9911796707
TMI Blog2007 (6) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction value in terms of Rules 4(2) and 10A of the Customs (Valuation) Rules, 1988 (CVR). He determined the FOB value of the impugned goods as Rs. 139.68 lakhs and confiscated the goods under Section 111(m) for misdeclaration of value with a view to evade payment of duty to the tune of Rs 40 lakhs An option was offered to redeem the goods on payment of a fine of Rs. 5 lakhs. A penalty of Rs. 2 lakhs was imposed on the importer under Section 112(a) of the Act. A penalty of Rs. 50,000/ was imposed under Section 112(a) of the Act on the CHA, M/s. Adarsh Shipping and Services. 2. The captioned appeals are directed against the above order. Facts of the case in brief are that on intelligence of gross undervaluation, the four colour offset press imported by M/s. Saffire Lithographers was seized on the reasonable belief that the same was liable for confiscation. A Show Cause Notice was issued to reject the transaction value in terms of Rules 4(2) (a), (b), (c), (f) and (h) and 10 (A) of the Customs (Valuation) Rules, 1988 (hence forth, CVR), proposing to fix the value at Rs. 164.512 lakhs in terms of Rule 8 of the CVR, to confiscate the machinery and to impose penalty on the importer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tory discount. A similar machine of "Mitsubishi" brand was imported in March 2006 at a value of Rs. 275 lakhs (Bill of Entry copy furnished to the importer). There was a contemporaneous import on 10-2-2006 of a second-hand four colour off set printing press with accessories which was more than 20 years old at a CIF value of Rs. 23.50 lakhs. The importer was furnished a copy of the Chartered Engineer's report on valuation of the imported machine. The Commissioner found that generally a machine more than 10 years old was valued at 1 /10th of its original value by Chartered Engineers. The importer did not seek to cross-examine the SGS Engineer who had estimated the value of the machine and did not produce the load port Engineer's Certificate. The importer offered to pay duty on a value of Rs. 38 lakhs as against the declared value of Rs. 23.28 lakhs. Thus the Commissioner found adequate grounds to reject the declared value. A discount of 12.5% was allowed on the assessed value of Rs. 164.512 and FOB value of the impugned goods fixed at Rs. 139.68 lakhs under Rule 8 of CVR based on the certificate of the Chartered Engineer. As the importer was in the business of distribution of off set ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ors (P) Ltd. v. CC, Bangalore [2005 (186) E.L.T. 307 (Tri. Bang.)]. The Counsel invited our attention to the E. Mail dated 27-2-06 from the supplier to the appellants communicating a copy of the E. Mail addressed to SGS India agent by his counter part in Japan. As per the communication between the SGS agents, the original E. Mail on the price of the machine was only for the reference of SGS India. He had found general price of "Shinohara" by phone from their sales office in Tokyo. He advised in the mail that for evaluating the equipment the SGS India had to investigate using comprehensive data. He had thought that the information was required to value used machine. The Counsel submitted that the SGS Japan must have reported the price on the basis of domestic market price in Japan. The comparison was attempted by the Commissioner in the case of new machine where the brand was different and the country of make was different and that the observation that the 10 year old machine was valued at 1/10th of the price of the new machine was without basis. He relied on the following case law: (i) L.M.L. Ltd. v. CC, 1992 (62) E.L.T. 619 (Tri) (ii) Mirah Exports Pvt. Ltd. v. CC [1998 (98) E.L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.-Bang)] once transaction value was rejected any reasonable method of arriving at the value could be adopted. 9. We have studied the records of the case and the submissions made by both sides. M/s. Saffire Lithographers were the sole distributor of the SHINOHARA products in India by their admission vide their letter dated 7-2-2006. They had been charged at the distributors' price for the impugned goods. The importer had admitted before the Hon'ble High Court of Madras that they were charged a lesser price as the supplier was introducing the impugned product to capture the Indian market and that the machine was intended for an exhibition. They had offered to pay duty computed on a FOB value of Rs. 38 laths as against Rs. 23.28 laths declared in the Bill of Entry. In their letter dated 27-2-2006, the supplier had informed the Commissioner that the regular price of the press imported was 9 million Japanese Yen whereas they had allowed a discount of 3 million Yen to M/s. Saffire Lithographers. We find that the importer was charged a specially low price for the product. The Distributorship Agreement between the supplier and the assessee described the assessee as an agent of SHINOHARA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of being heard, before taking a final decision under sub-rule (1)." Once the invoice value is found to be false, the assessing authority can adopt any reasonable method in order to ascertain the assessable value as held by the Tribunal in the case of Atlas Castings & Metal impregration v. CC, Hyderabad - 2005 (186) E L T 575 (Tri -Bang) 10 The investigation into the transaction to arrive at the correct price of the impugned goods was initiated on finding a different and much higher price for the imported item displayed by the manufacturer on the internet. This information was conveyed to the importer as required under Rule 10A of CVR. In the entire proceedings the assessee has not questioned the veracity of this price of 2,20000 pounds sterling advertised by the manufacturer at its own site As per Section 14 of the Customs Act, imported goods are to be assessed on a value at which such goods are ordinarily sold for export to India in the course of international trade. As the price gathered from internet could not solely be relied on to determine the assessable value, the Commissioner had got the goods inspected by the Chartered Engineer of an internationally reputed inspecting a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned machine). We do not find that the observation of the Commissioner is unreasonable. The erstwhile Rule 57S of Central Excise Rules '44, had provided for allowing depreciation to the tune of 10% per year of use of a new machine for reversing initially availed credit on its removal from the factory. The Commissioner also had found that a similar machine of Mitsubishi brand had been contemporaneously imported at Rs. 275 lakhs through Tuticron Port. If Mitsubishi is a superior brand, the Commissioner had given due allowance for the difference in quality and had fixed the value of the impugned goods at Rs. 139.68 lakhs (FOB) following the views of the internationally recognized experts. As a rule, every major manufacturer of machines has a printed price list containing prices from which an agent or sole distributor of the supplier gets discount/commission. In the instant case, the assessee, a distributor the manufacturer has withheld the said pricelist.; As per contract the supplier notifies the price of its products to the assessee every year in a price list/proforma invoice/quotation and the supplier issues a sale note on receipt of order from assessee. The invoice for the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in the case of Rajkumar Knitting Mills (supra) interpreting Section 14(1) of the Customs Act, 1962 is binding on us in view of the fact that the relevant words of Section 14(1) have not undergone any change and there is no contrary decision of any Larger Bench of the Hon'ble Supreme Court. Section 14(1) of the Customs Act, 1962 requires customs valuation to correspond to ordinary competitive price in international trade. Transaction value method is one of the methods of valuation under the Customs (Valuation) Rules, 1988. The transaction value has been defined to be the actual price paid or payable. The declared value may not represent the transaction value in every case. When the declared value is ridiculously low compared to the ordinary competitive price of comparable goods contemporaneously imported, such declared values cannot be adopted as customs value. In such cases, the transaction value method is clearly inapplicable as the declared value does not conform to the requirement of the said Section 14(1).... On the other hand, where the declared value is ridiculously low and does not correspond to the ordinary competitive price in international trade, then the other methods ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
