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TMI Blog2007 (7) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... Hong Kong by M/s. Compo Export of Hong Kong and M/s. Pearl Indus trial Company of Hong Kong. The price of ceramic capacitors was declared by the respondent in its Bill of Entry @ HK $ 6.00 per 1000 pcs. whereas the price of diodes was declared @ HK $ 29406 CIF as reflected in the invoices. On 27-4-1998 a show cause notice was issued by the Assistant Commissioner of Customs, Calcutta alleging inter alia that as per the overseas investigation report of the Hong Kong Customs and Excise Department the declared price did not represent the transaction value under Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 ("Customs Valuation Rules") as the price actually paid appeared to be different than the declared price and that the importer had under-invoiced the value of the goods to evade huge amount of the Government's revenue. At this stage, it may be pointed out that in the show cause notice the Assistant Commissioner had specifically invoked Rule 8 of the Customs Valuation Rules, 1988, which was subsequently given up by the Department. Be that as it may, the importer was asked to show cause as to why the value of the consignments in question shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orter were rejected. The show cause 'notice and the demand levied was confirmed. Aggrieved by the aforesaid decision, the matter was carried in appeal to the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The Tribunal allowed the appeal by holding that xerox copies of the export declarations, even though procured from Hong Kong customs will not make such declarations genuine declarations. According to the Tribunal, the origin of the goods was from China/Tiwan, therefore, there was a possibility of the export declaration price being on the higher side (over invoiced). This was in view of the fact that in some of the above countries, the goods are subsidized by the concerned Governments. Huge subsidies are given based on the export declaration price. Similarly, incentives are also given in that regard This possibility has not been rejected by the adjudicating authority Even according to the adjudicating authority, the Hong Kong supplier might have inflated the price in order to earn export incentives and if that be the case then according to the Tribunal, the export declaration made by the Hong Kong supplier cannot be made the basis for increasing the value of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue of imported goods under sub-rule (1) above shall be accepted: Provided that — (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which — (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below. (3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rem duty has to be deemed price as referred to in Section 14(1): Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation. i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and place of importation. This is where the conceptual difference between value and price comes into discussion. 7. Applying the above tests to the facts of the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One such letter is dated 19-9-1996. In the present case, the importer has alleged that the original declarations were with the Department. That certain portions of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar value instead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules. 9. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal and accordingly Civil Appeal No. 1137/2002 is dismissed with no order as to costs. Civil Appeal Nos. 5517/2004 and 5518/2004 10. These two civil appeals are a sequel to our judgment delivered to day in the case of Commissioner of Customs v. M/s. South India Television (P) Ltd. vide Civil Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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