ORDER
Gowri Shankar, Member (T).
1. Appeals taken up for disposal with consent, after waiving deposit.
2. Cora Chem, the appellant in Appeal C/404, exported four consignments of toothpaste in 1994. The value declared of the goods was based on a unit price of Rs. 19/- per tube of toothpaste. The department ascertained that the appellant purchased the goods at a unit price of Rs. 10/- from Fresh Laboratories and Sonal Cosmetic (Export) Ltd., who manufactured it. Notice was issued to the exporter alleging that the value declared of the toothpaste was in excess of its real value, with an intent to derive advance import licence (entitling import of the goods without payment of duty) of a higher value than would otherwise have been possible. Penalties were also proposed on the firm and its partner, Pravinchandra D. Kabutarwala. The firm and its partner replied to the notice disputing the contentions therein. They said that difference in price was attributable to the fact that the exporter had established a good market in the Commonwealth of Independent States of Russia formerly USSR, and that no evidence has been cited to show any overvaluation. The Commissioner did not accept these contentions and passed an order holding that the goods were overvalued, and imposed a penalty on the exporter and its partner. Hence these appeals.
3. The notice issued to the exporter cited no material whatsoever in support of the claim that the goods were overvalued. All that it said was that the difference between the purchase price of Rs. 10/- and the export price of Rs. 19/- was too high and not acceptable. The notice, in other words, is nothing other than the subjective opinion of the person who issued it and the order of the Commissioner confirming this notice is nothing more than his own subjective opinion. We are baffled by the claim that because there is a 90% difference in between the purchase price and the export price, it necessarily follows that the goods have been undervalued. It is, we agree, a possibility that this is so. This is however only one among many other possibilities. It is possible that the supplier of the goods had reduced the value so as to pay less duty on the goods; that there was a relationship between the suppliers of the goods and the buyer, justifying a preferential lower price; indeed it is equally possible that the appellant’s claim is true. If the department wished to proceed on any one of these possibilities, it was up to it to obtain an acceptable evidence to the extent required in support of its claim. Acceptance of the department’s claim would in face lead to a situation in which every
individual officer could decide what the correct price should be for export of goods. The officer in this case may have acted on the opinion that difference of 90% between the purchase price and sale price is too high and therefore impermissible; another may find 50% to be excessive; a third may find 30% to be excessive. Such an approach can by no means be countenanced. The order of the Commissioner being entirely arbitrary without being based on a shod of evidence has to be set aside.
4. The appeals are allowed and the impugned order set aside.