1999 (7) TMI 601 - AT - Customs

Summary

Issues Involved:
1. Short payment of Customs duty and imposition of penalty.
2. Alleged mis-declaration of value and undervaluation of imported components.
3. Validity of invoice value as assessable value.
4. Adherence to price lists and negotiation of prices.
5. Procedural aspects of invoicing and customs declarations.
6. Limitation and computation of duty demand.

Issue-wise Detailed Analysis:

1. Short Payment of Customs Duty and Imposition of Penalty:
M/s. Modi Xerox Ltd. challenged the Order-in-Original dated 7-4-1992, which confirmed a Customs duty of Rs. 26,34,936/- as short paid on the import of 129 components of Xerographic machines. Additionally, a penalty of Rs. 15 lakhs was imposed under Section 112 of the Customs Act.

2. Alleged Mis-declaration of Value and Undervaluation of Imported Components:
The Department issued a notice on 26-3-1991, alleging mis-declaration of value under Section 46 (4) of the Customs Act and proposed action under Sections 111(m), 3(2) of the Imports and Export (Control) Act, 1947, and Section 13(2) read with Section 68 of the Foreign Exchange Regulation Act. The appellants were accused of evading Customs duty amounting to Rs. 1,00,75,497/-. The appellants contended that the allegations were based on incorrect facts and explained that the discrepancies arose due to the invoicing system and the timing of price list updates.

3. Validity of Invoice Value as Assessable Value:
The appellants argued that the invoice value should be treated as the assessable value as per Section 14 of the Customs Act. They maintained that the invoice prices reflected the prices prevailing at RX Netherlands at the time of shipment and were not related to the purchase order dates. The Tribunal found merit in this argument, noting that the appellants had shown that the foreign suppliers followed a system of charging based on the price list prevalent on the date of invoicing.

4. Adherence to Price Lists and Negotiation of Prices:
The appellants explained that RX, UK operated four different price lists during the relevant period. They argued that the price lists were subject to variations and negotiations, which affected the invoicing. The Tribunal found that the appellants' claim about the existence of multiple price lists and the negotiation of prices had some force, supported by a letter from the foreign suppliers indicating price reductions and retrospective benefits.

5. Procedural Aspects of Invoicing and Customs Declarations:
The appellants detailed the procedural aspects of invoicing, explaining that the invoices served both as invoices and packing lists, and discrepancies in prices were due to the computerised invoicing system. The Tribunal accepted that the foreign suppliers' invoicing system was complex and that the appellants' declarations were not deliberately misleading.

6. Limitation and Computation of Duty Demand:
The Collector had accepted that the duty demand could not be determined by multiplying the differential value of components with the number of manufactured photocopiers. The Tribunal agreed with the appellants that the duty demand was arbitrarily computed and set aside the confirmed Customs duty of Rs. 26,34,936/-.

Conclusion:
The Tribunal concluded that the appellants had not deliberately misdeclared the assessable value and that the invoice value should be accepted as the assessable value. The Customs duty demand and penalty imposed by the Collector were set aside, and the appeal was allowed.