1999 (6) TMI 313 - AT - Customs

Issues Involved:
1. Valuation of imported goods.
2. Confiscation of goods under Section 111(d) and 111(m) of the Customs Act, 1962.
3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.
4. Applicability of Customs Valuation Rules, 1988.
5. Transaction value determination.
6. Relevance of quotations and proforma invoices.
7. Mutual interest and royalty considerations.
8. Licensing and phased manufacturing program.

Detailed Analysis:

1. Valuation of Imported Goods:
The primary issue was the valuation of the components of plain paper copiers Model BD 5110. The Collector of Customs fixed the value at JY 1,82,577 CIF against the declared value of JY 1,25,000. The valuation was based on the price of the complete machine minus the price of the drum, with a 40% discount allowed as the importers admitted importing only 60-65% of the components.

2. Confiscation of Goods Under Section 111(d) and 111(m) of the Customs Act, 1962:
The Collector held the goods liable to confiscation under Sections 111(d) and 111(m) due to importation without a valid import license and gross mis-declaration of value. The differential duty was secured by a bank guarantee of Rs. 50 lakhs. However, since the goods were released by the High Court's order, actual confiscation was not possible.

3. Imposition of Penalty Under Section 112(a) of the Customs Act, 1962:
A penalty of Rs. 3,50,00,000 was imposed under Section 112(a) for deliberate gross mis-declaration of value. The penalty also accounted for the redemption fine that would have been levied had the goods been available for confiscation. The bank guarantee of Rs. 50 lakhs was appropriated towards the penalty amount.

4. Applicability of Customs Valuation Rules, 1988:
The importer argued that the valuation should adhere to the Customs Valuation Rules, 1988, specifically Rules 4, 5, 6, 7, and 8. They contended that the price of JY 3,20,000 was the domestic market retail price and not comparable to international market prices. The Collector's valuation was challenged as it allegedly violated these rules.

5. Transaction Value Determination:
The importer claimed that the transaction value should be the price actually paid or payable for the goods when sold for export to India. They argued that there was no evidence of any clandestine remittance or mutual interest between the importer and the foreign supplier that would affect the transaction value.

6. Relevance of Quotations and Proforma Invoices:
The Collector relied on a quotation dated 24-11-1988, which was used to obtain a license in 1991. The importer argued that this quotation was outdated and that the prices had changed. However, the Collector found the proforma invoices suspect and considered the quotation as the correct transaction value.

7. Mutual Interest and Royalty Considerations:
The Collector noted that the foreign supplier, Toshiba, had a technical collaboration agreement with the importer, which included royalty payments. The tour notes of the importer's official suggested that the price lists and proforma invoices were influenced by these royalty considerations, making them suspect.

8. Licensing and Phased Manufacturing Program:
The importer had obtained a phased manufacturing program license, which allowed for the import of 20% of the machine's value. The Collector found that the importer did not adhere to this program, importing about 60-65% by value through the present consignments.

Conclusion:
The Collector's order was upheld with modifications. The valuation of the components was confirmed at JY 1,82,577 CIF. The penalty was imposed, but the confiscation of goods was not ordered as they were not available. The appeal was disposed of accordingly, with the Tribunal agreeing with the Collector's findings on valuation and penalty but modifying the confiscation aspect.

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