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TMI Blog1989 (6) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... he packing list of each of the aforesaid four consignments it appeared that there were the following discrepancies in the consignments : Name of the Vessel Remarks NADIA DM 520 3 out of 79 bundles contained sheets of thickness 0.6 mm i.e. only 3.8% of the total goods were of thinner variety (page 81 to 81-A in the paper book) 50% to 70% Range FAETHON DM 520 5 out of 64 bundles contained sheets of thick ness of 0.6 mm i.e. only 8% of the total goods were of thinner variety -do BAARN DM 520 6 out of 73 bundles contained sheets with thickness 0.6 mm or below i.e. only 8.22% of the goods were of thinner variety (page 72 to 72D in the paper book) -do- VOLTA RIVER DM 520 None of the sheets were of thickness 0.6 mm or below i.e. all the sheets contained total bags (page 86 to 86B of the paper book) - do - 4. Customs through DRI had some intelligence according to which there was manipulation by the importers in respect of the value of the goods. They made enquiries, recorded statements and issued show cause notices on 4-7-1985 (Volta-River, and Faethon), 4-12-1985 (Baarn) and 24-2-1987 (Nadia). Amongst other things Customs alleged that in respect of Volta-River the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of justice in accordance with the principles of natural justice obligatory on the Collector to allow inspection of these documents. Specifically the grievance of the appellants is that the following 4 documents were not disclosed to them : 1. Invoice No. 653 dated 31-12-1984 of M/s. Possehl in favour of Noordin for DM 709/-per MT CIF; 2. Correspondence between M/s. Possehl and M/s. Uni Tej & Co., Bombay; 3. Investigation report received from the West German Customs Authorities; 4. Invoice No. 639 dated 15-12-1984 of M/s. Possehl in favour of Noordin for DM 800 PMT CIF, Bombay. 7. We must also place on record that Shri Nankani, while repeatedly pleading that the non-supply of the documents was a clear violation of the principles of natural justice, equally he repeatedly submitted that the matter should not be remanded to the Collector. What he wanted was that the appeal should be allowed on the ground that there was violation of the principles of natural justice. Even when we put it to him that allowing the appeals would not necessarily be a consequence even if a violation of the principles of natural justice was held to be established, Shri Nankani adhered to his requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is that in each case the appellants under-valued the goods as mentioned in paragraph 5 supra. The appellants have an elaborate explanation in their defence. Before we proceed to examine this explanation we refer to the arrangements made by the appellants for import of the goods. In all these cases the exporter is a West German Firm Possehl. The goods are in the first instance said to be consigned to P.M. Noordin and Company (hereinafter referred to as Noordin) of Singapore. Noordin in turn invoices the appellants for the goods. The goods themselves come directly from West Germany to Bombay. The documents are made out in the name of Noordin and notified party are the appellants. The invoice price of Possehl to Noordin and Noordin's to the appellants are as follows : Possehl to Noordin Noordin to Appellants Volta-River DM 759 DM 550 Faethon DM 800 DM 550 Baarn DM 759 DM 550 Nadia DM 775 DM 550 10. The appellants have explained before the Collector as well as before us that the value declared by them which includes about DM 30 per metric tonne as charges by Noordin are the correct values. They submit that the steel sheets imported are of 3 varieties, depending on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the course of passing the impugned order. However, in view of what we recorded earlier and in view of the fact that the Customs directly or indirectly disclosed all their documents, and also in view of the vehement request by the appellants for not remanding the matter we do not enter into detailed examination of this ground. 13. Coming to individual matters, it is a submission of the appellants in respect of shipment of Nadia (Appeal No. C/1969/88-A) that only 3 out of 79 bundles of sheets are of thinner variety. They plead that the description of the goods, shipping marks, contract No. and letter of credit number are all irrelevant because the price is to be determined on the basis of the thickness. They also submitted that as per the agreement between Noordin and M/s. Possehl the price would be determined after the shipment depending on the mix of the goods according to the thickness. Referring to the enquiries made by the Indian Customs with Possehls the appellants submitted that in the absence of information about the questions put to Possehl and details of the actual documents picked up by the Customs, the allegations that the real value was according to the invoice issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kani also referred to some imports to Pakistan from Possehls (pages 300 to 312) to plead that the value should be assessed as declared by the appellants. The learned Advocate submitted that in respect of Baarn and Faethon the adjudicating officers did not refer to the invoices of the contemporary imports submitted by the appellants along with the reply to the show cause notice. In respect of Volta-River Shri Nankani argued that the Additional Collector wrongly invoked Rule 8 of the Customs Valuation Rules without discarding Rule 3. However, the Additional Collector did not give any reasons for doing so. Shri Nankani also submitted that the defective M.S. sheets is a class of goods by itself and the price of such goods can be compared. For all these reasons the learned Advocate pleaded that the declared value should be accepted keeping in view that the imported goods consisted, upto 90% of thicker variety whose value was less than that of thinner variety. 17. Shri Nankani also submitted that the fines in excess of ceiling permissible under Customs Act was imposed and these fines were imposed without finding out the market value of the goods. He also referred to the hardships underg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... packing list of M/s. Possehl along with a note from Shri N.N. Mehta (Father-in-law of Shri Sunil Mehta, Proprietor of Mehta Impex). Shri Sunil Mehta admitted the authenticity of the documents. In this context he made a reference to the statement of Shri Sunil Mehta extracted in show cause notice pertaining to the importation by Volta-River. The learned Representative argued that in reply to the show cause notice the appellants claimed that Shri N.N. Mehta, Father-in-law of Shri Sunil Mehta deliberately misguided the Indian Customs authorities by attempting to implicate Shri Sunil Mehta. He referred to the alleged matrimonial discord between the appellant and his wife and also referred to a copy of the legal notice sent to Shri Sunil Mehta by the Advocate of his Father-in-law and submitted that these documents were deliberately produced to create an impression that the Father-in-law caused all the troubles and submitted that such a claim could not be borne out by the facts. 21. Shri Sunder Rajan submitted that the appellants relied on a letter dated 3-1-1985 from M/s. Possehl which stated that the letter of credit was opened at the rate of DM 709 per metric tonne C&F and pleaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce with the contract in the sense that the goods were in fully assorted condition with varying width and thickness and also confirmity to the specifications and limits indicated in respect of thickness, width, length and weight per bundle. Referring to the stipulation about each bundle being limited to 2-6 tonnes per bundle, Shri Sunder Rajan submitted that if such a requirement was there, each bundle should be considered of thicker variety. Therefore, the assorted block should have referred the dimensional assortments rather than thickness alone. He underlined that the dimensional assortment was necessary in order to prove that the goods are not prime quality but were only mill rejects. 25. Shri Sunder Rajan vehemently emphasised that the packing specification supplied by Possehl is identical to the one supplied by Noordin to the appellants. In the Court the learned Representative demonstrated how Noordin took a photo copy of the packing specification issued by Shri Sunil Mehta super imposing his own letter head over that of Possehl. He argued that since the packing list of Possehl and Noordin were of the same date and referred to the same letter of credit, invoice No., bill of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issuing invoice at a higher price and later resorting to credit notes to adjust the price. He submitted that the entire evidence was only manufactured evidence, brought into existence at a later date just to be advanced as defence for the appellants. In this context Shri Sunder Rajan referred to the various documents sent by the German Customs to DRI. Shri Sunder Rajan submitted that in respect of Tapega the invoice and bill of lading were both dated 24-11-1984 but in the letter dated 26-11-1984 (page 334) Noordin asked for credit and compensation even before he received invoice and shipment. The learned Representative submitted that it clearly indicated the appellants' intention to under-invoice the goods on the basis of manufactured documents. 28. Shri Sunder Rajan referred to the affidavit given by Shri Hatim Nakhoda, Proprietor of F.M. Noordin and Company where Shri N.N. Mehta (Shri Sunil Mehta's Father-in-law was employed as Manager) and submitted that from this affidavit it was revealed that the contract was in fact signed for prices ranging from DM 709 to 800 per tonne depending upon the thickness and assortment. The learned Representative submitted that this deposition mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation by producing documentary evidence which was supplied by German Customs and with the other documents seized in Bombay. Therefore, the charges against the appellants are proved beyond reasonable doubt. In this context he referred to a judgment of the Tribunal in the case of Tara Art Printers v. Collector of Customs [1985 (20) E.L.T. 358] and submitted that as there is documentary evidence available the licences should be ordered to be debited to the full value and not the declared value. He also referred to another judgment of the Tribunal in the case of Delhi Plastics v. Collector of Customs [1988 (36) E.L.T. 360] (stated to have been upheld by the Supreme Court) and pleaded that the appeals should be dismissed and there should be no reduction in any of the amounts adjudged against the appellants. He also opposed the debiting of the licence with the declared value only, submitting that it is the ascertained value which should be debited in view of an amendment brought under Section 2E of the Imports and Exports (Control) Order, 1955 which equated the value for the purposes of imports as being the same as under Section 14E of the Customs Act. 31. In his rejoinder Shri Nankan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rangement like the one between those two would not have been possible even in the best of circumstances. However, these observations do not lead to any conclusion one way or the other. 33. Before we proceed further we would like to refer to the repeated assertions of Shri Nankani that the Collector relied on various documents which were not disclosed to the appellants. In the initial stages, the Department took the ground that these documents being privileged documents the appellants were not entitled to their disclosure. However, at a later stage Shri Sunder Rajan made a statement in the Court and filed a complete set of 51 documents and submitted that except the covering letter from the German Customs all other documents were disclosed to the appellants at one stage or the other. In fact the learned Representative placed the set before the appellants. The originals were perused by the Bench and the appellants and returned to Shri Sunder Rajan. Therefore, the wind is taken out of the sails insofar as the pleas about the violation of the principles of natural justice are concerned. In any event the learned Advocate's argument that the appeals should be allowed for the reasons of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld expect that when the goods are being imported, the importer would try to find out the best, cheapest and main reliable supplier and would protect himself by entering into correspondence and agreements. This is not the case here. 36. These circumstances indeed create suspicion, which is not enough. But the circumstances do not end there either. These further circumstances transform the suspicion into reasonable belief that all is not well with this importation. These circumstances which lead us to such a conclusion are as follows : 1. The first is the statement of Shri Sunil Mehta when Invoice No. 640 was seized from him. In this statement (extracted at page 2 of the paper book) Shri Mehta noted the difference in the price shown in Invoice 640 dated 15-1-1985 of M/s. Possehl and No. SP/14 dated 15-1-1985 of M/s. Noordin. He admitted in his statement the correct price of the goods covered by the invoice was DM 759 per metric tonne C & F. The explanation later given that Shri Mehta was not aware of the transactions between Noordin and Possehl has to be dismissed straightaway. Shri Sunil Mehta is the Propietor of the Importers' Firm and he should know what is happening. The invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be issued. We note that Possehl is not the manufacturer but is a supplier. They obtained the goods and shipped them. Why do they not encash the letter of credit for the actual amount only? To all questions during the course of hearing the learned Advocate for the appellants merely stated that when a letter of credit is opened the entire amount should be recovered. Even if it was so, there is no reason why the supplier cannot make out his invoice to Noordin according to the correct value. The materials would have been billed to him and he would have paid the bills and, therefore, known the correct price. In any event Possehl were said to be issuing credit notes almost immediately after the shipment indicating the ready availability of the information about 'correct' value. Still the invoice go at the higher price followed immediately by a credit note. Even in respect of such credit notes the learned DR pointed out some discrepancy which we have mentioned in the earlier para of this order. 39. We also take note of the uncontroverted submissions made by Shri Sunder Rajan that though the appellants have been stating the dates of credit notes (which are soon after the receipt of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. In respect of Baarn and Nadia there is alleged to be a shortfall of Rs. 4,82,063/- in the licences on debiting them with the ascertained value. In this case we are adopting the invoice value, on the basis of the genuineness. Debiting that value to the licences will be in consonance with the judgment in Glaxo Laboratories (supra). The licences were correctly debited with the ascertained value of the imported goods. The appeal in this regard is rejected. 45. The next question is whether there should be any modification of the fines and penalties imposed. All the findings are against the appellants. At the same time we take note of the plea that the Customs did not disclose the market value but arbitrarily fixed the quantum of fines. We note that the appellants too did not disclose any particular market value or margin of profit based on which the fine should have been fixed. We also keep in mind that the Customs did take an unusually long time to issue show cause notices; the reason could have been that they were investigating the case as is borne out by their obtaining documents from the German Customs and also from Singapore. At the same time the indirect punishment by way of d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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