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2004 (171) E.L.T. 141 (Tri.-Del.)
Justice K.K.Usha,President and Shri
C.N.B.Nair,Member (T)
INDIAN WATCH PARTS MFG.
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
CASES CITED
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.
2.
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.
3.
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)].
4.
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.
5.
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.
6.
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.
7.
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.
8.
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.
9. 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.
10.
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”.
11.
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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