ORDER
T.K. Jayaraman, Member (T)
1. This is an appeal against the Order-in-Appeal No. 47/2002, dated 25-2-2002 passed by the Commissioner of Customs (Appeals) Cochin.
2. The appellants filed Bills of Entry dated 25-3-99 for clearance of the goods declared as 79 M.T. of MS Scrap. The value declared was US $ 196 per M.T. The goods were assessed provisionally. Further, a detailed examination by Special Investigation Branch officers revealed that the goods imported were not MS Scrap but are mild steel flat bars of various lengths bundled together uniformly. Revenue proceeded against the appellants for misdeclaration of value and description relating to ‘London Metal Exchange’, Bulletin. The Original Authority fixed the value at 230 US $ per M.T. The goods were held liable for confiscation under Section 11(m) of the Customs Act, 1962. A redemption fine of Rs. 10,000/- was imposed. A penalty of Rs. 25,000/- was imposed under Section 112 of the Customs Act. The appellants were not successful in their appeal before the Commissioner (Appeals). The Commissioner (Appeals) upheld the Order-in-Original. Hence the appellants have come before the Tribunal.
3. Shri K. Karunakaran, learned Advocate appeared for the appellants and Shri R.V. Ramakrishnappa, learned JDR appeared for Revenue.
4. The learned Advocate urged that the goods were sold as Scrap only in the exporting country. He said that Revenue has not made a proper case for rejecting the transaction value. The rate of duty of MS Scrap and mild steel flat bars is one and the same. Hence, there was no motive for misdeclaration. He also questioned the adoption of ‘London Metal Exchange’ prices. He relied on the decision of the Apex Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321 (S.C.)] and urged that the adoption of ‘London Metal Exchange’ price without specifying as to why the transaction value cannot be accepted under Valuation Rules 4(2) is not correct.
5. The learned JDR appeared for the Revenue submitted that the goods though declared as Scrap were of uniform lengths bundled together. Hence this is a clear cut case of misdeclaration and the value declared is correct in law considering the fact that the goods are mild steel flat bars and not Scrap as declared. He said that the adjudicating authority rightly invoked the Rule 8 and arrived at the value by relying on ‘London Metal Exchange’ Bulletin. Further he has given a 10% discount from the Customs duty. He requested the Bench to uphold the Order-in-Appeal.
6. We have heard both the sides in the matter. As regards the mis-declaration, in view of the fact that the goods are of uniform lengths bundled together, they cannot be treated as Scrap. Hence the goods are liable for confiscation under Section 111(m) of the Customs Act. But as regards the value, attention is invited to Rule 4 (2) of the Customs Valuation Rules, 1988. The same is reproduced below :-
“4. Transaction value.
(1) XXX XXX XXX (2) The transaction value of imported goods under Sub-rule (1) above shall be accepted : Provided that - (a) the sale is in the ordinary course of trade under fully competitive conditions; (b) the sale does not involve any abnormal discount or reduction from the ordinary competitive price; (c) the sale does not involve special discounts limited to exclusive agents; (d) objective and quantifiable data exist with regard to the adjustments required to be made, under the provisions of Rule 9, to the transaction value; (e) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which- (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do no substantially affect the value of the goods; (f) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (g) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and (h) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of Sub-rule (3) below."
Before rejecting the transaction value, Revenue should indicate under which provisions of Rule 4(2), transaction value cannot be accepted. This is in consonance with ratio of the Apex Court decision in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321 (S.C.)] relied on by the learned Advocate. In the present case, the Revenue has not done that. Hence, there are no grounds to reject the transaction value. In view of this, the declared value shall be accepted. Considering the fact that no motive could be attributed to the misdeclaration on account of the same rate of duty for MS Scraps as well as mild steel flat bars, there is no justification for imposing the fine and penalty. In the facts and circumstances of this case we allow the appeal.
(Pronounced in the Court on 21-2-2005)