ORDER
S.S. Sekhon, Member (T)
1. Revenue has filed this appeal against Commissioner (Appeals) order No. C3/Addl./31/94 dated 31-10-1994. By this order, Commissioner (Appeals) while fixing the value of the impugned goods based on the manufacturer’s price list which showed them to be net FOB “without any further discount” allowed the trade discount to the extent of 30% on manufacturer’s price list even though the price list did not indicate any such trade discounts being offered by the manufacturer. Revenue finds that the Commissioner (Appeals)’ observation that the price list did not indicate any trade discount does not appear to be factually correct and in the facts and circumstances of the present case, the Tribunal’s order relied upon by Commissioner (Appeals) do not appear to be correct and the discount of 30% on list price should not be available and in these facts, it cannot be argued that the importer had not under-invoiced or under-valued the goods. This was a clear case of under-invoicing to evade Customs duty and therefore, the goods were correctly confiscated under Section 111 (d) and (m) of the Customs Act 1962. Hence the Collector (Appeals) was not correct in reducing the Redemption Fine from Rs. 1.5 lakhs to Rs. 50,000/- and setting aside of penalty of Rs. 20,000/- imposed on the respondent’s company under Section 112 was not justified.
2. We have heard Ld. DR Shri S. Sudarsan for the department who reiterates the grounds taken in the Revenue’s appeal and submits that even though the Supreme Court in the case of Etcher Tractors Ltd. v. CC as reported in 2000 (122) E.L.T. 321 (S.C.) has held that price list of the foreign supplier/ manufacturer is not a proof of ‘transaction value’ invariably and existence of the price list cannot be the sole reason to reject the transaction value, the Collector’s order for valuation may be correct in view of this decision of Supreme Court, yet his reducing the penalty on ground of the goods being eligible for confiscation being ‘pencil erazers’ which are in the nature of consumer goods ands not in the nature of ‘teaching aids’ as claimed by the respondents. Therefore, the reduction fine and setting aside of penalty would not be justified and the Tribunal should restore the order of redemption fine and penalty imposed by the lower authorities.
3. Ld. Advocate Shri Jayaraj appearing for the respondents submits that the redemption fine and the penalty of Rs. 50,000/- have been correctly determined and set aside by the Commissioner (Appeals) after relying on the Supreme Court decision in the case of M/s. Akbar Badruddin Jiwani [1990 (47) E.L.T. 161 (S.C.)] and after coming to a conclusion that in the present case the appellants had placed an order with the foreign supplier for supply of the subject goods and the supplier having supplied the goods had also issued an invoice. The department had somehow found out the price indicated in the invoice to be less than the price indicated in the price list of the manufacturer and therefore made out a case of under-invoicing/under-valuation and the department had not adduced any material evidence indicating a relationship between the supplier and the importer or any evidence indicating remittance of any amount over and above the invoice price by the importer to the supplier. The Collector (Appeals) has held that it was not uncommon to find supplier’s price to be less than manufacturer’s price on account of trade considerations and therefore, resorting to under-valuation and under-invoicing could not be determined and or justification for imposing penalty on the respondents. The Advocate further submitted that there was no material in the grounds of appeal of Revenue to indicate why the redemption fine of Rs. 50,000/- was considered to be inadequate. He, therefore, submits that the order of the Collector (Appeals) should be confirmed and the department’s appeal should be rejected.
4. Shri S. Sudarsan, Ld. DR in a rejoinder submitted that even going by Collector (Appeals)’s order for 30% reduction in the invoice, when the invoice values had been accepted, the amounts found to be 30% less than the price list of the manufacturer’s price and therefore, the invoice value should not be accepted.
5. We have considered the rival submissions and materials on record and after considering the same, we find :
(a) The question of determination of transaction value under the Customs Valuation Rules has been settled in the case of Eidier Tractors Ltd. [2000 (122) E.L.T. 321 SC] wherein the Hon’ble Supreme Court has held “it is only when the transaction value is rejected, then under Rule 3 (ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 – Conversely, if the transaction value can be determined under Rule 4 (1) and does not fall under any of the exceptions in Rule 4 (2), there is no question of determining the value under the subsequent Rules”. In this view of the Supreme Court decision, when we find that the Ld. Collector (Appeals) has come to a finding that there is no evidence of a special relationship between the supplier and the importer and or indication of remission of any amount over and above the invoice price by the importer to the supplier, then we find no reasons to differ from the ‘invoice value’ to be the ‘transaction value’ in the facts of this case applying the Supreme Court decision herein.
(b) Once we find that the 'invoice values' are acceptable as the 'transaction values' for the purposes of determination of duty, we cannot find any case or under invoicing or under-valuation as determined by the lower authorities. Therefore, we cannot find any case for confiscation of the goods under Section lll(m) of the Customs Act, 1962. (c) We have considered the question the question of import of 'rubber pencil erazers' under the claim of 'teaching aids' for which no licence was required. We find that 'pencil erasers' made out of rubber are used by students and draughtsmen and others using pencils for accounting purposes, therefore we cannot come to a conclusion that pencil erasers are only in the nature of 'teaching aids'. Pencil erasers are considered by us to be an article of stationery, used by consumers in schools, colleges, draughtsmen and accountants and would therefore be an item used by consumers wherever pencils are used for erasing the pencil marks. Therefore, the article 'pencil erasers' are more akin to consumer goods than to 'teaching aids' and since consumer goods require an import licence during the relevant period and no such import licence was produced, this confiscation under Section 111 (d) is therefore upheld. (d) We have found from the Collector (Appeals) order that he is led by his findings that there was no under-invoicing and therefore he has reduced the redemption fine to Rs. 50,000/-. The present appeal does not give any reason why the amount of Rs. 50,000/-is considered to be inadequate and therefore we find no grounds in the Revenue appeal and would not like to interfere with the redemption fine arrived at by the Ld. Collector (Appeals). (e) The Commissioner has come to a positive conclusion that there was no justification for imposing penalty on the respondents since the department failed to establish a clear-cut case of under valuation based on material evidence. The Commissioner has relied on the Supreme Court decision in the case of M/s. Akbar Badruddin Jhvani (supra) wherein their Lordships observed as follows: -
“The discretion to impose penalty must be exercised judiciously. A penalty will ordinarily be imposed in cases where the party acts deliberately in defiance of law, or guilty of contumacious or dishonest conduct or acted in conscious disregard of its application, but not in cases where there is technical or venial b each of the provisions of Act or where the breach flows from a bona fide plea that the offender is not liable to act in the manner prescribed by the statute.”
(f) We find that the Commissioner has exercised his discretion following this observation of the Supreme Court; no grounds have been brought out in the appeal as to why this exercise of discretion should be interfered with. Therefore, we do not interfere with the setting aside of the penalty by the use of discretion of the Commissioner (Appeals). 6. In view of our findings above, the Revenue appeal is rejected.