ORDER
K.S. Venkataramani, Member (T)
1. The appellants imported a consignment of Power Transistors and Fast Recovery Diodes for which they declared the value of Rs. 20,824/- CIF. There was a complaint from M/s. Nayar Electronics, who manufacture identical goods in India about under invoicing of the inputs of such goods and they produced before the Custom House copy of a fax dated 17-5-1991 from manufacturer M/s. Goodark Electronics, Taiwan quoting the prices of Fast Recovery Diodes. They also produced a proforma invoice from manufacturer M/s. Mospec, Taiwan regarding Power Transistors. Since these prices were higher than the declared price, the appellants were asked to explain the position. They produced manufacturer invoice of Mospec dated 17-3-1991 addressed to M/s. Mohado Ltd., Taiwan for Power Transistors to substantiate the prices declared by them. Similarly they also submitted manufacturers invoice of M/s. Goodark Electronics Corpn., dated 17-3-1991 to the same supplier in Taiwan in respect of Fast Recovery Diodes. These prices were slightly lower than the prices invoiced by the supplier. The Custom House showed these manufacturer’s invoices to the complainant M/s. Nayar Electronics, who agreed to verify the same by contacting the respective manufacturers about the genuineness of the invoices issued by them. The manufacturer M/s. Goodark replied to M/s. Nayar Electronics by fax dated 20-5-1991, saying the invoice has been made by their traders M/s. Mohado Ltd., and further stated that Mohado are under valuing the goods for saving tax by the importers in India. They further clarified that the prices quoted by them to M/s. Nayar Electronics are ex-factory prices. They further mentioned, that their offer to M/s. Mohado Ltd., is about 15% to 20% higher than quoted in the fax dated 17-5-1991 to M/s. Nayar Electronics. They further stated that the manufacturers invoice produced by the appellant had been prepared by the M/s. Mohado and not by the manufacturer themselves. They therefore disowned that invoice. Similarly the other manufacturer Mospec replied to M/s. Nayar Electronics by their fax dated 16-5-1991 saying that they do not admit the invoice dated 17-3-1991 said to have been issued by them and explained that the invoice in question has been typed by M/s. Mohado, on the blank invoice forms provided by them to M/s. Mohado Ltd., who is their customer in Taiwan and as per the business terms between them, they are required to provide blank invoices to M/s. Mohado. They also disowned the invoice. Show cause notice was issued to the appellants on 13-8-1991, proposing to reject the declared value to enhance the assessable value under Rule 8 of the Valuation Rules, 1988, on the basis of the quotations given by the manufacturers to M/s. Nayar Electronics and further proposing to import penalty on the appellant holding the import itself is unauthorised because the enhanced value is not covered by the value balance in the Import Licence produced by the appellants. The matter was adjudicated by the Additional Collector of Customs, Mumbai by his order dated 28-2-1992 whereby he confiscated the imported goods and enhanced the assessable as proposed in the Show Cause Notice to Rs. 1,40,665/- CIF. The Additional Collector levied fine in lieu of confiscation of Rs. 70,000/- and imposing penalty of Rs. 30,000/- on the appellant under Section 112 of the Customs Act, 1962.
2. Shri K.M. Mondal the ld. Consultant for the appellant submitted that the Department has enhanced the assessable value depending only on the evidence of M/s. Nayar Electronics who is their competitor in the field besides being the complainant before the Customs Authorities. No instance of contemporaneous import of the goods at the higher price noticed in the Custom House has been referred to in the impugned order. No import of the goods has been effected against the price quotation obtained by M/s. Nayar Electronics and they have also not imported any such consignment. The ld. Consultant further pointed out that the Additional Collector has not at all considered their contention before him that these goods valued at much lower prices than that declared by the appellant had been accepted by the Custom House at about the same time. The ld. Consultant cited case law reported in 1989 (44) E.L.T. 202 (Cal.) – Ghanshyam Chejra v. Collector of Customs and 1994 (74) E.L.T. 39 (Tribunal) to say that a mere quotation cannot be the basis for determination of assessable value, but that it has to be backed up at actual import at the prices quoted. The ld. Consultant further argued that the confiscation of the goods under Section 111(d) of the Customs Act, for the reason that the enhanced value was not covered by the value balance in the Import Licence Produced runs contrary to the Tribunal decision reported in 1997 (96) E.L.T. 447 (Tribunal) in the case of West Coast Traders v. Collector of Customs, Mumbai.
3. Shri K.L. Ramteke the ld. JDR referred to the invoice produced for the consignment which significantly does not give any reference to the purchase order and the payment of term is also by sight draft. There is no letter of credit opened for the import, the evidence has also shown clearly that the supplier M/s. Mohado, from whom the appellants have imported been found to abet importers in India to evade customs duty by under valuation. Even the manufacturers invoice produced by the appellant has been shown to be prepared by M/s. Mohado and disowned by the respective manufacturers. No reliance can be placed on such manufacturer’s invoices.
4. We have carefully considered the submissions made. We find that the Department’s case rests wholly on the evidence led by a complainant against the appellant, who is also their competitor in the field. The Custom House has chosen to give the manufacturer’s invoices produced by the appellant to the very same complainant for verification from the manufacturers in Taiwan, which is rather an odd procedure in our view when the department has the resources to have such verification made on their own. The method adopted is therefore not the proper one to follow in such case of suspected under valuation. Nor has the Department tried to obtain collateral information of contemporaneous import which is also available in the Custom House for past imports especially in the face of the contention by the appellants that imports of the goods had taken place at comparative prices declared by them and which have been accepted by the Customs. In such context the case law cited by the appellant that mere quotation cannot found the basis of determination of assessable value under Section 14 of the Act, becomes relevant because the quotation on which Custom House is relying upon has not been supported by any evidence of import at around prices containing that quotation. In this view of the matter we have, to hold that the Department has failed in this case to satisfactorily establish deliberate under valuation by the appellants, and while coming to this conclusion, it is also relevant to consider their further plea before the adjudicating authority that the import was not for trade purposes but for Research and Development. We are also in agreement that the ld. Consultant submitted that cofiscation of the goods under Section 111(d) of the Act, is not well founded where the excess over the licence value has been caused because of enhanced assessable value under Section 14 of the Customs Act. The case law cited in this regard is apt. In this view of the matter we set aside the impugned order and allow the appeal.
