ORDER
R.K. Abichandani, J. (President)
1. These two appeals raise a common question and have been argued together.
2. In Appeal No. C/608/01, the appellant has challenged the order dated 27.3.2001 passed by the Commissioner of Customs holding that the goods (white poppy seeds), covered by bills of Entry No. 662784 dated 8.12.2000 and 663451 dated 18.12.2000 were liable for confiscation under Section 111 (m) of the Customs Act, 1962 on the ground that the value of consignment was under-declared at US $ 850 MT and that the difference in duty on the refixed value at US $ 1129 CIF PMT which came to Rs. 5,40,623 was payable. A redemption fine of Rs. 5,40,000 was imposed in lieu of confiscation of goods. By the same order, the duty difference in respect of similar goods covered by bills of Entry No. 664212 dated 27.12.2000, 664947 dated 3.1.2001, 665311 dated 8.1.2001 and 665314 dated 8.1.2000 was worked out on the basis of the refixed value at US $ 1129 CIF PMT at Rs. 8,55,156 and the goods were confiscated under Section 111(m) of the said Act. A redemption fine of Rs. 8,55,000 was imposed with regard to the goods covered by these four bills of entry. By the same order, a consolidated personal penalty covering all these bills of entry of Rs. 1,50,000 was imposed on the importer under Section 112(a) of the said Act.
3. In Appeal No. C/609/2001, the appellant has challenged the order of the Commissioner of Customs confiscating the goods (white poppy seeds), under Section 111 (m) of the said Act, which were covered by bills of Entry Nos. 662784 and 662777 both dated 8.12.2000, on the ground that the value of the goods was under-declared at US $ 850 as against refixed value of US $ 1129 CIF PMT. The difference in duty came to Rs. 7,35,482. The Commissioner imposed a redemption fine of Rs. 7,35,000 in lieu of confiscation of goods keeping in view the quantum of the duty sought to be evaded. A personal penalty, covering the two bills of entry, of Rs. 75,000 was imposed on the importer under Section 112(a)of the said Act.
4. The goods in question were white poppy seeds having purity of 99.5%. According to the appellants, the transaction value of these goods was US $ 850 (FOB) under various bills of entry. The goods were imported under contracts entered into on 16.10.2000. According to the appellants, the shipment of the goods took place between October 2000 to March 2001. Show cause notices came to be issued to the appellants on 19.2.2001 alleging that the declared value of US $ 850 PMT (FOB) did not represent the correct transaction value because it was noticed that contemporary imports of white and yellow poppy seeds of Turkish origin were made at US $ 1050(FOB) and US $ 880 (FOB), respectively. These imports were made by M/s. Saccha Soudha Pedhi of Pune. Taking into account the actual freight and insurance, the CIF value was worked out at US $ 1129 per MT. In the show cause notice, reference was made to the Spices Market Weekly published by the Spices Board of India which indicated that the spot FOB price of Turkish poppy seeds was US $ 0.56 per pound which worked out to U.S. $ 1234 PMT.
5. The appellants contested the show cause notices by filing a detailed reply Contending that theirs was bulk purchase of poppy seeds through M/s. International Trading Company that supplied 95% of the imports made by India and further that the transaction value of the goods imported by M/s. Saccha Soudha Pedhi at US $ 1050 PMT (FOB) was not comparable in view of the difference in quality, time of import and small quantity of 51 MTs. imported by the said importer. The appellant furnished further reply producing documents before the Commissioner on 9.3.2001 for showing the genuineness of their transactions and pointing out that similar import of large quantity of poppy seeds of purity of 99.5% was made by importer from Chennai and the goods were to be supplied by the same supplier M/s. International Trading Company under contract dated 4.10.2000, at the same price of US $ 850 PMT FOB. A copy of the contract was also Annexed as Exhibit-D alongwith the said additional reply. It was also emphasized that there was bound to be a difference in the price of white poppy seeds having 99.9% purity imported by Saccha at US $ 1050 PMT FOB and the goods having purity of 99.5% which were imported by the appellants as per aforesaid bills of entry. The appellant also referred to a contract dated 21.10.2000 under which Saccha Soudha Pedhi had also imported white poppy seeds of 99.5% purity, at US $ 945 PMT FOB.
6. The learned Commissioner, in the context of the decision of the Supreme Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, wherein it was held that “transaction value” under Rule 4(1) of the Customs Valuation Rules was required to be accepted unless it was covered by any exceptions under Rule 4(2), held that in the light of the fact that Rule 10(A) of the Valuation Rules came into force from 19.2.1998, the ratio of the decision in Eicher Tractors Ltd. was not applicable to the present case. It was held that parameters regarding acceptance of transaction value and the basis for rejecting it with reference to the exceptions under Rule 4(2) appeared to have been considered in Eicher Tractor Ltd. which was decided on 14.11.2000, without considering the provisions of Rule 10(A) of the Valuation Rules. In our opinion, these remarks in the context of Supreme Court decision in Eicher case were totally uncalled for and the distinction tried to be brought out by the learned Commissioner on the ground that the Supreme Court had rendered the decision in Eicher Tractor Ltd. without considering the provisions of Rule 10(A) is totally unwarranted and highly improper. It is clear from para 11 of the decision of the Supreme Court in Eicher (supra), that the Supreme Court, in the context of Section 14(1) and Rule 4, held in clear terms that both these provisions provide that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be value in the absence of any of the special circumstances indicated in Section 14(1) and particularized in Rule 4(2). It is obvious that Rule 10(A) being subordinate legislation cannot override the provisions of Section 14(1) and will be required to be read in the harmony of the Parent Act.
7. The Commissioner while referring to Spices Weekly which listed the price of the goods observed that, in view of Rule 8(2) no value could be based on the values at which the goods were exported to other countries and that he did not propose to enhance the value on the basis of the price mentioned in the Spices Weekly. He further observed that this, however, raised doubt in his mind about the FOB value of the goods in question. It is surprising that while in terms stating that in view of Rule 8(2) of the Valuation Rules, the price as mentioned in the Spices Weekly for export to other countries could not be taken into consideration, why the Commissioner himself should get affected by such information.
8. The Commissioner while considering the question of difference in the purity of the goods dismissed the same by simply observing that a percentage difference in purity of 0.4 in agricultural products was not capable of accounting for price difference of 23.5%. This he has done without examining the price difference between poppy seeds of 99.5% purity and 99.9% purity which was even evident from the imports made by M/s. Saccha Soudha Pedhi that had imported poppy seeds of 99.9% purity at US $ 1050 PMT FOB and poppy seeds of 99.5% purity at US $ 945 PMT FOB. This aspect has been totally over looked by the Commissioner while considering the question of price variation due to the difference in quality of goods.
9. The most significant lacuna in the impugned order is non-consideration of the contentions raised in the reply submitted by the appellant in March 2001 particularly as regards the contract dated 4.10.2000 at Exhibit-6 annexed to further reply as referred to in para 1(v) thereof. The said contract was with the same International Trading Company and seems to have been executed on 4.10.2000. The buyers M/s. Esjaypee Impex Private Limited of Chennai entered into this sales contract for the purchase of a quantity of 850 MTs. of white poppy seeds of 99.5% purity for the price at US. $ 850 FOB with the condition of “prompt shipment” to Chennai. This was a transaction which was very near to the sales contract entered into by the appellant on 16.2.2000. The impugned order does not give any reason as to why the said transaction was discarded, especially when it was specifically stated by the learned Counsel before the Commissioner that “M/s. Esjaypee Impex Private Limited … have also cleared the goods at U.S. $ 850 FOB”. It appears to us that the learned Commissioner has adopted a lopesided approach by simply relying upon the import made by M/s. Saccha Soudha Pedhi of white poppy seeds of 99.9% purity without taking into account the other relevant transactions particular the sales contract dated 4.10.2000 entered into by M/s. Esjaypee Impex Private Limited for buying white poppy seeds of 99.5% purity at US $ 850 Per M.T. FOB and the sales contract dated 21.10.2000 entered into by M/s. Saccha Souda Pedhi for buying white poppy seeds of 99.5% purity at US $ 945 FOB. Non-consideration of this important evidence and the material aspect of difference in quality in its right prospective, in our view, has vitiated the impugned decisions, and both the matters require to be remitted to the learned Commissioner for a fresh consideration and decision.
10. The impugned orders are, therefore, set aside in both these appeals and the matters are remanded to the Commissioner for taking fresh decision in accordance with law and in the light of this judgment, expeditiously, preferably within three months from the date of the receipt of this order. Both these appeals are accordingly allowed.