1990 (8) TMI 144 - SC - Customs

Whether penalty or fine be reduced? Held that - The import of fully assembled copiers was prohibited. The appellants was only entitled to import 62% of the components. As already mentioned above, the device adopted by the appellant in the present case was a complete fraud on the Import Policy and the appellant was doing indirectly what he was not permitted to do directly. This is a case where the appellant had not only violated the terms and conditions of the licence but also committed a fraud on the Import Policy itself. Thus we find no ground or justification to reduce the penalty or fine. Appeal dismissed.

Issues Involved:
1. Misdescription of goods.
2. Misdeclaration of value.
3. Suppression of relationship with suppliers.
4. Suppression of the place of origin of goods.
5. Validity of the licence for imported goods.
6. Valuation of imported goods.
7. Confiscation and penalties.

Issue-wise Detailed Analysis:

1. Misdescription of Goods:
The Collector of Customs determined that the goods imported by the company were fully finished copiers in SKD/CKD form, contrary to the company's declaration that they were only parts of copiers. The Collector held that the description of items in the invoices had been deliberately manipulated to match the licence description. This finding was upheld by the Tribunal, which noted that the licence produced was not valid for any of the items imported, even when viewed individually.

2. Misdeclaration of Value:
The Collector rejected the company's declared value of the imported goods, determining the correct value based on quotations from M/s. Shun Hing Technology Ltd. The Collector found a misdeclaration of value amounting to Rs. 6,15,873/-, leading to a duty payable of Rs. 10,96,228.20P. The Tribunal upheld this valuation, rejecting the company's contention that the valuation was exorbitant and finding no cogent reason to interfere with the Collector's order.

3. Suppression of Relationship with Suppliers:
The Collector found that the company had suppressed its relationship with the suppliers, M/s. Shun Hing Technology Ltd., Hongkong, and M/s. Paralax Industrial Corp., Hongkong, who were agents of the manufacturers, M/s. Matushita Electric Co. Ltd., Japan. The Tribunal upheld this finding, noting the special relationship between the company and the suppliers.

4. Suppression of Place of Origin of Goods:
The Collector determined that the company had suppressed the place of origin of the goods, which were of Japanese origin and manufactured by M/s. Matushita Electric Co. Ltd., Japan. This finding was based on the Managing Director's admission and was upheld by the Tribunal.

5. Validity of the Licence for Imported Goods:
The Collector held that the imported goods were not covered by a valid licence, as the licence was for certain components and not for fully assembled copiers. The Tribunal upheld this finding, noting that the company had violated the terms and conditions of the licence and committed a fraud on the Import Policy by importing fully finished copiers in the guise of components.

6. Valuation of Imported Goods:
The Collector based the valuation on quotations from M/s. Shun Hing Technology Ltd., which the company had submitted with their application for approval of their phased manufacturing programme. The Tribunal upheld this valuation, noting that the company could not dispute the correctness of the prices mentioned in the quotations they had themselves produced. The Tribunal rejected the company's argument that the invoice prices should be taken as the basis for valuation in the absence of any other relevant material.

7. Confiscation and Penalties:
The Collector ordered the confiscation of the entire goods with an option for the company to redeem them on payment of a fine of Rs. 3 lakhs. Additionally, fines of Rs. 1 lakh each were imposed on the company and its Managing Director. The Tribunal upheld these penalties, finding no cogent reason to interfere with the Collector's order. The Supreme Court also found no justification to reduce the penalties or fines, noting that the company had not only violated the licence terms but also committed a fraud on the Import Policy.

Conclusion:
The Supreme Court dismissed the appeals, upholding the findings of the Collector and the Tribunal. The Court found no merit in the company's arguments regarding the valuation of goods, validity of the licence, or the penalties imposed. The appeals were dismissed with one set of costs.

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