ORDER
V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Original No. 6/99, dated 26-2-1999 passed by Commissioner of Customs.
2. The issue involves the redetermination of the declared assessable value of the following goods to the extent shown below :-
HDPE Injection Grade US $ 829 PMT/CIF Rs. 3,47,00,944/-
(1150 Metric Tonnes)
HDPE Film Grade US $ 890 PMT/CIF Rs. 6,47,84,156/-
(2000 Metric Tonnes)
HDPE blow moulding US $ 860 PMT/CIF Rs. 3,91,26,975/-
Grade
(1250 Metric Tonnes)
PVC Resin Paste grade US $ 930 PMT/CIF Rs. 5,41,54,499/-
(1600 Metric Tonnes)
LLDPE Film grade US $ 829 PMT/CIF Rs. 6,03,49,580/-
(2000 Metric Tonnes)
Total Rs. 25,31,16,154/-
3. In view of the enhanced assessable value as mentioned above, the order confirms the duty demand of Rs. 3,13,79,647/- under Section 28 of Customs Act. Penalty of the same amount under Section 114A of the Customs Act has also been imposed on the appellants.
4. Heard Shri V.S. Nankani, ld. Advocate for appellants and Shri S. Sankara Vadivelu, ld. DR.
5. Ld. Advocate submits that the basis of challenging the transaction value declared on the Bills of Entry adopted by Revenue is as follows :-
(a) Rule 10A of the Customs Valuation Rules has been invoked on the ground that manufacturers invoices have not been produced on demand and in view of higher prices noticed elsewhere, the transaction value needs to be discarded.
(b) With respect to items HDPE (IG) & HDPE (FG) the order enhances the assessable value on the basis of prices of these goods reported in PLATT’s report for the relevant period.
(c) For the remaining three items, the order impugned enhances the assessable value on the basis of letters exchanged between the two agents of foreign supplier based in the country which are available on pages 94 & 95 of the paper book. One letter is from M/s. Mitsubishi Corporation, Madras to M/s. LG Polymers India Private Ltd., Vizag offering the prices of these items of Korean origin dated 9-4-1998. The second letter is also from the same office to the same company dated 21-4-1998 again giving the prices of these goods. Based on these quotations, the order uses these prices to enhance the value.
6. Ld. Advocate submits that the goods were initially cleared on provisional assessment and the show cause notice leading to the order impugned was issued but finalised the said provisional assessment and hence no fraud is alleged or involved.
7. Ld. Advocate further submits that basis of this valuation is totally erroneous for the following reasons :-
(i) Rule 10A of the Valuation Rules ibid cannot be invoked as this was not in currency during the period of import which was May, 1997. The said rule was inserted vide Notification No. 10/98 (N.T.)-Cus., dated 19-2-1998 . As has been held in the case of Lakshmi Packaging as in 1998 (98) E.L.T. 91, even operation of Section 11AC cannot be with retrospective but only from the date it was introduced. The ratio of that decision applies in this case also and said rule cannot be invoked for a cause of action originating prior to 19-2-1998, which in this case is May, 1997. Therefore, the department cannot circumvent the burden placed on this under the said rule for discarding the transaction value declared by the importers without fulfilling the conditions mentioned in Rule (2) i.e. without showing that the said transaction value was fraudulent etc.
(ii) These rules clearly provide that the transaction value can be challenged on the grounds that contemporaneous imports were at higher prices. The prices mentioned in the PLATT’s report are not instances of contemporaneous imports from the country of origin into India for the relevant period inasmuch as that they represent only a private bulletin showing the price ranges and is therefore akin to price ranges reported in any commercial newspapers like Financial Express or The Economic Times etc. He submits that PLATT’s prices are region-wise and not country-wise whereas contemporaneous imports have to be considered only from the country of origin. He further submits that no allowances are made in these prices for difference in quantity/quality/freight. He submits that as their imports are bulk category therefore the freight would be much lower. He further submits that PLATT’s report is not identical in nature to the London Metal Exchange Bulletin which represents the actual transaction value at which the metals have been traded i.e. bought and sold. Therefore department’s plea that PLATT’s report is similar to LME bulletin is incorrect. He submits that as has been held in the case of Hind Afghan as reported in 1987 (31) E.L.T. 551 (Tribunal), these price ranges cannot be accepted as the values to enhance the declared transaction values.
(iii) He submits that the two letters exchanged between the local parties also are mere quotations and to that extent they do not represent contemporaneous imports . The law in this is very clear and he cites the decision of the Tribunal in C.C. v. Grover Overseas (P) Ltd. and Ors as reported in 1999 (84) ECR184 (Tribunal). He also cites the case law as in C.C. v. Mehta Trading House P. Ltd. reported in 1999 (33) RLT 557 (CEGAT) and Sippy Pramod Steel Alloys Pvt. Ltd. v. C.C. as in 1990 (45) E.L.T. 444 (Tribunal).
(iv) There is no import trade violation and no duty exemption involved in this case.
Ld. Advocate therefore concludes that Order-in-Original is totally erroneous in law and needs to set aside. He also submits that case laws in the case of Prasant Glass Works P. Ltd. v. C.C. as in 1996 (87) E.L.T. 518 (Tribunal) and Sharp Business Machines Pvt. Ltd v. C.C, as in 1990 (49) E.L.T. 640 (S.C.) relied upon by the department are not applicable in this case as the goods were totally different. In Sharp Business supra, there was no mention of any quotation being involved as is involved in this case .
8. Ld. DR submits that Rule 10A has been rightly invoked as the importers did not produce manufacturer’s invoices. He relies on case laws of Prasant Glass Works P. Ltd. and Sharp Business Machines Pvt. Ltd. supra as cited in the Order-in-Original impugned and submits that prices reported in the case of PLATT’s report were higher at the relevant time. He submits that PLATT report is akin to London Metal, Exchange Bulletin and the prices therein are bulk prices and not retail prices. He further submits that as has been submitted on pages 8 of the Revenue’s cross-objections to this appeal, there has been allowances made for differences in quantity, quality etc., and therefore ld. Advocate’s argument on this ground does not survive. He further submits that certificates of origin provided by the importers are not valid as they are not issued by the Chamber of Commerce of the country of origin but by the private supplier. On this ground also, the invocation of Rule 10A is valid. He also submits that correspondences exchanged between M/s. Mitsubishi Corporation and M/s. LG Polymers India Pvt. Ltd., are reliable evidences as both the companies are reputed and reiterates department’s submissions in the cross-objections as well as the order impugned on this issue. He therefore reiterates the Order-in-Original impugned and submits that there are no infirmities therein.
9. We have carefully considered the rival submissions and case records.
10. We find that Rule 10A of the Customs Valuation Rules cannot be applied to these imports of May, 1997 as it was inserted into effect vide Notification No. 10/98 (N.T.)-Cus., dated 19-2-1998. A new statute cannot have retrospective effect unless it specifically provides for it or unless it is clarificatory in nature. This principle of law has been well enunciated with respect to a similarly new statute e.g. Section 11 AC of CEA, 1944 in Lakshmi Packaging (supra). As a result, the transaction value cannot be discarded under this Rule and Revenue has to necessarily go to Rule 4 ibid in this quest.
11. We find that unlike the London Metal Exchange, where actual trading of metals takes place i.e., transactions are involved, and which are reflected in its LME Bulletin, the PLATT’s price report is not based on transactions but merely is a compilation of price ranges of various plastic materials. Further more, as these are region-wise (and not country-wise), therefore for all these reasons they do not represent alternate transaction values. We are hence unable to accept the proposition in the impugned orders that the assessable value can be enhanced on their basis in the absence of instances of contemporaneous imports and as no clear and convincing evidence to prove any fraud in the declared values is led with respect to HDPE (IG) and HDPE (FG). In the case of Hind Afghan (supra) it was held that price ranges in Financial Journals are not relevant as acceptable transaction values. Since PLATT’s report is also merely a similar journal, the ratio of the said decision is applied.
12. With respect to HDPE (BM) grade, the order impugned enhances assessable value relying on an import of 16 MT thereof from same country of origin around 10-4-1997. The quantity imported in the present appeal is 1250 MT i.e., almost 9 times more. It is a well recognised principle of valuation under the Act that when prices of identical or comparable goods are to be relied upon, then the quantity discounts are also to be considered. Obviously, it would not be correct to apply the price at which 16 MT of the item is imported to import thereof of 1250 MTS. The order impugned raises the value by US $ 50/MT i.e., from declared US $ 860 to US $ 910 on this count. The differential value of US $ 50/MT is less than even 8%. We are of the considered view that most suppliers would give such or even more discounts for bulk supplies of 1250 MTs when compared to 16 MT. Therefore, we hold that it would be unjust and legally incorrect to enhance the declared value on this basis.
13. With respect to PVC Resin Paste grade and LLDPE Film grade, the order impugned enhances assessable value on the basis of two informal quotations of local office of foreign manufacturer in India which are not even proforma invoices. We are not in a position to accept this for the following reasons. The declared transaction value, to be discarded, requires proof of either fraud or reliance on higher priced contemporaneous invoices as per Rules 425 of Customs Valuation Rules. Unless it is shown accordingly that the transaction value declared can be so successfully challenged and discarded, no resort to subsequent Valuation Rules is possible. In this case, we apply the well established legal position that mere quotations cannot be regarded as contemporaneous imports. Since there is also no evidence led on fraudulent declaration of the transaction values in the invoice and also as Rule 10A ibid is not available, therefore, the order impugned has erred in enhancing the assessable value based on these letters. In this connection, the ratio of our decision in the case of Grover Overseas as in 1999 (84) ECR 184 (T) applies, as also in United Traders (India) as in 1999 (112) E.L.T. 349(T) & in Kishandas & Sons in 1999 (112) E.L.T. 227 (T).
14. In view of the aforesaid analysis, penalties are also not leviable and we set aside the impugned order and allow the appeal with consequential relief, as per law.