1987 (6) TMI 66 - HC - Customs

Summary

Issues:
1. Allegation of under-invoicing by the Assistant Collector of Customs.
2. Challenge to the decision by the petitioners.
3. Comparison with a similar case involving Liberty Oil Mills.
4. Interpretation of the Customs Tariff Act.
5. Decision on the petition filed by the petitioners.

In this case, the petitioners imported "copra" of Zanzibar origin under a valid import license, invoiced by M/s. Panachand & Co. Pvt. Ltd., Singapore. The Assistant Collector of Customs alleged under-invoicing and issued a show cause notice. The petitioners explained that they imported as per the license conditions and paid the invoice value agreed upon with the sellers. The department claimed fluctuations in prices at the time, demanding an additional duty of Rs. 43,792.13. The petitioners filed a petition against the Assistant Collector's decision in October 1981.

Another oil company, Liberty Oil Mills, faced a similar situation, and their appeal reached the Central Board of Excise and Customs. The Board ruled in favor of Liberty Oil Mills, stating that the price offered by the seller should be considered for valuation under the Customs Tariff Act. The petitioners argued that the same reasoning should apply to their case.

The judge agreed with the petitioners, emphasizing that the seller's price should be accepted unless there is evidence of the buyer's interest in the seller's business. The petitioners had no such interest, and the price was the sole consideration for the transaction, as per the terms of the license. The judge found the department's under-invoicing claim baseless and ruled in favor of the petitioners, allowing the petition and discharging the Bank Guarantee without costs. The decision was based on the interpretation of the Customs Tariff Act and the absence of any evidence of under-invoicing in the import of the goods.