- (1.) The dispute involved in this civil appeal is as regards the assessable value of the Ceramic Capacitors and Diodes imported by the importer from M/s Pearl Industrial Company of Hong Kong during the period February, 1996 to July, 1996. The importer had declared the price of Ceramic Capacitors @ Hong Kong $ 6 per 1000 pcs. and the CIF price of the consignment of diodes was declared as Hong Kong $ 29406.
(2.) The facts giving rise to this civil appeal are as follows. The respondent had imported six consignments of ceramic capacitors and one consignment of diodes from Hong Kong during the above period. The goods were shipped from Hong Kong by M/s Compo Export of Hong Kong and M/s Pearl Industrial Company of Hong Kong. The price of ceramic capacitors was declared by the respondent in its Bill of Entry @ HK$ 6.00 per 1000 pcs. whereas the price of diodes was declared @ HK $ 29406 CIF as reflected in the invoices. On 27.4.1998 a show cause notice was issued by the Assistant Commissioner of Customs, Calcutta alleging inter alia that as per the overseas investigation report of the Hong Kong Customs and Excise Department the declared price did not represent the transaction value under Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 ("Customs Valuation Rules") as the price actually paid appeared to be different than the declared price and that the importer had under-invoiced the value of the goods to evade huge amount of the Government's revenue. At this stage, it may be pointed out that in the show cause notice the Assistant Commissioner had specifically invoked Rule 8 of the Customs Valuation Rules, 1988, which was subsequently given up by the Department. Be that as it may, the importer was asked to show cause as to why the value of the consignments in question should not be enhanced based on the export declaration under Rule 8 of the Customs Valuation Rules made by the Foreign Supplier. Accordingly, vide the aforestated show cause notice, the Assistant Commissioner raised a demand for the differential duty of Rs. 28,04,831.40 and fine in lieu of confiscation. In reply, the importer denied the above allegations. In reply, it was submitted that the show cause notice was based solely upon the purported investigation report of Hong Kong Customs and Excise duty; that the said report was accompanied by xerox copies of the export declarations; that the xerox copies did not bear the seal or signature of the customs officials in Hong Kong; that the authenticity of the declaration was doubtful; that the declarations were not the correct reproduction of the original and that there were endorsements to the effect that the documents shall not be used against any third party or in any legal proceedings. In other words, the importer contended that the charge of under-valuation cannot be based on xerox copies of the declarations which were not even certified by the competent authority in Hong Kong. According to the importer, such declarations had no bearing upon the actual sale price of the goods in the hands of Hong Kong exporters. According to the importer, there was no allegation in the show cause notice that it had paid higher value to the supplier than that declared by it in the Bill of Entry. Before the Assistant Commissioner, the importer supported the declared price mentioned in the Bill of Entry by relying upon various contemporaneous imports made during the above period by other importers whereas the price declared for identical goods was the same as the price declared by the importer in the present case in its Bill of Entry. It was further submitted by the importer that it was not open for the Assistant Commissioner to adjudicate the value under Rule 8 without going sequentially from Rule 5 to Rule 6 and Rule 6 to Rule 7 onwards. The importer further contended that, in the present case, the value of the goods could have been determined in terms of Rule 5 and, therefore, there was no question of invoking Rule 8. In this connection reliance was placed on the judgment of this Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai reported in 2000(122)E.L.T.321.
(3.) The above arguments of the importer were rejected. The show cause notice and the demand levied was confirmed. Aggrieved by the aforesaid decision, the matter was carried in appeal to the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT). The Tribunal allowed the appeal by holding that xerox copies of the export declarations, even though procured from Hong Kong customs will not make such declarations genuine declarations. According to the Tribunal, the origin of the goods was from China/Tiwan, therefore, there was a possibility of the export declaration price being on the higher side (over invoiced). This was in view of the fact that in some of the above countries, the goods are subsidized by the concerned Governments. Huge subsidies are given based on the export declaration price. Similarly, incentives are also given in that regard. This possibility has not been rejected by the adjudicating authority. Even according to the adjudicating authority, the Hong Kong supplier might have inflated the price in order to earn export incentives and if that be the case then according to the Tribunal, the export declaration made by the Hong Kong supplier cannot be made the basis for increasing the value of the goods in India. Further, according to the Tribunal, in the present case, the importer has relied upon instances of import of identical goods at identical rates by other importers from the same supplier (namely, M/s Pearl Industrial Company, Hong Kong) during the aforesaid period. The Department had accepted those rates. This evidence led by the importer herein has not been rebutted. It had not been discussed by the adjudicating authority. In the circumstances, the Tribunal allowed the appeal filed by the importer. Hence, this civil appeal has been filed by the Department.;