1991 (8) TMI 178 - AT - Customs

Summary

Issues: Allegation of under-valuation based on price reduction and premature show cause notices.

Analysis:

Issue 1: Allegation of Under-Valuation
The appellant imported Polyester Filament Yarn and declared prices lower than prevailing market rates, leading to show cause notices alleging under-valuation. The appellant explained the price reduction due to quality and introduction discounts. The adjudicating authority upheld the under-valuation allegation citing legal provisions of the Customs Act. However, no penalty was imposed due to lack of mala fides. The appellant argued that Section 17(1) and (2) were not relevant, emphasizing Section 15 for duty assessment at the time of goods removal from the warehouse. The appellant's contention of premature show cause notices was rejected, stating that bill of entry for home consumption must be assessed before warehousing, as per Section 46 of the Customs Act. The Tribunal agreed with the Department's position, emphasizing the distinction between assessment and payment of duty, ultimately dismissing the appeal on this issue.

Issue 2: Price Reduction and Undervaluation
The appellant's price reduction explanation was not accepted as a trade or quantity discount. The Department relied on quotations from suppliers to establish undervaluation, which was deemed correct legally and factually. The Tribunal found the reliance on a previous case law (1990 (48) E.L.T. 421 [Wax & Wax Products]) appropriate. Consequently, the appeal was dismissed, and the impugned order confirming the under-valuation was upheld.

In conclusion, the Tribunal rejected the appellant's arguments regarding premature show cause notices and upheld the under-valuation allegation based on price reduction, dismissing the appeal and confirming the Department's order.