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TMI Blog1992 (11) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... ore who were the representatives of M/s. Honeywell Inc./ U.S.A. for Asian Pacific Region including India. During their enquiries the Customs authorities also obtained from M/s. Usha Services and Consultants (P) Ltd. the representative of M/s. Honeywell High Tech Trading in India a quotation for the import of Modulator Motor Model M 944A 1010 at the rate of U.S. $ 271.41 (Ex-works). On the basis of me unit price of U.S. $ 271.41 the assessable value of the imported goods was worked out as Rs. 4,07,818/- as against the declared value of Rs. 80,564/- and the appellants were served with a notice requiring them to show cause as to why the 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 $ 189.99 (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 and other relevant factors. 3. In the appeal before the Collector (Appeals) the appellants contended that the lower authorities had relied only upon certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reason that no import had been made by M/s. BHEL and also on account of the fact that it was in respect of Model 944G1097 which had application in boilers whereas the imported Motor of Model M944A was for refrigeration and air-conditioning appliances. He added that the only other evidence on which reliance was placed by the lower authorities was the offer addressed by M/s. Usha Services and Consultants Pvt. Ltd. to Appraisers, SIB, Madras Custom House undertaking to supply the item in question at a price of US $ 271.41 per piece (ex-works). Shri Sridharan contended that even this offer could not form the basis for determining the assessable value of the imported goods since M/s. Usha Services and Consultants were the agents of M/s. Honeywell only for Process Control and Test Instruments and not for parts of refrigeration and air-conditioning machinery. He argued that the offer made to an officer of the Custom House by the local agent could not form the basis for determining the value under Section 14 of the Customs Act, 1962 since it did not relate to the price at which the goods in question were sold or offered for sale in the course of international trade. He contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imported consignment consisted of 100 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 purposes 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 individual case can be rejected if such goods are sold or offered for sale at higher price in the course of international trade. In support of his argument he relied upon the decisions in the following cases :- (i) Macneill Magor Ltd. v. CC [1987 (28) E.L.T. 318] (ii) Consolidated Coffee Ltd. v. Collector of Customs [1986 (24) E.L.T. 429] (iii) Calcutta Motor Dealers Association v. CC [1989 (42) E.L.T. 693] (iv) Sanjay Chandiram v. Collector of Customs [1991 (52) E.L.T. 413] Shri Prabhat Kumar further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 suppliers and the appellants or any amount having been remitted to the suppliers in addition to the invoice value. According to that the impugned order is contrary to the provisions of Section 14(l)(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 international trade as contemplated under Section 14 of the Customs Act. The appellants have also claimed that the quotations furnished by M/s. Usha Services and Consultants Pvt. Ltd. could not be relied upon for the determination of the value of the imported parts in India of commercial and residential airconditioning systems for which M/s. Usha Services and Consultants were not representing M/s. Honeywell as their authorised agents in India. 8. It is seen from the impugned order that while rejecting these arguments the Collector (Appeals) has held that under Section 14(l)(a) of the Customs Act, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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(l)(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 (Bom.)] is authority for this proposition. It had been laid down therein that though the price mentioned in the invoice may be the real price as between the parties the department would be entitled to levy duty on the deemed price as would be arrived at on application of the principles of Section 14(l)(a) of me Customs Act. This could be found stated at page 291 as follows :- This actual price of supply which we would assume is a genuine price in that deal can vary from the international market price which is the value for the purpose of Customs taxation ." 10. It is seen that in the case of Automotive Enterprises v. Collector of Customs (supra) it has also been held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned 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 authorites. Nor has been any application made to receive .this an additional evidence. It is not known whether the invoice now relied upon by the appellants was itself the subject matter of any adjudication or whether it had been accepted as such for assessment in connection with that import. In these circumstances we are not inclined to go into that matter any further or to act upon evidence based on that import to disbelieve the prices mentioned in the circular letter dated 7-2-1977. As mentioned earlier, that circular letter is by an authorised supplier of Glacier Bearings, mentioning special net prices for India. In the absence of any acceptable evidence to doubt the prices mentioned therein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rence between one model and another. Model M 944A has internal balance relay. 24 50/60 HZ, 18 watts, and model M 944G requires external balance relay, 120V (50/60 HZ), 13 Watts. Basically both models are similar and, therefore, their prices can be considered for comparison. As already pointed out, prices quoted by M/s. Usha Services for model M 944A cp, are as well with the price quoted to M/s. BHEL for model 944G. It is also seen from the case records that M/s. Usha Services informed the Department that their quotation was based on official price book and microfiche plates of M/s. Honeywell. In the circumstances, there is no reason to doubt the correctness of the price quoted by M/s. Usha Services. The appellants have also raised the objection that as M/s. Usha Services were not the authorised representatives for airconditioning and refrigeration products of M/s. Honeywell, they had no locus standi to quote price of the impugned goods. On this point M/s. Usha Services has forwarded to the Department a copy of Telex from M/s Honeywell High Tech. Trading, Singapore clarifying that though M/s. Usha Services were not agents for commercial and residential controls, they were allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces and Consultants (P) Ltd. was wholly arbitrary. In this regard our attention was drawn by the learned JDR to the Tribunal s observations in the case of M/s. Metal and Alloy Industries v. Collector of Customs reported in 1989 (40) E.L.T. 207 that quantity discount normally ranges between 5% to 10% only. Having regard to these observations of the Tribunal we do not find any force in the appellants claim that the determination of the assessable value of the imported goods on the basis of the quotation relied upon by the Department was arbitrary or unreasonable. 15. In view of the above discussion and on the ratio of the Tribunal s decision in the case of Automotive Enterprises v. Collector of Customs (supra), we do not find any infirmity in the impugned order. We, therefore, dismiss the appeal. 16. [Dissent per : Harish Chander, President]. - I have perused the order written by my learned brother, Shri P.K. Kapoor, Member Technical. I do not agree with the conclusion of my learned brother, Shri P.K. Kapoor. Accordingly, I am recording a separate order. 17. My learned brother, Shri P.K. Kapoor, Member Technical at length has narrated the facts in his order and also submissions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on page 27. Shri Sridharan argued that the price which has been paid by the appellant is the correct price and argued that no reliance should be placed on the same and invoice price should be accepted and no penalty is leviable. He pleaded for the acceptance of the appeal. 18. Shri Prabhat Kumar, the learned JDR who has appeared on behalf of the respondent, referred to the observations of the Assistant Collector on page 33 of the paper book. He argued that no regular printed price list has been filed. He also argued that it is not disputed that the origin of goods is United States. Shri Prabhat Kumar, the learned JDR argued that the Tribunal is the final fact-finding body. In support of his argument, he cited the following decisions :- AIR 1967 SC 1435 - CIT v. Walchand Co. (Pvt.) Ltd., 116 ITR 778 - Commissioner of Income-tax v. Gangappa Cables Ltd. He referred to the order-in-original and pleaded that full reliance may be placed on the evidence collected by the Collector. In support of his argument he referred to the following decisions :- 1. 1990 (48) E.L.T. 421 (Tribunal) - Wax Wax Products v. Collector of Customs 2. 1987 (31) E.L.T. 356 (Born.) - Satellite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is the sole consideration of the sale or offer for sale: (b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf." The revenue s main case is based on the proforma invoice dated 28th October which appears on page 27 of the paper book. A simple perusal of the proforma invoice shows that the quantity in the proforma invoice is mentioned as one Thermostat Modulator Motor. In my view, a mere quotation cannot be equated with invoice. Hon ble Bombay High Court in the case of Ashak Leyland Ltd. v. Union of India and Others reported in 1986 (26) E.L.T. 676 (Bom.) had observed in para No. 9 as under :- 9. Shri Hidayatullah for the petitioners contended that this course sought to be adopted by Shri Natu 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price at which the goods were sold by the Hongkong supplier and purchased by the importer was the price at which the value of the goods could be fixed under Section 14(l)(a) of the Act. The two invoices adopted as the basis of valuation against the importer is not sufficient evidence which can lead to inference that there was under-invoicing resulting in under-valuation. Under-valuation must be proved by proper evidence and the onus to prove the charge of under-valuation was on the revenue. The Revenue did not produce sufficient evidence to discharge the heavy onus which lies on them. Therefore, in these 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, 100 Modulator Motors were imported. Accordingly, no reliance can be placed on the proforma invoice. Accordingly, in view of the above discussion, I hold that the price declared by the appellants in the bill of entry as Rs. 80,564.00 should be accepted. 21. In the result, the appeal is allowed. POINT OF DIFFERENCE Whether in the facts and circumstances of the case, the declared invoice value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision the value of the goods shall be deemed to be the price at which such or like goods are ordinary sold, or offered for sale, for delivery at the time and place of importation, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole considertion for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alognwith 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] 26. One of the arguments of the learned advocate for not rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p Business Machines. 26.3 Price declared by the appellant on the basis of quotations of their suppliers which in turn is based on the quotation dated 30-11-1986 of Honeywell Air Conditioning, Middle East,, does not inspire any confidence at all. As rightly pointed out by the learned JDR, those quotations indicate quotations for uneven quantities available Ex-stock. There is substantial force in the learned JDR s arguments that these prices are the prices meant for the disposal of the entire stock. These prices, therefore, cannot be treated as prices in the course of international trade in terms of Section 14 of the Customs Act. 26.4 Another grievance of the learned advocate against the lower appellate authorities 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 10 to the appeal) in the case of M/s. Popular Exports (P) Limited that quantity discount ranging from 5% to 30% depending upon bulk buying to their authorised wholesale dealers has been i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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