ORDER
Harish Chander, Member (J)
1. M/s. Econtherm (P) Ltd. have filed an appeal being aggrieved from the order passed by the Additional Collector of Customs, New Delhi. Briefly, the facts of the case are that M/s. Econtherm System (P) Ltd., New Delhi, had imported a consignment of Dialectric Heater Components for Heat Tracing System for a declared value of Rs. 5,15,696.00 and had sought the clearance of the same under OGL Appendix 6, List 8, Part I, Item No. 476 of Import and Export Policy of 1985-88. The appellants also claimed the assessment under Heading 8516.30 of the Customs Tariff Act at the rate of 70% basic + 45% auxiliary + 20% CVD, and the duty worked out by the importer was Rs. 8,14,799.00. An intelligence was gathered by the special investigation branch of the Customs House that the goods were highly undervalued and it was also suspected that the goods were wrongly claimed under OGL. The bill of entry No. 209835, dated 18th February, 1988 was recalled by the SIB Unit. After thorough scrutiny and verification of the invoice it appeared that the value of the goods, namely, 15 QTV-2C and 20 XTV-2C declared at a rate of US $ 8.76 per metre and 19.40 per metre, respectively were too low. It was also doubtful that the goods were covered under OGL Entry 476 of Appendix 6, list 8, part I as claimed. Business premises of the appellant as well as Raychem Corporation, U.S.A. at New Delhi, were searched and during the course of search certain incriminating documents were recovered. It was also noticed that the importers had already cleared one consignment of the same item vide bill of entry No. 219303, dated 24th November, 1987 under OGL and the prices declared by them in the invoice were quite low. The SIB Unit was in possession of one trade price list PS 809 to PS 817 for chemelex heat tracing system which was effective from 1st July, 1986. This trade price list was issued by M/s. Raychem Chemelex, Heat Tracing System, 2555 Bay Road, Redwood City CA 94063, in supersession of the earlier price list, dated 1st October, 1984. This price of the products, namely, 15 QTV 2-C, 20 XTV 2-C and 20 KTV 2-CT mentioned in the trade price list was US $ 7.10 per foot, 9.00 per foot and 13.45 per foot (equivalent to US $ 23.29/MT, 29.53 MT and 44.13 MT) as against the declared value of US $ 8.76/MT and 19.40/MT. On the basis of the prices in the trade price list, the total value of the goods imported worked out to US $ 79527.61 as against the declared value of US $ 36380.00 FOB. The total CIF value in the Indian rupees worked out to Rs. 10,71,721.70 and the customs duty leviable on the same was @ 70% basic + 45% auxiliary and 25% CVD worked out to Rs. 1,80,08,530.30 against customs duty of Rs. 8,14,799.00 worked out by the importers on the basis of declared value of Rs. 5,15,696.00.
The importers stated that nothing incriminating was found in the records or documents seized during the course of search in their premises.
Regarding the show cause notice issued by the department, the importers stated that the following two charges were levied against them :-
I. That the goods imported were not covered under OGL, Appendix 6, List 8, Part I, Item No. 476 and warranted an import licence under Appendix 3A (462)(a).
II That the value as given in the invoice was not acceptable under Section 14(1)(a) of the Customs Act being at considerable variance with the manufacturers trade price list.
With regard to the ITC classification the importers stated that classification of goods under S. No. 462(a) of Appendix 3A was without any proper substance. They submitted that the goods imported were dielectric heater components for heat tracing system and this item was being regularly imported by them in the past. It was sophisticated heating material for non-domestic purposes, whereas S. No. 462(a) of Appendix 3A was meant for all types of electrical cables and wires for rating upto and including 132 KV but excluding flat/flat flexible cables. By definition an electrical cable is an assembly on one or from conductors either sold or standard, which is covered with a layer of insulting material throughout their length. The heater components imported by the importers, on the other hand, was an assembly of two copper conductors not individually insulated. The two conductors in this case interact with each other and thus are not a cable. Finally an electrical cable only transmits electrical energy from point to point, whereas heat tracer was not a carrier of electrical energy. It is a self-consumer of electrical energy and simultaneously dissipates it later. The individual conductors of a cable are fully insulated to avoid any contact between the two conductors otherwise, a short circuit blow out may result. The heat tracer on the other hand has current flowing between the two conductors through the semi-conductive core at each point along the heater length. Tracer resistance in this case varies as a function of its temperature. The cables on the other hand are specially manufactured to have low resistance and heat tracers are designed in a manner so that its resistance is high so as to generate heat.
By characteristic, a cable has a rated voltage or KV rating with which the cable is designed to operate. The heat tracer on the other hand has no KV rating and it has only a temperature rating. It is also flat flexible in nature, therefore, would not get covered under S. No. 462 of Appendix 3A.
The importers also stated that the goods”, namely, heat tracing cables were all along being cleared under OGL Appendix 6 and this was the established practice in other Custom Houses, as well as at Delhi. They made a reference to the order passed by the Collector of Customs, Air Cargo Complex, Bombay vide order No. S/10/986/87-ACU, dated 7-9-1987, where the same was allowed under OGL.
In the matter of valuation and under-invoicing, the importers stated the following :-
The burden of providing charge of under-valuation squarely lay on the department and the CEGAT has held this in its various orders. The reference was made to the orders in the case of Orient Enterprises v. Collector of Customs, Cochin -1986 (23) ELT 507, BV Hatcheries Pvt. Ltd. v. Collector of Customs, Bombay -1985 (20) ELT 335 and Walia Enterprises, Amritsar v. CCE, Chandigarh – 1987 (32) ELT 774 (Tri.). The department did not disclose any other manner except the manufacturers’ trade price list attached with the show cause notice or a special relationship existing between the suppliers and the importers or that the valuation as reflected in the invoices was in any manner different than the price at which such or like goods are ordinarily sold at the time and place of importation. They added that the department relied upon the price list, dated July 1, 1986 but failed to make any enquiries whether the price list was at all valid or whether any actual importation had at all taken place in accordance with the price list or whether the said price list was for an end-use customer or stockist. The importers stated that the said price list was superseded by current price list No. PS-726 and 729, dated October 1,1987. The xerox copy of the price list was submitted. This price list itself disclosed different prices for trade and for stockists and the price for annual forecast purchase of over US $ 30,000.00. The importers claimed that they were falling under the last category. Based upon the new price list, the price of the goods, namely, 20 XTV 2C and 15 QTV 2C was US $ 14.56/MT and US $ 10.72/MT against the invoice price of 14.06/MT and 8.76/MT, respectively. They also stated that according to the suppliers, the product KTV was absolute and since replaced by XTV and the prices for KTV are derived from old price list PS 811, extra-polated with the price of XTV with the stockist discount. This clearly indicated that the price lists relied upon by the department were obsolete in operational, replaced and superseded and these did not indicate the prevailing price list at the time of import.
The importers stated that they are international distributors and they are falling in the category of stockists and produced different letters issued by M/s. Radiation Technology, Bombay to various customers confirming that M/s. Lloyd Insulation, Delhi, were international distributors of Raychem Auto Tracers.
In view of the above, the importers stated that the value declared by them was quite acceptable under Section 14(1)(a) of the Customs Act, 1962.
The importers also relied upon a xerox copy of the letter, dated 4-4-1988 from M/s. Raychem Cyprus explaining sale pattern of M/s. Raychem Corporation. As a matter of trade policy, the price charged from the stockists and distributors etc. were different from those meant for end-users. For bulk order forecast purchase further discounts are offered.
The importers also stated that department did not try to make enquiries about contemporary imports of identical goods from Bombay etc. They stated that the price at which such goods are being released at Bombay are lower than the value declared by them. The department, therefore, has not been able to establish any case of under-invoicing of the goods.
In view of the above submissions, the importers prayed that the goods were not liable to any action under Section 111(d) and (m) of the Customs Act or any penal action under Section 112 of the Customs Act, 1962. They also requested for a personal hearing and a detention certificate for the period of detention.
In the xerox copy of the letter from M/s. Raychem Cyprus addressed to M/s. Econtherm Systems Pvt. Ltd., dated 4-4-1984 (a copy of which was submitted to the department), it was stated that the price of auto tracer sold to Econtherm was based on the price list, dated October 1, 1987 and the price charged was for an annual forecast sale of over US $ 30,000.00 KTV stockists were obsolete and replaced by XTV and, therefore, no price list for the same was available and it was based upon the previous price list with an appropriate discount. Regarding the reference on the price list as meant for “US distribution only”, it was stated that price lists were distributed only in USA and did not apply only to US distributors as contended by the department. It was also stated that it was only in USA and in India where Raychem had stocking representatives whose annual forecast were large enough to justify pricing as per column to the right in the price list for QTV and XTV. It was also stated that the same fact could be corroborated by actual invoices issued to US stocking representatives and to international distributors in Korea etc. It was also stated in the aforesaid letter that the products 15 QTV 2C, 20 XTV 2C and 20 KTV 2C were sold only in India and nowhere else in the world.
2. The appellants’ authorised representative at the time of arguments before the adjudicating authority also pleaded that there were two consignments and two show cause notices, one had already been cleared, and the other relating to the consignment detained one. The appellants had also contended that two invoices raised by M/s. Raychem Corporation in USA and one relating to China were also submitted. The invoices issued to China clearly showed that the price quoted was 10% lower than indicated in the price list effective from 1st October, 1987. On ITC classification it was stated that the clarification obtained from DGTD was duly shown to the appellants company’s Director. The opinion given by the DGTD was an expert opinion or a written clarification. The appellants contended that DGTD opinion did not have any validity. The appellants also requested for cross-examination of Lakshman Misra and Prabhat Kumar. Importers also submitted an expert opinion from the Centre for Energy Studies, IIT Delhi. On valuation and declaration, the appellants stated that the revenue relied on a fresh price list obtained from South Korea of extremely doubtful authenticity. The Korean price list was not issued by the manufacturer, but it was a simple typed list issued to different individual distributors in Korea. Prices were in Korean currency and the price list was effective from 25th October, 1985 and issued on 21st October, 1985 and bearing Korean stamp, dated 19th October, 1985. The appellants further contended that the price list pertains to 1985, whereas the goods were imported in 1988. The Addl. Collector in his order has observed that he is passing the order only in respect of live bill of entry, whereas the other related to the past clearances and the other case will be taken up later after other formalities are completed. The Addl. Collector did not accept the request of the appellants for the cross-examination of Mr. Lakshman Misra and Mr. Prabhat Kumar. As to the opinion of Shri Grover, Prof. of IIT, Delhi, he had observed that it was his personal opinion only. The appellants also did not think of availing of facility provided for seeking clarification from DGTD or CCI & E as laid down under para 23(3) or para 25(1) of Import and Export Policy. The adjudicating authority accepted the opinion of the DGTD and had held them as classifiable under Sl. No. 462(a) of Appendix 3A of the Import and Export Policy, 1985-88 and the same required an import licence for clearance. He had observed that the goods were liable to be confiscated under Section 111(d) of the Customs Act, 1962 and there was also misdeclaration of the value of the goods imported as falling under OGL Appendix 6 on the bill of entry and the goods were liable to confiscation under Section 111(m) of the Customs Act, 1962. For the purposes of valuation, the appellants had relied on the price list issued by M/s. Raychem on 1st October, 1987 in supersession of all previous price lists and had also produced a copy of the letter from M/s. Raychem Cyprus addressed to M/s. Econtherm Systems Pvt. Ltd., New Delhi. In the fax copy it was stated that products 15 QTV 2C, 20 XTV 2C are sold in India and nowhere else in the world, whereas an invoice raised by M/s. Raychem Singapore Pvt. Ltd. to M/s. Delta Trading Co. Ltd., 2079-2081 PETCH-BURI Explanation Road, Bangkok, Thailand (invoice No. 86586 dated 1-10-1987) shows that product No. 15 QTV 2C was sold to the above company in Bangkok. Similarly, 15 QTV 2C has been sold to the above mentioned company against invoice No. 86539 dated 16-6-1987. Thus, the importers’ submission that such goods were sold only in India and nowhere else in the world, is not sustainable. The importers have also stated that it was only in USA and India, volumes were large enough to justify stocking representative price list. The item of auto tracer is quite sophisticated and the other countries of the developed world would require this item on a much bigger scale. Details of volumes of business in India and other countries have been produced. Therefore, prima facie, the above submission does not appear to be correct.
The interpretation that the price list dated 1-10-1987 which was meant for “US distribution only” referred to the fact that the price lists were distributed only in USA (as stated by the importers) is untenable. The importers have stated that price lists were meant for distribution only in USA but for pricing of goods to India and China, invoices in respect of which are available, it appears that no uniform policy is being followed. Price for Chinese sale is lower by 10% than that applicable in the relevant column of the so-called price list dated 1-10-1987. The price for Indian sale is also not conforming to the price given in the relevant column meant for stockists and varies by 10-30% as discussed in the later part of this order.
In fact, comparison of the price list submitted by the importers dated 1-10-1987 with that of the price list effective from 1-7-1986, available with the department would indicate that while the price list dated 1-7-1986 was quite exhaustive and contained 9 pages, the price lists dated 1-10-1987 submitted by the importers were of 1 1/2 page. Full price list has not been submitted at all. The price list dated 1-10-1987 also states that the same is representative price list, whereas the price list dated 1-6-1986 clearly states that it supersedes the price list dated 1-10-1984. From these, it would be clear that price list dated 1-10-1987 is not quite correct and is not meant for international trade. This fact is also reflected in the Korean price list given to the importers. The Korean price list was only to establish that there are different prices for different categories. In the FY 1986 price list, it was clear that there are 4 categories of prices (1) International offer, (2) Price for Raychem USA to local distributor in USA, (3) Raychem Korea to local distributor and (4) local distributors to end-user in Korea.
The price of local distributor to end-user was highest, whereas the price for Raychem USA to local distributor in USA was the lowest and the international offer and the price for Raychem Korea to local distributor were more or less the same with a maximum difference of 10% (approximately). This copy of the price list issued in advance was given to the importers only to substantiate the fact stated above and nothing more, whereas the importers in their reply have digressed from the contentions made by the department. Copy of the two invoices issued in the USA by Raychem Corporation furnished by the importers at the time of personal hearing, only substantiates the departmental contention that the price given in price list dated 1-10-1987 is meant for “US Distribution only”. Regarding price list to the Chinese, it is not known what policy is being followed in respect of the same, since the pricing charged does not fall within any of the categories given in the price list dated 1-10-1987 submitted by the importers. It is to be borne in mind here that it is internationally known that USA is trying to enter the Chinese market which was hitherto closed to all international influencing countries in a big way. It is, therefore, reasonable to presume that the pricing and policy for the Chinese market will not represent true international pricing policy. The learned Addl. Collector observed that no explanation had been offered for the difference in invoice price for stocking representative. This difference was anywhere between 5 to 20% and had observed that the trade price list effective from 1st July, 1987 had not been superseded so far as price list dated 1st October, 1987 was meant only for US Distribution, and did not apply to international trade. He was of the view that invoice price was not acceptable under Section 14(1)(a) of the Customs Act, 1962, as the value was to be determined under Section 14(1)(b) read with Rule 3(B) of the Customs Valuation Rules, 1963. He has further observed that for ITC the goods were classifiable under Sl. No. 462(a) of Appendix 3A of the Import and Export Policy 1985-88 and the importers were liable to personal penalty under Section 112(a) of the Customs Act, 1962. He had enhanced the value of the goods from Rs. 5,15,696.00 to Rs. 10,71,721.70 under Section 14(1)(b) of the Customs Act, 1962 read with Rule 3 of the Customs Valuation Rules, 1963 and had ordered the confiscation of the goods under Section 111(d) and (m) of the Customs Act. However, he had given an option to the importers to redeem the same on a payment of fine of Rs. 10,00,000.00. He had also imposed a penalty of Rs. 1,00,000.00 under Section 112(a) of the Customs Act, 1962.
3. Being aggrieved from the aforesaid order the appellants have come in appeal before the Tribunal.
4. The appellants have also filed a miscellaneous application for the grant of permission for the additional evidences. The appellants as well as the respondents have filed miscellaneous application for admission of additional evidence. The appellants have filed 3 lists for the admission of documents.
LIST NO. 1 (DOCUMENTS/EVIDENCES WHICH HAVE BEEN REFERRED TO IN THE PROCEEDINGS BUT HAVE NOT BEEN ENCLOSED WITH APPEAL PAPER BOOK) S.No. Documents 1. Raychem's Price List issued: 15-8-1984 effective: 1-10-1984 2. DGTD letter No. 1(2)/I&ED/CLA-129/88 dated 12-4-1988. 3. DGTD letter No. PGU/5/(64)/SWG/86 dated 24-6-1986. 4. Order No. S/10-986/87-ACU dated 7-9-1987 by Collector of Customs, Bombay. 5. Order No. S/10-479/87-ACU dated 4-4-1987 by Collector of Customs, Bombay. 6. Bill of Entry No. 219303 dated November 1987 for Econtherm Systems Pvt. Ltd. 7. Bill of Entry dated 19-12-1986 (10-9-1987). 8. Bill of Entry dated 1-10-1986. 9. Bill of Entry dated 13-10-1986 (17-11-1986) 10. Bill of Entry dated 12-10-1986 (6-1-1986). LIST NO. 2 DOCUMENTS WHICH HAVE COME TO KNOWLEDGE OF APPELLANTS AFTER FILING OF APPEAL: 1. Bill of Entry No. 235861 dated 21-5-1988 (11-8-1988) of M/s. Radiation Technologies, Bombay. 2. Bill of Entry No. 80026 dated 26-5-1988 (3-8-1988) of M/s. Radiation Technologies, Bombay. 3. Invoice No. 380044 dated 5-2-1988 of Raychem Middle East International, Cyprus certified by Chamber of Commerce, Cyprus. 4. Invoice No. 380030 dated 13-11-1987 of Raychem Middle East International, Cyprus certified by Chamber of Commerce, Cyprus. LIST NO. 3 (DOCUMENTS NOW CONSIDERED RELEVANT TO THE PROCEEDINGS) 1. M/s. Bharat Heavy Electricals Ltd., Trichy. Purshase Order No. 1477962. 2. M/s. Hindustan Antibiotics Ltd., Pune. Purchase Order No. MAT/70813/114. 3. M/s. Cochin Refineries Ltd., Cochin. Purchase Order No. 9/2-1039-0. Shri A.K. Jain, the learned Advocate who has appeared on behalf of the appellants, has pleaded that in the interest of justice additional evidence may be admitted, otherwise the appellants shall suffer an irreparable loss. In support of his argument, he has referred to the following judgments : 1. 174 ITR 354 - Oswal Spinning and Weaving Mills Ltd. v. Commissioner of Income-tax Power to allow additional plea - Tribunal not justified in rejecting additional plea on ground that it was not raised before AAC - Tribunal bound to give reasons for rejecting application unless failure to raise plea earlier either intentional or wilful. 2. (1982) 133 ITR 231 - Atlas Cycle Industries Ltd. v. Commissioner of Income-tax, Patiala. Appellate Tribunal - Power to allow additional evidence - Tribunal has to allow or disallow additional evidence after applying its judicial mind. 3. (1978) 114 ITR 19 - Hanutram Ramprasad v. Commissioner of Income-tax, Assam
Where the Hon’ble High Court had held that: “At the appellate stage additional evidence may be taken and further enquiry may be made at the discretion of the Appellate Asstt. Commissioner. The Tribunal must while deciding an appeal, consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal.”
4. (1967) 66 ITR 462 (SC) – Udhavdas Kewalram v. Commissioner of Income-tax, Bombay City I
Where the Hon’ble Supreme Court had observed that: “Appellate Tribunal performs a judicial function under the Income-tax Act and it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal consider with due care all the material facts and record its findings on all contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law. The Tribunal is undoubtedly competent to disagree with the view of the Appellate Assistant Commissioner; but in proceeding to do so, it has to act judicially, i.e., to considere all the evidence in favour of and against the assessee.”
Shri Jain has argued that in view of the judgments cited by him, if the additional evidence is not admitted, the appellants shall suffer an irreparable loss.
5. Shri B.K. Gupta, the learned SDR who has appeared on behalf of the respondent, has opposed the admission of additional evidence. He has pleaded that the appellants cannot be permitted to file any additional evidence at this stage. He has cited a Supreme Court judgment in the case of State of U.P. v. Manbodhan Lal Srivastava reported in AIR 1957 S.C. 912 and has laid special emphasis on para No. 3. He has also referred to Order 41 Rule 27 of the Code of Civil Procedure. Shri Gupta has also referred to a judgment of the Privy Council reported in AIR 1931 Privy Council 143 in the case of Parsotim Thakur and Ors. v. Lal Mohar Thakur and Ors. He has also referred to another judgment in the case of Collector of Central Excise, Bombay v. Rohita Pulp & Paper Mills Ltd. reported in 1985 (21) ELT 571. He has pleaded that no additional evidence should be permitted at this stage. He has referred to a judgment of the Delhi High Court in the case of Jain Exports Pvt. Ltd. v. UOI and Ors. reported in 1987 (29) ELT 753. He has laid special emphasis on paras 68 and 69. Shri Gupta further argued that the judgment of the Delhi High Court was upheld by the Supreme Court. In reply Shri Jain has referred to a judgment of the Calcutta High Court reported in 1985 (4) ECC 69 Impex International v. The Collector of Customs, Calcutta and Ors. In particular he has referred to paras 75 and 76 of the said judgment. He has pleaded for the admission of the additional evidence. Shri Jain further stated that he does not press for the 84 price list. Shri Gupta, the learned SDR in support of revenue’s application for additional evidence has referred to the following documents :-
1. Letter F.No. 1(2)/IED/CLA/376 dated 7-10-1988 of T.K. Bhaskara Verma, Development Officer, DGTD addressed to Asstt. Collector, Customs, New Delhi.
2. Proforma invoice of Raychem Cyprus No. 048 dated 19-10-1987 received by Lloyd Insulation on 3-12-1987.
3. Detention notice F.No. S/10-3148/87 dated 24-9-1987 issued by Customs, Air Cargo Complex against M/s. Radiation Technology.
He has pleaded for the admission of the additional evidence. Shri Jain has opposed the admission of the additional evidence and pleaded that these investigations were after the filing of the appeal and the DGTD report should not be admitted. He has objected to the same and pleaded that no reliance should be placed on the same. In support of his argument, he has cited a judgment of the Supreme Court in the case of Mohinder Singh Gill v. Chief Election Commissioner, New Delhi and Ors. reported in AIR 1978 SC 852. He has laid special emphasis on para No. 8. Shri Gupta, the learned SDR in reply has referred to a judgment of the Supreme Court in the case of State of Mysore v. C.V. Ray reported in 1976 AIR S.C. 477 para No. 7, page 479.
6. On merits, Shri A.K. Jain, the learned advocate, has reiterated the facts. He has pleaded that the appellants had imported dialectric heater components for use in electric heat treating system. He has referred to page 54 of the paper book which is a catalogue of the heating element imported by the appellants. It is described in the catalogue “The heating element, a specially blended combination of polymer and conductive carbon, creates electrical paths between the parallel bus wires at every point along the circuit. As it warms, the core expands microscopically, increasing resistance to electrical flow and causing the heater to reduce its power output. As surrounding temperature cools the core, it contracts microscopically, decreasing resistance and increasing the heater output. And by means of this unique Raychem technology, the heater continues this response to temperature throughout the life of the product.” Shri Jain has argued that the revenue claims that it is a cable. He has referred to Indian Electricity ISI Standard 1855 part XXXII 1971. Shri Jain has argued that the appellant’s claim is that the goods imported fall under OGL appendix 6, list 8, part I, Item No. 476 of Import and Export Policy of 1985-88, whereas the department had taken the view that the goods imported were heat tracing cable covered under serial No. 462 (a) of appendix 3A of A.M. Import Policy 1985-88 and as such required an import licence for the clearance of the goods. He has pleaded that the DGTD’s view was not correct and has relied on technical opinion from the IIT Delhi. Shri Jain has again referred to ISI specifications which appears on page 60 of the paper book where the definition of ‘cable’ has been given vide para 2.3 where cable has been defined as “an assembly of one or more conductors, either solid or stranded, each covered with a layer of insulating material throughout its length, the whole being provided with a common protective covering.” He has also referred to McGraw Hill Dictionary of Electrical and Electronic Engineering. He has pleaded that it is not a cable. Even if it is presumed that it is a cable, it is a flat cable. He has pleaded that in the past clearances were permitted. He has pleaded that past practice has to be followed. In support of his argument he has referred to the judgment of the Calcutta High Court in the case of Impex International v. Collector of Customs, Calcutta reported in 1985 (4) ECC 60. He has pleaded that the DGTD opinion cannot be accepted. Opinion of Professor Grover of IIT, Delhi at pages 62 to 66 is correct. On valuation aspect Shri Jain has argued that invoice price has to be accepted in terms of provisions of Section 14(1)(a) of the Customs Act, 1962. In the present matter, Section 14(1)(b) is not applicable. He has referred to page 25 of the paper book where the telex recovered on search has been discussed in the order and pleaded that the appellants were not confronted with the telex. The telex comes in the order for the first time. He has referred to the price lists No. 810 and 81.1 which appear on pages 31 and 32 of the paper book. Shri Jain stated that the price list is effective from 1st July, 1986, whereas the importation was made in 1988. He has referred to page 23 of the paper book bottom para which is the order-in-original. He has referred to page 10 of the paper book and has also referred to page 45 which is the Korean price list and has referred to the last Item 20 KTV2-CT. Shri Jain has argued that the department’s reliance is on price list No. 810 and 811 and has also referred to Korean price list. He has referred to telex dated 27th October, 1987 and this telex was incorporated in the order for the first time and there is no mention in the show cause notice. The appellants denied this telex. Shri Jain has argued that earlier the goods were imported at the rate of US $ 8.76. He has also referred to US invoice which appears on page 72 of the paper book. The declared value of 28 KTV-2 CT is US $ 19.40. He has referred to page 17 of the additional evidence which is the copy of the operative order passed by the Collector of Customs in the case of Raychem Engineering Pvt. Ltd. Bombay. He has pleaded that there is downward trend of prices and has referred to page 9 of the appeal paper book. For 15 QTV 2-C, the quantity was 500 metres. The declared value was US $ 8.76 whereas assessed value was US $ 23.29. The price adopted by the revenue was not based on any basis. There is no evidence of any extra foreign exchange remittances. There is also no evidence of extra commercial consideration. No penalty is leviable. He has argued that the evidence which has been relied upon by the department the appellants were not confronted with the same and in spite of the requests of the appellants no cross-examination of Prabhat Kumar and allowed. Shri Jain has referred to the ITC policy and pleaded that the goods fall under appendix 6, list 8, part I, serial No. 476 and the revenue’s classification for ITC is not correct in law. He has referred to page 22 of the paper book which is the order-in-original and has referred to last para of the order. He has pleaded that there is reference of DGTD. He has argued that DGTD opinion is just advisory. He has referred to the judgment of the Tribunal in the case of Shri Ramdas Motor Transport Ltd. v. Collector of Central Excise, Guntur reported in 1984 (3) ETR 290. He has argued that in the past clearances had been allowed. He has again referred to the judgment in the case of Impex International v. The Collector of Customs and Ors. reported in 1985 (4) ECC at pages 75 and 76. He has pleaded that the assessment has been done under Heading 8516.10.
7. Shri S. Krishnamurthy, the learned SDR who has appeared on behalf of the respondent, relies on the order-in-original. He has argued that the valuation adopted by the revenue authorities is correct. He has referred to page 29 of the paper book which is the show casue notice and in the show cause notice there is clear mention of the undervaluation and there is substantial difference in prices. The invoice price is too low and the adjudicating authority has correctly followed the trade price list. He has pleaded for the dismissal of the appeal.
8. Shri A.K. Jain, the learned, advocate has referred to the letter from the foreign supplier. He has pleaded for the acceptance of the appeal.
9. We have heard both the sides and have gone through the facts and circumstances of the case. Both the sides have filed additional evidence. We have perused the additional evidence application. The appellants have filed three lists with the application for additional evidence. List 1 pertains to documents/evidence which have been referred to in the proceedings but have not been enclosed with the appeal paper book. We have perused the list No. 1 where there are 10 documents. Document at serial No. 10 is the Raychem price list dated 15th August, 1984. It is a fresh document which was not filed before the lower authorities. Document No. 2 is the DGTD letter No. 1(2)/I&ED/CLA-129/88 dated 12th April, 1988 and document No. 3 is DGTD letter dated 24th June, 1986. Documents No. 4 and 5 are copies of the previous orders passed by the Collector of Customs, Bombay. Document No. 6 is the bill of entry No. 219303 dated November 1987 for Econtherm Systems Pvt. Ltd. SDR says that an appeal has been filed against this. Documents No. 7 to 10 are bills of entry and are in the nature of fresh evidence. Now coming to list No. 2 which are documents which came to the knowledge of the appellants after the adjudication and are bills of entry and invoices No. 1 to 4. Now coming to list No. 3, it contains 3 documents which are of BHEL, Hindustan Antibiotics Ltd. and M/s. Cochin Refineries Ltd. We do not find any justification in the admission of documents at serial Nos. 1, 4, 5, 6, 7, 8 and 10 in list No. 1. We do not find any justification in the admission of any document in list Nos. 2 and 3 attached with the application for additional evidence. Accordingly, in the interest of justice, we order the admission of two documents at serials Nos. 2 and 3 in list No. 1 i.e. letter No. 1(2)/I&ED/CLA-129/88 dated 12-4-1988 from the DGTD and DGTD letter No. PGU/5/(64)/SWG/86 dated 24-6-1986.
10. Now coming to the revenue’s application for admission of additional evidence, the revenue has made a prayer for the admission of the following documents :-
(1) Letter F.No. 1(2)/IED/CLA/376 dated 7-10-1988 of T.K. Bhaskara Verma, Development Officer, DGTD addressed to Asstt. Collector, Customs, New Delhi.
(2) Proforma invoice of Raychem Cyprus No. 048 dated 19-10-1987 received by Lloyd Insulation on 3-12-1987. (3) Detention notice F.No. S/10-3148/87 dated 24-9-1987 issued by Customs, Air Cargo Complex against M/s. Radiation Technology.
There is another application for additional evidence dated 30th January, 1989. The revenue has also pleaded for the admission of a letter of Mr. Kathy Klin dated 12th January, 1989. We do not find any justification in the admission of this additional evidence. We have considered the judgments cited by both the sides. It is a settled law that parties to an appeal cannot be permitted to make out a fresh case and fill in the gaps and lacunae. The Hon’ble Supreme Court in the case of State of U.P. v. Manbodhan Lal Srivastava reported in AIR 1957 SC 912. Relevant extract from para No. 3 at page 915 from the said judgment is reproduced below :-
“It is well settled that additional evidence should not be permitted at the appellate stage in order to enable one of the parties to remove certain lacunae in presenting its case at the proper stage and to fill in gaps. Of course, the position is different where appellate court itself requires certain evidence to be adduced in order to enable it to do justice between the parties.”
11. Now coming to the merits of the case, the department had relied on a telex dated 27th October, 1987 and the appellants had asked for the cross-examination of Prabhat Kumar which was not granted to the appellants and which has not been referred to in the show cause notice. The adjudicating authority has not mentioned the same. The appellants had pleaded for the cross-examination of Shri Prabhat Kumar which was not granted. We are of the view that there was denial of principles of natural justice. The issues to be decided in this appeal are :
Whether the goods imported are dialectric components for heat tracing system falling under OGL, appendix 6, list 8 Part I, item 476 of the Import and Export Policy 1985-88 or cables?
The revenue’s main reliance is on the DGTD opinion. Shri Laxman Misra of DGTD, Industrial Adviser, had issued the official classification in this connection, as desired. The appellants had asked for the cross-examination of Shri Laxman Misra as well as Shri Prabhat Kumar. The appellants’ advocate Shri A.K. Jain in para A(vi) of the written submissions has again mentioned that cross-examination of these persons was denied. The Additional Collector in his order has mentioned on internal page 9 of the impugned order telex dated 27-10-1987 which relates to valuation. Shri A.K. Jain, Advocate had argued that this telex finds reference only in the order-in-original and no reference was made earlier. We are of the view that telex is very relevant for valuation, and the appellant should have been be confronted with the same, and an opportunity should also be given for rebuttal. In view of these observations, we are of the view that finding on valuation at this stage will be improper. Hon’ble Supreme Court in the case of Kalra Glue Factory v. Sales Tax Tribunal and Ors. reported in 167 ITR 498 had held that: “In arriving at the conclusion that the transaction entered into by the appellant firm was in the course of inter-State trade, the Sales Tax Tribunal relied, inter alia, on the statement of a partner of another firm which had not been tested by cross-examination.” The Supreme Court set aside the order of the Tribunal as well as the order in revision of the High Court therefrom and remitted the matter to the Tribunal giving directions regarding the documents offered by the appellant before the Supreme Court to be produced as well as the documents which the Tribunal had called for and had not been produced. Accordingly, we are of the view that the matter should be remanded. Since cross-examination was also denied, we are of the view that there was denial of principles of natural justice. In view of the above discussion and the judgment of the Supreme Court in the case of Kalra Glue
Factory v. Sales Tax Tribunal and Ors. reported in 167 ITR 498, we remand the matter to the adjudicating authority having jurisdiction and give an opportunity to the appellants to cross-examine them. Both the sides are at liberty to file any fresh evidence to substantiate their case in accordance with law. We further order that readjudication will be done within three months from the receipt of this order.
12. Since the whole matter rests on the classification for ITC purpose and valuation, and as such we would not like to express our views on merits. For statistical purposes, the appeal is allowed by way of remand.
V.P. Gulati, Member (T)
13. I agree with learned Brother Shri Harish Chander that the appeal has to be remanded for the reason recorded by him. However, I would like to observe that learned Brother while he has disallowed the admission of additional evidence as mentioned in List 1, List 2 and List 3 in para 4 of the order except for documents at Sl. No. 2 and 3 of List 1, he has observed in the operative portion of the order that both the sides are at liberty to file any fresh evidence to substantiate their case in accordance with law. By way of clarification I would like to add that while we have disallowed the admission of the documents as above for the purpose of the appellate proceedings before us, the lower authority is free to decide the request of the appellants for admission of any additional evidence, as held by learned Brother, on merits as per law for the purpose of de novo adjudication proceedings before him.