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TMI Blog1996 (7) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... value limit specified under the import licences issued to the importers and also alleging them to have rendered liable to penalty, by further alleging that the other Respondents had abetted in causing the under valuation and consequent unauthorised import. 2.1 Respondents Metalman Pipes Mfg. Co. Ltd. caused the import of 3469.870 M.T. of Prime Hot Rolled Coils confirming the specifications SAE 1008, declaring the total value at DM 19,60,476.56 at the rate of DM 565/- per M.T. and sought clearance thereof by filing five separate Bills of Entry. Clearance in respect to Bill of Entry No. 835 dated 2-11-1989, for 482.034 M.T. was sought against four transferable REP licences, on payment of duty, which initially was for home consumption, but subsequently converted in warehousing Bill of Entry, the clearance under the other four Bills of Entry was claimed, without payment of duty and under Import and Export Pass Book Scheme, against three DEEC Pass Books, and three licences, issued in their favour. The said respondents also produced five invoices all dated 15-9-1989, from Heyking Limited, Hong Kong, which indicated the price charged at DM 565/- per M.T. CIF, and the said party was show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regards, as detailed in the show cause notice, were seized. 2.5 Statements of the persons concerned were recorded. Mr. Vijay Soni, the Director of Metalman Ltd., while agreeing to placement of the order through M/s. M.A. Hoosain Bros. at the rate of DM 850.00 per M.T., stated that because as per the said order, the shipment was to be effected before 31-8-1989, which was duly established to have not been done, the said contract was terminated and subsequently they entered into contract for supply of the same material with Heyking Ltd., Hong Kong, at DM 565.00 and had opened the Letter of Credit in favour of Heyking Ltd. who had also issued invoices to that effect, and payment had been made accordingly. He denied to have either agreed or paid the balance amount by any other mode and manner. He contended that by the time the initial contract came to be terminated, the price of the subject material in the International Market was crushingly coming down. Statements of Mr Vinod Kumar Jatia, the brother of Mr. Rajkumar Jatia, the Director of Heyking Ltd., Hong Kong and reportedly looking after the business interest of Mr. Rajkumar Jatia, in India, was also recorded, where as Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the goods of the like nature are ordinarily sold or offered for sale. Pleading that this aspect has been totally overlooked by the adjudicating authority, he has referring to the averments in the pleading that the department has brought on record the evidence, in the nature of initial agreed price at DM 850.00 per M.T., the correspondence from M/s. M.A. Hoosain and Bros. in relation to renegotiation for the price, as also the actual payment at the rate of DM 785.00 to the Italian manufacturers M/s. Ilva SPA Italy, by Heyking Limited, in addition [to] evidence of contemporary import by Zenith Limited from the same manufacturers during the same period at DK 867.30 per M.T. and has submitted these evidences have not been considered, even for the purpose of rejection. He has however clarified that it was not his submission that the matter, in such circumstances, ought to go back for reconsideration and has pleaded that when the evidence is very much available, the same ought to be considered here and appropriate decision be given. 5.2 The ld. SDR has then pleaded that Heyking Limited were merely the financiers who had opened the Letter of Credit on behalf of Metalman Limited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be a factor when the provisions of Section 112 of the Act stand attracted. 5.6 The goods, in the submission of the ld. SDR, though duly imported have been undervalued attracting the provisions of Section 111(m) of the Act, and if properly valued, exceed the value limit of the licence, making that portion of import unauthorised and hence provision of Section 111(d) also stand attracted and hence order for confiscation also should be passed. 6.1 Mr. M.M. Jayakar, the ld. Advocate for Metalman Ltd. and their Director Mr. Vijay Soni, has referred to various documents recovered by the department from M/s. M.A. Hoosain Bros. as also from Metalman Ltd. and has pleaded that by the default on the part of the foreign suppliers in shipment of goods within the time specified, which was the essence of the said contract, the initial contract for supply of the goods at the rate of DM 850.00 per M.T. had already stood frustrated and hence fresh negotiation had taken place. Referring to the letter dated 4-10-1989, addressed by Metalman Ltd. to Heyking Ltd., he has pleaded that while re-negotiating, Metalman Ltd. offered to purchase the goods at DM 565.00 per M.T. from Heyking Ltd. which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... des the fact that Vinod Jhatia is no way concerned in any act of undervaluation, so far as Heyking Ltd. is concerned their rate was no more than that of mere financiers and that they have never agreed or acted as the suppliers. About issuance of Invoice he has submitted that they had already invested money and had to retrieve them and hence were compelled to act in a way as desired and directed by Mr. Soni of Metalman Ltd. The ld. Advocate has also referred to the documents and correspondence, and has pleaded that they are being falsely implicated as the persons involved. 8. Considering the submissions, the main issue for consideration is what ought to be the value of the goods imported, whether it could be DM 850.00 or DM 787.00 or DM 565.00 per M.T. 9. The ld. adjudicating authority has held that the value could be DM 565.00 per M.T. and has, for that purpose, assigned the reasons which have been briefly referred to earlier. 10. Going by the documentary evidence, coupled with the admissions from various parties, it comes out as an established fact that initially Metalman Ltd., placed an order with M/s. M.A. Hoosain Bros. for supply of 3000 M.T. of Prime Hot Rolled Coils a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the present international market, we can accept this material at the rate of DM 565 per M.T. CIF Bombay inclusive of interest for 160 days and have added that If our offer is acceptable to you, you can send us a formal contract to enable us to do the needful. This letter is replied by Heyking Ltd. on 6-10-1989, where expressing displeasure over the approach of Metalman Ltd., they have mentioned Under the circumstances, we call upon you to support your bid alongwith a confirmed and irrevocable Letter of Credit because we are not sure whether or not, you will open the Letter of Credit even if we accept your bid for 565 DM per M.T. Letter of Credit should be opened on our bankers CREDIT AGRICOLE . Alongwith the said letter, they have enclosed a contract, with a post script in the letter, mentioning As desired a fresh contract on negotiated rates and dated prior to the date of shipment is enclosed. The contract enclosed bearing dated 15-7-1989, starts with the words We feel pleased to herewith confirm sale of the following detailed goods to you . The price per M.T. is shown as DM 565.00 and the port of shipment is shown as any European Port. The evidence shows that Metalman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lman Ltd. and Heyking Ltd. had come into existence by 6-10-1989. If that was the fate accomplie, it remains unexplained as to how, Heyking Ltd. acting as an agent for Metalman, make the payment at DM 785.00 per M.T. Further, if they were mere agents providing financing to Metalman, why should they enter into fresh contract by accepting the bid , and issue invoices as also packing lists for the consignments. With both the buyer and seller being disclosed, Heyking Ltd., if they were acting merely as the agents, could have excused themselves by not retiring the documents by stating that their principals namely Metalman Ltd., had instructed them accordingly. Oral version of Mr. Rajkumar Jatia, which nowhere gets any support from any other documentary evidence, has, in the light of the documents available, to be viewed as not acceptable one. The correspondence and execution of documents, subsequent to cancellation of the contract initially agreed upon, clearly go to corroborate the version given by Metalman Ltd., namely, they had contracted to purchase the subject goods for DM 565.00 per M.T. 18. The adjudicating authority has considered this aspect and based on the concept of nego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , with an understanding that the documents may show price at DM 565.00 per M.T. and balance of DM 222.00 per M.T. would be paid by other means; the negotiated price of DM 565.00 per M.T. as accepted by the adjudicating Collector, should be upheld as the correct. Here, however, some circumstances, and documents are brought on record, which call for some consideration, which appears to have been not expressly discussed by the adjudicating authority. 24. The Supreme Court have, in Commerce International v. Collector (supra) held that for the purpose of valuation under the Customs Act, the invoice issued by the seller may not be accepted as the correct, and invoice from the manufacturers would be the proper evidence. The Tribunal have, in Shyam Antenna Electronics (P) Ltd. v. Collector (also supra) held that if the contemporary imports are at higher price, then negotiated lower price should not be accepted particularly when the other import is from the same manufacturer. 25. As is evident from the averments in the show cause notice, the department has procured invoice dated 7-11-1989 from manufacturers M/s. Ilva SPA, Italy who are also the manufacturers of the subject goods, where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce when comparable price has to be ascertained, in view of the fact that even the department has not alleged that there was an understanding even when negotiating the price initially negotiated by Metalman Ltd., to undervalue the goods. 29.4 Further, the department, even now, does not plead that the value of the goods ought to be assessed at either DM 867.30 or even at DM 850.00 per M.T. and have simply claimed enhancement of value to DM 787.00 per M.T. which obviously is lower by DM 80.30 to what is allegedly paid by Zenith Ltd. 29.5 This factor raises yet another issue as to whether the department has really intended to place reliance on the invoice in favour of Zenith Ltd. as the basis for enhancement in value or have just made a passing reference to that. The averments in the show cause notice indicate the later position. That however may not be taken as a ground for summarily reject the submissions that have now been raised. 29.6 It however remains a fact on record, that enhancement is not claimed to the extent of the price paid by Zenith Ltd. Nor it is the claim from the department that value be raised to DM 850.00 per M.T. 29.7 This also leads to show that the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were bound to follow if they were merely the agents for Metalman Ltd. With the transaction for sale at DM 565.00 per M.T. entered into between them and Metalman Ltd. having been duly held, based on clear documentary evidence, to be an independent transaction, and the plea of underhand dealing for balance amount of DM 222.00 per M.T. is held as not proved, in absence of any other probable explanation, it is not possible to take the said price as the one prevailing market price for the purpose of Section 14(1). On the contrary, their agreeing to sell the goods to Metalman Ltd. at the reduced price may even justify agreeing to the proposition that International Market price were consistently showing downward trend. If it was otherwise, Heyking Ltd. could have, instead of persisting Metalman Ltd. in taking the goods, and for that, agreeing to whatever, according to them, were unreasonable demands, would have straightaway negotiated with other party and sold the goods at the then prevailing market price, if they were higher than DM 565.00 per M.T. During the course of hearing the matter, the ld. Advocate for Heyking Ltd. was confronted with this aspect, and he could not provide any pla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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