1991 (3) TMI 229 - AT - Customs

Summary

Issues Involved:

1. Acceptance of invoice price by the Collector.
2. Alleged undervaluation of imported ball bearings.
3. Relevance of quotations and offers from other countries.
4. Application of Section 14(1) of the Customs Act, 1962.
5. Alleged violation of principles of natural justice.
6. Influence of restricted import policy on pricing.
7. Evidence of contemporaneous imports.
8. Relevance of cost of raw materials and production costs.

Issue-wise Detailed Analysis:

1. Acceptance of Invoice Price by the Collector:

The Collector accepted the invoice prices for the imported ball bearings based on the manufacturers' price lists authenticated by the Indian Embassy and other official bodies. The Collector found no evidence of contemporaneous imports at higher prices and observed that the reduction in prices could be due to various commercial practices. The invoice prices were accepted as the suppliers were government bodies, and there was no reason to doubt the authenticity of the price lists in the absence of contrary evidence.

2. Alleged Undervaluation of Imported Ball Bearings:

The appellants contended that the invoice prices were grossly undervalued based on complaints from the Ball and Roller Bearings Association of India and various quotations indicating higher prices in international trade. However, the Collector rejected these claims, noting that the department failed to provide evidence of contemporaneous imports at higher prices. The Tribunal reiterated that the burden of proving undervaluation lies with the department and that mere quotations without evidence of actual concluded contracts and imports are insufficient to establish under-invoicing.

3. Relevance of Quotations and Offers from Other Countries:

The appellants relied on quotations and offers from countries like the UK, West Germany, and Singapore to argue that the prices quoted to these countries were higher than the prices at which the ball bearings were imported into India. The Tribunal rejected this argument, stating that quotations alone do not prove under-invoicing unless they result in actual concluded contracts and imports. Additionally, the Tribunal clarified that international trade, as referred to in Section 14(1) of the Customs Act, should be understood in the context of imports into India and not trade between other countries.

4. Application of Section 14(1) of the Customs Act, 1962:

Section 14(1) of the Customs Act defines the value of goods for customs duty purposes as the price at which such goods are ordinarily sold in the course of international trade where the seller and buyer have no interest in each other's business, and the price is the sole consideration. The Tribunal emphasized that the invoice price should be accepted unless there is evidence of contemporaneous imports at higher prices or other factors indicating that the invoice price does not represent the true value.

5. Alleged Violation of Principles of Natural Justice:

The appellants argued that the Collector's order was void ab initio due to a violation of natural justice principles, claiming they were not given an opportunity to substantiate their case. The Tribunal rejected this contention, noting that the Customs Act does not require giving the department an opportunity in adjudication proceedings. The Tribunal found that the appellants were aware of the evidence and material relied upon by the Collector and had the opportunity to respond.

6. Influence of Restricted Import Policy on Pricing:

The appellants contended that the restricted import policy influenced the pricing of ball bearings, suggesting that the prices were artificially low to enable larger imports under the same license. The Tribunal dismissed this argument, stating that the nature of the import policy cannot be treated as an extra commercial consideration to discard the invoice price. The Tribunal found no evidence that the sellers and buyers were interested in each other's business or that the price was not the sole consideration for the sale.

7. Evidence of Contemporaneous Imports:

The Tribunal reiterated that in the absence of evidence of contemporaneous imports of similar goods at higher prices, the invoice price should be the basis for determining the assessable value. The appellants failed to provide evidence of such imports, and the quotations relied upon were not sufficient to establish undervaluation.

8. Relevance of Cost of Raw Materials and Production Costs:

The appellants argued that the increasing cost of raw materials should result in higher prices for the ball bearings. The Tribunal rejected this argument, stating that the cost of manufacture depends on various factors, and there was no material evidence to support the claim that the cost of bearings should increase due to higher raw material costs. The Tribunal also noted that the cost structure of local manufacturers cannot form the basis for the assessable value of imported goods.

Conclusion:

The Tribunal dismissed the appeals, upholding the Collector's acceptance of the invoice prices and rejecting the appellants' contentions regarding undervaluation, relevance of quotations, and influence of restricted import policy. The Tribunal emphasized the need for concrete evidence of contemporaneous imports at higher prices to establish undervaluation and confirmed that the invoice prices should be the basis for determining the assessable value in the absence of such evidence.