PNP 1 WP2748-16.8.sxw IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION WRIT PETITION NO.2748 OF 2011 Maxpure Water Systems Pvt. Ltd. and another ..Petitioners. versus The Union of India and others ..Respondents. ..... Mr. Prakash Shah with Mr. T. Vishwanathan i/b PDS Legal for the Petitioners. Mr. Pradeep S. Jetly for the Respondents. ...... CORAM : DR.D.Y.CHANDRACHUD & A.A. SAYED, JJ. 16 August 2011. P.C. : 1. The Petitioners have sought to challenge an order passed by the Settlement Commission on 24 February 2010 on an application under Section 127-B of the Customs Act 1962. 2. The Petitioners imported 44 consignments of Reverse Osmosis Membrane Element ULP 1812-75 during the period 2006-10. The department alleged that the Petitioners had resorted to an undervaluation in the subject imports, which related to goods which constituted parts of water purifiers in connivance with overseas suppliers and with an intent to evade the payment of customs duty. According to the department its case of undervaluation was supported by documentary material retrieved during the course of investigation PNP 2 WP2748-16.8.sxw and the statements recorded under Section 108 of the Customs Act 1962. The case of the department was that the differential amount had been routed through illegal channels to the overseas suppliers. In his statement recorded under Section 108 the Second Petitioner, who is a director of the First Petitioner admitted to undervaluation in respect of 36 out of 44 consignments. A notice to show cause was issued to the Petitioners on 26 April 2010. Annexure A-I to the show cause notice covered 19 consignments, Annexure-II covered one consignment, while Annexure-III covered 24 consignments. The notice was inter alia for the recovery of differential customs duty in the amount of Rs.20.51 lacs together with interest, confiscation of the imported goods or fine in lieu thereof and for the imposition of a penalty. 3. The Petitioners filed an application before the Settlement Commission. The Petitoners accepted a duty liability of Rs.13,17,839/- out of a total duty liability of Rs.20,51,556/-. The Settlement Commission in its impugned order noted that the Petitioners had admitted undervaluation in respect of all except 8 of the 44 consignments and admitted the additional duty liability demanded by the revenue on the basis of a valuation of the goods at U.S. $ 7.50 per piece. In respect of the remaing 8 consignments, the Petitioners claimed that the declared value of U.S. $ 6.30 per piece was correct. On the other hand, it was asserted by the revenue that in respect of an identical case relating to item No.18 in Annexure-I to the show cause notice which related to imports during the same period, the Petitioners had accepted a revised valuation of U.S. $ 7.50 per piece and hence, the claim of a lower valuation in respect to the PNP 3 WP2748-16.8.sxw very same goods appearing at items 17 to 24 of Annexure III was not acceptable. 4. The Settlement Commission furnished the following reasons in paragraph 11 of its order for rejecting the contention of the Petitioners : From the above it is clear that the applicant accepted the “ duty liability in respect of the said goods appearing at item no. 18 in Annexure-I, whereas it is disputing the very same valuation in respect of the same goods appearing at item nos. 17 to 24 in Annexure-III. Having accepted the demanded duty liability in respect of the very same goods in Annexure-I, by implication, the applicant has also accepted the value of the said goods. Now, the valuation of the same goods appearing in Annexure-III and imported during the same period cannot be disputed simply on the grounds that the latter imports were governed by a different contract, and that the applicant had been able to get a preferential price on the claim of being Authorised Dealer. It is an admitted fact that the applicant had deliberately mis-declared the value of goods imported earlier. Therefore the authenticity of the new contract is in question. The applicant has not been able to establish the genuineness of the new contract with lower value which notably approximates the earlier misdeclared value. Further, having admitted the value of the very same goods at Sr. No.18 in Annexure-I imported at the same period the applicant has no strong ground to plead for a lower valuation in respect of the same goods appearing in Annexure-III. The Bench, therefore, is in agreement with Revenue that the applicant is liable to pay the entire duty demanded in the SCN including the consignments covered under Serial Nos.17 to 24 of Annexure-III.” 5. Counsel appearing on behalf of the Petitioners submits that the depatment had not disputed the transaction value of U.S. $ 6.30 per piece which was based on the invoice dated 24 March 2009 and the PNP 4 WP2748-16.8.sxw price list of the Chinese supplier, Vontron Membrane Technology Company Limited. Hence, placing reliance on the provisions of Section 14 of the Customs Act, it was asserted that there was no basis to reject the transaction value. We are unable to accept the contention of the Petitioners. The Tribunal has recorded a specific finding that the Petitioners accepted a valuation of U.S. $ 7.50 per piece in respect of identical goods which were imported from the same Chinese supplier at a proximate period of time. According to Counsel appearing on behalf of the Petitioners the other consignment was imported by air at the Air Cargo complex and the Petitioner had per force accepted the valuation. The Settlement Commission, in our view, was justified in holding that once the Petitioner had accepted a valuation of U.S. $ 7.50 per piece in respect of the same goods sourced from the same foreign supplier, there was no reason or justification to depart therefrom in respect of the other consignments relating to the same goods. For these reasons, we are unable to come to the conclusion that there was any jurisdictional or other error apparent in the order of the Settlement Commission so as to warrant interference under Article 226 of the Constitution. However, the apprehension which has been expressed on behalf of the Petitioners by the counsel is that as a result the impugned order of the Settlement Commission, the revenue is declining to accept any other valuation in respect of other imports not covered by the impugned order where the price is at variance with what has been accepted by the Settlement Commission. On this aspect of the case, it is not necessary or appropriate for the Court to render any finding or opinion. If the Petitioners are aggrieved by any order passed by the competent authority and/or any assesment, PNP 5 WP2748-16.8.sxw the Petitioners would be at liberty to espouse such remedies as are available in law and the observations contained in the present order would therefore be confined to the consignments which are covered by the impugned order of the Settlement Commission. The Petition is accordingly rejected. (Dr. D.Y. Chandrachud, J.) (A. A. Sayed, J.)