1997 (5) TMI 223 - AT - Customs

Issues Involved:
1. Misdeclaration of value.
2. Validity of statements under threat.
3. Relevance of telex messages.
4. Interpretation of price lists.
5. Determination of assessable value.
6. Confiscation and penalty.

Detailed Analysis:

1. Misdeclaration of Value:
The appellant was found to have manipulated the prices of imported parts of Earth Moving Machinery. The Collector concluded that the transaction value declared by the appellant was significantly lower than the ordinary price, which was based on the manufacturer's price lists plus a 6% commission for the sole authorized distributor in India. The appellant's deliberate act of undervaluation was supported by statements from their representatives and corroborated by telex messages and other documents.

2. Validity of Statements Under Threat:
The appellant's representatives, Shri Jagdish K. Mehta and Shri Satish K. Mehta, initially admitted to undervaluing the goods and paying extra consideration in India. Although they later retracted these statements, claiming they were made under threat, the Collector found the retractions unconvincing. Subsequent confirmations of the initial statements and corroborating evidence, such as telex messages and bank withdrawals, led the Collector to rely on the original admissions.

3. Relevance of Telex Messages:
The Collector found the telex messages between the appellant and their suppliers to be incriminating. These messages indicated that the actual prices were based on the manufacturer's price lists minus a 5% discount, contrary to the lower prices declared in the invoices. The appellant's argument that the telex messages did not relate to the subject consignments was not accepted, as the messages clearly showed negotiations and agreements on prices for the imported goods.

4. Interpretation of Price Lists:
The appellant contended that the price lists were for "replacement parts" and only suggested prices for franchised distributors. However, the Collector and the Tribunal found that the price lists were relevant and represented the ordinary prices in international trade. The appellant's own documents and statements indicated that the prices were based on the manufacturer's price lists, and the discounts offered by their supplier, HL, were not consistent with the actual prices paid.

5. Determination of Assessable Value:
The Collector initially determined the assessable value based on the manufacturer's price lists plus a 6% commission. However, the Tribunal found that the correct assessable value should be the price list price minus a 5% discount, as indicated by the telex messages and the appellant's list dated 10-3-1990. The Tribunal directed the jurisdictional adjudicating authority to reassess the value accordingly, with additions for freight and insurance.

6. Confiscation and Penalty:
The Collector ordered the confiscation of seven consignments under Sections 111(d) and 111(m) of the Customs Act, 1962, and imposed penalties. The Tribunal set aside the confiscation under Section 111(d), as only the declared value should be debited against the licence. However, the confiscation under Section 111(m) for misdeclaration of value was upheld. The Tribunal also directed a fresh determination of the penalty, considering only the misdeclaration aspect and not the licensing angle.

Conclusion:
The Tribunal allowed the appeal in part, setting aside the impugned order and remanding the case for fresh adjudication in light of the directions provided. The assessable value was to be determined based on the price list price minus a 5% discount, with appropriate additions for freight and insurance. The penalty was to be reconsidered, focusing solely on the misdeclaration of value.

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