COLLECTOR OF CUSTOMS A

M/S. TELEVISION AND COMPONENTS LTD. AND ORS.

FEBRCARY 24, 2COO

jS.P. BHARUCHA AND MRS. RU\fA PAL, n] B

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 finmuplicate invoices and orders bearing same number and date disclosing different values recovered during C 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 D 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-- < 'omposite penalty levied by Collector for violation of Import Control Order and mis-declaration in value of goods- Held, quantum of penalty will have to be re--detem1i11ed by the Collector after detennining the issue on the licensing aspect by the adjudicating authority.

Respondent-company imported Tape Desk Mechanisms (TDMs) F from a foreign firm Y at S$ 250.00 per set. The import consignment was intercepted by Directorate of Revenue Intelligence (DRI) on receiving information of under-invoicing of the TD Ms and violation of provisions of Import Control Order, 1955 for investigation. High Court, on a Writ

Petition filed by the respondent challenging the investigation, directed the DRI to complete the investigation within two months. The DRI conducted G raids at oflice and factory premises of the respondent and recovered several documents. Statemenh from Managing Director and other persons including the clearing agent were gathered under Section 108 of the Customs Act, 1962. TDMs were seized by the DRI. The High Court, on a petition filed by the respondent challenging the seizure directed H

A provisional release of TD Ms against security.

The DRJ recovered in raids, identical orders bearing same numbers and dates, pertaining to the months of December 1988 and January 1989, placed by the respondent with another firm M as placed with firm Y for supply of TDMs at S$ 343.50 per set. In March 1989, by a public notice, TDMs were removed from Open General Licences (OGL) list thereby requiring licences for import und[r Import and Export Policy. However, the public notice allowed imports of TDMs without licence where irrevocable letter of credit (LJCs) were opened before the date of the public notice provided shipments are made within a period of 90 days from the date of the public notice. To avail of the exemption, the Revenue found that the respondent obtained amendment of the UC by its banker, which was originally opened in favour of firm M in January 1989, in favour of firm Y on misrepresentation that firm Y was an agent of firm M. The Revenue found that firm Y is independent of firm M and the order placed with firm D Y in January 1989 is a fabricated one. The Revenue also found that the orders were placed with firm Y after March 1989 with a new UC, which required a licence for import, which the respondents did not have. The Revenue further found that the fall in declared value of TDMs from S$ 343.50 to S$ 250.00 did not reflect the real value of TD Ms.

E Collector of Customs hsued a show-cause" notice alleging inter alia that the iespondent is liable to pay the difference of duty in respect of the TDMs calculated at S$ 343.45 per set instead of S$ 250.00 and contravention of Import Control Order. Collector, by an order, held that the respondent evaded customs duty of Rs. 32,03,594 and that the entire consignment F was liable to confiscation under the Act on the ground of evasion and illegal import of TD Ms without an import licence, which is in contravention of the provisions of the Import and Export (Control) Act and Import Control Order, 1955. Since the goods had been released on the directions of the High Court, the Collector ordered the respondent-company to pay the evaded differential customs duty and a penalty of Rs. 40 Lakhs, being G redeemable value of the goods and a further penalty of Rs. 5 lakhs each by the respondents-Managing Director and Director. In Appeal by the respondent, Tribunal set aside the imposition of differential duty and penalty. The Tribunal further remanded back to the Collector directing re-adjudication of the licensing aspect as per the directions of the High H Court and the contention of the Revenue.

COLLECTOR OF Cl.J~IOMS v. IBLEVISION A."110 COMPONENTS LID. 1141

In appeal to this Court, the Revenue contended that the respondent A imported the TDMs by under-invoicing that the misdeclaration in value resulted in evasion of customs duty, and that the import of TDMs contravened the provisions of the Import and Export (Control) Act, 1947 and the Import Control Order, 1955 as the import was made without a licence as required.

The respondents contended that there was no mis-declaration in value and under-invoicing, and that the TDMs supplied by firm Y and firm M are different models.

Partly allowing the appeal, the Court

HELD : 1.1. The finding of the Collector that the TDMs imported from Y should be valued at S$ 343.45 instead of S$ 250.00 was justified in fact and was keeping with the relevant statutory provisions. [1146-C]

1.2. The argument of the respondents that the TD Ms supplied by firm D Y and firm M are different models was never established and was contrary to the evidence. The respondentcompany utilised UC to import 500 sets of TD Ms from firm M @ S$ 260 per set and 3000 sets of TD Ms at S$ 250 from firm Y. No change had in fact been effected in the UC in respect of the nature of the goods for which the UC was initially opened. In other E words, the type and rate of TDMs of S$ 343.45 remained the same. In availing of the UC, the parties thereto must be taken to have done so in fulfilment of the original order placed on firm M where the rate mentioned was S$ 343.45 per st. Secondly, from Y's invoice, which was filed with the Customs authorities, also described the TDMs of the similar model. It was also admitted by the respondent-Managing Director in his statement under F Section 108 of the Act that in fact no order had been placed on firm Y on 5.1.1989 and the only genuine order was the one placed on firm M. Since Firm Y's supply of the 3000 sets of TD Ms was as per firm M's order, it must be taken to have supplied the same goods at the rate of S$ 343.45 per set.

Thirdly, the TDMs which were supplied by firm Y were the same as those for which the order had been placed on firm M and this is supported by the G statements recorded under Section 108 of the Act. The clearing agent, in his statement under Section 108, stated that the price of TDMs, shown by the respondent, was unusually low. The Collector correctly determined the value of the TDMs supplied by firm Y to "such or like" the goods for which the order was placed on firm M within the meaning of Section 14(1) of the H

SUPREME COURT RHORTS [2CCOl l S.C.R.

A Customs Act, 1962. The finding of the Collector is also justifiable under Section 14(1A) of the Act. (1149-B-H; 1150-G; 1151-G]

Collector of Customs, Calcutta v. Sanjay Chandiram, [1995] 4 SC 222 and Naresh J. Sukhawani v. Union of India, (1996) 83 ELT 258 SC, relied on.

1.3. Firm Y supplied the TDMs which was m, per the order placed on the firm M at SS 343.45 per set. The 'price payable' for the goods remained at S$ 343.45 per set which is the transaction value within the meaning of Rule 3 of Customs Valuation (Determination of Price of C lmported Goods) Rules 1988. The finding of the Collector that the unit price of the TDMs is S$ 343.45 and further order regarding payment of differential duty is upheld. (1152-D-H]

2. With regard tu import of the TDMs without a licence as per Import Control Order, 1955, the adjudicating authority should have to D decide (i) whether in law, a licence subsequently produced in respect tu items already imported b acceptable in law; (ii) if so, whether the licences in fact covered the items imported and are otherwise valid. (1153-Fl

3. The penalty levied by the Collector was a composite one, which E was imposed both on account of violation of Import Control Order and mis-declaration of value and evasion of customs duty. It is not possible to apportion the quantum of penalty between the contravention found. Therefore, while upholding the Collectors' finding Oil the isslle of mis-declaration and evasion, the question of quantum of penalty is lell tu be

F re-determined by the Collector after determining the issue Oil the licensing aspect. There is no finding by the Tribunal that the penalty imposed was unreasonable. In the circumstances of the case, the quantum of the penalty was justified. (1153-H; 1154-A-B]

4. The decision of the Tribunal is set aside in so far as it relates to G the finding on mis-declaration and evasion. The order of the Collector

directing payment of differential duty is affirmed. On the question of the violation of the Import Control Order, the adjudicating authority will decide the matter. Depending on his decision, the quantum of penalty will thereafter be determined by the Collector in the light of the findings.

[1154-C-D]

COUEC'l'UR UF CL'SfOMS v. TEHVISION AND COMPONENTS L:ID. [RUMA f AL, J.; 1143

CIVIL APPELLATE JL'RISDICTION : Civil Appeal Nos. 9026- A 9028 of 1996.

From the Judgment and Order dated 24.3.95 of the Central Excise and Gold (Control) Appellate Tribunal, New Delhi in P.O. Nos. 244-246 of 1995 in A. Nos. C/725/92-A, C/726 727/92-A.

RN. Salve, Solicitor General, K.N. Bhat, Additional Solicitor General, Wasim A. Quadri, Y.K. Verma, A. Subba Rao, Nikhil Sakhardande, P. Parmeshwaran and S.K. Agnihotri for the Appellant.

A.B. Rohtagi, Joseph Vellapally, Ms. Aparna Rohtagi, K.B. Rohtagi, C Mahesh Kasana, Mahesh Rohtagi and S.Y. Deshpande for the Respondents.

The Judgment of the Court was delivered by

RUMA PAL, J. (1) The issues in these appeals arise out of the import D of Tape Deck Mechanisms (TDMs) by the respondent No.1. According to the appellant, not only were the TDMs imported at a gross under-value which resulted in a non-payment of the appropriate customs duty but they were also imported contrary to the provisions of the Import and Export (Control) Act, 1947 and the Import Control Order 1955.

(2) The TDMs had been imported by the respondent No. l at S $ 250.00 per set from Yamato Industrial Co. Ltd. (referred to hereafter as 'Yamatos). Acting on intelligence that the imported TDMs were fraudulently under-invoiced and that the provisions of the Import Control Order, 1955 had been violated, the consignment was intercepted by the Directorate of Revenue Intelligence (DRI) at Kandla Port. Investigations were started by the DRI. The respondent No. 1 challenged the investigation under Article 22.6 before the High Court at Gujarat. The writ petition was disposed of by directing the D RI to complete the investigation and issue the show cause notice within two months.

(3) Raids were conducted at office and factory premises of the respondent No. l by the DRI and several documents recovered. Statements of the Managing Director, the Director and Assistant Manager as well as the clearing agent uf tht! rt!spondt!nt No. 1 were recorded under Section 108 of the Custom' Act, 1962 (referred to as the 'Act').

(4) The TDMs were seized. The respondent No.l appears to have

filed a Second Writ Application in the High Court at Gujarat challenging the seizure of the TDMs. The High Court directed the provisional release of the TD Ms against security. The goods were accordingly released but the investigation continued.

(5) On the basis of the documents recovered and statements under Section 108, a detailed show cause notice was issued to the respondents on 15th June 1990 alleging inter alia that the respondent No.1 was liable to pay the difference of duty in respect of the TD Ms calculated at the rate of S $ 343.45 per set instead of S $ 250.00 as well as alleging contravention of C the Import Control Order. The respondent No.l replied to the Notice. The Collector gave the respondents a hearing.

( 6) The Collector after considering the evidence found that there was a deliberate mis-declaration of value, manipulation of documents, attempt to evade payment of full customs . duty and attempt to circumvent the D Import Control Regulations by the Respondent No. 1 and its Directors.

According to the Collector, the TDMs imported by the respondent No.1 at S $ 250.00 per set were of the value of Singapore Dollar 343.45 per set and that the respondent No.I should have declared the value of the TDMs at Rs. 88,34,698 as against the declared value of Rs.64,30,847 . He, there- E fore, concluded that the respondent No.I had sought to evade duty to the extent of Rs. 32,03,594.00 and that the entire consignment was liable to confiscation under Section lll(m) of the Act. The Collector also held that the TD Ms required an import licence and since no import licence had been produced, the goods were liable for confiscation under section 111( d) of p the Customs Act read with Section 3(2) of the Import and Export (Control) Act, 1947 and Clause 3 of the Import Control Order, 1955.

(7) Having regard to his findings and the fact that the goods had already been released pursuant to an order of the High Court, he directed G the respondent No.l to pay the differential duty of Rs.32,03,594.00 and imposed penalty of Rs.40 Lakh on the n; spondent No.I under section 112(a) of the Act (as the redeemable value of the goods) and Rs.5 Lakh each on the Managing Director and Director of the respondent No.1.

(8) The respondent No.l and its Directors preferred an appeal H before two Members of the Tribunal.

COi LK'IORUFCUSfOMSv. TF:LEVISIONANDCQMPONENfSLID. [RUMAPALJ.J J l45

(9) During the pendency of the appeal the Gujarat High Court on a A Writ Application filed by the respond1;; nt No.1 passed an order on 26th June, 1992 to the following effect:

"Notice. Mr.B.B. Naik, learned counst:l, waives service of notice.

We heard Mr. S.I. Nanavati, learned counst:l for the petitioners and Mr. H.M. Mehta, senior Central Government standing counsel, for the respondents.

We have been informed that as against the adjudication order, C dated 26th February, 1992, the petitioners have already pn:forred an appeal. The only grievance i~ that r.:spondent N o.2 is not permitting the petitioners to produce the import licence. His grievance could be ameliorated by directing respondent No.2 to accept the import licence within two weeks from today and respond.:nt No.2 shall proceed with the matter in accordance with law. D This petition is disposed of in the abov1: terms. Notice is discharged. No costs."

(10) As far as the appeal befon: th..: Tribunal was conctrned, on a difference of opinion between the two members as to whether the order of E the Collector should be upheld or not, the matter was referred to a third Member. The third Member concurred with the view that the order of the Collector in so far as it assessed the value of the TD Ms at Singapore Dollar 343.45 was wrong. Consequently, the imposition of differential duty was set aside. On the question of the violation of the Import Control Order, the Tribunal acted on the basis of the High Court order and the concession of F the departmental rcpresentative that the issue was one which the "original authority" would have to look into and decide and remanded the matter back to the Collector with liberty granted to the parties to produce any fr.:sh evi.dencc bdore the adjudicating authority in this connection. In vit.; W of this order, the penalty imposed by th.: Collector on the rtspondents \\as G also set asidt.

(11) These appeals were thereafter preferred. No stay having been granted, the order of the Tribunal directing a re-adjudication of the lict:nsing aspect was taken. up by the Commissioner of Customs on 27th September, 1995. Before the Commissioner, additional licences w<:re H

A produced by the respondent No. 1. It was noted that since it was already found by the Collector that the licence covered the goods in question, and that the issue had not been pursued before the Tribunal, the licences should be accepted. The order, some what ambiguously, concludes with the sentence:

B "However, if the Department now decides not to accept the licences the party may be given another hearing to argue the merits of the case from the ITC angle.•

(12} The first question raised before us by the appellant relates to the finding of mis-declaration of the value and the evasion of customs duty.

C In our opinion, the finding of the Collector that the TDMs imported from Yamato should be valued at S $ 343.45 instead of S $ 250.cn was justified in fact and was in !teeping with the releVC!Jlt statutory provisions on the subject. As for the finding on facts, the relevant and admitted facts are required to be set out chronologically.

(13) The respondent No. 1 had placed several orders in July, September, October and December 1988 on Mis Mohan lmpex for supply of TD Ms. None of the orders mentioned the model or the make of the TDMs.

Each of the earlier consignments had been obtained by respondent No. 1 from Mis Mohan lmpex @ SS 343.45 per set.

(14} As far as the consignment in question is concerned, the ORI recovered two identical proforma invoices bearing the same number, both dated 29.12.98 for supply of 3G(l() sets of TDMs. Both were invoices of 'W'Js Mohan lmpex but the price quoted in one was S $ 343.45 per set llJld the other for S $ 250.C:l per set. The respondents have not been able to explcin F this duplication of invoices.

(15} The respondent No. 1 then placed an order on M/s Mohan lmpcx being Order No.TC-89-004 dated 5th January 1989 for supply of 30CO sets of TDMs at SS 343.45 per set. The ORI recovered an identical order bearing the same number and date placed by respondent No. 1 on G Yamato but @ S $ 250.00 per set. The respondent No. l's Director admitted in his statement under Section 108 that no order was placed on Yamato on 5.1.89 and this was a fabricated document.

(16) A letter of credit was established by respondent No. 1 through the Bank of India in favour of Mis Mohan Impex for supply of "Electronics H components for VCRs, viz. Tape Dec!t Mechanisms as per order No.TC-

COLLECTOR OF CU!ITOMS v. TELEVISION AND COMPONENTS LID. (RUMA PAL, J.) 1147

80-c:J4 dated 5th January 1989".

(17) It is not in dispute that till 21st March 1989, TDMs were covered by Open General Licences (OGL) under the Import and Export Policy of April 1988 to March 1991. By public notice dated 21st March 1989 the lmpoft and Export Policy was amended by removing TDMs from the list of items covered by OGL. Therefore, the import of TD Ms after 21st March B 1989 required a licence in terms of clause 3 (1) of the Control Order. The public notice, however, allowed certain imports of TDMs without licence subject to the fulfilment of conditions detailed in paragraph 4 of the notice, as under:·

"In respect of raw materials, components and consumables taken c

out of Open General Licence in terms of this Public Notice import under Open General Licence by eligible importer shall not be permitted except to the extent of irrevocable letters of credit already opened and established before the date of this Public Notice for which shipments are made within a period of ninety D

(90) days from the date of this Public Notice."

(18) The respondents sought to avail of this exemption. To this end, on 26th May 1989, the respondent No. 1 wrote to the Reserve Bank of India through the Bank of India stating that it had been informed by M/s Mohan lmpex that the material 'will not be ready for shipment before July E

1989. Since we are urgently in need of the Tape Deck Mechanism to ensure smooth production, we advised the beneficiary to arrange for immediate shipment. Accordingly, our beneficiary could fmd out a Japanese supplier who is in a position to give immediate delivery'. It was also stated that the supplier, Yamato had written stating that they were 'holding the goods F ready' and that L/C should be amended accordingly. The implication of this letter is that Yamato was to supply the same material for which the order had been placed on M/s Mohan lmpex and that Yamato was the agent of M/s. Mohan lmpex.

(19) Incidentally, the respondent No. l's Director subsequently ad G milted that the amendment of the L/C had been obtained on a mis-representation that Yamato had been introduced to the respondent No. 1 by Mis Mohan Impex in May 1995. In fact, the respondent No. 1 and its Directors were personally known to Yamato and its partners for several years and Yamato was wholly independent of M/s. Mohan Impex.

(19-A) The Collector held that the consent of the Banlc of India and Reserve Bank of India to the amendment of the Letter of Credit by substituting Yamato in place of M/s. Mohan lmpex and change in the Port of shipment in place of origin of the TDMs was obtained by suppn:ssion and mis-representation of essential facts. It was also held that the lettt:r of credit which was operated for payment of M/s. Yamato was in fact a new letter of credit and therefore the import of the TD Ms from Yamato was not covered by clause 4 of the Public Notice dated 21st March, 1989.

Before the Tribunal the advocate for thi: respondents did not press for the validity of the letter of credit from January, 1989 and conceded that it may be deemed as if the letter of credit was opened in May 1989 as held by the Collector.

(19-B) In view of this, the entin: consignment of TD Ms required an import licence under clause (2) of the Import and El<port (Control) Act, 1947 and clause 3 of the Import Control Order, 1955 prior to the import

(20) Returning to the narration of facts relevant to the issue of valuation. After the issuance of the Public Notice, then: was a purported fall in the declared value of TDMs from S $ 343.50 to S $ 250.00 per set.

Yamato is a Japanese concern. Yet on 17.5.1989 Yamato is alleged to have given a fresh proforma invoice to the respondent o.1 quoting the price in E Singapore Dollars per set instead of quoting the price in yen. As said by the Collector "Out: to the change in the Import Policy, the importers had a special interest in ensuring that the unit price w~ brought down so that the quantity of import could be increased.'

That this dramatic "fall" in value of the TD Ms did not reflect the real F value of the TDMs is borne out by the evidence both documentary and oral.

(20-A) At the outset it is clear that if the shipment by Yamato was pursuant to the fabricated order dated 5th January 1989 placed on it, the G value declared by it cannot be accepted as genuine. See Collector of Customs, Calcutta v. Sanjay Chandiram, [1995) 4 SCC 222. Therefore the value of the TDMs would have to be determined according to the law applicable.

(20-B) Section 14(1) of the Act provides for valuation of goods for H purposes of assessment by reference to the price at which "such or like

COLLFCTOI{ OF CUSTOMS v. TELEVISION AND COMPONENTS LTD. [Rt:MA PAL, l) 1149

goods" are ordinarily sold at the time and place of importation in the cause A of international trade.

(20-C) Much of the arguments of the respondents before the Collector, the Tribunal as well as this Court proceedi:d on the basis as if it were established that the TDMs which were to have been supplied by M/s.

Mohan lmpex were different from the TDMs in fact supplied by Yamato. B lt was argued that M/s. Mohan Impex was to supply TDMs of National Model whereas M/s. Yamato had supplied VCRs of NEC model. To this end, several documents in connection with the price of NEC model TDMs wen: also sought to be relied upon by the respondents. The basis of the argument was never established and was contrary to the evidence.

(21) Firstly, the respondent No. 1 utilised the letter of credit to import 500 sets of TDMs from M/s Mohan Impex @ S$ 260 per set and 30CO sets of TD Ms at S$ 250 from Yamato. The 500 sets from M/s Mohan Impex arrived at Bombay and the 3000 sets from Yamato arrived at Kandla.

o change, howcwr, had in fact been effected in the Letter of Credit in D respect of the nature of the goods for which the letkr of credit was initially opened, namely, ''electronics components, namely, Tape Deck Mechanisms, as p.:r order No. TC-89-004 5:89". In other words, the type and rate of TD Ms of S $ 343.45 remained the same. In availing of the letter of cr..:dit, he partie~ tht>reto must be t "kt'u to have done sn in fulfilment E 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 F 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 G 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, H

A (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

B 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 C 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 D 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 A 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." B

(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 C 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 S 343.45 per set. There is nothing on record to show thr.t the earlier invoices did not refer to TD Ms of the type supplied by WJs Yamato. The Asistant Manager of respondent No. 1 bad admitted E 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 F 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 G 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: H

"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 C 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 D 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 TD M 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 dateot 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 e 11dc:nt that the value of TD Ms 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 G 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 TD Ms was manipulated because of the change in the impon policy by which the import of TD Ms was restricted considerably.

(35) We would, therefore, uphold the fmding of the Co'lector that H the unit price of the TD Ms for S $ 343.45 as also his fur her order

COLLECTURm CUS1'0MS v. TELEVISION AND COMPONENTS i..TD. [RUMA PAL. 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 B that the import of the TD Ms 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 E 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 TD Ms 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 G 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 H

A 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 B 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 C 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 penal- D ty 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.