1998 (4) TMI 268 - AT - Customs

Summary

Issues:
1. Inclusion of 20% CIF payment to indenting agent in the assessable value of imported goods.
2. Confiscation of goods and imposition of penalties under Customs Act.
3. Penalty imposed on Mahabeer & Co. for their role as indenting agents.

Issue 1: Inclusion of 20% CIF payment in assessable value:
The case involved appeals arising from adjudication orders by the Commissioner of Customs-II, Mumbai, regarding the inclusion of a 20% CIF payment by importers to their indenting agent, Mahabeer & Co., in the assessable value of imported offset printing machines. The importers argued that the 20% payment was for commission, installation, and technical advice, which should not be included in the assessable value. However, it was found that the payment was compulsory for the importers to obtain the machines, making it part of the transaction value. The Tribunal cited Valuation Rules stating that all payments made as a condition of sale should be added to the transaction value. The Tribunal differentiated this case from a previous decision, emphasizing that the nature of the payment was akin to the transaction value of the goods.

Issue 2: Confiscation of goods and imposition of penalties:
The Commissioner of Customs had ordered the confiscation of goods and imposed penalties under Sections 111(d) and 111(m) of the Customs Act due to the non-inclusion of the 20% CIF payment in the assessable value. The Tribunal upheld the determination of the assessable value, leading to the maintainability of the confiscation and fines. However, considering the interpretation of the law involved, the Tribunal set aside the penalties on the importers, as no mala fides were found on their part. It was noted that in a previous case, penalties were not imposed by the Commissioner.

Issue 3: Penalty on Mahabeer & Co. as indenting agents:
Mahabeer & Co., acting as indenting agents, were also penalized under Section 112(a) of the Customs Act. The Tribunal found no evidence of collusion between Mahabeer & Co. and the importers. Considering that the department had not penalized Mahabeer & Co. in similar cases previously, and the essential role played by Mahabeer & Co. in facilitating imports from a specific supplier, the penalty on Mahabeer & Co. was deemed unsustainable and was set aside. The appeals of Mahabeer & Co. were allowed based on these considerations.