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TMI Blog2001 (7) TMI 962X X X X Extracts X X X X X X X X Extracts X X X X ..... s revealed during the investigation that the Chartered Engineers Certificate was signed by one J.A. Monnin who was the Managing Director of M/s. TIPL and M/s. Tavadec SA. Enquiries made by DRI Officers, in the case of M/s. Chiramith Precision India a sister concern of M/s. TIPL, revealed that the value of these 20 machines as declared and assessed, was not correct, a show cause notice dt. 11-1-99 was issued on the grounds alleging - "M/s. Tavadec Industries Pvt. Ltd. vide letter dt. 23-12-96 addressed to Assistant Commissioner of Customs, Air Cargo Complex have stated that there is no relationship between M/s. Tavadec SA, Switzerland and M/s. Tavadec Industries Pvt. Ltd., Mangalore. Charted Engineer's certificate produced by the importer is issued by Sri J.A. Monnin who is the Managing Director of M/s. Tavadec Industries Pvt. Ltd. and M/s. Tavadec SA. M/s. Chiramith Precision India, a 100% EOU and one sister concern of the importer had imported a Machine vide Bill of Entry 338, dt. 30-2-96 at SFR 15000 per machine and both the machines are the same and Sri J.A. Monnin influenced the price of the machines." Proposing confiscation of the 20 machines under the provisions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th different Toolheads or attachments they can turn out different components. Accordingly their classification will be under Heading 8458.19, as lathes or turning centres. It is also seen from para 13 of reply filed by M/s. TIPL that the supplier will naturally charge less by allowing extra concession in the price when the machines imported are in large numbers compared to the price of only one machine, and therefore the value of machine imported by Chiramith Precision cannot be compared with those imported by M/s. TIPL. In making such a statement M/s. TIPL have admitted the fact that the machines imported by M/s. TIPL & M/s. Chiramith are one and the same. It is also a fact that M/s. Chiramith Precision are undertaking job work for M/s. TIPL on the same machines which they use to produce watch screws. This goes to show that with different tools the same machines can be put to different uses. Therefore the defence argument that these machines are used for different production lines and have different technical characteristics, and different classification under the Tariff, and the end-uses of the products are different, lacks merit. I therefore hold that the machines imported by M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the commercial level both parties are end-users and goods are identical goods (TORNOS - M4) as discussed above. The machines were also manufactured in Switzerland which fact is not disputed. The other contention of the party, that the quantity involved in the said cases vary, is no doubt correct. M/s. TIPL have also cited a number of judgments in this regard. However, in the instant case the department has adduced sufficient evidence to show that the transaction between TIPL and Tavadec S.A. was not a normal commercial transaction and therefore the question accepting the invoice value under Section 14 of the Customs Act, 1962 or the transaction value under Rule 4(3) has already been ruled out. Therefore taking recourse to the value of identical machine imported by M/s. Chiramith Precision is in order. As far as the various decisions relied upon by the party are concerned, it is necessary to take into account the facts involved in the various cases relied upon by the party in order to consider whether the ratio of any of the said decisions will apply in this case. In the case of M/s. Atco Industries one set of goods was imported by actual user and 24 sets by a dealer for resale. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where one user in selling machines to another user. There is no buyer-seller transaction in the commercial sense. The Valuation Rules also does not provide for quantity discount but allows trade discounts if it is allowed uniformly to all buyers. I, therefore, hold that the value of the machinery imported by M/s. Chiramith Precision shall be adopted as the value for arriving at the assessable value of identical machinery imported by M/s. TIPL. Such a value represents a fair value in this case inasmuch as the Chartered Engineer has given an unbiased certificate in respect of identical machinery imported by M/s. Chiramith Precision as discussed above. To this extent it is proved that M/s. TIPL have suppressed the fact that Chartered Engineer Shri J.A. Monnin on whose opinion the assessment was made in respect of Bill of Entry No. 71830, dt. 23-12-96, was the Director in Tavadec S.A. Switzerland and Managing Director, TIPL and had in this capacity influenced the price leading to undervaluation and loss of revenue to the Government. Therefore, the machinery imported by M/s. TIPL is liable for confiscation under Section 111(m) of the Customs Act, 1962 and they are also liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Customs. Thus, Shri B. Ramachandra is also liable for penalty under Section 112 of the Customs Act, 1962." 3. We have heard both sides and considered the matter and we find - (a) With the amendment of Section 14 and bringing into force, the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Ad valorem duties are to be reckoned with respect to the value to be determined by reference to these rules (hereinafter referred to as CVR-88 for short). Rule 3, CVR-88, read with Rule 2(1)(f) thereof prescribe that value shall be the 'Transaction Value' determined as per Rule 4 CVR-88, and if the same cannot be determined under Rule 4, it shall be determined by proceeding, sequentially through Rules 5 to 8 of CVR-88. Failure to observe this sequential mandate of the Rules, would render such value the determinations, to be incorrect. Such determination cannot be upheld, as is held in Kumar Agencies, 1993 (65) E.L.T. 500; Sushil Enterprises, 1993 (68) E.L.T. 657; Polyvinyl Industrial Corporation, 1994 (74) E.L.T. 426; Surya Products, 1995 (78) E.L.T. 249 and Shri Ganesh Agencies, 1999 (112) E.L.T. 185. (b) Examining the determination of value in the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtered Engineer Certificate was signed by him. We cannot find anything in this conduct of Shri Monnin to be extraordinary or not of and a routine commercial nature activity for M/s. Tavadec SA his Swiss firm which procured the machines from another Swiss firm. The only whiff, of a special consideration comes, if any, from the following sentence, as deposed by Shri Damle - "..…..Mr. Monnin paid for machineries to M/s. R. Scharff. We have made payments to Tavadec SA after about six months. J.A. Monnin only has prepared Chartered Engineer's Certificate to suit our convenience. For all these services rendered by J.A. Monnin. He has not charged us…..... Q. why he has not charged any service charge for the above work ? A. He was one of the Director of M/s. TIPL Mangalore and had 50% interest in the Firm. He has not charged anything". In this, we find Shri Damle, therefore not to have admitted anything more than the desire of Shri Monnin, at the time of dispatch of Machines, to work for the Importer appellant-Company, where he was yet to be approved as and appointed as a Managing Director which approvals came only in 1997 which to our mind is not material reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decision to step out and proceed to determine value under Rule 5 CVR-88, is not as per law. (d) However, examining the valuation as arrived at under Rule 5 of CVR-88 by the adjudicator, we find the adjudicator has found the goods imported by M/s. Chiramith Precision and M/s. TIPL to be 'IDENTICAL GOODS' for the reasons, as in paras 12 and 15 of the order (extracted supra). We find that the appellants had in a written submissions during the hearing had submitted the difference in the imported machines of M/s. Chiramith and of M/s. TIPL as under - "4.2... The difference between the two machines is enumerated below : Screw Machine Sliding Head Lathe (a) Used for manufacture of screws used for machining the turned components (b) Products used in watch making and horological industry machined turned components used in Electronic Industry (c) Machines manufactured in 1990 machines were manufactured in 1991 (two machines) 1992 (17 machines) and 1993 (one machine) (d) Supplied in Feb. '96 supplied in Dec. '96 (e) supplied by M/s. Machines Moutier, R SCHORPP, Moutier, Switzerland supplied by M/s. Tavadec SA, 2710, Tavannes Switzerland. (f) Nomenclature in Bill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualified man in charge, to comment on machines under comparison. The appellants have urged and there are technical reports placed on record, which have been ignored by the Adjudicator. The Chartered Engineer, whose Certificate is being accepted and relied upon as issued in the case of M/s. Chiramith and not in this case viz. Shri Monnin has in his reply to this show cause notice averred - "As a technically qualified person I am able to state with certainty that the one machine imported by M/s. Chiramith Precision (India) was altogether different in its technical characteristics as it was "Tornos M4 No. 24166 screw machine 4 mm dia capacity with feeder pipe, leg and attachments." This full description is given in the voice issued by the supplier of the machine namely M/s. Montier Machines Schorff. I may state that 20 machines imported by M/s. Tavadec are "M4 Tornos Sliding Head Lathes". Thus the two are different in their technical characteristics and also the price charged by the supplier is dependent on the number of machines sold." Since the adjudicator, has relied upon the Certificate issued by Shri J.A. Monnin, in the case of imports by M/s. Chiramith, further clarification o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord by the department, to establish the machines to be identical. The entire findings in the order are an interpretations of the adjudicator, not backed by any Technical Material, that they are identical goods. For 'high precision machines' as in this case, have to be and should have been, left to Technical Experts and be based on Technical Expertise, which is/could be available. Since that has not been done and Shri Monnin's certificate as regards M/s. Chiramith cannot be doubted; we also find Technical opinion of Shri Monnin on record corroborate the other opinions brought on record by the appellant, that the machines are not identical; the certificates and submissions of Shri Monnin are left unchallenged. This induces us to conclude that the imports are not proved to be of Identical Machines' to call for Rule 5 valuation under CVR-88 in the facts of this case. (e) We find, besides the unchallenged technical opinion of Shri Monnin on record, in this case, that machines in the two imports are not identical; the following facts confirm to us, to conclude the same - (i) the dates of imports are in February 91 and October '96 hence as regards the time of import and on Sw ..... X X X X Extracts X X X X X X X X Extracts X X X X
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