9911796707
TMI Blog1995 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- on the Director of Company. Duty has been ordered to be paid on the ascertained value of Rs. 42984.59 and the differential duty of Rs. 389438.40, if the importer chooses to clear the goods on payment of redemption fine. Aggrieved by this order, the company and its Director, have preferred these appeals. 2. The facts in these appeals are that the importers clearing agent filed a home consumption Bills of Entry No. 1792 dated 29-6-1990 on behalf of the importer for clearance of 14 packages said to contain Rubber Hoses. The detailed particulars of the consignment are as follows : 1. Name of the Supplier : M/s. Techno Chemie Kessier Co., G.M.B.H., P.O. Box 1227, D-6367, Karben 1 2. Country of origin : West Germany 3. Description of goods : 3420 Meter Rubber Hoses of different quality (4 SP DH 6, 12, 16, 20, 4 SPS DH 25, PL-7 DH 10 PS - 8 DH 20) 4. Invoice No. Date : NR 8363 - R - 18690, dated 23-4-1990 5. Name of the vessel : M.V. Tiger Sea 6. Rot No. Line No. : 395/90, Line No. 5 7. Total CIF V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mentioned that M/s. Hydro Krimp A.C. Pvt Ltd. represented M/s. Technno Chemie in India and the said importer was advised by M/s. Techno Chemie to contact M/s. Hydro Krimp A.C. Pvt. Ltd. for their requirement of `TCH high pressure hoses. Further, a copy of invoice of latest shipment by `CONTI was also obtained from the same importer wherein the name of the manufacturer/supplier was shown as `CONTI TECH . Therefore, on physical examination of the goods in the dock, the department presumed that `CONTI as the original manufacturer of the goods since the wording `CONTI was found embossed on the rubber hoses. Thus, the importers were alleged that they had grossly undervalued the goods with an intention to evade huge amount of Customs duty. In view of special relationship between buyer and seller and the very high prices found in the price list of the manufacturers themselves the declared transactional value under Rule 4 of the Valuation Rules, 1988 was not accepted and it was alleged as to why the assessment should not be done under subsequent rules. In this regard, the comparative prices available for import of identical goods from M/s `CONTI which against the following invoices w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2,89,425.12. Since the C.I.F. value of the goods as ascertained was Rs. 4,79,629.82, the importers were alleged to have attempted deliberately under invoicing to clear goods with C.I.F. value Rs. 1,90,204.70 without any valid licence which was alleged to be unauthorised in terms of Section 3(1) of the Import Export (Control) Act, 1947 and Clause 3(1) of the Import Control Order, 1955, rendering the goods liable to confiscation under Section 111(d) of the Customs Act and for penalty under Section 111(a) of the Act, and a demand for payment of full duty of Rs. 10,76,273.68 on the ascertained value as detailed above was demanded. Hence, a show-cause notice dated 26-10-1990 was issued to the appellants. The importers vide their reply dated 11-3-1991 contesting the departments allegations and submitted as follows : 1. That they are a registered SSI unit engaged in manufacture of Hose Assembly. They import bare hoses and sell those after adding suitable indigeneous fitments. 2. That the department has not been able to make out a case against them since mere doubt, a surmise or apprehension cannot take away the genuineness of the invoice which is well settled in view of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lector has held that from the documents enclosed with the show-cause notice, it is quite clear that M/s. Techno Chemie is a subsidiary company of M/s. Continental. The same is also reflected in the literature of M/s. Continental dated 17-8-1982, wherein it is written that hose assemblies can be obtained from subsidiary company, Techno Chemie-6367. Karben-1. The Addl. Collector has also relied on letter dated March 13, 1984, M/s. Continental had advised M/s. Indo Industrial Services to contact their subsidiary company, M/s. Techno Chemie for purchasing a crimping machine, letter dated 24-6-1985 was also relied which M/s. Techno Chemie wrote to M/s. Indo Industrial Services that they had received their letter dated 30-3-1985 through M/s. Continental Cummi-Werke Ag, Hanhover. On these correspondences, the ld. Addl. Collector has held that it clearly established that both Chemie which is raising invoices showing prices less than the prices of the parent company, M/s. Continental. He has also relied on the written reply dated 11-3-1991 and held that it showed that the technical comparison of products manufactured by M/s. Techno Chemie with that of M/s. Continental price to give a view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sole distributor of that company. Referring to the term, `person appearing in the definition of the Act, ld. Advocate submitted that a sole distributor cannot also become a related person, until and unless he falls within the clauses (i) to (viii) of the Rule 2(2) of the Rules. He submitted that even if they are held to be related person even then valuation as per Rule 4 cannot be discarded and in that event sub-rule (3) of Rule 4 is required to be applied. He submitted that transaction value is bound to be accepted and the exceptional cases fall within Rule 4(a)(b)(c) (d). He submitted that Rule 4(d) had been invoked and Rule 4(d) deals about related person. As the appellants are not related person, in terms of Rule 2(2), the Transaction Value in terms of main Rule 4, cannot be rejected. He also submitted that the price lists relied were all irrelevant, for the reason, the invoice compared is that of the year 1988, while the present import is of 1990. The quantity imported also varies and so also the specification. He also submitted that the Addl. Collector cannot compare the imports of Germany with those of USA imports, which is not permissible as only contemporary imports of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction value is not to be accepted and that it should be loaded into the price of M/s. Continental of 1988 to be held as the prevailing price of 1990, and on the basis that there is a nexus between the importer and the supplier M/s. Techno Chemie? The answer is a simple no. The reason being that there is in the first place no allegation of the importer being a related person in terms of Rule 2(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Further, the importers are an independent company incorporated under the Companies Act in India and carrying on independent business in India. The supplier M/s. Techno Chemie by their letter dated 8-5-1990 had advised M/s. Indo Indl. Services to contact M/s. Hydro Krimp A.C. Pvt. Ltd., Calcutta for Hoses as they represented them, on M/s. Indo Indl. making enquires of the product. This letter merely indicate that Hydro Krimp, the importer is merely an agent or a person dealing or selling in the goods manufactured by Techno Chemie. It does not imply that M/s. Techno Chemie and M/s. Hydro Krimp, the importer, are related persons or being one and the same. Therefore, the conclusion drawn by ld. Addl. Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dentical goods or similar goods. The proviso states that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 9 of these Rules and cost incurred by the seller in sales in which he and the buyer are not related; Sub-rule (c) of Rule 3 states that substitute values shall not be established under the provisions of clause (b) of this sub-rule. Therefore, it has to be held that in the first place the department has not proved that the appellant is a related person of the supplier and that the transaction value alone has to be accepted in this case. Now we are required to look into the question of undervaluation. The supplier s invoice is dated 23-4-1990. This is being compared with the invoice dated 16-6-1988 of Continental issued to M/s. Indo Industrial Services. 4 SP, DN 16 s unit price of the supplier in this case is 9.10 as against 14.40. The quantity is 200 m, as against 80 m. The 4 SP DN 20 quantity is 409 m and unit price of supplier is 10.25 as against Continentals 320 m at 17.10 DM. The allegation is that both the supplier and Continent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was some bargaining before the price of U.S. $ 1.80 CIF per piece was finalised. The first is a letter of 18th June, 1984. In that letter the supplier has stated that We offer our last price at the rate of U.S. $ 1.80 CIF BBY, subject to your purchase of total quantity of 49670 Pcs and no rebate is allowed . It was also stated in that letter that their principals were supplying the said commodity to them at U.S. $ 1.69 per piece. That was to indicate the margin of profit for the supplier. To this, the importer responded by writing a letter dated 9th July, 1984 stating that they were not interested in purchasing the entire quantity of 49670 pieces and requested the supplier to offer the rates quantity-wise i.e. to indicate the price on the basis of quantity. In response to that letter, the supplier wrote a letter dated 23rd July1984 stating as under : Please note as you are our old and valuable (sic), we can supply you smaller quantities on the following price : 10,000 pcs. At the rate of US $ 2.20 each CIF Bombay 20,000 pcs. At the rate of US $ 2.00 each CIF Bombay 40,000 Pcs. At the rate of US $ 1.80 each CIF Bombay". It will, thus, be seen that the price ..... X X X X Extracts X X X X X X X X Extracts X X X X
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