ORDER
Gowri Shankar, Member (T)
1. Diary Den Pvt. Ltd., Ahmedabad imported a consignment of ice-cream making machine and filed two bills of entry in September, 1992 for their clearance. The investigations by the department extend also to a consignment which had arrived and was sought to be cleared during the pendency of the investigation. The investigation resulted in the issue of notice to the importer proposing to deny the exemption contained in Notification 59/87, enhancing the value of the machine from that declared of Rs. 985198 – to Rs. 5846492 and assessing the machine to duty at this value and imposed penalty on Harish Shah, its Managing Director. Adjudicating upon the notice, the Commissioner confirmed all the proposals in it, proceeded to deny the exemption enhancing the value of the machine for assessment and demanded the duty consequently due, imposed penalty on the appellant and the Managing Director. These two have appealed this order.
2. We shall first consider the eligibility of the goods to exemption contained in Notification 59/86. The relevant Entry 13 of the table to the notification partially exempts from duty “refrigerators and refrigerating equip- ment including freezing equipment (electrical and others) other than household type refrigerator”. The Commissioner has denied the exemption to the ice-cream making machine on the ground that they are not simple refrigerators. He says “…machines imported did not merely carry out the function of refrigeration. They are not simple refrigerator or refrigerating equipment or freezer, they are much more than that. They are the machine which had a refrigeration base which in addition are built to carry out functions like mixing, slashing, mixing of different colour and flavour and having a mechanism for dispensing.” He finds that ice-cream making machine are not understood as a refrigeration machine in the common parlance. This is the argument that the departmental representative repeats while defending the Commissioner’s order.
3. The counsel for the appellant cites the decision of the Tribunal in Western Refrigeration Pvt. Ltd v. CCE -1995 (77) E.L.T. 673. The Bench of the Tribunal which passed this order had before it for consideration classification of a refrigeration post mix beverage fountain which it described as a single unit composite machine performing the function of a refrigerator and automatic service of a required quantity of chilled and carbonated soft drink. It found that the function of mixing carborator and dispensing with the machine performed were not all together separate and different functions unconnected with the refrigeration equipment but “a process akin part and parcel of the refrigeration”. Therefore, without referring to the explanatory notes to the Harmonised System of Nomenclature it held the goods to be covered by the explanation, it is not disputed that the goods are classifiable under Heading 84.18 of the Tariff, which includes “refrigerators, freezers and other refrigeration or freezing equipment, (electric or other)”. The explanatory notes relating to this part of the heading explain that apparatus of this kind (at page 1269) if inter alia in the form of cabinet or other furniture or appliances incorporating a complete refrigerating unit or an evaporator or a refrigerating unit, whether or not equipped with ancillary devices such as agitators, mixers, moulds. These appliances include domestic refrigerators, refrigerated show cases and counters, ice-cream or frozen food storage containers, refrigerated water or beverage fountains, milk cooling vats, beer coolers, ice-cream makers etc.” The reason advanced by the Commissioner for denying the exemption on the machine are ice-cream makers are equipped with ancillary devices is unacceptable in the light of this notes. The judgment of the Supreme Court in Steel Authority of India Ltd v. CCE – 1997 (91) E.L.T. 529 that in construing the exemption notification the interpretative notes to the tariff may be considered is relevant in this regard. Thus, both on the basis of the Tribunal’s earlier decision and the explanatory notes the goods should be entitled to the exemption.
4. The remaining part of the demand relates to the value of the imported goods. In the four bills of entry which are the subject matter of the notice, the appellant had declared the value of the ice-cream machine totalling Rs. 998159/-. The show cause notice alleged that the value of these goods was Rs. 5846492/-. The notice worked out the duty demandable by working out exemption contained in the Notification to Rs. 21962347/-. Based on the duty payable, the difference between the value of Rs. 58.46 lakhs approx. claimed by the department and that declared of Rs. 9.89 lakhs by the appellant at the rate of 55% would work out to 32.15 lakhs approx. This is the rate of duty that is available by applying the exemption which we have held the goods are entitled.
5. It is a translation to the Indian of the Italian customs report that has been produced before us and was made available to the appellant. This report which is entitled “Statement of the survey data” by three Italian customs officers, and is signed by Gino Cocchi, Managing Director of Car-pigiani, makes the following points. Diary Den is the sole distributor of Car-pigiani SRL operating exclusively on Indian territory. The machinery exported to India in conformity with the national and international norms in matters of safety and hygiene and have been manufactured as a special design production and control in accordance with ISO 9001 Norms. It says that apart from commission of 15% paid to Diary Den for sales up to 199, a commission of DN 3224 has been paid for sale of a machine to Sri Lankan client. It says further that the invoice of which copies were sent by the Indian customs are “formally and substantially different from those accounted by Car-pigiani SRL and approved by the Italian customs and the admissions of the accounted invoice sample higher than those reported are duly settled outcomes.” The notice which was initially issued to the appellant proposed to enhance the declared value of the ice-cream machine on their view that on a special relationship between the appellant and Caprigiani, the Italian supplier of the machine, being the sole distributor and exclusive representative, and on the further view that captions from other parties and from Caprigiani itself indicated higher price. Captions from Uniden Systems, Singapore the quotation from Caprigiani to a buyer at Dubai and captions of Caltraji another Italian manufacturer of ice-cream machine was cited as evidence. Subsequently, a corrigendum to the show cause notice was issued. This corrigendum stated that during the course of further enquiries caused abroad, photocopies of four invoices of Caprigiani “duly attested by Italian customs authorities in respect of sales of the subject four consignment and also in respect of insurance policy procured by the department. From the aforesaid document, it is revealed that the actually transacted value of all the invoice to be together was nearly six times then the value declared to the department by Diary Den India Pvt. Ltd. at the time of clearance of the subject goods”. The corrigendum also stated that the Italian custom after making enquiry had certified that up to February, 1990 15% commission had been paid to the importer for the sales made in India; from 12-3-90 onwards. Commission had been acknowledged for sales made in India. Copies of the invoices forward to the Italian custom were entirely different from those entered in the books of account of Caprigiani and attested and stamped by Italian customs; amount shown in the invoice produced by the Italian supplier which had been entered in the books of account of the supplier of a much higher than those mentioned in the copies of the invoices forwarded (by the Indian customs) and the price charged for the sales in India were consistent with those charged for other foreign buyers for the same machinery.
6. The department concludes from this that the invoices which were enclosed to the report of the Italian customs represented the price that the appellant paid to the Italian supplier for the goods and therefore formed the assessable value.
7. The contention of the counsel for the appellant with regard to this are as follows. Photocopies of the invoices that were enclosed to the Italian customs report have not been authenticated. The requirement of Sub-section (6) of Section 78 with regard to the manner in which documents have to be being proven have not been complied with. The presumption provided under Section 139 of the Customs Act, 1962 with regard to the truth of contents of these documents cannot be presumed. The judgment of the Supreme Court in Collector of Customs v. East Punjab Traders – 1997 (89) E.L.T. 11 and decisions of the Tribunal are relied in support. It is further contended that the report of the Italian customs itself contains particulars which are clearly incorrect. There is no evidence pointing to the appointment of Diary Den as a sole distributor or agent of Carpigiani in India or elsewhere. Carpigiani was not in possession of ISO 9001 certificate at the relevant time and was only awarded in March, 1993, much after the importation was completed. The report does not contain a clear admission of Cocchi that its contents are correct. The report does not cite any evidence showing the receipt by Carpigiani of the differential amounts. Extract from the books of account were not produced. Cocchi does not anywhere show that he received these amounts or how he received them. The reports cites the remarks of Cocchi in which he has enclosed a separate explanation. This report has not been produced. Despite repeated requests, Cocchi was himself not available for cross-examination. Cocchi himself had affirmed an affidavit on 21-12-94 in which he has categorically stated that the invoice issued to Diary Den and produced to Indian customs was the correct amount. These invoices were sent to bankers. No amount than the value shown in the invoices which have been received through banks was received by Carpigiani.
8. The department emphasises that Cocchi had signed the copy of the Italian customs report and has thus affirmed that the invoice which he gave to the Italian custom house showed the correct value of the goods. He has not in his later affidavit retracted from this or explained. The invoice themselves were sent by Italian customs and their authenticity is therefore established. Cocchi has also signed photocopies of invoices which were sent by Italian customs to India, thus authenticated.
9. It is not possible for us to agree that the photocopies of the invoices which were relies upon in the Show Cause Notice have not been established as having been sent by Italian customs. Doubtless these are photocopies. However, each of these photocopies is seen to have been attested by the three customs officers who signed the report of the Italian customs and by the initials of somebody signing over the letterhead of Carpigiani, presumably Cocchi. In East Punjab Traders, the Supreme Court said that the presumption available under Sub-section (2) of Section 139 of the Act would not be available to photocopies of documents which did not bear any signature and did not come from proper custody. In the case before us, there is no dispute that Italian customs sent photocopies of six invoices in India. The fact that photocopies of six invoices bearing the signature of the customs officers and of employee of Carpigiani lead us to conclude that these were the same invoices. These are the same copies that form the enclosure to the report of Italian customs. The presumption available in Sub-clauses (a) and (b) of Clause (2) in Section 139 would extend to these documents. The question that now remains is the truth of these documents. The report of the Italian customs says that the amount shown in these invoices “are duly settled outcomes”. This in effect is what Cocchi has said. At the same time, however, it is not possible to overlook the fact that Cocchi Gino had expressed some reservations in the report. The report specifically mentions that Gino had enclosed a note “which are enclosed for you the present statement”. This note has not been produced. In the light of the fact that it is referred to in the Italian customs report it forms an integral part of that report and should have been made available to the appellant. Alternatively, Gino should have been made available for cross-examination. Further, the affidavit which Gino affirmed subsequently to the report in which he has categorically stated that Italian company did not receive any amount other than those sent to Diary Den through package charges and these referred to the correct value of the machines had not been dealt with by the Commissioner and cannot be ignored.
10. We have thus two directly contradictory stands taken by the supplier of the goods with regard to the value. One stand reflected in the copies of the invoice gave to the Italian customs and the statement of Gino in their report is that the price for the machine was far higher than is stated in the invoice that it had earlier been issued. The opposite stand, taken by Carpigiani in issuing invoice of lower value and reiterated as being correct in a subsequent affidavit of Gino that lower price are the correct ones. Added to this the fact that the Italian customs report is itself incomplete lacking the explanatory statement of Gino. In this background, the fact of which would otherwise be of great relevance, the fact that there is no evidence of payment made by Diary Den to Carpigiani over and above the price claimed, become significant.
11. What has been enclosed to the Show Cause Notice is a photocopy of a document bears upon it the signatures of Gino Cocchi of Car-prigiani, an Italian supplier and of customs officers. We wish to see in original exactly what has been received by the Indian custom from the Italian customs and wish to know whether the appellant was given inspection of this document and the matter was therefore adjourned to 24-9-2002. On this date, the departmental representative produced the document that were received and after hearing the arguments of the parties and considering the written submissions that has been filed by the appellant (the departmental representative has not filed any written submission), we proceed to decide the matter.
12. The document that was received is a photocopy in Italian of a report from the Customs, Excise and revenue Policy, Regional Unit, Bologna, bearing upon the first page (after the title page) and the last page initials and the signatures of Gino Cocchi and three Indian customs officials. Copies of invoices issued by Carpigiani which bear upon the initials of three persons and Gino Cocchi. These invoices show the value of the goods sent by Carpigiani to be substantially higher than the value declared in the invoices that were filed with the bills of entry that the appellant filed in the Customs. If the contents of the reports received from Italian customs has to be accepted, it would lead to the conclusion that the value that was declared by the importer is far lower than the price that was charged by the Italian suppliers. Thus the question before us is the acceptability of the report and its enclosures.
13. The following objections have been raised by the counsel for the appellant against the acceptance of these documents. It is not known how the department procured the document. There is no indication that they were received from the High Commission of India in London or through any other channel. The appellants had been informed by the Custom House in Mumbai that copies of relevant invoices and insurance enclosed to the report were handed over to A.L. Sharma, the appellant’s representative. Sharma was not given copies of the letters received from the Italian customs. Therefore, it is difficult to accept the report as authentic. A reading of the report shows that the Italian custom officers visited the premises of Carpigiani and gathered information from that company. Paragraph three of the report shows that photocopies are attached to invoices issued by Carpigiani was approved by Italian customs and documents issued from the said customs and of insurance policy drawn up by Carpigiani relating to the machines. The report also mentions towards the end of the statement of Gino Cocchi, Managing Director of Carpigiani some problems. Therefore, it is clear that the documents were procured from the custody of the exporter and not obtained from the custody of the Italian customs. Further, they were photocopies. In the light of this, the presumption under Section 139 (2) of the Act will not be available. Reliance is placed upon the Supreme Court’s decision in CC v. East Punjab Traders – 1997 (89) E.L.T. 11, Uttam Mohanlal Jain v. CC – 2000 (124) E.L.T. 661, Rajendra Sanghvi v. CC – 2001 (130) E.L.T. 638, V.K. Impex v. CC – 2002 (141) E.L.T. 564 (T) = 2002 (51) RLT 846 and Mohd. Abdul Halim v. CC – 2001 (130) E.L.T. 842 (T) = 2001 (43) RLT 609. The report of Gino Cocchi did not contain an affirmation that it is true and correct. It does not say that the value as mentioned in the invoices were reflected in the books of account of the exporters. No extracts of Carpigiani’s account has been enclosed. Italian customs have not sent details such as advance stated to have been received by the supplier, who and by what manner the difference between the amounts shown in the invoices submitted to Customs in India and the other invoices were paid. There is no documentary evidence to show the importer paid any additional amount to the supplier. The requirements contained in the provisions of Section 78 (6) of the Evidence Act have not been satisfied.
14. The departmental representative emphasises that there is no question from the signatures of the officials of Italian customs and the reports and its enclosures were furnished by the customs and seeks to distinguishes cases and contends that it is established beyond doubt that the documents have come from Italian customs and its authenticity has to he accepted.
15. Clause (2) of Section 139 of the Act provides for raising presumption in respect of documents which inter alia have been received from any place outside India in the course of investigation. The report that have been shown to us is a photocopy of the report turn up by the Italian customs in that language but bearing upon it the signatures in original of the three customs officials and of Gino Cocchi. The documents enclosed to it are also photocopies again authenticated by the initials of these officials. The counsel for the appellant did not dispute that the report was in fact sent by officials of the Italian customs. The fact that the precise authority of the Indian Government to whom this document was handed over by the Italian customs has not been established should not by itself be a bar against considering it to be authentic. Once it is accepted and it is certified in the light of the signatures that the report was prepared by the officials of Italian customs, and the report is tendered in evidence by an agency of the Government of India, it is a matter of details as to the various channels through whom it passed, and as we have noted, there is no serious challenge to the fact that the report was in fact drawn up by the Italian customs. The fact, which appears evident, that the officials of the Italian customs visited the premises of Carpigiani does not by itself render the documents accompanying that document invalid or unacceptable. It is not possible to say therefrom that the invoices and other documents were recovered from the premises of Carpigiani and not from the custody of the Italian customs, ft is entirely possible, while part of the investigation was done at the premises of Carpigiani, the rest of it was done by the customs officers; it is not possible to say with any certitude whether the invoices were or were not obtained from the premises of Carpigiani. But even assuming that they were, we do not see how this matters. The invoices bear upon them the signatures of Gino Cochhi and the endorsement of the Customs department Dogana Delia Spezia of 1992 (Dogana means Customs, meaning their authenticity has further been attested by the signatures of the customs officials on the photocopies).
16. In CC v. East Punjab Traders, the Supreme Court considered acceptable photocopies of documents recovered by an Indian customs officer from a shipping company of an exporter in Japan and not from the Customs agent. The Court wondered why the Indian customs did not interact with Japanese customs and obtained authentic copies of the documents from the Japanese customs. It also noted that the documents did not bear the signatures of the exporters, forwarding agent, stevedore or the customs officers and have been authenticated later by the customs officials.
17. In Uttam Mohanlal Jain v. CC again the Tribunal noted that the document did not bear the signatures of any customs officers. This is the same reason for which the documents did not accept in Rajendra Sanghvi v. CC and other decisions cited by the appellant. That objection therefore will not be available to the appellant here.
18. We also do not see how the fact that Gino Cocchi had put at the end of the report some objection has any bearing upon the issue. In point of fact, Gino Cocchi had enclosed a note, which was not given to the appellant. We have seen this note and it was shown to the representative of the appellant at the hearing before us. All that it says that Gino Cocchi was reluctant to sign the report because he did not wish to jeopardise his relationship with the Indian buyer.
19. It is subsequent to the issue of the notice, Gino Cocchi in a letter again affirmed that no money had been received by him over and above the amount mentioned in the invoices which were presented before the Indian customs by the importer. The value of these documents is negligible. It is not affirmed before a notary. As between this letter and there ports of the Italian customs the letter carries greater weight. In any event, the invoices enclosed to that reports speak for themselves. We are satisfied that these invoices are covered by the provisions of Section 139 (ii) of the Act and are admissible as evidence. They are seen to have been issued in the course of business by the exporter and the value shown in these documents would he the correct value. There is therefore under valuation of the machines to the extent indicated in the show cause notice.
20. In the result therefore we confirm the duty. The value of the goods therefore rightly comes to Rs. 5846492/-, as against the value declared of Rs. 986159/-. The demand for duty payable on this account is confirmed.
21. The penalty imposed on the appellants having been on both is required to be proportionately reduced. We therefore reduce the penalty on Diary Den to Rs. 25 lakhs and Harish Shah to Rs. 5 lakhs.
22. Appeals allowed in part.