1985 (3) TMI 288 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of value.
2. Determination of the correct assessable value under Section 14 of the Customs Act.
3. Penalties imposed.

Issue-wise Detailed Analysis:

1. Misdeclaration of Value:
The appellants, M/s. Automotive Enterprises, imported bearings from the UK and declared prices at lb0.58 and lb0.69 for main and connecting rod bearings respectively. The Department issued a show cause notice alleging that the correct prices were lb1.37 and lb1.19, as per the price list from the authorized agents. The Collector of Customs found the appellants guilty of misdeclaration, leading to confiscation of goods with an option for redemption and penalties.

2. Determination of the Correct Assessable Value Under Section 14 of the Customs Act:
The appellants argued that the prices in their invoices were correct, based on negotiations and the sellers' inability to obtain better prices. They contended that the price list relied upon by the Department was merely an offer indicating maximum prices. However, the Tribunal noted that even if the invoice price is genuine, the Customs Act allows for duty assessment based on the deemed value under Section 14(1)(a), which considers the international market price.

The Tribunal examined whether the prices in the invoices were true and if not, what the deemed value should be. The appellants relied on letters and invoices from M/s. Harvin Exports, suggesting the goods were sold at lower prices due to being dead stock. However, discrepancies in the quantities supplied indicated that the stock might not have been entirely dead stock. The Department's reliance on a circular letter dated 7-2-1977, which indicated higher prices, was deemed more credible. The Tribunal concluded that the prices in the appellants' invoices were not acceptable, and the prices in the circular letter should form the basis for the deemed value under Section 14(1)(a).

3. Penalties Imposed:
The Tribunal upheld the penalties imposed by the Collector of Customs, considering them not excessive given the volume of import. The appeal against the penalties was dismissed.

Separate Judgment:
A concurring judgment agreed with the order but for different reasons. It emphasized that the deemed value under Section 14 is not the actual or invoice value but the market price at the time and place of importation. Since there were no contemporaneous imports or market prices available, the assessable value had to be determined under the Valuation Rules. The circular letter dated 7-2-1977 was considered relevant for determining the assessable value, and the appeal was dismissed on this basis as well.

Conclusion:
The Tribunal confirmed the lower authorities' orders, holding that the appellants intentionally misdeclared prices and that the correct assessable value should be based on the circular letter dated 7-2-1977. The penalties were upheld, and the appeal was dismissed.