ORDER
G.A. Brahma Deva, Member (J)
1. Since the issue involved is common in these two cases, they are clubbed together and are being disposed of by this common order.
2. The dispute relates to payment of freight charges. The appellants had imported goods, viz., polypropylene from M/s. Sunitomo Corporation, Japan. The goods were invoiced by the suppliers on F.O.B. basis. There has been difference in between the declared freight charges and the freight shown in the Bills of lading. Since freight declared is less than the freight as per Bill of lading CIF value was worked out by adding the freight shown in the Bill of lading. It was claimed by the appellants that CIF value should be worked out by adding actual freight incurred by them to the F.O.B. and in this case freight incurred by them at the rate of U.S. $ 1450 per 20 ft. container which was inclusive of ocean freight and the other port charges prevailing on date as per Contract dated 5-8-1991 entered into between them and the United Liner Agencies of India Pvt. Ltd., and based on the respective debit notes. These contentions were negatived by the Collector who adjudicated the proceedings in appeal No. C/170/92-A and similar view was taken by the Assistant Collector as well as Collector (Appeals) in appeal No. C/1890/92-A. Hence these two appeals.
3. It was contended on behalf of the appellants that actual freight incurred by the appellants is to be taken into consideration while determining the assessable value. It was submitted that the appellants had entered into a contract with M/s. United Liner Agencies of India Pvt. Ltd., New Delhi, Agents of Shipping Line M/s. Kawasaki Kisen Kaisha Ltd. (K. Line). As per the contract the ocean freight was to be charged at the rate of U.S. $ 1450 per 20 ft. container for transport of the goods from Japan to India; that the payment was to be made to M/s. United Liner Agencies of India Pvt. Ltd., against their Debit Notes in respect of each consignment. Accordingly, the Debit Notes were raised.
4. The matter had come up for hearing before the Tribunal on 25-11-1992. Shri D.N. Raina, learned counsel for the appellants addressed the arguments for some time and took time to produce evidence to the effect that discount was given by the Agents of a Shipping Line on the normal ocean freight and as to why it was not shown in the Bill of lading.
5. Subsequently, Shri Sogani, learned Consultant has come with the miscellaneous application (No. C/Misc./611/93-A) for taking additional evidence on record. He Said that since the Collector (Appeals) in Appeal No. C/1890/92-A has expressed the doubt that more than one debit note could be raised and the importers may be producing only one debit note, the appellants approached K. Line for clarification in this matter. Appellants’ letter dated 16-6-1993 to K. Line, the certificate dated 14-1-1993 and letter dated 13-7-1993 of K. Line and also the quotation dated 21-12-1992 of M/s. American President Lines are relevant for taking proper decision. He said that letter dated 14-1-1993 confirms that they had agreed to give volume discount and had authorised their Agents M/s. United Liner Agencies of India Pvt. Ltd., to sign contract with the appellants on ocean freight of U.S. $ 1450 per 20′ container and they have received at that rate covered by five Bills of lading. It was due to mistake that they had indicated normal freight in the Bills of lading. He referred to the letter dated 13-7-1993 wherein it was stated that they took a conscious decision not to indicate the contracted freight in the bill of lading as they suspected that the other Shipping Lines may come forward to offer still further discounted rates and to avoid Unhealthy competition from the other Shipping Lines. Sri Sogani said that the appellants have also received quotation dated 21-12-1992 from M/s. American President Lines Ltd., to show that the freight charges for a 20′ container from Japan to India are US $ 1300 + US $ 25 which is less than the rate charged by K. Line. He contended that as per rule 9(2)(a) of the Customs Valuation Rules, 1988, the cost of transportation has to be included for arriving at the value under Section 14(1) or (1A) of the Customs Act and cost of transportation has to be freight charges actually paid or payable and not the price shown in the bill of lading. He relied upon the decision in the case of Pragati Press and Anr. v. Collector of Customs (1992-41-ECR-21), wherein it was held that there is no reason as to why the actual freight and insurance charges incurred by the appellants should not be taken into account rather than the notional freight. He said that it is common knowledge in the International as well as in the Inland trade that the purchasers of bulk quantity enjoy a better discount referring to the decision in the case of Ghanshyam Cherja v. Collector of Customs, reported in 1989 (44) E.L.T. 202. He also referred to the decision in the case of Bharat Heavy Electricals Ltd., Bombay v. Collector of Customs 1983 (13) E.L.T. 958 in support of his contention that since a lower price for sale of large quantity of goods is known and accepted thing in trade, therefore, the rebate allowed by the Shipping Lines was admissible for deduction to arrive at the assessable value u/s. 14 of the Customs Act. Under these circumstances, he requested to accept the discounted freight in arriving at the assessable value and to set aside the imposition of fine levied under Section 111(m)of the Act.
6. Shri A.K. Singhal, learned JDR, appearing for the respondent submitted that copy of the letter dated 5-8-1991 is not in the nature of contract which is said to have been entered into between the party and the Agents of K. Line. Neither quotations obtained from them placed on record nor consideration appeared in the contract for such lower rate. He said that there is no reason for discarding the Bill of lading as it reflects the normal freight charges. Difficulty in mentioning the correct freight was neither explained properly nor it was claimed as discounted freight at the first instance. If error had taken place it should have been corrected by the person who committed such an error. But instead even after correspondence in the letter dated 14th January 1993 of K. Line it is stated ‘that freight mentioned in the Bills of lading is the normal rates chargeable for cargoes from Japan to India’. Hence question of correcting mistake does not arise though they have concluded latter that they have billed for the normal freight by mistake while issuing the said Bill of lading. He said that quotation from American President Lines Ltd., dated 21-12-1992 cannot be taken on record as it was offered after a year from importation and in what context it was issued is not clear since it refers to discussion of the party with Mr. Atul Dayal and those details are not forthcoming. Subsequent latter dated 13th July, 1993 also cannot be taken on record as it is solicited one since letter addressed to them by the party is not forthcoming. He said that it is difficult to believe that this letter is in response to the letter written by the party on 16-6-1993 to the Agent of K. Line and replied directly. He doubted bona fides of the letter dated 16-6-1993 pointing out some discrepancies and, accordingly, he opposed for taking additional evidence on record. He contended that normal freight charges is to be taken while arriving at the assessable value and not the discounted value since the discount was neither given nor rate of discount is normal.
7. The miscellaneous application No. C/Misc. /620/93-A is also filed by the appellants to take additional evidence on record to show that even in other ports, actual freight paid/payable is added to FOB invoice value to arrive at GIF/assessable value instead of freight shown in the Bill of lading, in support of their contention.
8. On a careful consideration of the matter, we agree in principle that actual cost of the freight incurred by the importer is to be taken into consideration while determining the assessable value. Rebate on freight is admissible if it was allowed as per the agreement and in the course of International Trade. But in the instant case it was claimed by the appellants that freight charge paid by them was less than the freight shown in the Bill of lading. Since Bill of lading being an authenticated document burden lies more on the party to establish that freight shown in the Bill of lading was more than actual payment. They produced contract and Debit Notes before the Adjudicating Authority. The contract was in between the party and the Indian Agents of transporting Company without substantiating that it had got approval of the Principal. The contract as such does not indicate either of discount or of permissibility of volume of discount as it was rightly pointed out by the D.R. It was not even their case before the Adjudicating Authorities that it was discounted freight paid by them but it was claimed that freight paid by them was as per contract and based on Debit Notes. The concept of discounted price was developed during the pendency of the appeal and tried to substantiate through the correspondence which they entered later. If they knew that it was discounted freight which was offered to them we are unable to understand what prevented them to produce necessary evidence in support of their claim at the relevant point of time before the adjudicating authorities. Since they failed to produce the same we do not feel it proper to accede to their prayer in allowing the additional evidence in support of their fresh claim. Secondly, when they came to know that it was not the freight charge paid by them as shown in the Bill of lading it was for them to prove with substantial evidence to establish that mistake has crept in the Bill of lading. But they have failed. The general principle is that the Appellate Court should not travel outside the records of the lower court and cannot take any additional evidence in the appeal. Rule 23 of CEGAT (Procedure) Rules is an exception and that exception should be exercised sparely and most judiciously. The Hon’ble Supreme Court held in the case of State of U.P. v. M.C. Shrivasthava (AIR 1957 SC 912) that additional evidence should not be permitted to be produced to enable a party to fill up a lacuna especially if the party could have produced such evidence before the lower authority but failed to do so without sufficient cause for the same and this view was affirmed again in the case of Jain Exports Pvt. Ltd. 1993 (66) E.L.T. 537. Accordingly, we cannot countenance such a demand and if it is allowed it would create a wrong precedent. When once we have taken the view that additional evidence cannot be permitted at this stage, we do not find any infirmity in the impugned orders. Department was justified in taking freight charge as mentioned in the Bill of lading for determining the assessable value as Bill of Lading reflects normal freight charges prevailing on that date. However, as regards redemption fine levied in Appeal No. C/170/92-A, we feel some lenient view is called for in the facts and circumstances of the case. Accordingly, redemption fine is reduced to Rs. one lakh as against two lakhs. But for this modification, these two appeals are dismissed upholding the respective impugned orders.