ORDER
G.P. Agarwal, Member (J)
1. Both these captioned appeals are directed against the impugned order-in-original passed by the Collector of Customs, New Delhi, whereby he has ordered the confiscation of the imported consignment with an option to redeem the same on payment of a redemption fine of Rs. 1,00,000/- in addition to the duty payable on the consignment at the assessable value of Rs. 1,42,080/- and also imposing personal penalty of Rs. 1,00,000/- upon the appellant Shri A.K. Kohli, proprietor of the appellant firm M/s. Sandeep Industries.
2. Factual backdrop: In pursuance of intelligence that the appellants M/s. Sandeep Industries, New Delhi were indulging in gross under-valuation of component parts of electronic typewriters for manufacture/assembly of electronic typewriters with a view to evade Customs duty, the officers concerned searched their business premises on 7.10.1985 and as a result thereof a large number of incriminating documents were recovered and seized. Simultaneously a close watch was also kept at ICD, Pragati Maidan to intercept the consignment of the appellant firm. The goods were found to have arrived in Container No. IEAU-2467277 and for the clearance of which Bill of Entry No. 616 was filed by the importers on 17.9.1985 declaring assessable value as Rs. 68,462/-. On examination of the said goods it was found that as per Supplier’s Certificate of the Country of Origin the goods were declared to be Japanese origin but in the Bill of Entry the same were declared to be of Hongkong origin. It was also revealed that carrier and Rocker type Assembly did not bear any mark to indicate country of origin, the motor drive indicated country of origin as Mexico, Tape Ribbon that of France and Motor Drive spare parts that of IBM. As the goods appear to have been undervalued, the same were seized. Statements of the appellant Shri A.K. Kohli, proprietor of the appellant firm were also recorded. In his statements Shri A.K. Kohli inter alia stated that the component parts of typewriters imported by them were that of IBM correcting electric typewriters; that the said components of typewriters did not have any marking or any trade name as the same were erased at Hongkong; that these component parts (one set of typewriter) were costing in the range of Rs. 7,500/- CIF and that if the Department felt that these are under valued, the value may be enhanced and duty be levied on such enahanced value and goods be released to them. During the investigation the business premises of M/s. Alphabetics Pvt. Ltd., New Delhi, the sole selling agents of the typewriters manufactured by the appellant firm were also visited and Shri R.K. Bansal, their Joint Managing Director during his statement surrendered a large number of documents being relevant and useful to the enquiries. In his statement the said Shri R.K. Bansal also inter alia stated that the electronic typewriters manufactured/assembled by the appellant firm of which they were the sole selling agent were IBM correcting electric III typewriters and that FOB price of one IBM correcting electric III typewriter was HK $6160.00. On the basis of the said investigation the department formed a tentative view that the CIF value of component parts of electric typewriters (electric typewriter in SKD condition) imported by M/s. Sandeep Industries as declared by them in the Bill of Entry in terms of Section 46 of the Customs Act, 1962 was not genuine for the purpose of assessment as enunciated in Section 14(a) of the Customs Act, 1962 as the investigation conducted in the case revealed that the CIF value of the IBM correcting electric III typewriter woulr1 work out as under
‘A’ FOB Value of one IBM correcting & Electric III Typewriter
vide Peter Chows World Wide Mail Order Service … S$2305.00
value in SKD condition…with 40% discount 1383.00
Plus 20 1/8 Freight & Insurance… 278.00
CIF Value of one set in SKD condition S$1661.00
CIF value in Indian Rupees (Taking one Singapore $ equal
to Rs. 4.5)… Rs. 7474.5
‘B’ Value of one IBM correcting electric III Typewriter as stated by
Shri R.K. Bansal, Joint Managing Director of M/s. Alphabetics
Pvt. Ltd. in his statement recorded under Section 108 of the Cus-
toms Act, 1962... HK. $ 6160.00
Value in SKD condition with 40% discount $ 3695.00
Plus 20 1/8 Freight & Insurance... $ 743.82
CIF value of one Kit... $ 4439.82
or4440 H K$
CIF value of one kit in Indian Rs...
(Taking one HK $ equal to Rs. 1.6) Rs. 7104.00
"C CIF value of one kit of IBM electric III Typewriter as stated
by Shri A.K. Kohli, Prop, of M/s. Sandeep Industries in his
statement recorded under Section 108 of the Customs Act,
1962... Rs. 7500.00
'D' CIF value of one kit IBM correcting electric III in SKD
condition as declared by the Importers on B/E... Rs. 3423.00
3. As a sequence thereof a show cause notice was issued to the appellants calling upon them to show cause as to why
(i) the seized goods should not be confiscated under Section 111(m) of the Customs Act, 1962 and the value of the said goods should not be enhanced from Rs. 68,462/- to Rs. 1,42,080/-;
(ii) the Customs duty leviable on enhanced value of Rs. 1,42,080/- should not be charged from them;
(iii) and why penal action under Section 112 of the Act, ibid should not be taken against them.
4. In their reply to the show cause notice the appellants inter alia submitted that the charges of gross undervaluation were not based on the facts of the case on record; that these were also not consistent with provisions of Section 14(a) of the Customs Act, 1962 as well as general practice/procedure relating to valuation and assessment of imported goods; that the notice had earlier got cleared consignments on the basis of the documents produced by the notice, oral explanation tendered by them and after necessary enquiries, the value declared by them in the Bill of Entry had been accepted for assessment purpose; that it was a known fact that Hongkong, Taiwan and Korea are world famous markets where all kinds of expensive electronics and mechanical goods are manufactured and elsewhere were copied and sold at cheaper rates; that since most of the components imported by the notice were of non I.B.M. origin the value declared in the Bill of Entry showed slight difference when compared with the similar goods of I.B.M. make and listed in the Jacky’s International Catalogue published in Kowloon, Hongkong; that the plea of the importers as such had been accepted for giving the benefit of non-brand items and the value declared in the Bill of Entry was accepted by the authorities at C.W.C. Import Cargo Unit for assessment purpose; that the same is very clear from the note on the reverse of the Bill of Entry No. 616 dated 17.9.1985; that the case of the valuation of the goods was dealt with in File No. VIII/12/ACU/10/334/84 in the said office; that the allegation in the show cause notice that the goods had been imported in SKD condition in the present case was not correct; that the said allegation was not borne out from the invoice, description of the goods mentioned in the Bill of Entry and the examination report of the examining officer on the back of the Bill of Entry No. 616; that the entries in all the documents showed that only following components of the electric typewriter had been imported by the noticee in me consignment in question in addition to certain spares
i) Carrier & Rocker type assembly;
ii) Motor Drive;
iii) Selective & Film assembly;
iv) Paper feed rolls; and
v) Plastic extruded components;
that the complete list of components furnished by the suppliers showed certain other components in addition to those mentioned above; that the goods, as such, had been imported by the noticee on individual parts basis from time to time and not in SKD condition as alleged in the show cause notice, that the value worked out in the show cause notice in respect of complete unit of the typewriter was also not applicable as only components mentioned above as well as in the invoice, Bill of Entry and other documents had been imported by the appellants; the country of origin had been mentioned erroneously as Japan by the suppliers; that the same has been correctly mentioned in the B/E as of Hongkong origin; that a copy of letter dated 16.10.1985 from the suppliers M/s. S. Framjee & Co. Ltd., Hongkong alongwith a copy of their telegram dt. 15.10.1985 was enclosed in support of party’s declaration and in conformation of their explanation that the goods were of non I.B.M. brand; that valuation arrived at by the Department was based upon (a) Peter Chow’s World Wide Mail Order Service Catalogue, (b) Statement of Shri R.K. Bansal, (c) Statement of Shri A.K. Kohli; that there was basically a factual error in calculating the assessable value in the first i.e. (a) proposition; that it was a general practice/procedure relating to valuation that a discount of 60% is admissible on the Mail Order House Catalogue price; that the value worked out in all the three cases had been calculated after deducting a discount of 40% instead of 60%; that as such the basis of valuation was not correct and legal under the provisions of Section 14 of the Customs Act, 1962; that Peter Chow’s World Wide Mail Order Service Catalogue related to Singapore whereas the goods in that case had been imported from Hongkong which was more broad based and famous International Shopping Centre; that as required under Section 14(a) the place of importation being Hongkong, a Catalogue showing prices prevailing in Singapore market would not be relevant when prices prevalent in Hongkong market were available and could be ascertained; that as such fixation of prices on the basis of Peter Chow’s Catalogue was not justified; that similarly, the other two propositions based upon statement of the importer and their sole selling agents could also not form the basis of assessment as those did not conform to the provisions of Section 14(a) or 14(b) of the Customs Act; that neither the price prevalent at the place of importation had been taken into consideration as required under Section 14(a) nor the same was based upon independent market enquiries to determine the value as provided in Section 14(b) and as such the same were not tenable in law; that as per Jacy’s International Catalogue for 1985 the price of I.B.M. correcting Selector III Typewriter was US $ 800.00 which on deduction of 60% discount, remained US $ 320.00 equivalent to HK $ 2490.00 as compared to the value declared by the appellant in the Bill of Entry on the basis of quotations of M/s. S. Framjee & Co. Ltd., Hongkong, the suppliers which was HK $ 2169.00; that that left a difference of HK $ 321.00 which was accountable due to non-brand components imported in that case as already explained and that it was requested that the relevant file of Import Cargo Unit as mentioned above might be called for, which dealt with the approval of value in the case of previous import by the appellant but the Adjudicating authority did not summon the said file.
5. After the usual adjudication proceedings the adjudicating authority ordered for the confiscation of the imported consignment with an option to redeem the same on payment of a redemption fine of Rs. 1 lakh in addition to the duty payable on the consignment at the assessable value of Rs. 1,42,080/-. The adjudicating authority also imposed a personal penalty of Rs. 1 lakh on Shri A.K. Kohli, proprietor of the appellant firm inter alia holding that the statements recorded during the investigation of Shri A.K. Kohli, proprietor of the appellant firm and Shri R.K. Bansal, Joint Managing Director of M/s. Alphabetics Pvt. Ltd., which were never retracted about the price prove what has been stated in the show cause notice fixing the price at Rs. 7104/- per set of Correcting Selector III Electrical Typewriter and their statements only go to corroborate Peter Chow’s World Wide Mail Order Catalogue which was made available to the importers alongwith the show cause notice. He also held that the contention of the appellants that the goods were not in the SKD condition but only components was rather surprising as the packing list and the invoice itself show that they are sub-assemblies alongwith the plastic extruded components which make a whole electrical typewriter coupled with the fact that the appellants are simply assemblers that too not from primary components stage, for these machines. As regards the contention of the appellants that earlier similar previous import by the appellants were cleared without any objection, the adjudicating authority concluded that the same is of no use for the reasons that if a proper officer as accepted some situation, it is not binding on others. On these findings he concluded that the value as proposed for this consignment in question at Rs. 1,42,080/- is just and proper apart from being fair and consequently he adopted the same value for the purpose of assessment. As regards misdeclaration as to the value of the goods, he held that the same is obvious from the statements of Shri A.K. Kohli and Shri R.K. Bansal and therefore the goods are liable to confiscation and the appellants have made them liable to penalty.
6. During the pendency of the appeal the appellants moved their Misc. Application No. 155/88-A requesting that during the raid their all papers relating to the import of the item in question as well as the record pertaining to the earlier import whereby the goods imported earlier were cleared after giving a discount of 60 per cent on the Mail Order Price, were seized and the same were not available for inspection and it was only recently that the inspection was allowed and after inspection they came to know that the earlier importation was allowed under File No. VIII/12/ACU/10/334/84. In these circumstances they requested that the SDR may be directed to make available the said file at the time of arguments. They also requested that similar direction to produce certain Bill of Entries and DRI File No. 34/29/DZU/85 be also given. This application was also listed for hearing alongwith the appeal.
7. When the case was called for hearing and the Bench asked the appellants to argue on the said application Shri G.L. Rawal, learned Counsel for the appellants submitted that this application was moved to show that earlier 60% discount on the Mail Order Price was allowed and since now the Tribunal relying upon its earlier Order No. 607/85-A dated 6th August, 1985 given in the case of Takara Electronics v. Collector of Customs, has recently held in the case of Nikon Systems (P) Ltd., Noida v. Collector of Customs–Order No. 78/89-A dated 28.2.1989 1989 (23) ECR 343 Cegat that 60 per cent discount should be allowed on the Mail Order Price, he was not required to argue on the said application. On a pointed question from the Bench as to whether he is pressing that application or not, Shri G.L. Rawal, learned Counsel for the appellants did not give a positive reply but half-heartedly submitted that the said judgments rendered by the Tribunal serve the purpose of the said Misc. Application which he would be referring to during the course of his arguments. At this stage Shri A.S.R. Nair, learned SDR informed the Bench that the case file is available with him and he filed the certain documents relevant to the case and also gave the copies of these documents to the appellants.
8. On merits Shri G.L. Rawal, learned Counsel for the appellants submitted that the findings of the learned Collector that the goods in question were imported in SKD condition is against the record. Elaborating on his arguments he submitted that from the list of the component parts imported a complete typewriter cannot be made out. Certain components besides those imported are yet required to be imported for making out a machine which are as follows
Price per unit HK $.
(a) Keyboard shift and space bar assembly. 595.00
(b) Cover mounting 272.00
(c) Set of roller chains and components 93.00
(d) Correcting/correction assembly. 83.00
(e) Card holding platen 10.00
(f) Set of Miscellaneous components 18.00
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HK $ 1075.00
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9. As regards under-valuation of the imported goods Shri G.L. Rawal, learned Counsel for the appellants submitted that the adjudicating authority erred in not giving a discount of 60% on the Mail Order Price as held by this Tribunal in the case of M/s. Takara Electronics v. Collector of Customs, supra followed in M/s. Nikon Systems (P) Ltd. v. Collector of Customs, supra. He also submitted that the various pleas were taken in defence while replying to the show cause notice and the same were reiterated at the time of personal hearing but the adjudicating authority did not consider any of such pleas and recorded a finding that since the statements of S/Shri A.K. Kohli and R.K. Bansal are true the defence of the appellants is not tenable. He submitted that this approach of the adjudicating authority was wrong as he ought to have considered the various pleas taken up by the defence distinctly and separately. He further submitted that it is true that the said statements of S/Shri A.K. Kohli and R.K. Bansal were never retracted but at the same time their statements with regard to value of the imported goods could not be legally accepted in the absence of any corroboration. He also submitted that the appellant firm M/s. Sandeep Industries is a partnership firm and Shri A.K. Kohli is one of the partners and this aspect was not considered by the adjudicating authority at the time of imposing a personal penalty upon Shri A.K. Kohli. In the instant case admittedly no show cause notice was issued to Shri A.K. Kohli in his capacity as a partner. Consequently, in the absence of any show cause notice to him no penalty can be imposed on him and that the adjudicating authority has wrongly described him as a proprietor of appellant firm M/s. Sandeep Industries. In a nutshell he submitted that the case was not properly adjudicated and therefore, the remand would be proper.
10. In reply Shri A.S.R. Nair, learned SDR agreed that the goods in question were not imported in SKD condition and therefore, the whole basis adopted by the adjudicating authority for valuation is wrong and therefore, he would have no objection if the case is remanded for de novo adjudication. He also added that the other pleas which the appellant have taken up before us need not be gone into inasmuch as the appellants would have an opportunity to advance the same during the de novo adjudication.
11. We have considered the submissions and perused the record. We agree with the learned Counsel for the appellants that the subject goods were not imported in SKD condition and, therefore, the whole basis adopted by the adjudicating authority for valuing the goods is erroneous. Under these circumstances, we set aside the impugned order and remand the case to the adjudicating authority with the direction that he will adjudicate the case afresh taking into consideration that the subject goods were not imported in SKD condition. In doing so he will give reasonable opportunity to the appellants to defend their case.
12. Before we part with the case we would like to say that we have our own reservations with respect to the case of Nikon Systems (P) Ltd. v. Collector of Customs (Order No. 78/89-A dated 28.2.1989) decided by this Tribunal wherein it was held that a discount of 60% is admissible on the Mail Order House Catalogue price when we look to the case of Takara Electronics v. Collector of Customs (Order No. 607/85-A dated 6.8.1985) decided by this Tribunal on the basis of which the said case of Nikon Systems (P) Ltd. v. Collector of Customs was decided.
13. In the result the impugned order is set aside and the case is remanded to the Collector of Customs, New Delhi for fresh adjudication as directed above.