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TMI Blog2008 (9) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... out of order of the Commissioner No. SN/13-20/05 dated 13-2-2005. Commissioner by the said order decided eight show cause notices issued on various dates starting from 18-9-2001 to 3-10-2002 and all of them were based on the same set of evidences. 1.2 Customs Appeals Nos. 571 and 577 of 2005 arise out of order of the Commissioner No. 11/SN/ADJ/05 dated 31-3-2005. Commissioner by the said order decided the issues based on the same set of evidences as in the cases mentioned in the appeals referred to in para 1.1 above. 1.3 By the above orders demands of duty of customs stand demanded from M/s. Studio System, M/s. Sara Electro Acoustics Private Limited and M/s. Modern Radio House. Goods belonging to these appellants also stand confiscated; penalties stand imposed on the importers and on Shri H. Thakur. 2. Heard both sides. 3.1 Relevant facts, in brief, relating to Appeals Nos. 795 to 798 are as follows: (a) M/s. Modem Radio House, a Partnership firm, M/s. Studio System inc, a Proprietaty firm and M/s. Sara Electro Acoustics Private Limited, are basically run by Shri Haresh Thakur, either in his capacity as power of Attorney holder, or as proprietor or as Director. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the said one item was enhanced but the value of other items in the bill of entry were also enhanced on the same proportion. (b) The transaction value declared in respect of imports made under 18 bills of entries by the importers stands rejected by the Commissioner without valid reasons. The Commissioner has relied upon paras 20 and 21 of his order wherein he discussed two isolated transactions and generalised the same and adopted in respect of all other cases of imports covered by 18 bills of entries and such generalisation was not warranted and permissible under law. (c) The value has been enhanced arbitrarily and based on unreliable documents. In respect of imports under 18 bills of entries, demand has been confirmed mostly based on TASCAM price lists of 1-11-1996 and 1-4-1997, price lists of Modern House (which did not refer to any effective date), another price list relating to April 1997 giving prices of some goods in Yen. Reliance has also been placed on proforma invoice dated 9-6-1997 of Kelmark system and the price list of dated 1-4-1997 of M/s. Ultra Studio Lab. (d) He submits that in respect of Customs Appeal Nos. 795 to 798 substantial amount of demand i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified in the rules, and there cannot be any other meaning given to Rule 4. He also submits that if Rule 4 is not applicable still Rules 5, 6, 7 and 7A have to be considered and the authorities cannot jump to Rule 8 straightaway. (i) The demand relates to period prior to coming into operation of Rule 10A of Customs Valuation Rules, 1988. Therefore, the burden of proof cannot be shifted to the importers to show that the value declared by them is genuine. At any rate, if the value was found/suspected to be lower, then it was necessary for the department to have sought for the details like manufacturer's prices and only on failure of the importers to do so, the Department could rely on other mode of valuation under Rule 8. 5.1 Learned DR reiterated the findings of the Commissioner and drew our attention to the following points. 5.2 The price lists which were relied upon have been recovered from the premises of the importers only. The appellants have not cooperated in the investigation. 5.3 In most of the cases, there is very wide variation between the import price declared by them and the prices found in the pricelists. For example in bill of entry 571123 the price d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value declared by the importers. The relevant portion of his finding in this regard, as contained in order of the Commissioner dated 13-2-2005 is reproduced below:- "20. The noticee has further submitted that they had imported the goods from M/s. Al-Yamin, UAE under the cover of an invoice which represents the true transaction value. All payments were made through bank and in no case they had declared less value than the transaction value. It was submitted that the department has not brought on record any evidence to show that the invoices were not genuine or that they did not represent price paid/payable as agreed between the buyer and the seller and that the said invoices were manipulated. They submitted that the invoices represent the true transaction value and the evidence which the department has produced in the form of price list were not proof of transaction and evidence of contemporaneous imports were necessary to reject the transaction value. They had quoted certain judgments in their favour in this regard as detailed in the written submission as above. Before taking up each bill of entry for further discussion and the evidences which the department has brought for rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. The importer did not produce any correspondence in his defence from M/s. Al-Yamin stating that the sale of the goods made by him was a stock clearance sale on account of closing of their business and clearance of stock at throw away prices. I find that M/s. Al-Yamin sold the goods for a fairly long period of about a year to the importer. If that was the reason, it is unbelievable that the stock clearance at throwaway prices would continue for such a long period despite the fact that the price list, of said items show prices at very high level which the said supplier could have grabbed at the time of subject sales. I felt it relevant to take note of para 6 of the notice wherein it is stated that the stock of goods lying in their godown for which Sh. Haresh Thakur has given an undertaking to the effect that said stock of goods will not be sold, transfer or disposed off without the prior permission of the customs authorities whereas when the investigating officers visited the premises on 17-11-97 they found that Sh. Haresh Thakur could not produce the goods as per the said list. This act of Sh. Haresh Thakur also revealed his mala fide all along. 21. Under Clause (a) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no data regarding deductive or computed value of goods have been submitted by the importer therefore, the value of the goods is determined on the basis of Rule 8 of the Customs Valuation Rules. Rules 8(2)(iv) of the Customs Valuation Rules 1988 states that no value shall be determined under the provisions of (this rule) on the basis of the price of goods for export to country other than India. In the present case the export prices for India were available in the form of the Tescam price-list and Modern Radio price list brought on record by the investigation and recovered during the course of search conducted at the office and premises of the notice". 7.2 We find that the Commissioner has, for confirming substantial part of the demand, merely relied on the price lists. The price lists or quotations are subject to negotiations. It is common knowledge that the discount from the printed price lists is a trade practice throughout the world. Even in the solitary case relied by the Department to show that the price lists has been acted upon as in the case of import by Setron from M/s. Ultra Studio Lab, we find that the price quoted as per price list dated 1-4-97 for digital audio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing, Section 14(1A) does not arise. In the absence of such evidence invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same lime as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7-A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these Rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India". If the phrase "the transaction value" used in Rule 4 were not limited to the particular transaction then the other rules which refer to other transactions and data would become redundant. 14. It is only when the transaction value und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to anyone else wishing to buy the o stock, there is no reason why the declared value in question was not accepted under Rule 4(1). 10. The learned Advocate conceded that in respect of bill of entry 553809 dt. 3-8-97, the price declared by them was 60 US$ as against the price of 689 US$ found in proforma invoice and that he did not want to contest the issue. However, the said bill of entry related to many other items. The ld. Advocate assails the decision of the adjudicating authority to enhance the value to 11 times in respect of other items on pro rata basis as not justified and not warranted. We accept this submission as well. 11. From the above, the following emerges - (a) There is wide variation between the prices found in documents like price lists, quotations, price guide and the prices declared by the importers throwing strong suspicion. However strong the suspicion may be, the same cannot take the place of proof. (b) The price enhancement is mostly based on such price lists, quotations, price guides and no evidence of actual import into India at the price at which the prices mentioned in these documents has been relied upon. (c) No contemporaneous import p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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