9911796707
TMI Blog1996 (9) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... s of M/s Sigma Electronics and M/s. Sagar Electronics had revealed that no company existed at the given addresses. Therefore, on receipt of intelligence that few shipments consigned to the firms had landed at Air Cargo Complex, Delhi, officers of the DRI intercepted the same on 6-11-1992 and 7-11-1992. The goods declared as components of Alarm clocks on examination, were found to be DC Micro motors of Mabuchi make of different volts. Similar consignment of DC Micro motors had been transhipped to Jaipur prior to the arrival of the above consignment. Further enquiries by the DRI revealed that Vasudev Moolrajani had no firm by the name of Vikas Watch Manufacturing Company at Jaipur. On a visit to this premises, Shri Vasudev Moolrajani was found to be available there and his statement under Section 108 of the Customs Act, 1962 was recorded on 7-11-1992 in which he stated inter alia that he owned nine companies in the name and style of : 1. M/s. Sagar Electronics, Jaipur. 2. M/s. Sigma Electronics, Jaipur. 3. M/s. Vikas Watch Mfg. Co., Jaipur. 4. M/s. Swiss India Electronics, Jaipur. 5. M/s. Shree Triputi Electronics, Jaipur. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r/supp- lier Unit price ascertained by the depart- ment Actual unit price as per the report of H.K. Customs & Excise Department Unit price finally approved by Collector, Customs 1. 2. 3. 4. 5. D.C. Micromotors H.K.$ 0.75 -US $ 0.85 US $ 0.86 Ann. II to letter dated 8-9-1993 US $ 0.88 + handling charges and commissioner US $ 1 - HK $ 7.8 US $ 0.85 (Para 67 r.w.) page 40 of the order Calcula- tors H.K. $ 3.12 - US $ 1.75 Actual FOB - HK $ 7.025 Sl. Nos. 11 & 12 of Ann. I to letter dated 14-5-1993 HK $ 10.50 US (sic) Digital clocks HK $ 3.71 Price list of Wattari Ind. US $ 1.30 Sl. No. 13 & 14 of Anne. II to letter dated 14-5-1993 (read with invoice Nos. in Para 75 of the order) HK $ 13.00 US $ 1.30 (sic) para 77 Cardiac patches or Gra-phics-electro des HK $ 0.07 (page 278) - US $ 0.15 Sl. No. 13 of Ann. 1 to letter dated 14-5-1993 (See invoice No. mentioned in Para 79 of Collector's order) HK $ 1.20 US $ 0.15 (para 81 r.w.p. 40) Foley baloon cathetors HK $ 0.25 Rs. 14.21 - US $ 0.52 Sl. No. 14 of Ann. I to the letter dated 14-5-1996 HK $ 3.223 Rs. 14.21 (para 89 r.w.p. 40) Button Cells HK $ 0.04 - HK $ 1.5 HK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring on record the following two documents : (1) Report dated 14-5-1993 of Hong Kong Customs (issued by the Deputy Head of Trade Standards Investigation Bureau, Honk Kong) forwarded to the Indian Customs alongwith two enclosures; (2) Report dated 8-6-1993 forwarded by the Hong Kong Customs to Indian Customs alongwith the enclosures. The appellants objection to these documents was that the reports were not utilised by the department during the original adjudication proceedings even though they were available and till date, the documents on which the reports are based, have not been disclosed to the appellants. Similarly, the statement of the foreign suppliers had not been given to the appellants. The learned DR appearing for the Revenue stated that he was not in a position to supply the original documents in view of the International understanding between India and Hong Kong and the conditions subject to the Hong Kong Customs had supplied the information and documents to Indian Customs viz. the prohibition on the use of these documents in legal proceedings and the consequent claim to privilege. After hearing both sides in detail we considered that the documents wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on the Bill of entry; moreover, the appellants had themselves organised the procurement and shipping of the goods at Hong Kong and they were aware of what was being shipped and what was the price mentioned in the invoices. When the appellants had made wrong declarations on the Bills of entry in respect of 26 consignments, a change of heart could not be expected in respect of the remaining 14 consignments. We have carefully considered the rival contentions. Section 111(m) of the Customs Act reads `any goods which do not correspond in respect of value or any other particulars with the entry made under this Act or, in the case of baggage, with the declaration made under Section 77 in respect thereof'. The term `entry' is defined in Section 2(16) as 'entry' in relation to goods means an entry made in a `Bill of entry'. If a Bill of entry has not yet been filed, the question of goods imported not corresponding with the goods entered in the Bill of entry cannot arise. We are, therefore, of the view that in cases where a bill of entry has not been filed, Section 111(m) would not be attracted. However, the position is somewhat different in respect of the contravention under Section 111( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered the submissions made by both the sides. We do not find any evidence on record to show that any instructions were given by or on behalf of the appellants to the Shipping Corporation of India in respect of the declarations to be made in the import manifest. The Import Manifest (Aircraft) Regulations, 1976 provide that every import manifest shall cover all the goods carried in the Aircraft and consist of, inter alia, a cargo manifest in Form III. The cargo manifest shall be delivered in separate sheets in respect of (a) cargo to be landed (b) unaccompanied baggage (c) goods to be transhipped and (d) same bottom or retention cargo. Import Manifest (Vessels) Regulations, 1971 also provide for submission of a cargo declaration in Form III. The manner of declaring cargo is also the same as in the case of Import Manifest (Aircraft) Regulations, 1976. Form No. III of Cargo Manifest for air has columns for `number of packages' and `nature of goods'. Form III of Cargo declaration for vessels have columns `number and kinds of packages i.e. cases, cartons, bag, bales, pieces' and description of goods; there is no column in either of the two forms requiring declaration of value. The descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these two shipments were attributable to typing error and misunderstanding in the communication between the Indian buyers and the Company. There was, however, no malpractice involved. At the end of the letter, it is stated that 'a statement has been obtained from a Director of the Company, Mr. C.J. Sujan to confirm the above findings'. The second letter dated 8th June, 1993 is more detailed and refers to the supplies made by several companies to the supplier of the present goods namely CNS Fortune. At the end of this letter, the following statement has been made, "in the respect of 5 declarations lodged for the consignments, four are correct and one incorrect. The incorrect export declaration was a genuine mistake of the company which wrongly quoted the US dollar for the Hong Kong dollar in the amount declared. No legal action will be taken against the above (C) and (E) companies since the value discrepancies on the export declarations resulted from genuine mistakes". The first letter dated 14th May, 1993 (without annexures) was delivered to the appellants on the last day of hearing before the Collector. The second report dated 8th June, 1993 was given to the appellants after t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants to rebut the contents of the two reports. He challenged the veracity of the reports and the details contained therein. During the arguments on the department's application for additional evidence (viz. the two aforesaid reports), the Counsel for the appellants insisted upon the production of primary material on the basis of which these reports were prepared. The learned Departmental Representative stated that he was not in a position to supply the original documents in view of the International understanding between India and Hong Kong and the conditions subject to which the Hong Kong Customs had supplied information and the documents to the Indian Customs viz. the prohibition on use of these documents in legal proceedings. Accordingly he claimed privilege. Countering these submissions the Counsel for the appellants, argued that there are certain principles governing claim of privilege and in this respect he invited attention to the Supreme Court judgment in the case of Shri S.P. Gupta reported in AIR 1982 SC 149 and Shri R.K. Jain v. Union of India reported in 1993 (65) E.L.T. 305 (SC). After hearing these arguments, we allowed the reports to be taken on record. However, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt decision reported in the Court Room Highlights in 1996 (84) E.L.T. A47 and various other decisions of the Tribunal to the effect that quotations alone cannot form the basis for proving undervaluation. We are of the view that quotations can be relied upon if they are found to be genuine, reliable, relevant, contemporaneous and relate to the sale of comparable goods meeting the requirements of Section 14 of the Customs Act and the Customs Valuation Rules, 1988. Therefore, evidentiary value of each quotation has to be considered on its own merits. 9. We now deal with the individual items of import, in respect of valuation, ITC contravention and the rate of duty. 9.1 DC Micromotor :- The appellants have claimed benefit of ITC Public Notice 32/92-97 which provides that components of consumer durables can be imported by actual users. According to the appellants, they manufacture alarm clocks and they have also a certificate from the Director of Industries, and since they are actual users, and are eligible to claim the benefit of Public Notice 32/92-97. They have also stated that DC Micromotors imported by them are suitable for use in alarm clocks. The case of the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for operating the bell, and since the appellants manufacture alarm clocks, we are inclined to hold that the appellants can be considered actual users in relation to the import of DC micromotors for use in the manufacture of alarm clocks. It is also noticed that the appellants had offered to demonstrate the use of these DC micromotors in their alarm clocks before the Collector. In these circumstances, we hold that the benefit of PN 32/92-97 cannot be denied to the appellants for the import of DC micromotors. As regards classification, there is not dispute that DC micromotors are classifiable under Heading 85.01 and are also eligible to the benefit of Notification 62/88-Cus., dated 1-3-1988 as amended. The dispute is whether Sl. No. 2 or Sl. No. 2A applies. The department submits that Sl. No. 2 is applicable whereas the appellants claim that Sl. No. 2A is applicable. Both the serial numbers cover DC micromotors of voltage rating not exceeding 13.5 volts and output not exceeding 2 - volts. The difference between two serial numbers is that Sl. No. 2 is for DC mircromotors for audio cassette recorders or player whereas Sl. No. 2A is for DC micromotors for other uses. Here the DC micromo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , New Delhi STOC Lab under this Department may be contacted for confirmation. Import of populated PCB is in any case under the negative list of Exim Policy 1992-97 and requires an import licence from the office of the Director General of Foreign Trade (page 130 of the paper book). The appellants contended that the opinion itself suggested confirmation from a lab. They also stated that resistors and capacitors are missing and cross-examination of the officer of Department of Electronics was not allowed. We do not see much force in the contention of the appellants. They have already stated that they are not pressing their grievance regarding cross-examination. They have also not categorically disclosed as to what parts are missing. In our opinion, the advice given by the Department of Electronics shows that the goods imported appears to be calculators in CKD form. In any event, the goods contain populated PCBs which require an import licence for their importation. We therefore, uphold the finding of the Collector that calculators in CKD form are liable to confiscation under Section 111(d). 10.1 As regards valuation, the entire case of the department is based on the quotation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation under Section 111(d) the Solar Cells are also liable to confiscation. 12. Digital Clocks : The Department has alleged that the goods have been misdeclared as `components of digital clocks' whereas they are digital clocks in CKD condition, based on the examination report and the personal opinion of the adjudicating officer based on the examination of the samples by him. The Collector has observed that 5,000 pieces of metal contact and 5,000 pieces of reflector have not been found in the packages when examined together. The goods are however invoiced, implying that they have been short landed. The absence of the same in no way proves that the item is not a CKD digital quartz clock. The Collector has therefore, confiscated this item under section 111(d) of the Customs Act. Whether it is a case of short-shipment or short landing, the facts remains that the goods as imported, are not complete digital clocks in CKD condition. We are not of the view that in such technical matters the Collector's personal opinion regarding the nature of the goods can be taken as a definite evidence. In the case of Western Transformers and Equipment Pvt. Ltd. v Collector of Central Excise, Jai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding of the Collector regarding valuation of this item. 14. Balloon Catheters : During the hearing the Counsel for the appellants, conceded that the goods were not eligible to the benefit of Notification No. 201/81-Cus. He, however, claimed exemption from additional duty under Notification No. 339/86-C.E., dated 11-6-1986. In support of this claim, he relied upon the judgment of the Calcutta High Court in the case of Fitwell Fastener (India) Pvt. Ltd. v. Collector of Customs reported in 1993 (68) E.L.T. 50 (Cal.). Although the appellants had not claimed the benefit of Notification No. 339/86 at the original stage, we extend the benefit of this Notification because the appellants had claimed exemption from additional duty at the original stage, though under a different notification and the exemption is available on merits. 14.1 Concerning valuation, the show cause notice relied upon the price list of Sanko Trading Co. The Collector has observed that `the department has relied upon the price list of Sanko Trading only to cast doubt upon the invoice price and to show that it is not logically possible for the goods to be valued at 0.25 HK $ each as declared in invoice 92/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tative note to Rule 8(2) provides for a reasonable flexibility in the application of the method. But if one looks at the examples given in Rule 8(3), it would appear that the flexibility is with regard to the definition of similar or identical goods or with regard to the time gap of 90 days. Moreover, even if flexibility is applied, some adjustment in value on account of flexibility has also to be made. Therefore, we are not satisfied that all the conditions of Rule 7 have been met and that Rs. 14.21 can be taken as a reasonable price under Rule 7 or Rule 8 of the Valuation Rules. 15. Button Cells : ITC Circular 12/92-97, dated 3-9-1992 (page 285) states that there existed certain doubts about the importability of items listed therein, including button cells. It has been clarified that button cells do not fall under the category of the negative list of imports and therefore, can be freely imported without a licence. On 21-10-1992, Public Notice No. 64/92-97 was issued, which listed button cells as one of the items for import under the Scheme of Special Imports Licence. In the case of Union of India v. Shree Ganesh Steel Rolling Mill Ltd. reported in 1996 (84) E.L.T. 3 (SC) t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28-2-1985 is available to the appellants. This notification exempts parts of digital, digi, digiana, electronics wrist watches and similar combination type wrist watches from payment of duty in excess of 60%. For getting the benefit of this notification, a certificate from the Directorate of Industries of a State is required. Such a certificate was issued by the Directorate of Industries, Rajasthan, Jaipur. Initially this certificate was issued on 22-6-1992 and by mistake also referred to another Notification No. 345/85-Cus. Thus this certificate was issued for two Notifications namely 41/85 and 345/85. Realising that the Joint Director, Industries was not competent to issue a certificate under Notification No. 345/85-Cus, the certificate was partially modified and made valid only under Notification No. 41/85-Cus. Since both the unamended and amended certificates were valid under Notification 41/85-Cus., the appellants are entitled to the benefit of exemption under this Notification. 17.1 Concerning valuation, the Department has relied upon 3 quotations (i) quotation of M/s Oam International (ii) Quotation of M/s Rich Mal and (iii) Quotation of M/s Shui Hing. We have already ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Electronics (Order Nos. 141-143/94-NB, dated 13-3-1996). We do not think that the addition of metal strap would make any difference because, even with metal straps, the goods cannot be regarded as watch cases. There is no evidence that the backs of cases detained by the Department in Foreign Post Office or elsewhere are compatible with the bezels imported in these consignments. We therefore, hold that importation of this item cannot be held as unauthorised and the goods are not liable to confiscation under Section 111(d) of the Customs Act, 1962. 20.1 As regards valuation, the Department has relied upon three quotations : (i) Quotation of M/s. Oam International; (ii) Quotation of M/s. Shui Hing; and (iii) Quotation of M/s. Rich Mal. We have already dealt with them in relation to the item `alloy metal bezel fitted with glass' and our finding in relation to that item would equally apply here. Accordingly, the charge of undervaluation is not sustainable. 20.2 Turning to the question of exemption under Notification Nos. 41/85 and 126/92, the benefit has been denied on the ground that Integrated Bracelet cases are not eligible to benefit under this notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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