9911796707
TMI Blog1997 (5) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... 6,655.00, Rs. 3,96,480.00, Rs. 4,69,863.00, Rs. 2,84,017.00, Rs. 2,39,874.00, Rs. 3,557.00 and Rs. 54,245.00 respectively. The goods were manufactured by Allison Transmission USA (for short AT) for Detroit Diesel Corporation USA (for short, DDC), both being divisions of General Motors, USA. All the consignments were purported to have been supplied by M/s. Heldean Ltd. UK (for short, HL) a proprietary concern belonging to Shri Praful Patel, who raised invoices. The relevant documents were collected from the Custom House Agent. The office premises of appellant was searched and several documents were seized. The documents included certain telex messages, list dated 11-4-1990 prepared by appellant showing details of DDA (i.e. Detroit Diesel Corporation and Allison Transmission) as on 10-3-1990, invoices for import of spares of AT by the appellant from M/s. American Corporation USA and M/s. Janis Exports, USA. Statements of Shri Satish K. Mehta, a partner of appellant and Shri Jagdish K. Mehta, who was managing the concern were recorded on several dates and statement of Pankaj V. Shah was also recorded. Enquiries were made with M/s. Prem Nath Diesels Pvt. Ltd., New Delhi (for short PN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t were 5 to 12 1/2% higher than the 1989 price list prices. There was a quotation from M/s. Amwin Corporation, USA, authorised distributor in USA quoting price as list price less 28% for spares of AT (List prices are 40% higher than distributor prices and less 13 to 15% for spares of DDC). Appellant had specifically sought for price lists of AT and DDC showing the distributors price to finalise the decision. 5. The list prepared by appellant on 11-4-1990 showed details of AT and DDC goods as on 11-4-1990 and contained columns for part number, quantity ordered and despatched, quantity balance and rate in US $. The rates indicated were at par with distributors prices in the 1989 price list less 5%. The invoices for AT and DDC goods ordered by appellant from M/s. Amwin Corporation, USA and M/s. Janis Exports, UK showed prices higher than the distributors prices shown in the price list. Copies of orders placed by HL on CMP were not available in the appellant s premises. A telex message from HL to appellant showed that a sister concern of CMP was charging distributors prices as shown in the price list. 6. Satish K. Mehta produced price list of AT. He stated that the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India of AT and they import and arrange import based on distributors prices shown in the price list. They were distributors of DDC till December, 1979 and were arranging import on the same basis. In the case of third party import they receive 6% commission and the manufacturer supplies goods on prices shown as distributors prices shown in the price list plus 6% commission. They effect imports based on distributors prices shown in the price lists. 9. Accordingly show cause notice dated 27-7-1990 was issued to appellant alleging the above facts and circumstances and proposing to load the value of components cleared already and yet to be cleared adopting the distributors prices shown in the manufacturer s price list plus 6% (commission payable to PND) and to demand differential duty on such values. The value of components already cleared would be Rs. 9,26,989.00 and components yet to be cleared would be Rs. 32,74,759.00 as against the declared value of Rs. 5,48,893.00 and Rs. 14,64,691.00 respectively. It was also alleged that goods of value of Rs. 3,78,096.00 and Rs. 25,49,035.00 respectively were not covered by any valid licence and import of such goods was in contravention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o clear the other consignments. Licences produced are valid. In any event, appellant is willing to produce valid licence to cover the import. 11. The findings and reasoning of the Collector were as follows :- (a) AT has a printed price list and has appointed PND as sole authorised distributor entitled to 6% commission on sales. The price list price plus 6% is the ordinary price at which these goods are available in India. Hence, the transaction value which is for less than such ordinary price cannot be prima facie accepted, particularly since the subject components are supplied by a trader in UK. (b) The documents seized from appellant s premises showed that the appellant had manipulated with the supplier to have the goods under-valued. This position was accepted by Shri Jagdish K. Mehta and Shri Satish K. Mehta in their earlier statements. This conclusion is also supported by the admission of Shri Jagdish K. Mehta regarding cash payment made and promised over and above the invoice value. Hence, the transaction value cannot be accepted. (c) Transaction value of identical goods (Rule 5) was not available in respect of all the varieties of goods imported by appellant. In some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only stock list and distributor s prices have been shown therein to be shown to customers for the purpose of negotiations and as appellant is paid 6% margin on such prices. (e) The price list shows distributor s prices for replacement parts . These are suggested prices which franchised distributors may charge to dealers operating under them and the same will not apply to parts exported by suppliers. Prices for replacement parts will be generally higher. (f) The 12 consignments comprise about 650 varieties of parts of Earth Moving Equipment. 97 varieties of parts among the varieties covered by the manufacturer s price lists are shown therein as obsolete (90 of AT and 7 of DDC) and for 85 of the obsolete items price has not been shown in the price list. (g) The imported parts were surplus lot lying with the supplier who was offering discounts thereon and in the case of obsolete items, discount was very high and prices declared were special negotiated prices. (h) The Collector has relied on a solitary import of a small consignment and the same could not be relied on. (i) Appellant has now produced copies of documents relating to 27 contemporary imports as additional eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ke adjustment in invoice prices to show lower prices in the invoices to save customs duty and in November, 1989 HL agreed to raise invoices at list prices less 45% though the actual cost will be list prices less 5% and the difference between the two prices was to be paid to Shri Praful Patel in India in Indian currency. He claimed that their telexes to CMP and the CMP quotations had been destroyed as they were on the basis of list prices lest they fall into the hands of the department of competitors. He agreed to obtain copies from CMP and furnish the same to the investigators. He also admitted payment of Rs. 3 lakhs, out of the price to Shri Praful Patel in India in December, 1989 - January, 1990 in two instalments and balance amount was to be paid on his next visit. The amount was withdrawn from current account No. 7661 of appellant with Indian Bank. Invoice prices had been remitted separately through Banker. He also admitted that the invoice prices submitted to customers did not reflect correct value which was as per the price lists and expressed readiness to pay duty on consignments pending clearance and already cleared as per price list prices. 14. The above statements, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious telex messages relied on to be incriminating. Copies of the telex messages had been furnished to the appellant. The show cause notice also made reference to these documents as relating to the subject consignments. The only answer in this behalf in the reply (at page 9) was that the telex messages have been misinterpreted. Appellant did not state in the reply that the documents did not relate to the subject consignments. According to learned counsel for appellant, the telex messages did not result in actual import of any goods, a case not propounded in the reply. According to learned counsel, total value of goods referred to in the telex message was US $ 3,65,780 which would support his contention that they cannot relate to subject consignments for which total declared value was about US $ 90,000 while the loaded value was slightly more than twice the declared value which will be far short of US $ 3,65,780. This would only suggest that only a part of the goods covered by the telex messages was actually shipped. Copies of the telex messages seen at pages 92, 92A, 94A, 95, 95A, 96 and 96A of paper book I show that appellant placed orders for supply of these goods with CMP at pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, fleet price and D/N price. D/N price is the price at which distributors may sell the parts to dealers. This price list does not indicate that D/N price is that price which can be charged by franchised distributors . There is no such condition seen in the price list. AT price list also furnishes list price, flat price and distributors price. The price list states that distributors prices shown are the prices at which AT sells replacement parts to its franchised distributors and direct dealers and the prices are suggested with respect to distributors prices to dealers operating under them. The price lists relate not to Earth Moving Machinery but refer to spare parts. In our opinion replacement parts mean only spare parts. The contention of appellant has no force as even the reply to the show cause notice stated that The basis of pricing is always the price list of the manufacturer. Copies of the price lists were made available by the appellant to the officers. Shri Satish K. Mehta on 15-5-1990 admitted that AT spares are governed by AT price list copy of which was furnished by him and in general they always keep the price list as the basis of their deals. Shri Jagdish K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant s list dated 10-3-1990 admits of no doubt. Those prices as admitted by Shri Jagdish K. Mehta are less 5% prices. That actual cost was arrived at by deducting only 5% as discount. Our attention has not been invited to any reliable material showing that the imported goods came from any surplus lot or carried 45% or higher discount. The correctness of the contentions urged is belied by the admission of Shri Jagdish K. Mehta. 20. Point (h) Paragraph 4(ix) of the show cause notice referred to invoices of import of AT spares by the appellant from M/s. Amwin Corporation USA and M/s. Janis Exports at prices more than the distributor prices shown in the relevant price list. Paragraph 14 of the notice referred to information provided by PDP (sole authorised representative in India of the manufacturer) to the effect that they arrange import from AT and DDC based on the price list. PND was obtaining 6% commission which would be included in the invoice value. Paragraph 15 of the show cause notice referred to invoices and Bills of Entry obtained from PND which also showed the price list price. Paragraph 17 of the notice specifically referred to an invoice dated 2-3-1990 obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce, no prejudice has been caused to appellant by the failure of the Collector to high-light any particular aspect dealt with in the reply to the show cause notice. 24. Point (m) It is contended that even if price is to be loaded only the declared value and not the loaded value should have been debited against the licence. The Tribunal has granted such relief in several instance. See Uma Sons v. Collector of Customs, Calcutta, 1996 (88) E.L.T. 540 (Tribunal). We, therefore, set aside the confiscation of seven consignments under Section 111(d) of the Act. 25. For the reasons indicated already, we agree with the Collector that appellant is guilty of gross and deliberate misdeclaration of value justifying confiscation of seven consignments under Section 111(m) of the Act. We uphold the confiscation of seven consignments under Section 111(m) of the Act and set aside the confiscation under Section 111(d) of the Act. The Collector has fixed consolidated redemption fine under both the provisions. The quantification of fine for redemption in lieu of confiscation under Section 111(m) has to be determined afresh after determining the duty demand as indicated above. 26. Points (j) and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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