1983 (10) TMI 64 - HC - Customs

Issues Involved:
1. Legality of the order dated March 24, 1981, passed by the Special Secretary to the Government of India.
2. Allegations of mis-declaration under Section 111(m) of the Customs Act, 1962.
3. Imposition of a fine of Rs. 3,50,000/-.
4. Assessment based on the F.O.B. price of Swiss Francs 63,500/- for each machine.
5. Determination of whether the imported machines were new or second-hand.
6. Allegations of under-valuation of the imported machines.
7. Confiscation of machines under Section 111(d) of the Customs Act, 1962.
8. Imposition of a penalty of Rs. 10,00,000/- under Section 112 of the Customs Act, 1962.
9. Validity of the evidence used for determining the value of the machines.
10. Refund of fine and additional customs duty paid.

Issue-wise Detailed Analysis:

1. Legality of the Order Dated March 24, 1981:
The petitioners challenged the legality of the order passed by the Special Secretary, which held them guilty of mis-declaration under Section 111(m) of the Customs Act, 1962. The revisional authority directed that the assessment be made on the basis of the F.O.B. price of Swiss Francs 63,500/- for each machine and imposed a fine of Rs. 3,50,000/-.

2. Allegations of Mis-Declaration Under Section 111(m) of the Customs Act, 1962:
The Customs Appraiser initially alleged that the machines were new SPM 61 machines rather than second-hand SPM 18 machines, leading to a show cause notice for mis-declaration. The Collector of Customs concluded that the machines were new and undervalued, resulting in confiscation and penalties. However, the revisional authority later accepted that the machines were second-hand SPM 18 machines and found no fraudulent mis-declaration for Import Trade Control purposes.

3. Imposition of a Fine of Rs. 3,50,000/-:
The revisional authority reduced the fine in lieu of confiscation to Rs. 3,50,000/- based on the loss of revenue. This fine was contested by the petitioners, who argued that the value declared by them was accurate.

4. Assessment Based on the F.O.B. Price of Swiss Francs 63,500/- for Each Machine:
The revisional authority determined the value of each machine to be Swiss Francs 63,500/- based on evidence provided by the Department. The petitioners argued that this valuation was incorrect and that the declared value should be accepted.

5. Determination of Whether the Imported Machines Were New or Second-Hand:
The Customs Appraiser and the Collector initially determined that the machines were new. However, the revisional authority later accepted that the machines were second-hand SPM 18 machines, overhauled before dispatch.

6. Allegations of Under-Valuation of the Imported Machines:
The Department alleged that the machines were grossly undervalued. The revisional authority concluded that there was no under-valuation for Import Trade Control purposes but accepted the Department's claim for customs duty purposes, setting the value at Swiss Francs 63,500/- per machine.

7. Confiscation of Machines Under Section 111(d) of the Customs Act, 1962:
The Collector of Customs confiscated the machines under Section 111(d), giving the petitioners the option to pay a fine in lieu of confiscation. This decision was later revised by the revisional authority, which reduced the fine.

8. Imposition of a Penalty of Rs. 10,00,000/- Under Section 112 of the Customs Act, 1962:
The Collector imposed a penalty of Rs. 10,00,000/- on the petitioners. The revisional authority, however, found no justification for imposing any personal penalty and fine in lieu of confiscation.

9. Validity of the Evidence Used for Determining the Value of the Machines:
The revisional authority relied on two pieces of evidence: a letter and a telegram from M/s. Mowe, which indicated varying values for the machines. The petitioners argued that the evidence was misinterpreted and that the declared value was accurate. The court found merit in the petitioners' argument, stating that the revisional authority mis-read the evidence.

10. Refund of Fine and Additional Customs Duty Paid:
The court directed that the fine of Rs. 3.5 Lakhs and the additional customs duty paid based on the enhanced assessment be refunded to the petitioners. The Customs Department was instructed to ascertain the refund amount within four weeks and make the payment.

Conclusion:
The rule was made absolute, and the order of the revisional authority imposing the fine and enhancing the assessment value was set aside. The court declared that the price stated by the petitioners in the Invoice was the correct price and directed the respondents to refund the amount of fine and additional duty within six weeks. No order as to costs was made.

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