COLLECTOR OF CUSTOMS v. M-S. TELEVISION AND COMPONENTS LTD. AND ORS

Citation: [2000] 1 S.C.R. 1139

Court: Supreme Court of India

Bench: S.P. BHARUCHA, RUMA PAL

Judgment text

COLLECTOR OF CUSTOMS M/S. TELEVISION AND COMPONENTS LTD. AND ORS. FEBRCARY 24, 2COO jS. P. BHARUCHA AND MRS. RU\fA PAL, n] Customs Act 1962/Customs Valuation (Detennination of Price of Im-ported Goods) Rules 19/il:f- Sections 14, 10/i and 111/Rule 3-lmport of Tape Desk Mechanisms from two finm~uplicate invoices and orders bearing same number and date disclosing different values recovered during raids-Giarge of under-invoicing and mis-declaration of value of goods and consequent evasion of customs duty- Transaction Value-imposition of differential customs duty-Held, valid. Import and Export (Control) Act, 1947- Section 3(2)-lmport Control Order, 1955---Clause 3-Tape Desk Mechanisms removed from OGL lists-Licence required for impo~Amendment of Letters of Credit opened on misrepresentation to avail exemption--lmport of goods without requisite licence- -Violation of-Held, the adjudicating authority should decide the violation- Scope of adjudication spelt out.

Penalty-- reto must be t"kt'u to have done sn in fulfilment of •he original ord. ::r placed on th" M·>hau lmpex whae the r"te mentiQned was S $ 143. 45 p.. :r s.. :t. (22) Secondly, Yamato's invoice which was filed with the Customs authorities also described the TDMs as 'electronic components for VCRs viz. Tape Deck Mi::chanisms as per order No. TC/89/004 dated 5. 1. 89'. As already noted, it was admitted by the respondent No. l's Director in his statement under Section 108, that in fact no order had been placed on Yamato on 5th January 1989 and the only genuine order was the one placed on M/s Mohan Impex. Since Yamato's supply of the 3000 sets of TDMs was "as per" Mohan Impex's order, it must be taken to have supplied the same goods . i. t the rate of S $ 343. 45 per set. (23) Thirdly, that the TDMs which were supplied by Yamato were the >ame as those for which the order had been placed on M/s Mohan Impex ~ further supported by the statt:ments recorded under Section 108 of the Act.

(See in this connection : Naresh J. Sukhawani Vo Union of btdia, (1996 (83) ELT 258 (SC). ) The respondent No. l's Director and Assistant Manager confirmed before the DRI in their statements under Section 108 of the Act that the TDMs which were sent by Yamato were the same as those for which the orders were placed on Mis Mohan Impex. The Assis· tant Manager of the respondent No. 1 stated that the order with M/s Mohan Impex was subsequently 'transferred" to Yamato and not thmt a fresh order was placed. Even the Managing Director of respondent No. 1 had this to say: "I also state that whatever item was entered into contract with Mis Mohan Impex for the l/C opened with them in January '89 remained same (but for the make) - even in our fresh contract with Yamato Japan. Thus, there is no material change in our fresh contract with Mis Yamato.

" (24) Now, the TDMs supplied by Yamato bore no marking and the order on Mis Mohan Impex did not mention the model Interestingly, the clearing agent of the respondent No. 1 in his statement under Section 108 said: "On the basis of common experience, it is stated that it is a fact that though importer had been telling the customs at ! (ar. dla port that these T. D. M. 's are not of national 0-30, there cannot be any proof of these as it is undisputed that TOM (Tape Dec! t Mechanism) of National G-30 is 100% identical to the unes being now cleared by the importer. I can only say on the basis of my experience of exclusively handling this item (V. C. R. /T. V. and their components) for some importers and other sister concerns thllt as per sample drawn and being submitted to D. R. I. today, it is HID% same and identical to National G-30 but for only G-30 Mar! tin~ not being shown on these sets.

Anyone in this trade can also know the same as it is a trade information of such and such manufacturer. " (25) Again the clearing agent stated that the price of the TDM as shown by respondent No. 1 was unusually low. He said: ''I am very. well aware that. in past consignments, the same was never so low at S $ 250 per set. Tape Deck Mechanism has never been passed by me for any importer for any model. I had told the COLLECIOROFCUS"IOMSv. TELEVISIONANDCOMPONENTSLTD. (RUMAPAL,J. j 1151 · importer that this value was too low but they stated that they would manage by showing that these goods were different. The party also said they would produce some engineer to show that these were different while I on the basis of my experience told them that these goods did not look different from what I have been clearing on their behalf. But they said they would try to bring some engineer.

" (26) The respondents sought to rely upon an invoice dated 10th Mnrch 1989 passed by NEC to Yamato for which the price was shown at approximately@ 237. c:> S $per set. The invoice further showed that the shipment was. to be made to India. The significance of the date was not lost on the Collector who noted that it could not relate to the shipment in question as admittedly the contract for supply of TDMs was placed on Yamato by respondent No. 1 only in May 1995. The Collector also discounted· the evidentiary value of two other invoices produced by respondents in respect of NEC model of TDMs on the ground that they related to imports of 8 to 10 months after the date of import of the consignment in question. (27) The Collector on the other hand relied upon earlier invoices showing the value of TDMs S S343. 45 per set. There is nothing on record to show thr. t the earlier invoices did not refer to TDMs of the type supplied by WJs Yamato. The A~sistant Manager of respondent No.

1 bad admitted th& respondent No. 1 had effected many shipments of the same TDM (4 to 5 shipments) e&lier. (28) The Collector, in the circumstances narrated, correctly determined the value of the TDMs supplied by Yamato to be "such or like" the goods for which the order was placed on Mis Mohan lmpex within the meaning of S. 14 (1) of the Act. (29) The fmding of the Collector is also justifiable under Section 14 (lA) of the Act. Section 14(1A) provides for the determination of the price in accordance with rules made in this behalf subject to the provisions of sub-section (1). The rules which have been framed in this connection are the Customs Valuation (Determination of Price of Imported Goods) Rules 1988 (hereinafter referred to as the Valuation Rules).

(30) Rule 3 of the Valuation Rules provides for the determination the method of vllluation and states that: "For the purpose of these rules:- (i) the value of imported goods shall be the transaction value; (ii) If the value cannot be determined under the provisions of clause (i) dbove, the value shall be dt:terrnined by procet:ding si::qui::ntiaily through Rules 5 to 8 of these rult:s. " (31) Rule 4 sub-rule (2) provides that the transaction value of imported goods shall bi:: acccptt:d. Thi:: transaction valui; has been defined in sub-rule (1) of Ruic 4 as the price actually paid or payable for the goods whi::n sold for export to India subject to certain adjustments with which we are not concerned. (32) Yamato ~upplit:d the TDMs ·'as pa Ordt:r :-;o. TC/89/004 dated 5. 1. 89 which was thi; ordt:r placed on M/s Mohan lmpcx for supply of TDMs at S $ 343. 45 pt:r set. The: 'price payabk for tht: goods remainc:d S $ 343. 45 per st:t.

The transdCtion in this case cwn at the time of import n:fom:d to the order placc:d on M/s Mohan lmpcx. The pnce payable in respect of that transaction for the TDMs was S $ 343. 45 per set. It may, therefore, be stated that the transaction value was S $ 343. 45 per TDM set within the meaning of Rule 3. (33) The n:asoning of the two Members of the Tribunal who st:t aside the ordt:r of th. : Colkctor proci::eded on the fallacious premise that the Collector could not 'adopt two different dates, one from the date- ot L;'C and other from the date of the valuation'. They also relied on thc: invoice dated 10th March J989 issued by NEC as well a statement of tht. Collector quoted out of conh:xt to come to the conclusion that it was e11dc:nt that the value of TDMs had substantially fallen. (34) The two Members misread the order of the Collector compktely.

The Collector had refem:d to the datt: of L/C only in conni:ction with applicability of paragraph 4 of the Public Notice and not in conn ;ctiun with the valuation at alL They also misconstrued the statement of th•: Collt:ctor reiating to the fall in prices. What he had said was that the fall m price of TDMs was manipulated because of the change in the impon policy by which the import of TDMs was restricted considerably. (35) We would, therefore, uphold the fmding of the Co'lector that the unit price of the TDMs for S $ 343. 45 as also his fur her order COLLECTURm CUS1'0MS v. TELEVISIONAND COMPONENTS i.. TD. [RUMAPAL. J. ] 1153 regarding paymt:nt of differential duty. (36) The oecond issue raised by the appellant before us is whether the question of acceptability of the licences covering the import of the TDMs should have been remanded by the Tribunal.

According lo the appellant, the import of TDMo clearly contravened the Import and Export (Control) Act, 1947 and the Import Control Ordtor 1955. It is submitt. :d that the import of the TDMs having been made without a licence there was no quescion of submission of a licence subseqm:nt lo the import. According to the respondents the appellant should not be allowed to raise the issue because the appellant had participated in the proceedings before the Commissioner after the remand and that the hearing was proceeding. (37) We accepc the submission of che rnspondents, not on the ground put forward but because the appdlant's repn:oentative before tht: Tribunal had conceded that the issue should be decidt:d by the original authority in terms of thc order of the High Court. Ni. :vertheless, w1: would likc to clarify thc scope of the issue before the adjudicatmg authority.

(38) It is not clear on what basis the High Coart was persuaded to allow the import licence to be produced subsequent to the importation of tht. : goods. Howevcr, in directing the matter to be proceeded with in accordance with law, it is clear that the High Court did not decide finally whethl:r the licences could, at all, be relied upon by the respondent No. l for avoiding their liability for contravention of clause (3) of the Control Order. The adjudicating authority will, thert:fore, have to decide (i) whether in law, a licence subsequently produced in respect of items already imported is acceptable in law, (ii) If so, whether the licences in fact covered the items imported and are otherwise valid. (39) This brings us to the question of penalty. It is to be remembered that the Collector had imposed a penalty of Rs. 40 lakhs on the respondent No. 1 as being equivalent to the redemption value of the TDMs which were not available for confiscation and Rs.

5 lakh each on the respondent No. l's Directors. The penalty was a composite one in the sense that it was imposed both on account of violation of the Import Control Order and because of mis-declaration of value and evasion of customs duty. The majority set aside the penalty on the respondent No. 1 because they negatived the finding of under valuation and evasion and also in view of the order of remand. It is not possible to apportion the quantum of penalty . • between the contraventions found. Therefore, although we have upheld the Collector's finding on the issue of mis-decfuration and ewsion, the questioa of quutum of penalty will have to be re-determined by the Collector after determining the issue on the licensin:; aspect. (<O) We ma! te it clear th2. t there WllS no fimdina by the Tn1nmal tJmt the penalty imposed was umezsonable.

On the other band, the disscntins Member who had opined against the remand, had held, in our opwon correctly, that in the circumstmces of the case the quantum of ilie penalty was justified. (41) The appeal is accordingly partly allowed. The decision of the Tribunal is set aside in so far as it relates to the finding on mis-declaration and evasion. The order of the Collector directing payment of differential duty is affirmed. On the question of ilie vioktion of the Import Control Order, the adjudicating authority will decide the matter in the liaht of the questions earlier framed. Depending on his decision the quantum of penalty will thereafter be determined by the Collector in the 1i3bt of the fimdin3s in this judgment. The respondents will pay the costs of the appeals to the appellant assessed at Rs. sc:? :l. B. S. Appeal partly alkr. r. :d.