Decided on September 30,1991



G.A. Brahma Deva, S.V. Maruthi (J), Members - (1.) THIS is an appeal against the Order -in -Appeal No. 3161/88 dated 29 -8 -1988 passed by the Collector of Customs (Appeals), Bombay.
(2.) FACTS of the case, in brief, relating to the dispute are that the appellants imported 1875 M. Tons of PVC Resin Suspension Grade ex -M.V. OCEAN STAR from Yugoslavia declaring at a CIF price of US 477.44 per Metric Ton and for the whole consignment of 1850 MTs which is equivalent to Rs. 1,10,27,016/ -. On arrival of the goods it was noticed by the appellants that the goods were damaged on the Voyage due to bad weather and other causes. Accordingly, they claimed 50% abatement in value of the goods. A report of Surveyors was also filed in support of their contention that the Cargo was partly damaged. In a letter dated 17 -10 -1985 addressed to the Assistant Collector it was stated that due to faulty loading of the Cargo in the Vessel approximately 300 tons of the Cargo was lost and the whole Cargo had depreciated in value by about 60% due to mixing of the Cargo with foreign material and that the contaminated goods were totally unfit for being taken into use for manufacture of the articles like PVC pipes because these contaminated goods will bring number of manufacturing defects such as scratches, cracks, intermittent linings etc. They submitted that the goods would not be of any use for manufacturing standard quality items and consequently the goods would not fetch even 30% of the present market value of the sound goods. They submitted that this fact has been brought to the notice of the port department and insurance company and requested that the consignment may please be examined and thereafter reasonable abatement of duty may be given to them in respect of these goods claimed to be damaged and deteriorated in quality. They also addressed a letter to the Assistant Collector of Customs stating that suppliers had agreed to a rebate of 50% in price because the Cargo was damaged on account of faulty loading at load port and the supplier was willing to bear the cost of damage. The Deputy Collector who had passed the order had held that analysis of the samples of the goods as per report of the Customs Laboratory showed that contamination in the consignment in the form of impurities was to the extent of 6.4% as against 9 to 11% claimed by the appellants. He observed that party has claimed 50% reduction in value on the basis that the contamination of the goods was to the extent of about 10%. Since the contamination was only to the extent of 6.4%, the proportionate reduction in value to the extent of 30% would, therefore, be reasonable and, accordingly, he ordered for abatement of duty on account of damage/deterioration of the goods by reducing the value of the goods to the extent of 30% under Section 22(3)(a) of the Customs Act, 1962. This view was confirmed by the Collector (Appeals). Hence, this appeal.
(3.) SHRI L.P. Asthana, learned Counsel, appearing for the appellants, submitted that neither copy of the test report relied upon by the Department was supplied to the appellants nor the sample taken for analysis could be considered as representative of the whole lot. He said that percentage of contamination whether 6.4% or 10% is immaterial as in any case it would render the consignment useless for the purpose for which it had been imported. He contended that claim of the appellants was not based on any report but on actual damage to the extent of 50% based on credit note given by the supplier after examining the goods. He said that since the supplier has accepted damage to the extent of 50% and given 50% rebate in price, the goods should be valued accordingly by giving 50% abatement. Shri Prabhat Kumar, learned JDR while countering the arguments submitted that sample was drawn in the presence of party as can be seen from the records and party was well aware of the contents of the report. Hence, it cannot be said to be denial of principles of natural justice. The samples drawn were tested and retested on 3 -12 -1985 as requested by the party and samples revealed that it contained percentage of Soda Ash - 4.8% and percentage of others 1.6%. He said that since retest was done as requested and same was not rebutted by the party, a new plea cannot be taken that report cannot be relied upon as they are bound by the results. He referred to the decisions of the Tribunal in the case of Eagle Mineral Products v. Collector of C.E., reported in 1988 (38) E.L.T. 315 and Collector of Central Excise v. Navdeep Chemicals (P) Ltd. [1988 (37) E.L.T. '62]. He said that letter of credit was neither placed before the lower authorities nor can be taken into consideration as compromise between the parties cannot be the basis to determine the value under Section 14 of the Customs Act. He contended that part of the contract is yet to be completed and the rebate given by the Supplier works out only 27% if the entire contract is taken into consideration. He said that the goods have not become useless and in fact they have been taken in use and the Department was justified in giving proportionate abatement based on chemical report to the extent damage was caused.;

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