ORDER
D.C. Mandal, Member (T)
1. Brief facts of the case are that the appellants imported a consignment of goods describing the same as “Methyl Acrylate Polymer Shinkolite P-MDP” and CIF value US $ 20.400.00 in the bill of entry filed for clearance of the goods. The Bill of entry was accompanied by invoice dated 12-6-1985 issued by M/s. Kasai Shoji Co. Ltd., Japan, bill of lading No. 108 1829C, dated 2-6-1985 and certificate of origin No. CTC BO 39941, dated 12-6-1985. The appellants claimed clearance of the goods under OGL Appendix-6 (1) of the Import Policy AM 85-88. No. OGL declaration, SSI Registration etc. were, however, furnished in support thereof. The goods were examined and representative samples were drawn from the consignment and sent to the Deputy Chief Chemist of the Customs House for chemical analysis. As per the test report of the Chemical Laboratory, the imported goods are “Polymethyl Methacrylate” and not “Methyl Acrylate Polymer” as declared by the importers. Representative samples drawn from the consignment were also tested in the Laboratory of M/s. Gujrat State Fertilizer Corporation Ltd., Vadodara and as per test report dated 27-3-1986 received from the above Laboratory the goods were not decomposed but were ‘Virgin”. The premises of the appellants were searched by the Customs Officers and one file containing pages 1-32 was seized. The file contained two sale notes bearing the same number, namely, MP-2-3489-3, but of different dates, namely, 2-3-1985 and 12-4-1985. in the sale note dated 2-3-1985 the goods were described as “Methyl Acrylate Polymer” and in the sale note dated 12-4-1985 the goods were described as “Methyl M Acrylate Polymer Decomposed Material clearance sale Shinkolite P-MDP moulding grade”. In the import documents, namely, invoice, bill of lading and certificate of origin, the sale note number MP-2-3489-3, dated 2-3-1985 and not dated 12-4-1985 was shown. In the letter of credit application the description of the goods was shown as “Methyl Acrylate Polymer”. However, in the letter of credit copy and telex the description of the goods was shown as “Methyl N Acrylate Polymer”. Shri C.R. Shah, Officer, Foreign Exchange Department, Dena Bank, Andheri (West), in his statement given under Section 108 of the Customs Act, 1962, stated that in the letter of credit copy and the telex there was typographical error and the actual word should be “Methyl” and not “Methyln”. The Custom House noticed that in an import of 17 MT of Shinkolite P-MDP (Polymethyl Methacrylate) imported by M/s. Lumax Industries Limited, 63,64 Gokhale Market, Delhi-54, the price of the goods was shown at US $ 1475 PMT whereas the price declared by the appellants in the present importation was US $ 600 PMT. Methyl Acrylate Polymer is classifiable under Customs Tariff Heading No. 39.01/06 read with Customs Notification No. 227/76 and 90/85 and under Item 15A(1) of Central Excise Tariff read with Central Excise Notification No. 71/84 @ 40% + 30% AD + 40% CVD + 5% of CVD. “Polymethyl Methacrylate” is classifiable under Tariff Heading No. 39.01/06 read with Notification No. 36/83 and under Item 15A(1) of the Central Excise Tariff read with Central Excise Notification No. 241/82-C.E. @ 150% + 40% + 15% CVD + 5% of CVD.
2. In the above circumstances, a show cause notice was issued to the appellants alleging mis-declaration of the description and under-valuation of the goods. It was also alleged that this mis-declaration was made by the appellants with a view to evading customs duty to the tune of Rs. 11,23,788.72. The Additional Collector of Customs, Bombay, who adjudicated the case, held that the charges were established and the goods were liable to confiscation under Section 111(m) of the Customs Act, 1962 read with Section 3(2) of the Imports and Export Control Act, 1947. He confiscated the goods under Section 111 (m) of the Customs Act, 1962 with a fine of Rs. 1 lakh in lieu of confiscation. He also imposed a penalty of Rs. 3 lakhs on the appellants under Section 112 of the Customs Act. The Additional Collector further ordered that the value of the goods for assessment should be taken as US $ 1475 PMT, GIF instead of US $ 600 MPT. The said order of the Additional Collector has been challenged by the appellants in the present appeal before us.
3. We have heard Shri B.B. Gujral for the appellants and Shri S. Krishnamurthy for the respondent. Shri Gujral has argued that the goods were examined at the request of the importers. Rate of duty was not filled by them. Chemical test report says that it is Shinkolite P-MDP. Invoice at Annexure ‘B’ to the appeal Memorandum describes it as Methyl Acrylate Polymer Shinkdite P-MDP. The declaration in the bill of entry was made on the basis of this Invoice, Certificate of origin (Annexure ‘C’ to the appeal memorandum) and the bill of lading (Annexure ‘D’ to the appeal memorandum) gave the same description. The shipment period in the sale note dated 2-3-1985 was April/May 1985. The period of shipment had to be extended and another sale note dated 12-4-1985 was made. This sale note is at Exhibit ‘F’ to the appeal memorandum. The goods are described in more details in the sale note dated 12-4-1985. In the sale note dated 12-4-1985 the goods were described as “Methyl N Acrylate Decomposed material clearance sale Shinkolate P-MDP moulding grade”. Personal hearing was held on 23-3-1986 and 24-3-1986, after which an addendum to show cause notice was issued on 7-4-1986. A reply was given to this addendum by the appellants. Regarding valuation, Shri Gujral has argued that the Additional Collector enhanced the value under Section 14(1) (a) and not Section 14(1)(b) on the basis of one single Import of M/s. Lumax Industries Ltd. The Additional Collector has not given any finding that the goods of M/s. Lumax Industries and of the present appellants were comparable. According to Shri Gujral, Import at US $ 1475 PMT could be a case of over-invoicing. There is no evidence of any unauthorised remittance of foreign exchange to the suppliers of the goods. On the basis of one single contemporary Import the Additional Collector could not enhance the value under Section 14(1) (a) of the Customs Act. Value could be enhanced under Section I4(1)(b) read with Rule 3(2) of the Customs Valuation Rides. The appellants themselves were not sure about the qualify of the goods. So, they requested for examination of the goods before assessment although the same were described in the bill of entry on the basis of the invoice description. The sale note dated 12-4-1985 clearly states that the goods were decomposed and that it was a clearance sale. So, the value was slightly on the lower side. Shri Gujral has also argued that the prices of three contemporary Imports were furnished to the Additional Collector, but he has not given any findings why he did not accept the same. The price declared by the appellants is within the same range with other three contemporary imports. The particulars of these three contemporary imports have been furnished by Shri Gujral in the open court at the time of hear- / ing before us on 9-3-1988. These contemporary imports are (i) a consignment of 17 MT by M/s. Naresh Udoyog vide bill of entry dated 1-7-1985 at price of US $ 728 PMT, (ii) a consignment of 51 MT by M/s. Dev Plastics vide bill of entry No. 1739/36, dated 22-7-1985 at price of US $ 710 PMT and (Hi) a consignment of 20 MT by M/s. Varsha Industries vide bill of entry No. 1678/4, dated 9-7-1985 at price of US $ 710 PMT. Shri Gujral has further stated that in the show cause notice confiscation of the goods was proposed to be under Section 111 (d) and 111 (m) of Customs Act, but in the impugned order the Additional Collector has confiscated the goods under Section 111 (m) only. This shows that the Additional Collector was convinced that Section 111 (d) was not contravened. He has argued that penalty of Rs. 3 lakhs was totally disproportionate to the offence, if any at all. According to Shri Gujral, the appellants have not committed any offence under Section 111 (m) of the Customs Act. The burden of proving the charge is on the Department. The said burden has not been discharged. He has also argued that for confiscation and penalty, which are panel provisions, in-controvertible evidence is necessary. There is no such-in-con-trovertible evidence in this case. Shri Gujral has relied on the following decisions in support of his arguments :-
(i) 1985 (21) ELT 140 (Tribunal) – Rakesh Press, New Delhi v. Collector of Customs, Bombay.
(ii) 1985 (20) ELT 358 (Tribunal) – Tara Art Printers, New Delhi v. Collector of Customs, Bombay.
(iii) 1981 Income Tax Reports (Vol. 131) Page597 (S.C.) –K.P. Varghese v. Income Tax Officer, Ernakulam and Anr..
(iv) 1978 ELT 494 (Kerala) – M. Koyakutty, Kayam-Kulam v. Collector of Customs and Central Excise, Cochin.
In conclusion, Shri Gujral has, however, stated that the rate of duty should be at the appropriate rate on the goods as found on test, but there should be no confiscation and penalty.
4. Arguing for the respondent Shri Krishnamurthy has stated that this is a dear case of mis-declaration of description and value. The appellants’ price in US $ 600 PMT whereas for the same goods M/s. Lumax Industries paid the price of US $ 1475 PMT. In none of the import documents submitted by the appellants it Is stated that the goods are decomposed. Therefore, the ground that the goods were decomposed and It was a clearance sale is not valid, and the lower value Is not justified.
5. We have considered the case records and arguments advanced on both sides. The bill of entry, invoice, certificate of origin and bill of lading description of the goods is “Methyl Acrylate Polymer” and not “Polymethyl Methacrylate”. On chemical test, the goods were found to be Polymethyl Methacrylate. The sale note dated 2-3-1985 described the goods as “Methyl Acrylate Polymer”. This sale note dated 2-3-1985 was referred to in the invoice, certificate of origin, bill of lading and the application for opening letter of credit The argument of the appellants that the goods contracted for purchase were actually “Polymethyl Methacrylate” as per the sale note dated 12-4-1985 is not acceptable as the said sale note was not quoted in any of the documents filed before the Customs authorities as well as before the Bank. The invoice is dated 12-6-1985, certificate of origin Is dated 12-6-1985 and the bill of lading is dated 2-6-1985. If the sale note.dated 12-4-1985 was the correct sale note, then all these documents should have referred to that particular sale note and not the sale note dated 2-3-1985. Mis-declaration of the description of the goods is established beyond any doubt.
6. So far as the value is concerned, we find that the charge of under-valuatlon framed by the Department is based on the import price of one consignment imported by M/s. Lumax Industries Ltd. This price was US $ 1475 PMT as against the appellants’ Import price of US $ 600 PMT. The appellants have submitted before us the prices of three consignments imported by other importers which show prices of US $ 728, 710 and 710 PMT respectively and the period of import was July, 1985. The learned advocate has pleaded that the prices of those three consignments and other particulars were furnished to the Additional Collector. He has, however, not given his findings as to why he did not accept the price of those three consignments. It was necessary for the adjudicating authority to give his findings as to why the price of any of the three consignments relied on by the appellants was not acceptable to him and why he took the price of US $ 1478 PMT in preference to any of those three prices. On this ground, the order of the Additional Collector is required to be set aside and the matter remanded to him for de novo examination, since according to the provisions of Section 14(1)(a) of the Customs Act, 1962 the value of the Imported goods chargeable to ad valorem rate of duty shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation in the course of international trade, where the seller and the buyer have no interest In the business of each other and the price Is the sole consideration for the sale or offer for sale and in Section 14(1)(b), It is provided that where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf shall be the deemed value of the goods.
Accordingly, we set aside the Impugned order and remand the case to the Additional Collector of Customs, Bombay for de novo examination of the valuation of the goods in accordance with law, after giving another opportunity of personal hearing to the appellants. The redemption fine and penalty Imposed by the Additional Collector are also set aside subject to our findings in paragraph 7 of this order.
7. As the impugned order is set aside and the matter is remanded for re-examina-tton for the purpose of proper valuation of the goods in accordance with law, the adjudicating authority will be at liberty to re-determine the quantum of redemption fine and penalty having regard to our findings that the description of the goods has been mis-declared and his decision on the point whether there is under-vatuation of the goods, but such redemption fine and penalty should not exceed the find and penalty imposed in the impugned order.
8. As we are remanding the matter for de-novo examination of the valuation of the goods, we do not consider it necessary to discuss about the case laws cited by the learned advocate. We, however, make it dear that the remand is confined to the valuation aspect and the quantum of redemption fine and penalty, and not in respect of mis-declaration of description of the goods. We have held in paragraph 5 of this order that there is mis-declaration of the description of the goods.
9. Duty on the imported goods should be charged at the rate applicable to the goods found on test of the samples by the Customs House Laboratory which has been accepted by the learned advocate during his arguments before us.
10. The appeal is disposed of in the above terms.