K. Sreedharan, J. (President)
1. The appellants M/s. R.D. Extrusion (P) Ltd. purchased one Water Hydraulic Extrusion Press Plant for price of DM 2,10,000 ex-factory, Sweden. The importer sought clearance of the goods under EPCG Scheme on the basis of licence issued by Director General of Foreign Trade, New Delhi. Customs Authorities doubted the correctness of the value declared by the importer. They caused an investigation to be made to find out the actual value of the machinery. On such investigation they came to the conclusion that the machinery was to be dismantled by the importer and the dismantling costs should be added to the price shown in the invoice and duty levied accordingly. By Order-in-Original No. BKG/CC/ ICD/TKD/7/2000, dated 29.01.2000, the Adjudicating Authority finalised the valuation of the machinery by including dismantling charges of DM 1,40,000. The authority also included differential amount of freight and other expenses stated to have been actually incurred by the importer in making the assessment. Penalty of Rs. 5 lacs was also imposed on the importer under Section 112(V) of the Customs Act, 1962. This order is under challenge.
2. On the ground that the importer did not satisfy the terms of bond executed for Rs. 3.5 lakhs, that amount was also added to the differential duty of Rs. 20,17,473/-.
3. At the time of hearing the appeal, importer who personally argued his case submitted that if actual freight was not included while paying the duty, he is prepared to pay the differential duty found payable by him on actual figures. In this view he did not dispute his liability to pay duty on actual freight incurred. But according to him, the actual expenditure incurred by way of freight will have to be re-computed on the basis of the relevant documents. This submission made by the importer appears to be reasonable. The Adjudicating Authority is directed to re-compute the freight and to assess duty accordingly, with notice to the importer.
4. The main dispute in this appeal relates to the addition of dismantling charges of the machinery to the value shown in the invoice for the purpose of assessment to duty. According to the importer the value paid by him for the machinery was ex-factory and the amount was DM 2,10,000. At the time when the sale of the machinery took place from M/s. Hasemann Maschinen on 09.12.94, the Water Hydraulic Extrusion Press Plant was stuffed in 48 containers. The sale of this machinery by its previous owner M/s. Hasemann Maschinen is evidence by Invoice No. 241/94, dated 09.12.96. On page 10 of the impugned order the Adjudicating Authority referred to the investigation re-port submitted by the officer who investigated the transaction between the importer and their seller namely Hasemann Maschinen. The report of the investigating agency shows that invoice No. 241/94, dated 09.12.94 issued by the supplier is genuine. This conclusion was accepted by the Adjudicating Authority. In other words the Adjudicating Authority proceeded on the basis of the above conclusion reached by the investigating agency that the details mentioned of the invoice in relation to the machinery purchased by the importers were true and genuine. That invoice fixed the price of the machinery at DM 2,10,000. The machinery was sold ex-factory, Sweden. The invoice stated that the machinery was stocked in 48 containers. The numbers of those containers were also mentioned in the invoice. We are at a loss to understand how the machinery which was stuffed into 48 containers could be saddled with dismantling charges for finding out the assessable value.
5. A letter sent by Shri Alex Zoller, dated 01.09.1992 to the importers was relied on by the Adjudicating Authority to load the amount shown in the Invoice. Dismantling charges mentioned in that letter was taken as one relating to the machinery purchased by the importers under Invoice No. 241/94, dated 09.12.94. Machinery mentioned in the letter dated 01.09.1992 was valued at DM 9,98,000 and that price was ex-foundation price. The machinery purchased by the importers under invoice No. 241/94, dated 09.12.1994 was ex-factory Sweden, valued at DM 2,10,000. So adjudicating authority was clearly in error in treating that the dismantling charges mentioned in the said letter as addable to the value shown in the invoice. DM 1,40,000 claimed in the letter dated 01.09.92 as the dismantling charges could be in relation to another machinery which was worth DM 9,98,000. Under no circumstances can that dismantling charge added to the value shown in the invoice which was found by the investigating agency to be genuine. The adjudicating authority was clearly in error in loading price mentioned in the invoice by DM 1,40,000 as dismantling charges for finding the assessable value.
6. In view of what have been stated above we set aside the order of the adjudicating authority wherein the value of the imported machinery was loaded by DM 1,40,000.
7. Adjudicating authority proceeded on the basis that the value of the goods imported exceeded the amount mentioned in the licence. According to the importer this conclusion reached by the authority is also unsustainable because the value of the machinery should have been calculated at the then prevailing exchange rate of one DM is equivalent to 20.32 Indian rupees, as stated in the licence itself. If the value of the machinery was assessed at that exchange rate, it was argued that the value would not have exceeded the amount covered by the licence. We find much force in this argument and we accept the same. The adjudicating authority is directed to re-examine the issue as to whether the goods covered by Invoice No. 241/94 dated 09.01.1994, without addition of the dismantling charges, will exceed the limit covered by the licence.
8. On the facts and circumstances of this case and in view of the findings arrived at by us as stated above, we do not find any justification in imposing a penalty of Rs. 5 lacs under Section 112(v). The said penalty is vacated.
9. In view of the conclusions reached by us as stated above, the order of the adjudicating authority dated 29.01.2000, impugned in this appeal, is set aside. That authority is directed to examination whether actual freight charges were included for the purpose of assessment of duty payable. In case it was not so done, the actual freight incurred must be found out and duty payable should be assessed. Adjudicating authority should also see whether the value of the goods imported exceed the limit fixed in the licence taking note of the exchange rate of 1 DM is equivalent to 20.32 Indian Rupees.
10. On the ground that importer failed to satisfy the terms of the bond, the amount covered by the bond has been adjusted towards differential duty. This part of the order of the adjudicating authority is also set aside.
11. The appeal is disposed of in the manner stated above. The adjudicating authority should pass fresh order in terms of the directions given above, as expeditiously as payable, at any rate within two months of the receipt of a copy of this order. We make it clear that while passing the final order an opportunity of being heard should be accorded to the importer. office is directed to forward a copy of this order to the adjudicating authority forthwith for due compliance with the directions above mentioned.