2015 (12) TMI 1344 - AT - Customs

Valuation - reliance on the quotation price - Rejection and re-fixing of transaction value - Determination of value under Rule 8 - Confiscation of goods - Demand of differential duty - Held that - Value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of the prices mentioned therein. The company has not only not disputed the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. Fact that the trade representative of USSR in his letter dated January 20,1987 has asked the appellant not to divulge the specially quoted price to any other party in India, in itself indicates that the price offered to the appellant was a special price and not the ordinary price of such goods in the course of international trade. The price in the ordinary course of international trade has been indicated in the price list published by the manufacturers in USSR. We, therefore, find no ground to interfere with the order of the Tribunal - Decided against Assessee.

Issues Involved:
1. Rejection and re-fixing of transaction value.
2. Determination of value under Rule 8.
3. Demand of differential duty invoking extended period and interest thereon.
4. Confiscation of imported goods.
5. Penalty on two firms under Section 114A.
6. Penalty on Shri Nitin Shah.

Issue-wise Detailed Analysis:

1. Rejection and Re-fixing of Transaction Value:
The appellant imported broadcasting equipment, including Hitachi Z-ONE-D Camera Systems, which were declared as "Products for display at Broadcast India 95 exhibition, to be returned after the exhibition." However, the equipment was sold domestically, leading to allegations of under-invoicing and misdeclaration. The Customs authorities argued that the declared transaction values were significantly lower than those indicated in the manufacturer's price lists and other recovered documents, suggesting a deliberate undervaluation. The appellant contended that the low prices were due to negotiations and the introduction of new products in the market.

2. Determination of Value under Rule 8:
The Customs authorities determined that the transaction values declared by the appellant did not represent the actual transaction value as defined under Rule 4 of the Customs Valuation Rules, 1988. They argued that since the declared values were significantly lower than the manufacturer's price lists and no valid discounts were documented, the value should be determined under Rule 8, which allows for valuation using reasonable means consistent with the principles of the Customs Valuation Rules. The assessable value was thus recalculated based on the manufacturer's price lists, leading to a substantial increase in the duty liability.

3. Demand of Differential Duty Invoking Extended Period and Interest Thereon:
The Customs authorities issued a notice demanding differential duty, invoking the extended period due to the alleged willful misdeclaration and undervaluation by the appellant. The differential duty was calculated based on the revised assessable value determined under Rule 8, resulting in a significant amount of duty being evaded. Interest on the differential duty was also demanded.

4. Confiscation of Imported Goods:
The Customs authorities sought the confiscation of the imported goods under the provisions of the Customs Act, arguing that the goods were imported based on false declarations and undervaluation. The appellant's defense was that the declared values were genuine and based on negotiated prices and discounts, which were commercially acceptable.

5. Penalty on Two Firms under Section 114A:
Penalties were proposed on the two firms involved in the importation under Section 114A of the Customs Act, which deals with penalties for short-levy or non-levy of duty in cases of collusion, willful misstatement, or suppression of facts. The Customs authorities argued that the firms had colluded to undervalue the imported goods and evade duty.

6. Penalty on Shri Nitin Shah:
A penalty was also proposed on Shri Nitin Shah, the Managing Director of the appellant firm, for his role in the alleged undervaluation and misdeclaration. The Customs authorities argued that Shri Nitin Shah was directly involved in the negotiations and documentation that led to the undervaluation of the imported goods.

Judgment Analysis:
The learned Counsel for the appellant argued that the price lists used by the Customs authorities could not be the sole basis for rejecting the declared transaction values. They relied on the Supreme Court's decision in Eicher Tractors Vs. CC, which held that a price list is not proof of transaction value and discounts are commercially acceptable. They also argued that the price lists from 1995 could not be used for imports made in 1997 and 1998 due to the falling prices of electronic goods. The Counsel emphasized the need for sequential application of valuation rules, as held in South India Television Vs. CC Calcutta.

The learned AR countered that the issue of time gap between the price list and the imports was not raised before the Commissioner and that the documentation between the appellant and the supplier indicated collusion. The AR relied on the Supreme Court's decisions in Sharp Business Machines Pvt. Ltd. and Padia Sales Corporation, which supported the use of manufacturer's price lists for determining the correct value of imported goods.

The Tribunal considered the arguments and evidence presented by both parties. It noted the Supreme Court's observations in Eicher Tractors and South India Television regarding the need for sequential application of valuation rules and the acceptance of discounts. However, it also considered the evidence of collusion and the significant discrepancy between the declared values and the manufacturer's price lists.

Conclusion:
The Tribunal upheld the rejection of the declared transaction values and the determination of value under Rule 8, based on the manufacturer's price lists. The demand for differential duty and interest was also upheld, along with the penalties on the two firms and Shri Nitin Shah. The Tribunal emphasized the importance of accurate declarations and the adherence to valuation rules to ensure proper assessment of customs duty.

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