ORDER
S.S. Sekhon, Member (T)
1. (a) Facts briefly, are, 41 packages arrived from overseas by Airmail. They were intercepted by the officers of Air Intelligence Unit on 14/15.5.2002 before they were presented by the Postal Authorities to the Proper Officer for assessment. Subsequently, only 27 packages were taken up for investigation. These 27 Airmail packages were consigned to four firms namely M/s May Flower, Impex, M/s Empress International, M/s Classique Enterprises, M/s Berlin Fashions. These firms are managed by Shri Shashi Arora as proprietor/partner. The goods contained in the Airmail package were seized for being misdeclared/not declared under panchanama on 21.5.2002 and after they were inventorised and valued. The goods consigned to M/s May Flower Impex were valued at Rs. 27,90,380 CIF, Rs. 19,80,420 CIF, respect of goods consigned to M/s Express International, Rs. 27,56,760 CIF and Rs. 18,86,805 CIF in respect of goods consigned to M/s Classique Enterprises and M/s Berlin Fashions respectively. The goods were thus collectively valued at Rs. 93,94,365 CIF and Rs. 1,40,91,547 LMV.
(b) It is alleged that in respect of the consignments of “watch movements” no Invoice/Bill or any other documents nor any value or quantity, nature and quality or country of origin was found declared on the Customs Declaration Form. In the case of goods declared as “glass stones,” the value declared on the customs declaration form was Hong Kong $250. The value declared on each consignment/lot was the same in Hong Kong $ 250, though quantity varied from 12.9 kgs. to 20 kgs. No supporting commercial invoice/bill was found.
(c) From the residential premises of Shri Shashi Arora, searched various incriminating documents were seized which according to the department prove and also give the details regarding the modus operandi of the attempts to bring in goods through Post-Parcels by evading Customs duty. The enquiries made reveal that Shri Shashi Arora was master minding the entire operation and was attempting to import the said goods by mis-declaring both value and quantity.
Three documents, which the department has relied upon, very strongly are;
(i) a page found in a file from residence, in which Shri Shashi Arora has requested on Shri Dilip Bhai (Sri Dilip Agarwal or Shri Dilip Sujan) to send through speed post parcels various items to the above said four firms.
(ii) another sheet of paper in which Shri Arora directs the exporter to describe of goods as “Glass Stones” and the value of each parcel is shown as HK $ 250. The quantity to be sent is shown as 20 kgs. of Glass Stone of each weighing 5 to 10 kgs. of small packets therein.
(iii) A letter addressed to Shri Dilip Bhai, wherein the word ‘Euro’ has been disfigured with a ball point pen giving rise to a suspicion regarding Shri Arora’s attempt to conceal the true value.
(c) Statements were recorded mainly from Shri Shashi Arora and Shri Dilip Bhai, whereas four statements were recorded from Shri Shashi Arora on the following dates i.e. 20.5.2002, 24.5.2002, 1.6.2002 and 5.6.2002, statement was recorded from Shri Dilip Sujan on 5.6.2002. As per these statements, a case is made out that Shri Shashi Arora has admitted all the allegations made by the department through his voluntary statement and Shri Dilip Sujan has denied any knowledge and involvement in these transactions.
(e) It is also alleged that the cup chains, chattans imported are all ‘Oktent quality’ (of European origin) and therefore the value of these goods has to be taken as the one at which such branded goods are to be assessed.
(f) Based on these investigations, the department effected seizure of the impugned goods and show caused for confiscation and imposition of penalties under the relevant sections of the Customs Act.
2. Submissions were made on behalf of the appellants before the Commissioner adjudicating the issue and after hearing the appellants passed the impugned order was passed, enhancing the value of ‘Glass Stone’ parcels, confiscating the movements absolutely and imposing fine and penalty on Shashi Arora. Hence these appeals.
3. After hearing both sides, considering the material on record, it is found-
(a) Out of 27 post parcels, 10 were containing watch movements and 17 were found to have glass stones/chattans. Since the parcels were coming in official foreign mail bags and were duly accounted in the Postal Records they were not and cannot be considered unmanifested parcels imported and attempted to be cleared clandestinely. In the normal course, as per procedure established by law, such parcels were required to be dealt with and cleared from Customs Controls as per the provisions of “Rules Regarding Postal Parcels and letter packets from Foreign Posts in/out of India.” This enactment stipulates, mail bags containing the parcels shall be appropriately labeled and as such will be allowed to land, pass, either with or separately from the regular mails at the Foreign Parcel Department of Foreign Post in the case of port of Bombay as Rule 1 of the rules. The Post Master at the Bombay Postal Wharf was thereafter required to present a memo showing number of parcels and Parcel Bills to the proper officer alongwith the senders declarations or declarations despatch notes etc. & thereafter the Parcels were required to be assessed as per Rules 2(b) to (7) & detention seizures, if required resorted to under rule (8). This prescribed procedure under the rules is not followed. The arbitrary findings and reliance placed by the Ld. DR, on prohibition issued under Section 11 of the Customs Act, 1962 vide notification of G of I. FD (C.R) Notification No. 78 Customs dated 2nd August 1938 as amended by 151 Customs dated 24.12.1938 & 44-Cus dated 26.7.94 is not called for and cannot be upheld. These notifications, also provide for the declarations of true nature, value and contents of Post Parcels imported to be sent separately. The invoices carrying the contents of these 27 parcels have since been produced and would have been produced before the Proper Officer were required to be therefore considered. The same has not been done by the Proper Officer. No contravention of Section 111(d) is therefore caused and confiscation thereunder is called for in the facts of this case, when the interception seizure has been effected even before reaching the stage and Customs barrier where a declaration required under Section 83 of the Customs Act, 1962 was to be made. The Revenue authorities are as much bound by the provisions of these Rules and the Customs Act provision as all others. The act of seizure etc. made by Airport Intelligence Officer is premature and is without jurisdiction in this case and we find force in the appellants plea on this account. The same is upheld to call for to set aside the order impugned consequent to such an act.
(b) It has to be observed, that unseemly haste is shown, by AIR Intelligence Officers, in this case, following the findings of this Tribunal in the case CC Mumbai v. Triveni Industries, 2003 (158) ELT 854 (Tri-Mum) where the bench had observed with respect to an act of Directorate of Revenue Intelligence Officer on intercepting ‘Imported Post Parcels’ of watch movements, as —
“8. We observe that the whole procedure followed by DRI is erroneous. The post parcels were addressed to someone in Ahmedabad. Had the DRI not shown such unseemly haste, the goods would have been handed over to the proper officer of Customs by postal authorities as set out in the Rules referred to elsewhere in this order and as per Section 83 of the Customs Act and that officer would have followed the procedure set out in the Rules. He would have dealt with the parcels in the manner presented….”
Thereafter the bench went on to find and rule–
“…………The goods are therefore not liable to confiscation under Section 111 (d) of the Customs Act as held by Commissioner (Appeals). The goods are not also liable to confiscation under Section 111 (d) of the Customs Act as held by Commissioner (Appeals). The goods arc not also liable to confiscation under Section 111 (d) of the Custom Act as held by Commissioner (Appeals). The goods are not also liable to confiscation under Section 111(m) as the invoices subsequently produced contained all particulars…….” (underlining supplied)
Following the same and in facts, in this case, when Directorate of Revenue Intelligence Officers act is considered to be erroneous and in haste, Air Intelligence Officer cannot escape that remark for similar act. The confiscation under 111(m) is not upheld. The same is to be set aside.
(c) The re-valuation arrived and reasons to deny the value of glass stone found by the Commissioner are —
2.10 The Ld. Advocate pointed out that the panchanama of the said goods revealed that the contents of the postal packages and the declaration made on the labels affixed on the packets are the same which are mentioned in the Annexures to the said panchanama, value mentioned in the Customs Declaration Forms in respect of imitation glass stone is HK$ 250 for each consignment, however the weight of each consignment varied between 12.9 kg. to 20.1 kg. Therefore, the allegation pertaining to mis-declaration in value is without basis. I find that the contents in respect of 17 packages have been declared as ‘IMITATION’ in the accompanied Customs Declaration Forms. Further, the said Customs Declaration Forms indicates that the goods are of Chinese make, having declared value as 250 HKD for each parcel of weight ranging from 12.9 kgs. to 20.1 kgs. Shri Shashi Arora in his statement recorded on 20.5.2002 and 24.5.2003 inter alia admitted that he placed orders in the month of April 2002 to Shri Dilip Sujan. He stated that he does not know any exporting firm in China or Hong Kong and the goods were dispatched by Shri Dilip Sujan as per his order in his statement dt. 1.6.2002, he stated that his friend Dilipbhai sells glass chattans in Hong Kong and he (Dilip bhai) imports glass chattans from Europe. Me (sic, He) further stated that two parcels of glass chattans he received from the said Dilipbhai six months back. He admitted that the glass chattans imported by him are of ORIENT quality. He further stated that Dilip Sujan had procured the said consignment from Europe. On being confronted with a letter (dt 2u Oj 2002) which was received from his wife Smt. Kanchan Arora on (18 (> 2002)* by the Customs Officers alongwith a file containing other documents, he admitted that through the said letter he had instructed the said Dilipbhai to show the value of each parcel as 250 HKD and on confronting another letter in the said file he admitted that the word ‘EUR’ was scratched by him in order not to let the value to be known by others. The total value for 17 parcels containing glass chattans and cup chains was declared as (17 x 250) HK$ = 4250 HKS or equivalent to Indian Rs. 27.625 only. It is an admitted fact that the seized goods are of European origin and of OKTENT make having a much higher value than the declared value.
2.11 The documentary evidences i.e. letters or notes handed over to the Customs Officers by the wife of Shri Shashi Arora indicate that the relation between Shashi Arora and his supplier (Dilipbhai) was not a normal relationship between a buyer and a seller in the international trade. The correspondence dt. 20.3.2002 addressed to Shri Dilipbhai by Shri Shashi Arora indicate that the said Shri Shashi Arora directed Shri Dilipbhai to assign the description of the goods as ‘glass stones’ and the value of each parcel as 250 HKD and the weight of the each consignment around 20 kgs. On confronting with the said correspondence dated 20.3.2003, Shri Shashi Arora has admitted that the contents of the said letter were true and that such direction was given to the supplier by him. The letter dt. 20.3.2003, directing the said Shri Dilipbhai and the admission of Shri Shashi Arora in his statements that he ordered to the supplier in the month of April and the arrival of the postal consignment by Thai Airways in the month of May (14.5.2003), reveal that the consignment of glass stone were imported by Shri Shashi Arora as per his orders. Shri Shashi Arora has not contradicted the fact that the impugned goods were opened on the basis of a his direction given to the supplier. The value declared on the (Customs Declaration Forms (of glass chattans and cup chains total 4250 HK$ equivalent to Indian Rs. 27,625) was as per the directions and the instructions of the buyer Shri Shashi Arora, so also the description and the quantity of the goods. The accompanying documents to the parcels containing glass chattan, cup chains etc. did not include any invoices, packing list or certificate of origin or any documents to disclose correctly the value, quantity, nature and description of the goods. The label or Customs Declaration Form whereon the consignor had made declaration on behalf of the importer were not the correct declaration as discussed above. Therefore, I find that the goods were mis-declared with regard to the value, quantity (wt) and description and country of origin, on the direction of Shri Shashi Arora on behalf of his 4 companies in the name of which the subject import taken place. Shri Shashi Arora did not disclose the name of any real supplier other than Dilipbhai. He stated that he acted as an agent of Shri Dilipbhai, one Bhayuji and Gutaman for promotion of the business in India for which he was to receive commission. No invoice from the supplier of the goods was furnished leaving any scope of further verification of the declared value by the department.
2.12 It already been discussed in the preceding paras that the said declaration made on the Customs Declaration Form accompanying the consignment has to be treated as Entry in terms of Section S2 (sic, 52) of the Customs Act, 1962. The importer vide their letter 6th August 2002 and 16th August 2002 submitted photocopies of invoices No. 4102, 4103, 4104, 4105 all dated 13 5.2002 addressed to Classique Enterprises & Empres international, both of 12 A. Sett Minor, Pedder Road, Mumbai 400026, INDIA and the May Flower Impex and Beneton Fashion both of 43 Queens Road, Ruby Compound, Mumbai 400002, declaring the unit price per kg. at the rate of 600 US $ and containing the description of the goods as glass stone and stone chain. Made in China Total value declared on the said photocopies of the invoices was ISS 4 US $ equivalent to Rs. 91,374 (approximately) for 314 kgs. glass stone and cup chains Vide the said letter which they submitted alongwith the above-mentioned photo copies of invoices, it was stated that the consignment are of China Origin and are from stock lot. However, it is seen that no mention of goods being of stock lot was made on the Customs Declaration Form. Also on physical examination the goods were not found as stock lot. It is further observed that the importer and the Learned Advocate on their behalf made different submission regarding the value of the goods at different points of time. For glass chattans and cup chains they declared the value on the Customs Declaration Form as Rs. 27,625 on the said photo copies of invoices as Rs. 91,374 and maximum value Rs. 2,48,994 was indicated in response to the show cause notice. The discrepancies in value for the same consignments (glass chattans and cup chains) declared or submitted by the noticee at different point of time clearly indicate that the noticee has suppressed the facts and have tried to mislead the department by making wrong submissions regarding the description and value of the goods under consideration.”
The above findings of the Commissioner cannot be accepted for the reasons —
(i) The letter dated 11.5.2002 Shri Arora talks of subject suppliers to be of China original goods. The same claim was reiterated by importers /08/2002 (sic) claiming the value to be US$ 1884 equivalent to Rs. 91,374 for 314 kgs of Glass Stones & cup chains alongwith photocopies of invoices showing the same to be of China origin.
(ii) From the panchanama dated 21.5.2004 relied upon in the show cause notice, nowhere it appears that the goods have been opined by an expert, to be not a ‘stock lot’ of Chinese origin as claimed. The Commissioner is relying upon extraneous material to come to such a finding and reject the claim of stock lot.
(iii) The absence of a declaration on parcels and or different claim made as regards value even if true cannot be a reason to reject Transaction Value. When invoices are being produced subsequently, especially when Commissioner has found that the Declaration Forms contain an expression as per invoice and such invoices could be produced belatedly and have to be considered as provided for by the notifications under the Customs Act noted supra.
(iv) As regards the alleged Chattans, the statement relied upon by Commissioner dated 1.6.2002 of Shashi Arora on perusal reveals the following question and answer thereto.:
“Q. The Chattans and cupchains imported by you are OKTENT origin. Is it true?
Ans. The Chattans and cupchains imported by me are of OKTENT quality.” which cannot only be interpreted to mean that Shashi Arora has admitted the goods to be of OKTENT origin. His admission to the effect is that they are of OKTENT quality. Merely because goods are of accepted to be of a Branded Quality i.e. OKTENT quality, they cannot be equivalent in value/price of Branded genuine goods of that quality, especially in case of such consumer items. The admissions & the statement are being misread and misinterpreted to reject the eligible claim of goods being of Chinese origin.
(v) Valuation as per price list of OKTENT make is therefore not approved, since goods are not proved to be of that make.
(vi) Reliance on a Panchanama dated 15.11.2002 by the Commissioner cannot be approved when that is not a relied upon document. This reliance exhibits total lack of application of mind and the order to be traversing beyond the notice. Such orders cannot be upheld.
(vii) Goods are not genuine OKTENT make glass stones, thus no adverse inference on the declarations containing the words Immitation Glass Stone made in the Declaration Forms can be arrived to hold the charge of mis-declaration and undervaluation.
(viii) The fact that different weights have been assigned a same value will go to prove that the goods are from a stock lot and no adverse inference can be drawn from the seized document as made out, in this connection.
(ix) The erasure/attempted obliteration of the word EURO on a document will not have any significance, since goods under import are not proved to be of European origin or an OKTENT make. There is no evidence that OKTENT quality goods are not made in CHINA & can be imported only from EUROPE in EURO currency.
(x) The valuation as arrived is not as par the valuation rules. There is no reason found to reject Transaction Value in this case. The invoices value have to be accepted and duty charged accordingly.
(d) Commissioner as regards watch movements valuation found:
“2.14 The importer also submitted vide their letter dated 6.8,2002, mentioned above the photocopies of 4 invoices No. 002713, No. 002714 and No. 002717 all dated 13th May 2002 for watch movements, addressed to the four different companies. The said 4 invoices contained the description of watch movements as WATCH MOVEMENT JAPAN PART AS CHINA NO. 2035”, total quantity 70,000 piece, having unit value of US $ 0.20, on this basis the total value of the consignments comes 14,000 US $ equivalent to Indian Rs. 6,79,000. The learned advocate have relied upon the said photocopies of 4 invoices and submitted that the maximum value of watch movements for 63000 pieces should be Rs. 6,30,000. It is seen that the said photocopies of invoices were submitted after several months from the date of seizure of impugned goods, when it was known to them that the department on the photocopies of invoices itself speaks that the watch movements parts are Japanese. In fact they conveyed that the watch movements parts are of Japanese origin and assembled in China. The authenticity of the value declared subsequent cannot be accepted when the original declaration was incorrect. Inadequate and erroneous Shri Shashi Arora in his statements recorded on 1.6.2002 and 5.6.2002 has submitted that he has never placed any order for import of the watch movements and the same were sent by Shri Dilip Sujan without his knowledge. He further submitted that after the shipment, Shri Dilip Sujan had informed him about the same but did not inform anything about the value. Thus, it can be seen that for the import of watch movements the nature of transaction itself is not the normal transaction during the course of international trade and hence the invoice submitted by them subsequently cannot be relied upon for the purpose of determination of transaction value within the meaning of Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 1988. The customs declaration from accompanying the said goods contain the description of the watch movements, make, number, nature and country of origin. As discussed above, the invoices submitted in this regard showing the total value of the watch movements as Rs. 6,79,000 cannot be accepted for the reasons stated above. While comparing with the correct valuation arrived at by the department the value of similar items imported in the past, it was revealed that the value declared on these invoices are abnormally low and does not represent the true transaction value. Accordingly, the valuation of watch movements was arrived on the basis of import value of similar goods as reflected in the data on National Information Data Base (NIDP) available on the Computer System of different Customs House. The importer-wise detailed Valuation Sheet was accordingly prepared and annexed to the panchnama drawn on 21.5.2002. On examination of the consignments of watch movements the particulars available thereon reveal the following:
“2035-00 A-FTJOUW, MYOTA CO, Japan “or “2035 00 A-MKOUXU, MYOTA CO. Japan” or “2035-00A-FK04 XI MYOTA CO Japan” etc. The valuation of watch movements as per Annexures, has been determined on the basis of identification marks and numbers, make, country of origin and the name of the manufacture and total value arrived at Rs. 35,61,600 (CIF) and Rs. 53,42,400 (LMV) based on the products and price of the goods of Japanese origin. Under the circumstances. I do not find any reason to interfere with the value proposed in the show case notice. In view of the above, I find that the total value of Rs. 26,625 CIF submitted in the reply to Show Cause Notice is grossly understand (sic), unrealistic and hence not acceptable for the reasons discussed in the proceedings (sic) paras. On the basis of the foregoing the total value of the 27 parcels of glass stones, cup chains and watch movements is placed at Rs. 62,29,988 CIF and Rs. 93,44,982 LMV.”
The same cannot be upheld in view of the following:
(i) In the case of watch movements, no declaration regarding the description quantity, country of origin was on the Customs Declaration Form. The importer had submitted vide his letter — dated 6.8.2002, 4 numbers of invoices all dated 13.5.2002 for watch movements. The description in the invoices were as follows:
“Watch movement Japan part ass. Chine No. 2035”. The value declared was US$ 0.20 per piece for a total quantity of 70000 pieces which means the value comes to 14000 US $ equivalent to about Rs. 6,79,000.
(ii) The descriptions state (sic, stated) above clearly show that the parts going into assembly of the watch movements were from Japan and that the watch movements were assembled in China Japanese parts and they were shipped from China/Hong Kong as “assembled watch movements’. The departments attempts to state that the goods are of Chinese origin is wrong as there is nothing brought out in that the parts were not assembled in china and the whole watch movements did not emerge in China and were not indeed manufactured in China but were assembled in Japan.
(iii) Therefore, the valuation done of these watch movements as if they are of Japanese origin is without any basis. These watch movements of Chinese origin consisting of Japanese parts are to be valued. The valuation done by the department and the value of Rs. 35,61,650 (CIF) and Rs. 53,42,400 (LMV) is on a mis-placed finding without any material that the goods are of Japanese origin.
(iv) The goods are claimed to be cheap variety used for mass production of cheap watches, which are available for as low, as Rs. 50 in a fully assembled condition at various place of this country for such cheap movements of quality of Chinese origin and valuing them as done by the department cannot be accepted. Evidence on clearance of such watch movements at the declared price of US & (sic, $) 0.20 by the various Custom houses was submitted. The order has without any basis held that these watch movements are of high quality Japanese origin and have proceeded to value them accordingly. The valuations are therefore not upheld.
(v) Therefore the watch movements should be valued as per the declaration made by the importer appellants and the goods should be reassessed and thereafter released to the appellants on payment of appropriate duty. The appellants claim the goods, the disclaimer of Shri Dilip Sujan notwithstanding. There is no evidence on record that ownership of the goods is not with Shri Arora.
(e) The correspondence dated 20.3.2002 addressed to Shri Dilipbhai by Shri Arora, which was recovered from Shri Arora’s residence instructing to assign the goods as ‘Glass Stones’ and with a value of each parcel to be HK$ 250 and weight 20 kgs. and the imputation arrived at from this document are to be considered. This letter is relied to be giving the alleged ‘blue print’ of the entire modus operandi of mis-declaration and under-valuation is on interpretation. This letter is admitted by Shri Arora to have been written by him, and would be instructions on normal packing and value limits of parcels which Arora had to clear. The direction to keep value at KH$ 250 for a weight of 20 kgs. per parcel could be emanating from Arora’s counsel consideration of duty required to be paid by him per parcel on Glass Stones, which is the correct declaration of the goods and the weight for handling the size of parcel. Ipso facto the letter would not lead to a presumption of mala fides or attempt to smuggle by mis-declaration.
(f) When no reason to arrive at confiscation under Section 111 (d) and (m) for contravention of notification under Section 11 of the Customs Act, 1962 and for mis-declaration of quantity, quality as value are found, the reasons arrived at for confiscation are not upheld, the orders on confiscation are to be set aside and appeals to be allowed.
(g) When no goods are found to be liable to confiscation, the penalty as imposed under Section 112 of the Customs Act, 1962 are not called for and are set aside and appeals allowed.
4. In view of the findings, the order is to be set aside and appeals allowed.
5. On setting aside the order, the parcels to be cleared on payment of appropriate duty on declared values to the importer.
6. Appeals ordered to be disposed of in at above terms.