Ms. Jyoti Balasundaram, Member (J) and Shri Moheb Ali M., Member (T)

MYTRI ENTERPRISES

Versus

COMMISSIONER OF CUSTOMS, MUMBAI

Order Nos. A/490-495/2004-WZB/C-II, dated 2-7-2004 in Appeal No. C/382-384/2003 and 94-96/2004

Valuation (Customs) - Enhancement of value - Goods imported from Dubai - Transaction value rightly rejected as uniform prices declared for all the goods irrespective of model, and combination without giving further details - No infirmity in impugned order in relying upon quotations received from traders of Dubai, and prices available on website, to revise value of goods in question - Section 14 of Customs Act, 1962. - The prices indicated both in quotations and website are wholesale prices. So long as the quotations themselves are tendered as evidence, the appellant had opportunity to demolish them by producing evidence in their favour. They did not avail the opportunity except asking for cross-examination of the officers concerned. As per decision of Tribunal in the case of Satellite Engineering Ltd., non-disclosure of intending importers, and non-producing them for cross-examination will not amount to violation of natural justice. In impugned order, the value of the impugned goods has been arrived at on the basis of the lowest quotation offered by one of the dealers of Dubai. One cannot find fault with such decision. [paras 21, 22, 23, 24, 25]

Confiscation and penalty - Under-valuation - Value of goods grossly misdeclared by declaring uniform prices for all the models of goods imported - Goods liable to confiscation - Penalty imposable - Sections 111(m) and 114A of Customs Act, 1962. [para 28]

Penalty - Customs - Penalty can be imposed simultaneously on firm and partners - However, having regard to fact that penalty has been imposed on both the partners, further penalty not imposed on firm - Section 114A of Customs Act, 1962. [para 29]

CASES CITED

 

Agarwal Trading Corporation v. Assistant Collector — 1983 (13) E.L.T. 1467 (S.C.) — Referred................................. [Paras 16, 29]

Aggarwal Distributors Pvt. Ltd. v. Commissioner — 2000 (117) E.L.T. 49 (Tribunal) — Referred.................................... [Paras 8, 15]

Hind Industries v. Commissioner — 1997 (90) E.L.T. 499 (Tribunal) — Referred............................................................... [Para 10]

India Sea Foods (Regd.) v. Collector — 1984 (16) E.L.T. 243 (Ker.) — Referred............................................................... [Para 16]

Maya Enterprises v. Collector — 1994 (71) E.L.T. 817 (Tribunal) — Relied on........................................................... [Paras 13, 21]

Overseas International v. Commissioner — 2001 (127) E.L.T. 599 (Tribunal) — Referred..................................................... [Para 8]

Pan Asia Enterprises v. Collector — 1995 (79) E.L.T. 322 (Tribunal) — Referred.............................................................. [Para 12]

Pan Asia Enterprises v. Collector — 1997 (94) E.L.T. A59 (S.C.) — Referred.................................................................. [Para 12]

Poonam Plastic Industries v. Collector — 1989 (39) E.L.T. 634 (Tribunal) — Referred....................................................... [Para 11]

Priti International v. Commissioner — 2001 (137) E.L.T. 184 (Tribunal) — Referred............................................................. [Para 8]

Puja Poly Plastics Pvt. Ltd. v. Commissioner — 2001 (131) E.L.T. 200 (Tribunal) — Referred............................................. [Para 8]

Satellite Engineering Ltd. v. U.O.I. — 1983 (14) E.L.T. 2177 (Bom.) — Relied on...................................................... [Paras 10, 23]

Sound-N-Images v. Collector — 2000 (117) E.L.T. 538 (S.C.) — Referred.......................................................................... [Para 8]

Techno Marketing v. Commissioner — 2004 (164) E.L.T. 113 (Tribunal) — Referred ................................................... [Paras 8, 18]

REPRESENTED BY :    Shri V.S. Nankani, Advocate for the Appellant.

Shri R.K. Pardeshi, JDR, for the Respondent.

[Order per : Moheb Ali M., Member (T)]. - These appeals arose out of a common order of the Commissioner of Customs, Mumbai. The importers are aggrieved by the order inasmuch as the Commissioner confiscated the goods (car speakers) under Section 111(m) of the Customs Act, rejected the declared value and imposed penalties on the partners of the importing firm under Section 114A.

 

2.The revenue  is aggrieved that the Commissioner has merely imposed penalties on the partners without imposing a suitable penalty on the importing firm.

 

3.Both the  importers’ appeals and the Revenue’s are taken up for disposal.

 

4. M/s. Mytri Enterprises is a partnership firm. It has two partners S/Shri Sushil Kumar Agarwal and Jayant Bachata. The firm imported car speakers (declared them as load speakers) of three models, declared on uniform price of US $ 9 per pair totally valued at US $ 14,391 CIF and filed a bill of entry for their clearance. They were assessed to duty enhancing the value from US $ 9 to US $ 11.60 per pair in respect of one model, US $ 9 to 11.74 per pair in respect of another and US $ 9 to 11.81 per pair in respect of the third one. This revision of value is in accordance with a formula invented by the Commissioner of Customs, Mumbai. The formula is contained in a letter dt. 11-1-2003 by the Commissioner addressed to the Chief Commissioner. We append the letter to this order so that we don’t have to reproduce its contents here. After the bill of entry was assessed the goods were examined by the shed appraiser in the presence of officers of C.I.U. Such an examination resulted in the discovery that the consignment consisted of three different models, of three different sizes and wattage. The model numbers are TS-A 6955, TS-A6985 and TS-A6995. The invoice doesn’t speak of any ‘TS’ though. The goods were seized on the ground that the importers mis-declared the value and material particulars. The goods were imported from a trader in Dubai. Apart from the brand, the sizes and the wattage no other technical details of each of the models are either given in the invoice or in the packing list. The department could know the exact specification of each of the models through a catalogue.

 

5.It is the  department’s contention that the importer misdeclared the value of the goods rendering them liable to confiscation under Section 111(m) of the Customs Act, and the importers themselves rendered themselves liable to penalty under Section 114A of the same Act. The goods were seized but however were released provisionally after the importer executed a bank guarantee and bond on the directions of the Hon’ble High Court of Bombay before whom the importers agitated against seizure of their goods.

 

6.The  Commissioner in the adjudication order re-determined the value on the basis of evidence gathered during the course of investigation. Such evidence mainly consisted of quotations received from abroad (Dubai) from other sellers of the same goods and the prices available on the internet. The prices shown in the quotations and the internet were wholesale prices. In the impugned order the Commissioner demanded a duty of Rs. 13,32,042/- in addition to the duty admitted by the importers. He confiscated the goods and imposed penalties on the partners.

 

7.Heard both sides.

 

8.The order of the Commissioner was assailed by the ld. Advocate Shri V.S. Nankani on the following grounds:

 

(a)    The department failed to produce a single invoice where the prices of the same goods were found to be higher. He furnished details of contemporaneous imports, the prices declared, the assessable value accepted/loaded by the customs and argued that the appellants’ prices compared well with the ones declared by other importers.

(b)    He referred to the letter addressed by the Commissioner of Customs Mumbai to the Chief Commissioner in regard to valuation of car audio speakers. In this letter the Custom House adopted a particular method of valuation of car speaker of both lesser and well known brands. The same method should have been adopted for determining the value of the appellants’ goods as well. In fact the method adopted in the said letter was brought to the notice of the Tribunal at Delhi in identical proceedings. The Tribunal accepted the contention that the same norms as stated in the letter should be adopted in the case of the appellants before them. The present appellants are put to a dis-advantage vis-a-vis other importers when a different norm is applied to their goods. The case of Techno Marketing v. CCE, Calcutta, Order No. 640/03 dt. 18-11-2003 [2004 (164) E.L.T. 113 (T)] was relied upon.

(c)    The Commissioner erred in discarding the transaction value relying on some prices quoted in some obscure quotations engineered by the investigating officers themselves (S/Shri Sharma and Colaco). The case of Overseas International v. CCE, Chennai [2001 (127) E.L.T. 599 (T) = 2000 (41) RLT 101 (Tr.)] is relied upon to agree that quotations cannot overrule the prices shown in the invoice.

(d)    Reliance on prices exhibited in the internet is erroneous. Aggarwal Distributors Pvt. Ltd. v. CCE, New Delhi [2000 (117) E.L.T. 49 (Tri.)] was relied upon.

(e)    Cross examination of Shri Sharma and Shri Colaco was not allowed resulting in gross violation of principles of natural justice.

(f)     Burden of proving under-valuation is on the department and it can only be discharged by production of affirmitive evidence and not on the basis of suspicion etc. The department failed to produce any worthwhile evidence. Puja Poly Plastics Pvt. Ltd. v. CCE, Calcutta [2001 (131) E.L.T. 200 (Tri.)] and Sounds N. Images v. CCE [2000 (117) E.L.T. 538 (S.C.)] were relied upon in support of the contention.

(g)    Price quotations addressed to non-existing parties are not offers for sale under Section 14 of the Customs Act, Priti International v. CCE, Chennai [2001 (137) E.L.T. 184 (Tri.)] is relied upon.

(h)    Penalties on both the partners of the firm should not have been imposed under Section 114A of the Customs Act, whereas the section provides for imposition of penalty on the importer who contravened the provisions of the Act.

 

9.The ld. JDR  Shri R.K Pardesi strongly supported the impugned order in so far as it related to confiscation of goods, rejection of transaction value and imposition of penalties on the partners of the firm. His grouse is confined to non-imposition of penalty on the firm as well.

 

10.In support  of his contention that prices indicated in a quotation can be relied upon to reject a declared price the ld. JDR found support in the case of Hind Industries v. Commissioner [1997 (90) E.L.T. 499 (Tri.)]. An appeal against this decision was dismissed by the Supreme Court] wherein the Tribunal held that an adjudicating authority can determine the value on the basis of the prices indicated in quotations after giving suitable allowance. In the present case a suitable allowance was given by the adjudicating authority. He also relied on the decision of the Tribunal in the case of Satellite Engineering Ltd. v. Union of India [1983 (14) E.L.T. 2177 (Bom.)] wherein the High Court held that non-disclosure of names of exporters who sent the quotations has not caused any hardship to the petitioners. He argued that in the present case the names of the exporters who sent the quotations were disclosed although the recipients of the quotations were not permitted to be cross-examined. No hardship is caused to the importers in such an event.

 

11.The ld. JDR relied on the case of Poonam Plastic Industries v. CCE [1989 (39) E.L.T. 634 (Tri.)] wherein the Tribunal held that the department is not required to prove actual value with mathematical precision when transaction is veiled in secrecy. In the present case the prices declared are veiled in secrecy as the importer failed to disclose the actual value of each of the models of speakers, a fact which is known to him alone.

 

12.He cited the case of Pan Asia Enterprises v. CCE, [1995 (79) E.L.T. 322 (Tri.) which is later upheld by the Supreme Court [1997 (94) E.L.T. A59 (S.C.)] and argued that when the imported goods were not supplied by the manufacturer and when the