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TMI Blog1991 (5) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... issued under paras 175 177 of Import Policy, 1988-91 under Appendix 3-A Sl. No. 396 was produced. The Customs House found that erasers were consumer goods capable of directly satisfying human beings and as such are covered by entry No. 145 of Appendix 2-B of Import Export Policy, 1988-91 and also further found that the Import Licence dated 14-12-1988 produced cover import to the extent of one lakh of a single item and thereby in the Import Licence value had been exceeded in the present case. As per the impugned order : The invoice value against Bill of Entry No. 203894 dated 20-1-89 and Bill of Entry No. 203895 dated 20-1-89 has been shown in the following manner : CIF New Delhi US $ 20160.00 Freight charges US $ 14000.00 C I Value US$ 6160.00 and against BE No. 203860 dated 20-1-1989 CIF New Delhi US $ 17280.00 Freight charges US $ 12000.00 C I US$ 5280.00 Thus it is clear that it is the freight which controls that C I price whereas the C I and F.O.B price have their own identity the said condition of freight charges from CIF price may make the C I price and the FOB price to almost negligible and much below their real prices." Proceedings were i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25% to the invoice value, CIF value of the goods was declared as Rs. 2,73,542/- and assessable value as Rs. 2,75,594/-. The goods were claimed for assessment under Heading 4002.59 read with Notification No. 82/86 and Import Licences, similar to those in the above case with flexibility provisions under paras 175 and 177 of Import Policy, 1988-91, were produced for the clearance of the goods being covered under Appendix 3-A Sl. No. 396 of the Import Policy. The Customs House assessed the goods declared in the Bill of Entry to duty on the basis of the documents produced under what is known as second appraisement under which assessment after an order of the clearance of the goods is passed provided on superficial examination, the description of the goods are found to tally with the declaration in the invoice and in the Bill of Entry. The Assistant (ICD), while countersigning the assessment, directed to get the goods examined and called for representative sample to determine classification. The goods were examined and it was found that they were pencil erasers in consumer packing of boxes, each box containing 48 pieces. The markings on the boxes were as follows : High Glass Picture E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Bank directly from the supplier. He had attested it in good faith. The Customs House also alleged that the importer filed a declaration under Rule 10 of Customs Valuation Rules, 1988 as required disclosing full details relating to the value of the goods imported and thus suppressed correct factual position. In these circumstances, the Customs House sought to enhance CIF value of the goods to Rs. 6,80,786.68 as against the CIF value of Rs. 2,73,542/- by taking the price of one gross of erasers as US$ 3.75, besides seeking to confiscate the goods imported unauthorisedly. On considering the defence of the appellants, the Additional Collector held that there had been mis-declaration of the goods by the appellants by pointing out that declaration regarding gross quantity is written in the Bill of Entry that too only in original copy thereof. The other copies are totally silent about it. The Additional Collector also found that the discrepancies between the two invoices, the one obtained from the Bank and the other with the Bill of Entry, were serious in that the value declared therein and the description of the goods significantly differ. In this connection, he also noted the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Customs Act. 3.2 The Ld. Consultant, Sh. B.B. Julka, appearing for the appellants contended that in both these cases, there was combined transport documents relating to freight. In one case, it was for the transport of the goods from Japan to Singapore by sea and from Singapore to Delhi by air, and in the other case it was by sea from Japan to Bombay and on to the ICD, New Delhi by rail. The Department had made, mainly, four allegations for under-invoicing on the ground that C I prices cannot be determined by reducing freight charges from CIF value and that freight element was less than air freight as per air way bill and that the Department felt that CIF by air is really CIF by sea and had enhanced the value of the imported consignment. The Department had also accepted the CIF invoice value to work out the assessable value taking Singapore as the country of origin for which there was no justification. In the original show cause notice for the ICD consignment, there was no charge- of under-invoicing which was made only in the supplementary show cause notice on the basis of the quotation from Hongkong. It was ultimately not relied upon in the adjudication order. 3.3 The Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts, answer to this description synthetic rubber products. The very fact that the Department had sought clarification from the CCIE shows that they were themselves unsure. Then the benefit of doubt should go to the appellants. In any case, there was no case of mis-declaration and at worst it could be a case of incomplete declaration. The redemption fine imposed in both the orders and penalty are harsh and excessive. 4. Sh. B.S. Ganu, Ld. S.D.R. submitted that the import licences in this case were produced for clearance of the goods were issued under paras 175 and 177 of the Import Policy relating to flexible clause and referred in this connection to the provisions of para 182 (1) of the Policy and as regards the nature of the goods, the Ld. SDR drew attention to the examination report of the goods by the Department which showed that they were nothing, but erasers as a stationery item. The Additional Collector also inspected the sample and confirmed the nature of the goods as consumer goods going directly to satisfy human needs. There was mis-declaration of the goods not only for the purpose of ITC, but for assessment under Customs Tariff Act, as synthetic rubber under Heading 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en from the certificates submitted. The vast difference between the two consignments cannot reasonably be on account of freight only. The quantum of fine and penalty is justified, according to the Department, having regard to the high margin of profit on the goods imported. In reply, it was contended by the appellants that in the ICD B/E, the price regarding air cargo complex import were not given as that consignment had not been cleared. The goods had been imported against REP licence under its terms and the rubber eraser being a product of synthetic rubber is covered by Sl. No. 396 of Appendix 3(A) ITC Policy, according to the appellants. 5. We have carefully considered the submissions made by the Ld. Consultant and the Ld. S.D.R. Two questions that arise in this case are whether the import was valid or not and also whether the value for assessment purposes as declared by the appellants in these two cases represented the correct value in such purposes under Sec. 14(1A) of the Customs Act, 1962. Taking up the question about the validity of the import, the appellants have produced import licences under Appendix 3 Part (A) of the ITC Policy, 1988-91 and claimed clearance against S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll under Sl. No. 396 of Appendix 3(A) of the ITC Policy, 1988-91 which is as follows: Rubber products inclusive of products from natural and/or synthetic rubber and accessories excluding the following: (i) Oil seal, bushings, O Rings and tyres/tubes (including flaps in equal numbers) for automotive application. (ii) Drive rubber belts, rubber rings, rubber cushions and rubber rollers for tape recorders/tape deck-mechanism. (iii) Rubber blankets, for drafting machines and condensers rubbing aprons woollen cards." 7. The appellants case is that such erasers are synthetic rubber products covered by the above entry. However, the description of the goods in Appendix 3(A) as above, cannot be taken to be a specific description for synthetic rubber erasers, but the Sl. No. 396 is only a generic description of synthetic rubber products. We have also found that as a ready to use consumer goods, this rubber eraser is also includible under the generic description of consumer goods howsoever described not appearing individually in Appendix 3(A) covered by Sl. No. 145 of Appendix 2(B). When such is the position, when rubber erasers are covered by the generic descr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. The Collector has also invoked Rule 11 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 which provides that in case of dispute between the importer and proper officer of customs valuing the goods, the same shall be resolved within the provisions contained in Section 14(1) of the Customs Act, 1962. It is seen that the Additional Collector has found that the price quotation of the goods (of) Chinese origin cannot be made basis for determination of assessable value and there is no allegation that the seller and the buyer are related persons or that they are interested in the business of each other or that the price is not the sole consideration for the sale or offer for sale. The price with which the comparison is to be made is that at which such or like goods are ordinarily sold and offered for sale for delivery at the time and place of importation. It is, further found that the Additional Collector has proceeded to determine the assessable value on the basis of the CIF price of the consignment imported at the Air Cargo Complex minus air ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansport document with the transit at Singapore. The Additional Collector determined the assessable value at CIF, New Delhi by deducting actual air freight from Singapore - New Delhi and arriving at the CIF Singapore price deducting therefrom 1.12 per cent to arrive at CIF price at Singapore and adding 16% to the above CIF as assessable value CIF, New Delhi. It is not clear from the Additional Collector s order as to the particular method in the Valuation Rules, 1988 adopted by that authority in arriving at the assessable value. It is also correct that the appellants were not put on notice regarding this method. Moreover, although the Additional Collector s order is not very clear, in so far as the invoice produced for the goods is not disputed in the order, the valuation has to be within the frame-work of Customs Valuation Rules, 1988 sequentially from Rule 4 thereof and when it is a question of adding the cost of freight only and insurance charges such an exercise will have to be done in terms of Rule 9(2) of the Valuation Rules. But this Rule also lays down that addition to the price actually paid or payable, shall be made under this Rule on the basis of objective and quantifia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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