods were defective in nature. There is no material to substantial this explanation. The import documents like the invoice nowhere mentioned the goods as defective. There is also no evidence that upon receipt of the goods in India, they were found to be defective in any manner, either during customs examination or thereafter. No evidence has been produced to show that there were large rejections of parts during the assembly of watches with these imported parts. Nor has the importer Shri Ishwar Dass Moolrajani given details as to what were the defects in goods. Clearly this is a no ball thrown by Shri Moolrajani and it has worked as a googly on the adjudicating authority.

The obligation of an importer with regard to declarations made about the nature, quantity and value of the imported goods is strict. Section 46(i) of the Customs Act states that an importer (for home consumption) of any goods shall make entry thereon and sub-section (4) of the same section stipulates that the importer, while presenting the bill of entry, shall at the foot thereof make and subscribe to a declaration as to the “truth of the contents of such bill of entry” and shall, in support of such declaration, produce to the proper officer the invoice, if any, relating to import goods. Thus, the invoice to be produced should indicate the full value of the goods. When the issuer of the invoice indicates one value for the goods in the invoice and another value in other documents, the customs authorities are fully justified in holding the invoice value to be not the transaction value. Finding of misdeclaration of value also would be justified in circumstances where under declaration of value in the import invoice and the bill of entry help in evading high rates of import duty.

The Revenue is entirely justified in contending that the export declarations obtained by them were authentic. These are statutory documents filed before Customs authorities in Hong Kong .Hong kong authorities made these documents available to Indian Customs authorities on request. In the present case, there is no circumstances calling in question the particulars taken from the export declarations. In fact, the particulars of the goods declared in the export declaration and the invoices tally and the importers have accepted this fact. To a case like this, the decision of the Apex Court in the case of East Punjab Traders and the decisions of this Tribunal (cited by the respondent) has no application. In fact, the decisions of this Tribunal in the case of M/s. Orson Electronics Pvt. Ltd., and Commissioner v. M/s. Multimetal Ltd. clearly apply. Same is the ratio of the decision of this Tribunal in the case of Weston Components Ltd. v. CC, New Delhi-2000 (118) E.L.T.199 and Ram Khaxana Electronic v. CC , Air Cargo, Jaipur-2003(156) E.LT.122.

The finding of the Commissioner on the question of limitation is grossly erroneous. This is clear from the following observations of the Apex Court in the case of Union of India v. Jain Shudh Vanaspati Ltd, 1996 (86) E.L.T.460 (S.C.). “Demand Show Cause Notice issued under Section 28 of the Customs Act, 1962 for demand of duty can be issued without reviewing under Section130, the order of clearance passed under Section 47 of the Customs Act, 1962. The High Court was, therefore, in error in coming to the conclusion that no show cause notice under Section 28 could have been issued until and unless the order under Section 47 had been first reviewed under Section 130. Case remanded”.

In view of the above, we find merit in the appeals. The appeals are allowed After setting aside the orders impugned in these appeals. Consequently, duty demand of Rs.2,55014/- is confirmed against respondent M/s. Indian Watch Parts Mfg. and dutydemand of Rs.90,277/- is confirmed against respondent M/s. Ruchi Ram & Sons. Further, penalties of Rs.1,25,000/- and Rs.45,000/- are imposed on M/s. Indian Watch Parts Mfg. And M/s. Ruchi Ram & Sons. Respectively under Section 112 of the Customs Act, 1962.

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