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TMI Blog1992 (11) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. Honeywell High Tech Trading Company, a subsidiary of M/s. Honeywell Tech. The imported goods were found to be of U.K. Origin. The Department obtained from M/s. Usha Services and Consultants Pvt. Ltd. the representatives in India for M/s. Honeywell High Tech Trading Co. a quotation in their proforma invoice dated 28-10-1987 for Thermostat model T 6060 B1047 at US $ 27.07 (Ex-works). On the basis of the unit price of US $ 27.07 ex-works the assessable value of the imported goods was worked out as Rs. 6,07,397.00 as against the declared value of Rs. 69,809/- and the appellants were served with a notice requiring them to show cause as to why duty should not be levied on the value of the goods as determined by the Custom House. 2. On receipt of the reply to the show cause notice the Assistant Collector passed an order determining the unit price of the goods as US $ 18.95 (FOB) on the basis of the quotation of M/s. Usha Services and Consultants (P) Ltd. on which a reduction of 30% was permitted having regard to the quantity imported. 3. In the appeal before the Collector (Appeals) the appellants contended that the lower authorities had relied only upon certain quotations. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the goods since it was based on the offer given by the manufacturers own branch namely Honey- well Middle East Pvt. Ltd., Sharjah and the appellants had produced before the lower authorities Computer print out showing contemporaneous imports of the item at the same price through Bombay Custom House. He stated that the offer at a price of US $ 27.07 per piece made by M/s. Usha Services to the Department in their Proforma Invoice No. HW/PCD/BAN/0004 dated 28-10- 1987 was not relevant since it was for only one Thermostat Model No. T6060B- 1047 and no imports had been made against it. He added that the only other evidence on which reliance was placed by the lower authorities was that M/s. Usha Services and Consultants Pvt. Ltd. had informed the Customs authorities that similar Room Thermostat Model T4160A-100 had been offered by M/s. Honeywell High Tech Trading Co. to M/s. Airtech Engineers, Madras at a unit price of Japanese Yen 7395, ex-works (equivalent to Rs. 641) under proforma invoice No. USC/5315/1119 dated 25-7-1986. Shri Sridharan contended that these offers could not form the basis for determining the assessable value of the; imported goods since M/s. Usha Services a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price book of M/s. Honeywell. He added that as held by the Tribunal in the case of M/s. Wax and Wax Products v. Collector of Customs [1990 (48) E.L.T. 421] it was permissible for the Department to determine the assessable value of the imported goods on the basis of the quotation given by the local agent of the foreign supplier of the goods. In this regard he also placed reliance on the decision in the case of Peakcraft v. Collector of Customs [1991 (53) E.L.T. 122]. He added that having regard to the fact that the imported consignment consisted of 1496 pieces, a discount of 30% was allowed while determining the value of goods on the basis of the quotation given by the local agent for 1 piece. On the grounds that the Tribunal had observed in the case of M/s. Metal and Alloy Industries v. Collector of Customs [1989 (40) E.L.T. 207] that the quantity discount normally ranges between 5% to 10%, Shri Prabhat Kumar contended that the discount of 30% was adequate. He stated that it was well settled that the value for the purpose of assessment under Section 14 of the Customs Act, 1962 is the deemed value as provided for under that Section and the price paid for the imported goods in an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on behalf of both sides. It is seen that the point that arises for consideration in this case is whether the invoice value represents the assessable value of the goods or the deemed price of the goods under Section 14(1)(a) of the Customs Act, 1962 as determined by the lower authorities on the basis of quotaions furnished by the authorised representative of the manufacturers in respect of certain products would be the real value of the goods in question. 7. The appellants have contended that invoice value has to be deemed as the value under Section 14(1)(a) of the Customs Act, 1962 since it was based on the prices quoted by the suppliers in the normal course of international trade and there was no evidence to show any relationship between the sup pliers and the appellants or any amount having been remitted to the suppliers in addition to the invoice value. According to them the impugned order is contrary to the provisions of Section 14(1)(a) of Customs Act, 1962 since it relied upon certain quotations or offers for sale against which no goods were imported and even if any goods had been imported against these quotations such imports would not have been in the course of internati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision is reproduced below :- We have heard Shri N.C. Sogani, Consultant for the appellants and Shri A.K. Jain, Senior Departmental Representative for the respondent. Shri Sogani has cited several decisions in support of his contention that the prices mentioned in the invoices should be accepted as the proper prices unless the department is able to produce any other acceptable evidence to prove that the same was not the proper price. There can be no doubt that if a charge of misdeclaration is made against an importer it would be for the department to establish the said charge by acceptable evidence. But the same proposition would not be wholly correct so far as the assessment to duty is concerned. This is so because under Section 14(1)(a) of the Customs Act the value for purposes of assessment of duty would be the deemed value as provided for under the said Section, even if the invoice price is proved to be the true price as agreed to between the parties. The decision of the Bombay High Court in the case of Union of India and Others v. Glaxo Laboratories [1984 (17) E.L.T. 284 (Bombay)] is authority for this proposition. It had been laid down therein that though the price m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r bearings, the letter being addressed to an authorised agent in India. That letter indicates a considerably higher price than the one mentioned in the letter dated 22-8-1977 or the orders and invoices following the same. The contention for the appellants in respect of that letter is that the same was merely an offer for sale at the prices mentioned therein but that the actual prices were to be concluded on further negotiations only. In their reply to the show cause notice the appellants had mentioned, with reference to his letter dated 7-2-1977, that Fiat Engine bearings mentioned in the said price list have been exported by M/s. A.E. Auto Exports at almost half the prices mentioned therein. During adjudication no proof had been offered of such an allegation. Before us Shri Sogani produced an invoice with reference to Perkins bearings, stating that the same related to Item No. 13 of the letter dated 7-2-1977 and that the supply was at a price lesser than the one mentioned in the letter dated 7-2-1977. No reference had been made to this supply before the lower authorities. Nor has been any application made to receive this an additional evidence. It is not known whether the invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the same as the basis for his valuation." 12. Since M/s. Honeywell had confirmed that M/s. Usha Services and Consultants Pvt. Ltd. had been permitted to issue quotations in respect of parts of commercial and residential controls in few cases, it follows that as confirmed by them they were in possession of the official Honeywell price book on the basis of which they had claimed to have issued quotation in proforma Invoice No. HW/PCD/BAN/0004 dated 28-10-1987 in respect of 1 piece Model T6060B1047 Thermostat at the rate of US $ 27.07 per piece. Since, they were representing in India M/s. Honeywell, who are a company of international repute it stands to reason that the quotation furnished by them must have been on the basis of the necessary authorisation from the principals and in accordance with their official price-list. We find from the proforma invoice dated 28-10-1987 that M/s. Usha Services and Consultants (P) Ltd. had also endorsed a copy of their quotation for information to M/s. Honeywell, European Distribution Centre in Netherlands. Evidently, they would not have done so if they were not authorised to issue the particular quotation or it was not in accordance with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd also submissions of both the sides and as such, I need not narrate the same in my order. The appellants had imported a consignment of 1496 pieces Room Thermostats Model 6060 B-1047 (temperature control) from Dubai made by M/s. Honeywell Inc., U.S.A. at unit price of US $ 3.62 against Invoice No. 3089 dated 29th February, 1987 (sic) issued by M/s. Zainab Air-conditioning, Dubai. The value of the goods in the Bill of Entry was declared as Rs. 69,809.00 based on the CIF price of US $ 5372.35 shown in the invoice. Enquiries made by the Customs Authorities revealed that Thermostat Model 416A100 which was similar to the room Thermostat imported by the appellants was offered to the importers in India at Japanese Yen 7395 per piece ex-works by M/s. Honeywell High Tech Trading Company, a subsidiary of M/s. Honeywell Tech. The imported goods were found to be of U.K. origin. A quotation was obtained by the Department from M/s. Usha Services and Consultants Pvt. Ltd., the representatives in India for M/s. Honeywell High Tech Trading Co. in their proforma invoice dated 28-10-1987 for Thermostat Model T6060 B1047 at US $ 27.07 (ex-works). On the basis of the unit price of US $ 27.07 ex-works ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Others reported in 1986 (26) E.L.T. 676 (Bombay) had observed in Para No. 9 as under :- 9. Shri Hidyatullah for the petitioners contended that this course sought to be adopted by Shri Natur for the respondent is not open to him. Relying on an earlier decision in AIR 1952 Supreme Court 16, a five-judge Bench has held in AIR 1978 Supreme Court 851 Mohandra Singh v. Chief Election Commissioner that when a statutory functionary makes an order based on certain grounds, its validity must be judged by the reasons in the shape of affidavits or otherwise. Otherwise an order which is bad in the beginning may by the time it comes to a Court on account of a challenge get validated by additional grounds later brought out. Shri Hidayatullah has cited two more cases of this Court (both Division Bench decisions) where the aforesaid decision of the Supreme Court has been applied to orders passed by the statutory authorities under the Central Excises and Salt Act. See 1980 E.L.T. 258 Bush (India) Ltd. v. Union of India and 1983 E.L.T. 2289 Dunlop Rubber Company v. M.V. Raghavan Ayer. Shri Natur did not profess to controvert the submission advanced by Shri Hidayatullah and in our opinion righ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e circumstances the correct assessable value of the goods is as declared by assessee in relevant import document and the finding of under-valuation was quashable. In the matter before me, 1496 pieces of Room Thermostat Model 6060 B1047 (temperature control) were imported. Accordingly, no reliance can be placed on the proforma invoice. Keeping in view my observations in Appeal No. C/3567/88-A in the case of M/s. Popular Exports (P) Ltd. v. Collector of Customs, Madras, I hold that the price declared by the appel1ants in the B i 11 of Entry as Rs. 69,809.00 should be accepted. 22. In the result, the appeal is allowed. 20-4-1992 (Harish Chander) President POINT OF DIFFERENCE Whether in the facts and circumstances of the case, the declared invoice value of Rs. 69,809.00 should be accepted as held by the President or the value assessed at Rs. 6,07,397.00 as ordered by the Member (Technical)? 20-4-1992 (Harish Chander) President (P.K. Kapoor) Member (Technical) 23. Following point of difference between the Hon ble President and learned Member (T) Shri P.K. Kapoor has been referred for my opinion :- Whether in the facts and circumstances of the case, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. [Emphasis supplied] 27. One of the arguments of the learned advocate for not relying on the aforesaid decision of the Supreme Court in the case of Sharp Business Machines is that in that case the quotation was produced by the importer itself and therefore, it could not be disputed. In the instant case, however the quotation has been produced by the department. This distinction drawn by the learned advocate in my view is not material to the facts and circumstances of this case No material has been produced by the appellant to rebut the aforesaid quotation from M/s. Usha S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stock. These prices, therefore, cannot be treated as prices in the course of International Trade in terms of Section 14 of the Customs Act. 27.4 Another grievance of the learned advocate against the lower appellate authority s order is that discount of 30% given by the lower authorities is arbitrary. In view of the reasons given by the learned Technical Member, I do not think that this quantum of discount can be termed arbitrary . I also find from a copy of telex from Mr. B. Redwan of Honeywell (Annexure 12 to the appeal) in the case of M/s. Muchhala Consultants (P) Ltd. that quantity discount ranging from 5% to 30% depending upon bulk buying to their authorised wholesale dealers has been indicated in the said telex. The lower authorities have given the maximum quantity discount of 30% available on such products as given by M/s. Honeywell even in case of bulk buying. 28. Accordingly, I agree with the learned Technical Member (P.C.Jain) Member (T) 3-11-1992 FINAL ORDER 29. In view of the majority decision, the appeal is dismissed. New Delhi Dated 24-11-1992 (P.K. Kapoor) Member (T) (Harish Chander) President - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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