ORDER
S.V. Maruthi, Member (J)
1. These two appeals are disposed of by a common order as the appeals arise out of a common adjudication order. The appellant in appeal No. C/1504/90-A is the importer.
2. The appellant in appeal No. C/3047/90-A is the department.
3. The importer has come up in appeal against the enhancement of value of imported goods from the declared value of US $ 7.50 per great gross c.i.f. Calcutta, and 22 paise per needle whereas the department has come up in appeal against the order of the adjudicating authority on the ground having enhanced the value it has not imposed penalty and not confiscated the goods.
4. The brief facts are as follows :
The importer imported 33 cases containing 1375 great gross of industrial sewing machine needles of assorted sixes from M/s Lucky Dragon Co. Hongkong. The goods are of Japanese origin. The appellants declared the value at US $ 7.50 per great gross c.i.f. A show cause notice was issued proposing to enhance the value at Japanese Yen 3.10 per piece c.i.f. which are also of Japanese origin.
5. The Collector on receipt of their reply to the show cause notice in his adjudication order observed as follows :
“The department has not been able to establish clearly that the needles of PFX 130 TYPE of Japanese origin. I have seen the sample of the imported needles as well as the organ brand. There is certainly a difference of quality between the two and the Organ needles have a better finish. The department’s contention for loading the value to Japanese ¥ 3.10 is not accepted as the invoice relied by them is more than a year old and therefore cannot be said to be contemporaneous in terms of section 14 of Customs Act, 1962. Moreover, the quoted invoice is for Organ brand which the imported goods are not. These are definitely inferior in quality compared to Organ brand needles. Market enquiries as requested by the importer revealed that there is difference in quality and price of two types of needles. The prices of Organ brand are 20% higher than the goods imported in this consignment. The wholesale market price of the imported goods which in the market parlance are known as ‘machine brand’ is Rs. 60 per 100 pcs. After allowing the deduction of duty, discount, various charges from landing of the goods to the delivery to the customers, the value proposed by the importers of 22 paise per needle appears to be acceptable.”
6. In other words, the Collector enhanced the value of the goods to 22 paise per needle on the basis of agreement made by the appellants as to the value of the goods imported against which the importer as well as the department have come up in appeal.
7. The main contention of Shri Harbans Singh on behalf of the importer is that the department having failed to adduce evidence of imports at a higher price of contemporary goods ought to have accepted the transaction value. The appellants have not agreed for enhancement of value to 22 pcs. Assuming that there is an agreement there cannot be an assessment on the basis of consent. In support of this contention he relied upon the judgement of the Supreme Court in
I.T. Commissioner v. Finn MVAR (AIR 1965 SC 1216)
wherein it was held that “As in the case of estoppel it cannot operate against the provision of statute. If a particular income is not taxable under the Income Tax Act it cannot be taxed on the basis of estoppel or any other equitable doctrine.”
8. He also referred to the following observations of the Supreme Court in
Dunlop India v. UOI – [AIR 1977 SC 597]
.
“There is no estoppel in law against a party in Taxation Matter. If a party .’ in order to clear the goods for customs has given the classification in accordance with wishes of the authorities or even under same misapprehension and if the law allows it a right to ask for refund on proper appraisement and which is actually applied for the party cannot be estopped for making such application and ask for such refund.”
9. Shri Singhal, learned JDR appearing for the department brought to our notice two paragraphs in the show cause notice under which the prices of contemporaneous import were indicated and according to him they are relevant and therefore, the enhancement of value is in accordance with law. The relevant paragraphs in the show cause notice are as follows :
“Invoice No. CN5/80105/125, dated 05-10-1988 of M/s. Cheil Needle Mfg. Co. Ltd. Korea, Importer M/s. Insat Corporation, 25 Strand Road, 559 Marshall House, Calcutta, showing import of following type of needles –
Total
PFX 130 Size No. 14 500 gross US $ 1.872 Per gross
No. 16 2500 gross -do- US $ 9,360.00
No. 18 2000 gross -do-
-------------------
5000 gross
Invoice No. 490/54-01017 dated 5.9.1988 of M/s Stroj Import Foreign Trade Company, Czechoslovakia, importer Peacock Industrial 9, Banslolla Lane, Calcutta 700007 relating import of
Value
PFX 130 Type of needles size Nos. value
14 14,400 Rs. 185 per 1000 pcs.
16 115,200 total value
18 14,400 Rs. 26,640.00
On the basis of above evidence, it is clear that the industrial sewing machine needles are sold in international trade specifying the type and size no. It is also seen that the value is dependent on the type of the needle (irrespective of size) and country of origin. It is further observed that the needle of PFX 130 type of all sizes of japan origin are sold in international market @ J ¥ = 3.10 per piece CIF and J ¥ = 2.65 per piece CIF whereas the value for PFX 130 of Korean origin is US $ 1872 per gross. The value for PFX 130 of Czechoslovakia origin are Rs. 0.185 per piece.
The importer has made importation of the needles of PFX 130 type of Japanese origin and the corresponding imports noticed at this Custom House have been priced at J ¥ = 3.10 per piece CIF & J ¥ = 2.65/pc CIF. The Custom House has not accepted the value of J ¥ = 2.65/pc CIF as it was not supported by any evidence regarding general reduction of the value for all importers.
Therefore, the value at which similar goods of Japanese origin have been imported is Japanese ¥ 3.10 per piece. Thus it appears that the subject goods have been imported at a lower price compared to the imports of similar goods from same country in this period. The value of the subject goods under section 14(1) of Customs Act, 1962 should, therefore, be Japanese ¥ 3.10 per piece instead of US $ 7.50/- Great Gross as declared by importers.”
10. We have called for the records of the adjudicating authority in order to find out whether the importer has agreed for enhancement of the value at 22 paise per needle. The relevant proceedings are as follows :
“Records of personal hearing opposite. I have seen the varying quality of the goods imported from Japan under brand ‘organ’ as well as the brand imported by the Importers. These were shown to Shri D. Singh, A.C. and Shri J.K. Batra, Addl. Collr. Let Additional Collector (B) arrange for a quick verification of the wholesale market prices of the quality of goods imported in the present case. Let a comparison also be taken in terms of the prices for ‘organ’ needles as the price of ‘organ’ needles has been taken on the basis in the Show Cause Notice.
Addl. Collector. Sd/- R. Gopalanathan
Collector
Shri Hasmukh Kundalia appeared for personal hearing before me today. He submitted that the goods imported by them are Industrial Sewing Machine Needles of Japanese origin which are of a very inferior type without any brand name. Shri Kundalia produced samples of certain needles of organ brand which are of Japanese origin and also organ brand which are of Korean origin. Shri Kundalia contended that on a comparison it can be seen that the needles imported by them are of a very inferior quality and that the prices cannot be equalled with that of organ brand of needles, the price of organ brand needles works out to 28 paise per needle at the time of importation. The prices of needles of Korean origin as accepted by the Department themselves are between 14 paise and 16 paise per needle. In Page-2 of the Show Cause Notice………..of Japanese origin and Korean origin are one and the same. In that case they should be given the benefit of the price taken for Korean needles. They are… to accept the price of 22 paise per needle as they want this consignment to be cleared because the same is lying in the Deptt. for a long time and has also suffered a lot of demurrages to the goods. There has been some theft also in the Docks. Let the Department conduct an independent market enquiry and ascertain the approximate price for their quality of needles as compared to organ brand needles and the case may be decided on that basis and the decision of the Adjudicating Authority is acceptable to them. In .case any loading is undertaken they should not insist on the licensing coverage also. In this connection, the decisions given by various judicial bodies have been cited in the reply to the show cause notice.
Sd/- R. Gopalanathan
Collector
Dt. 20-11-1989
We may accept the offer of 22 paise per needle. We may accordingly load the value … per needle. For license we may accept the invoice value. I will dictate the .. in two days time.”
Sd/-
“Please call for the Bill of Entry.”
11. In the present proceedings before us the partner has filed an affidavit which reads that “On 10-5-1991,1 requested Shri Hasmukh Kundalia to state that at the time of personal hearing on 20-11-1989 before the Collector of Customs, Calcutta whether he had agreed to any compromise offer relating to the valuation of the said item/items and whether there was any specific instructions from us regarding the same.” The importers also has filed a letter written by Shri Hasmukh Kundalia dt. 21-5-1991. The relevant portion of the letter reads as follows :
“Please note that I appeared before Mr. R. Gopalanathan, Collector of Customs on 20-11-1989 for personal/adjudication proceedings relating to your imports of a consignment of 33 cases containing 1375 Great Gross of Industrial Sewing Machine needles (Assorted sixes), ex-Andhika Paramita, Rot No. 692/88 line No. 22.
During the personal hearing I have not agreed to any compromise offer relating to the valuation of said item/items, as there was no specific instructions from you regarding the same.”
12. From a reading of the record of proceedings it does not appear that the appellants have categorically agreed for assessment at enhanced rate of 22 paise. It is not absolute but is a conditional agreement as the proceedings indicate that their prayer to accept the price at 22 paise per needle as they want the consignment to be cleared because the same is lying in docks for a long time has also suffered a lot of demurrage. They also indicate that independent market enquiry should be made by the department and ascertain the approximate price for their quoted needles. We, therefore, agree with Shri Harbans Singh that there is no agreement for enhancing the value at 22 paise.
The Collector proceeded as if the importers offer 22 paise as proceedings read : “That we may load the value and accept the invoice value for licence purpose.”
We are, therefore, of the view that there is no unqualified agreement by the appellant to accept 22 paise per needle.
13. Even assuming that there is an agreement, the appellants are not estopped from claiming the assessable value on the basis of transaction value in accordance with the rules, in view of the judgment of the Supreme Court in the case of
Dunlop India Ltd. v. U.O.I.
(supra), the relevant portion is as follows :
“At one stage Mr. Sanghi pointed out that in certain Bills of Entry of Dunlop India Limited, their Agents, Messrs Mackihnon, Mackenzie & Co. Private Ltd. gave the I.T.C. Item No. 87 with regard to the imported V.P. Latex. This, according to Mr. Sanghi, clearly shows how the appellants themselves have understood the matter. There is, however, no estoppel in law against a party in a taxation matter. In order to clear the goods for the customs, the appellants’ Agents may have given the classification in accordance with the wishes of the authorities or they may even be under some misapprehension. But when law allows them the right to ask for refund on a proper appraisement and which they actually applied for, we do not attach any significance to this aspect of the matter pointed out by counsel. The question is of general importance and must be decided on its merits.”
14. The next question for consideration is whether the transaction value is to be accepted.
15. In the show cause notice, the proposal to enhance the value on the basis of similar goods imported at Japanese Yen 3.10 per piece.
16. We have already extacted the observations of the Collector while rejecting the proposal made in the show cause notice. The Collector on a personal examination found that there is a difference in quality between the imported needles, and the organ needles have a better finish. He rejected the invoice value of Japanese Yen at 3.10 as the invoice is more than one year and the said price is for organ brand whereas the imported goods are not branded at all. He also found that the imported goods are of inferior quality when compared to the organ brand needle. In view of the findings of the Collector on physical examination of the goods we have to hold that the department failed to establish that the price of identical or similar goods are imported at higher price than the price at which the appellants have imported the goods. In the absence of imports at higher price of identical or similar goods there is no other go except to accept the transaction value. We, therefore, hold that the assessable value should be on the basis of transaction value.
17. Since we arc accepting the transaction value the question of levy of penalty and confiscation of goods does not arise.
18. The appeal of the importer is allowed and the Department’s appeal is dismissed.