R.M. Sahai and S.C. Sen, JJ.

COMMERCE INTERNATIONAL

Versus

COLLECTOR OF CUSTOMS

Civil Appeal No. 2198 of 1988, decided on 29-3-1995

Valuation (Customs) - Goods purchased by importer from foreign trading company - Value declared in the seller’s invoice not accepted since seller was not the manufacturer of goods - Department requiring the importer to furnish manufacturer’s price list since the seller itself was not a manufacturer - Foreign seller not willing to reveal the source of supply - Manufacturer’s price list obtained by department - Declared value of goods when compared with manufacturer’s price list found to be much below the normal price in the international market - Goods liable to confiscation having been under valued - Valuation of goods under Rule 3(b) of the Customs Valuation Rules, 1963 on the basis of manufacturer’s price list valid when seller refuses to divulge the name of the manufacturer - Value determinable under Rule 3(b) if it cannot be determined under Rule 3(a) ibid - Secton 14 of the Customs Act, 1962.

 [paras 2, 3]

[Order]. - The only question that arises for consideration in this appeal is whether the Tribunal was justified in applying Rule 3(b) of the Customs Valuation Rules framed under Section 14 of the Customs Act.

2.The appellant filed a Bill of Entry for clearance of 125 cartons of toners declaring the value of the goods at a particular amount on the basis of invoice-cum-value and country of origin certificate issued by M/s. Sangill Ltd. Since the seller was not a manufacturer the Department required the appellant to furnish the price list of the goods under import but the appellant instead of filing the price list stated that they had purchased the goods from a trading company which was not willing to reveal the source of supply. Consequently, the Department obtained export price list from M/s. Coates Electrographics Limited. After examining the price list of M/s. Coates Electrographics Ltd., the Collector was of the opinion that it was a case in which Rule 3(a) could not be applied. Therefore, he proceeded to determine the value under Rule 3(b) and on the price list supplied by the manufacturer the valuation of the toner imported by the appellant was determined. It was held that the value of the goods when compared with manufacturer’s price list was much below the normal price in the international market. The goods were directed to be confiscated with an option to clear on Rs. 8 lakhs. Penalty of Rs. 1000/- was also imposed. Against this order the appellant approached the Tribunal. The Tribunal found that the Collector did not commit any error in applying Rule 3(b) but reduced the redemption fine from Rs. 8 lakhs to Rs. 5 lakhs. The penalty of Rs. 1,000/- was maintained.

3.Section 14(1)(b) of the Customs Act empowers the appropriate authority to determine the value of the imported goods in accordance with provisions contained in Rules 3 to 8. Rule 3(a) provides for determination of value of such goods, with comparable goods produced or manufactured and ordinarily sold or offered for sale to other buyers in India under competitive conditions. Rule 3(b) permits the proper officer to determine valuation on the export price at which such goods or comparable goods are ordinarily sold or offered for sale under competitive conditions to buyers outside India. The determination under Rule 3(b) could be undertaken if the valuation could not be determined under clause (a). The authorities found that in the nature of goods imported by the apellant the valuation of it could not be determined under rule 3(a). Therefore, Rule 3(b) was rightly invoked. And the determination having been done on comparable goods offered for sale in competitive conditions in countries outside India the order does not suffer from any error of law. The Tribunal further did not commit any error in relying on the price list supplied by the manufacturer as compared to trading company which refused to divulge the name of the manufacturer.

4.In the result, this appeal fails and is accordingly dismissed. But there shall be no order as to costs.

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