ORDER
P.C. Jain, Member (T)
1. Brief facts of the case are as follows :-
1.1 The appellant/importer imported Polyester Filament Yarn semi-dull first quality of 30, 40 and 50 Deniers respectively and sought clearance thereof against Bills of Entry Nos. 3/219, 3/226, 322/53 and 396/504. The importer’s contract registered with the Textile Commissioners in terms of the ITC Order showed a price of $ 3.40 instead of the contract price of $ 3.70 per Kg. in respect of 40 D, $ 3.00 per Kg instead of the contract price of $ 3.30 per Kg in respect of 50 D and $ 3.70 per Kg instead of the contract price of $ 3.90 per Kg. in respect of 30 D. The importer explained the reduction from the earlier contract price on account of quality and introduction discount. Since the explanation was not found sufficient three show cause notices dated 11th August, 1983 were issued alleging under-valuation. In support of the allegation of under-valuation quotations dated 25-7-1983 and 4-7-1983 given by M/s. Damodar & Sons and M/s. J.M. Trading Corporation respectively were relied upon to show that the invoice prices declared by the appellants were lower than the prevailing market price of the same type of goods.
1.2 In reply to the show cause, the appellant herein contended that (1) the show cause notices were premature as the goods were merely warehoused and no bills of entry for home consumption were filed; (2) it was also stated that the invoice prices were negotiated prices and the same were admissible under the Customs Act for the purpose of assessment.
1.3 The adjudicating authority did not accept the aforesaid contention on the basis of evidence available with the department and on the legal construction of Section 17(1) and (2) read with Section 46 of the Customs Act as also of Section 18 ibid. Allegation of undervaluation was upheld. However, in the facts and circumstances of the case, the adjudicating authority did not impose any penalty on the appellant since no mala fides were attributed.
2. Elaborating the same submissions as made before the adjudicating authority, the learned advocate Shri P.G. Gokhale for the appellant herein stated that Section 17(1) and (2) are not relevant for the purpose of present controversy. It is Section 15 of the Customs Act which is relevant. It is not denied by the Customs, submits the learned advocate, that the duty is to be paid on the warehoused goods at the time of removing the goods from the warehouse. For the purpose of assessment of duty rate of duty applicable to the goods and valuation of the goods are only the two relevant factors. Since rate might change at the time of removal of the goods from the warehouse it is not necessary to assess the bill of entry for home consumption at all at the time of allowing the goods to enter the warehouse. Seeing in this light, the learned advocate has submitted that the show cause notice was premature and the question of valuation was not to be decided at the time of allowing the entry of the goods in the warehouse. In other words, he submits that there is no necessity to assess the bill of entry for warehousing. It is only a bill of entry for home consumption which is required to be assessed to duty so that the duty assessed can be paid.
2.1 Learned DR opposing the said contention has urged that Section 17(1) and 17(2) clearly spelt out that after entry of the goods Under Section 46 has been made, the goods may be examined and tested by the proper officer and thereafter “the duty, if any, leviable on such goods shall…be assessed.” He submits that Section 46 envisages filing of bill of entry both for home consumption and for warehousing. It follows from this that bill of entry for home consumption will also have to be assessed before allowing the entry of the goods in a warehouse. Section 15 of the Act, submits the learned DR, merely provides for determining the relevant date for determination of rate of duty and Tariff valuation of the goods. He submits that valuation in any case is distinct from Tariff valuation and it is nobody’s case that any tariff value has been prescribed for the goods under consideration by the Central Government. Valuation in any case will be determined Under Section 14 of the Customs Act which stipulates that valuation of the goods has to be at the time and place of importation. In the face of these legal provisions, the learned DR submits, there is no substance in the plea of the learned advocate.
3. We have carefully considered the pleas advanced on both sides on this issue. We are inclined to agree with the reasons advanced by the learned DR to show that the show cause notices were not premature. He has rightly pointed out that bill of entry for home consumption has to be assessed before allowing entry of the goods in a warehouse without payment of duty. Section 46 of the Customs Act directs that an importer of any goods other than the goods intended for transit or transhipment, shall make entry thereof by presenting to the proper officer a bill of entry for home consumption or for warehousing in the prescribed form. Section 17 further makes it mandatory that duty, if any, leviable on the imported goods shall be assessed except as otherwise provided in Section 85 which has no application in the present case. We also notice that warehousing of the goods is covered by Chapter IX of the Customs Act. Section 59 envisages execution of a bond by the importer in a sum equal to twice the amount of the duty assessed on such goods. This provision, clearly indicates that the goods entered in the bill of entry for warehousing have to be assessed before they are warehoused. Section 60 also makes this position clear that when the provisions of Section 59 have been complied with in respect of any goods the proper officer may make an order permitting the deposit of the goods in a warehouse without payment of duty. It is significant to note that deposit of the goods in the warehouse is done without payment of duty and not without assessment of duty. Distinction between assessment and payment or collection of duty is by now very well settled. Assessment is a stage prior to payment or collection. Therefore, in view of this discussion, we do not agree with the appellants on the first issue.
3.1 As regards the second issue regarding the reduction in price, we agree with the findings of the adjudicating authority for reducing the price and the reduction in the instant case could not be treated either as a trade discount or as a quantity discount. The reliance placed by the department on accepting the quotations of the indenter/sole selling agent of the supplier for the purpose of arriving at the finding of undervaluation is correct in law and on fact. The reliance placed by the learned DR on 1990 (48) ELT 421 [Wax & Wax Products] is quite apt. Accordingly, we dismiss the appeal and confirm the impugned order.