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TMI Blog1992 (7) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... ta by sea amounting to UK £ 9,775.00. 3. Pursuant to the said contract the foreign supplier shipped the goods on board on 24th February, 1991, and raised an invoice in respect of the said goods bearing No. 12421/EA 41897 dated9th March, 1991. In the usual course of business the appellant insured the said goods with New India Assurance Co. Ltd. on 18th April, 1991, for which he paid the premium of Rs. l,637/-. The Clearing Agent of the appellant M/s. B.B. Bose Sons filed the Bill of Entry for home consumption on or about 18th April, 1991, in respect of the said goods with the Customs authorities and the same was noted by a Noting number 922 on 18th April, 1991, on which date the appellant for the first time came to learn that the said goods had arrived at the Port of Calcutta on or about 21st March, 1991, per vessel TIGERSTREEM', under Rotation 167/91 Line No. 3. The Appraiser of the concerned group i.e. Group 5A took steps for getting the Bill of Entry assessed but for reasons unknown to the appellant the respondent No. 2 had not assessed the Bill of Entry till the last week of May, 1991. In the meantime the respondents were making undue delay in assessing the said Bill of Entr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e valuation of the impugned goods was far higher than £ 0.62 per unit as provided for the quotation of LUCAS CAV in the year 1989. 8. The said writ application was disposed at by the learned Judge by the following order :- "In this case, I cannot ignore the fact that since the Bills of Entry relied upon by the petitioner dated August, 1990 and October, 1990 were cleared by the respondents, the respondents have received further intelligence/material relating to goods such as those imported bey the petitioner. While it is true that strictly speaking the letters of the Director Revenue Intelligence Alert notice and the letter of the High Commission in London would not amount to evidence of the facts contained therein; nevertheless it cannot be said that the Customs authorities had no material whatsoever to depart from the earlier stand taken by them. The Bill of Entry and invoices are sufficiently proximate in time to the petitioner's import to be relevant to the determination of value. It may be that upon a final determination it is found that the import transaction relied upon by the respondents was not a representative transaction Justifying a finding as to the value of the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment will be at liberty to enforce the Bank guarantee and encash the fixed deposit receipt and appropriate the sums together with all interest accrued on the fixed deposit towards the dues of the Customs authorities 15 days after a copy of the assessment order has been served on the petitioner and subject to any order that the petitioner may obtain from any competent authority under the Customs Act, 1962. (i) If, on the other hand, the final assessment is in favour of the petitioner, the respondents will make over the amount covered by the fixed deposit together with all interest accrued thereon and also discharge the Bank guarantee to the petitioner 15 days after the final assessment order is communicated to the prosecuting officer of the department and subject to any order that the Customs Department may obtain from any competent authority under the said Act. (j) In default of the Customs authorities completing the assessment within the specified time or within such extended time as may be mutually agreed to, the respondent will discharge the Bank guarantee and make over the amount in the fixed deposit together with all interest accrued thereon to the petitioner. It is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ench for hearing. In course of the hearing, leave was prayed for on behalf of the appellant to challenging the said order of the Collector of Customs (Judicial) dated 20th August, 1991, in this proceeding by a supplementary affidavit. Such leave was granted. Thereafter, the matter came up for hearing before this Bench. 15. It has been contended by Mr. P.K. Dutta, learned Advocate for the appellant, that the finding of the Collector of Customs (Judicial) in his order dated 28th August, 1991, in respect of Import Trade Control Violation is perverse. It is also his contention that the Collector of Customs (Judicial) was not right in holding that Sl. No. 40(4) of Appendix 6 in terms of ITC PN dated 6th November, 1990, only such spares of trawlers as are specifically and individually included in one of the lists of Appendix 6 are entitled to be imported under OGL. Mr. Dutta has also urged that since spares of trawlers fall under the specific items appearing under Sl. No. 40(4) of Appendix 6 of the relevant Import Policy, it cannot fall under the generic entry under Paragraph 730 of Appendix 3, Part-A as amended by the Public Notice. He has also challenged the determination made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the instant case. The word 'listed' appearing in the said Public Notice dated 6th November, 1990, cannot by any stretch of imagination, refer to lists 1 to 11 of Appendix 6. The word 'listed' in the said Public Notice can only mean 'appearing'. The word 'listed' in Entry No. 730, Appendix 3A cannot signify lists Nos. 1 to 11 of Appendix 6 or in Appendices 2, 5, 8 fir 10 in as much as in the Import Policy, apart from lists Nos. 1 to 11 or F Appendix 6, the Word list appears under Appendix 2 (list of banned items), in Appendix 5 ('list' of canalised items), and in Appendix 10 (list of equipment/machinery allowed as spares on a restricted basis) but the word 'list' does not appear under Appendix 8 which only states scientific and measuring instruments - items restricted for import. In other words, it would be clear; that the word 'list' appearing in the said Public Notice cannot refer to the word 'list'. The word: 'list', therefore, could only connote 'appearing'. Therefore, the amended provisions of Chapter VI, Paragraph 76, sub-paragraph (3) could only be read as permissible spares are those Which are specifically listed i.e. appearing in Appendix 6 of the Import Policy. So a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Government for public information. Public notices are issued periodically without repealing or modifying the earlier notices or notifications. In such circumstances, the Public Notice cannot amend the provisions of the OGL Order. The amendment sought to be made by the Public Notice is, therefore, without the authority of law and is liable to be struck down. 25. There is another aspect of this issue. Spares of trawlers is a specific item appearing at Sl. No. 40(4) of Appendix 6 of the said Import Policy. It cannot, therefore, fall under the generic entry under Paragraph 730 of Appendix 3, Part-A as amended by the said Public Notice. In Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise, reported in 1990 (45) E.L.T. 525 (S.C.) , the Supreme Court held that unless the department can establish that the goods in question can, by no conceivable process of reasoning, be brought under any of the tariff items, resort cannot be had to the residuary items. The aforesaid view has been approved by the Supreme Court in Indian Metals Ferro Alloys Ltd. v. Collector of Central Excise, reported in 1991 (51) E.L.T. 165. 26. It is well settled that when there is a c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for import is a raw material, component, consumables, capital goods or a consumer item banned for import, may be obtained from the DGTD (Import and Export Policy Division), Udyog Bhawan, New Delhi. For Iron and Steel Items, ore/concentrates of iron, Manganese and Chromium, clarification is to be obtained from the Department of Steel. Clarification in respect of electronic items is to be obtained from the Department of Electronics. (2) In case where imports have been effected in exact conformity with a prior clarification obtained from the concerned technical authority as above, any problem faced by the importer in that respect at the time of clearance may be referred to the policy cell at CCI E Headquarters, New Delhi. Pending resolution of interpretation of the policy, Customs may be advised by CCI E, in special cases, to allow clearance of that particular consignment. (3) Clarification on any item-wise entry may be obtained by Actual Users from the Regional licensing authorities at Delhi (CLA), Bombay, Calcutta and Madras. Clarification will be given in consultation with the concerned technical authority or the Regional Clarification Committee, wherever considered neces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellant come with in the purview of Item Sl. No. 40(4) of Appendix 6 specifically allowing import of spares except those included in Appendices 2, 3 Part -A, 8 and 10 of trawlers, there cannot be any Import Trade Control violation. 31. The main contention urged on behalf of the appellant is that the finding of the Collector of Customs (Judicial) as regards under-invoicing is perverse. This contention has to be carefully examined in the light of the facts found and/or admitted and the provisions of the Act and the Rules. In terms of Section 14 of the Customs Act, 1962, the value of imported goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation or exportation, as the case maybe, 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 offer for safe. 32. Section 14 of the Act has to be read along with Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as the said Rules). Under the said Rules, only in ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to one of the following values ascertained at or about the same time:- (i) the transaction value of identical goods or of similar goods, in sales to unrelated buyers in India; (ii) the deductive value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 9 of these rules and cost incurred by the seller in sales in which and the buyer are not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule." 33. The normal principle for arriving, at a price is to ascertain the transaction value in terms of the provisions of Section 14(1) of the Customs Act, 1962. The said Valuation Rules provide for the method of valuation. The value of the imported goods shall be the transaction value. The said Rules, inter alia lay down that if it is not possible to arrive at a transaction value then the other rules of the said Valuation Rules which are framed there under are to be followed sequentially. Rule 4 of the said Valuation Rules, 1988 deals with tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value. (2) Where the costs and charges referred to in sub-rule (1) of Rule 9 of the rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods." Rule 2(1)(c) Definition. - Identical goods means imported goods- (i) which are the same in all respects, including physical characteristics, quality and reputation as the goods being valued except for minor differences in appearance that do not affect the value of the goods; (ii) produced in the country in which the goods-being valued were produced and (iii) produced by the same person who produced the goods or where no such goods are available, goods produced by a diferent person but shall not include imported goods when engmeeiring, develop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TVS Ltd. is October 15, 1990 whereas invoice in respect of the goods imported by the appellant is dated March 19, 1991 (Annexure "B" to the writ petition). 42. Fourthly, the Bill of Entry for warehousing of M/s. Lucas TVS Ltd., Madras sought to be relied upon by the Customs authorities was provisionally assessed with an endorsement by the authority concerned to the effect that the value was to be verified, whereas the Bill of Entry for home consumption of similarly placed importers who have already cleared their goods which were relied upon by the appellant in the writ petition have been finally assessed. Thus, there is no justification nor any basis to compare the price applicable for significantly much lower quantity shown in the Bill of Entry for warehousing which has been provisionally assessed for the purpose of showing that there has been an under-invoicing in the instant importation. 43. Fifthly, M/s. Lucas Export Services Ltd., U.K. who are the manufacturers of the goods imported are the collaborators of M/s. Lucas TVS Ltd., Madras for the purpose of manufacturing Fuel Injection Equipments including Fuel Filter Elements under the registered trade mark 'Lucas' in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Export Services Ltd. in favour of M/s. Lucas TVS Ltd., Madras at £ 0.66 which is based on special discount. Such unit price, therefore cannot be the basis for determining the value of the imported goods. 47. The value of the goods declared in the Bill of Entry, as it appears, is in accordance with the invoice given by the foreign supplier and the same is based on transaction in which the foreign supplier and the appellant had no interest in the business of each other. 48. In the premises, the unit price declared by the appellant in the Bill of Entry filed before the adjudicating authority ought to have been accepted as correct unit price and the adjudicating authority should have assessed the price in terms of provisions of Section 14 of the Customs Act, 1962 and Rule 4 of the Valuation Rules. Even assuming Rule 4 of the said Valuation Rules has no application in the matter of assessment of the imported goods and even assuming that the adjudicating authority is entitled to rely upon the said Madras Bill of Entry for consideration of the valuation in the instant case, then in that event, it is incumbent on the adjudicating authority under Rule 5(3) to consider the lowest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bly and,in accordance with known principles of law. The authority must not act as a mere tax gatherer by any means. There must be a reasonable basis for such belief supported by cogent evidence and no fanciful ideas that importers are out to take advantage over the authorities and thereby deprive the Exchequer. It has also been held therein that the fact that self same authority having cleared the very same articles a few months earlier ought not to have been ignored. Giving a go-by to the evidence at hand and relying upon something which does not have a direct bearing on the concerned subject does not speak of a non-harassive attitude. 54. In Ghanshyam Chejaria v. Collector of Customs, reported in 1989 (44) E.L.T. P. 202 and in Trident Television (P) Ltd. v. Collector of Customs, reported in 1990 (45) E.L.T. P 24, it has been held by the Court that when the Customs authorities have cleared identical goods at identical price in the past, they are bound by their own precedents. This is an age old concept which is being followed from the case of Mercantile Express Co. Ltd. v. Assistant Collector of Customs, reportered in AIR (l958) Cal. P.630 = 1978 (2) E.L.T. (J 552) (Cal.) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as no reason has been given why in such a case personal penalty should exceed the fine; that apart, no fine or penalty is imposable in this case because the order of the adjudicating authority is itself not sustainable being otherwise perverse. 58. As a matter of fact, the learned Counsel for the respondents has not seriously disputed that the penalty imposed is shockingly disproportionate to the offence charged and allegedly proved. 59. It has been next contended on behalf of the appellant that no reliance should be placed on the affidavit-in-reply (to the supplementary affidavit) of Shri Samir Ranjan Dutta affirmed on 16th December, 1991 as the same purports to adduce or introduce new grounds and/or fresh reasons for the first time to validate the adjudicating order which is otherwise not sustainable in law. This contention has substance. 60. In the affidavit, reliance is now placed in one invoice of Lucas Export Services Ltd., England and a letter dated 13th August, 1991 written by the Deputy Chief Controller of Imports and Exports to the Collector of Customs annexed to the affidavit of the Customs authorities. The Collector of Customs (Judicial) did not refer to the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o enable the Court to find out which facts can be said to be proved on affidavit evidence of rival parties. Allegations may be true to knowledge or allegations may be true to information received from persons or allegations may be based on records. The importance of verification is to test the genuineness and authenticity, of allegations and also to make the deponent responsible for such allegations. In essence verification is required to enable the Court to find out as to whether it will be safe to act on the said affidavit evidence. In absence of proper verification facts cannot be admitted in evidence. Reference may be made in this connection to the decision of the Supreme Court in A.K.K. Nambiary v. Union of India Anr., reported in AIR 1970 S.C. 652. In our view, apart from the infirmities mentioned hereinbefore, no reliance can also be placed on the said affidavit affirmed on behalf of the respondent. 63. Another contention has been raised that the judgment under appeal cannot also be sustained. The learned Judge observed that the respondents have received further intelligence/material relating to goods such as those imported by the appellant which cannot be ignored in spi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erer and there must be some reasonable basis for such belief supported by cogent evidence and not fanciful ideas that the importers are out to take advantage over the authorities and thereby would deprive the exchequer. A higher quotation would not by itself without there being any other materials or evidence justify the inference of under-invoicing. Where the transaction is at arm's length and price is the sole consideration for sale or offer for sale and there is no evidence of any clandestine remittance made over and above, the invoice value shoul4 be the value of assessing the goods imported. The burden to prove misdeclaration of prices in the Bill of Entry lies on the department and cannot be discharged by mere suspicion and the charge of under-invoicing has to be supported by the evidence of prices of contemporaneous imports of like kind goods. There has been no evidence to show that there has been any clandestine remittance of amount towards the cost or the goods imported over and above what has been declared in the import documents. In our view on the facts and in the circumstances of the case, it is evident that the authority concerned has passed the purported order of adj ..... 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