ORDER
G.A. Brahma Deva, Member (J)
1. This appeal is preferred against an order-in-original dt. 2-9-1992 passed by the Collector of Customs, New Delhi.
2. The appellants M/s. Usha Amorphous Metals Limited filed a Bill of Entry No. 101148, dt. 21-8-1991 for clearance of the goods declared as Amorphous Boron Silicon deetinal strips. The goods are covered by two invoices issued by M/s. Netglass Allied Signal, U.S.A. In the Bill of Entry, the country of origin is declared as U.S.A. and the country of consignment as U.S.A. In the Bill of Entry, the CIF value of 44,061 US $ and 188.08 Kgs. Amorphous Boron Silicon steel strip has been declared as US $ 41,857.95 and US $ 478.4 respectively. The appellants have claimed clearance of the goods under OGL Appendix 6 list 8 Part I 81 No. 818(ii), which is described as Amorphous Silicon electrical steel sheet/wide Coils/Strips for the manufacture of electrical equipment and components thereof. The appellants are actual user of the imported goods for the manufacture of electrical motors, transformers and switchgear as per DGTD registration certificate. Not being satisfied with the claim of the appellant and declaration of the value of the goods, the show cause notice was issued among other charges proposing to adopt value at the rate of US $ 4,000 per metric ton. After considering the reply to the show cause notice and submissions, the Collector who adjudicated the proceedings confirmed the charges made in the show cause notice as regards valuation and ordered for confiscation of the goods under Section lll(m) of the Customs Act, 1962 permitting redemption on payment of fine of Rs. 3,00,000/- (three lacs). He also imposed a penalty of Rs. 50,000 (fifty thousands) on the appellant.
3. Shri R. Santhanam, learned Advocate appearing for the appellant submitted that there were three charges against the appellant viz. (i) unauthorised imports, (ii) erroneous claim of the benefit of exemption notification and (iii) misdeclaration of value of the goods. On being satisfied two charges were dropped but the Collector confirmed the charge of misdeclaration enhancing the value based upon the assumed figures. Hence, only point to be considered in this appeal is the issue with reference to valuation. He said that at the first instance the show cause notice was issued by the Assistant Collector in the instant case and he was not competent to issue relying upon the decision of the Tribunal in the case of Alcobex Metals (P) Ltd. v. Collector of Central Excise 1992 (58) E.L.T. 108, but said that he is not pressing this issue since the appellants are eager to have decision on merits in view of the fact that the goods are lying with the Customs. Further the show cause notice did not indicate the basis for enhancement and no such evidence was supplied to the party. Since there was a delay in adjudication proceedings on being the matter was taken up with the Member of Board of Central Excise & Customs, subsequent to that, addendum to show cause notice was issued indicating basis wherein M/s. Usha Rectifier imported the goods as per Bill of Entry No. 005461 dt. 5-12-1987 declared US $ 4 per Kg. He said that the goods imported by M/s. Usha Rectifier in 1987 that too only 1 metric ton cannot be compared with that of bulk quantity of more than 21 ton imported by the appellants. Price of the goods prior to 4 years cannot be considered to be contemporaneous evidence since the goods must be compared with that of similar goods imported at the relevant time. He said that transaction was at arm’s length since no extra commercial consideration has been passed and this was neither alleged nor doubted and in the circumstances onus is on the department to prove substantial evidence relating to comparable goods with comparable quantity from same country of origin and at relevant time and place and in support of his contention, he cited a series of cases of different High Courts as well as of the Tribunal including decision of the Calcutta High Court in the case of Sushil Kumar Kayan v. Assistant Collector of Customs -1993 (68) E.L.T. 537. He said that in the corrigendum name of the importer was referred to as NGF without mentioning bill of entry and the relevant invoices but as can be ascertained from NGI7 it was small quantity imported that too in the year 1987 and further imports made by the party referred to in the corrigendum was accepted as declared and even subsequent to the adjudication proceedings also, the similar goods imported by the appellants were accepted at declared price in view of the fact that the appellants have become 100% export oriented unit. Referring to the miscellaneous application (C/Misc/1651/92-A) filed by the applicants, he submitted that the benefit of 100% export oriented and consequent exemption from duty of customs should be given to the appellants since the goods were remaining with the custody of the Customs Authorities and the appellants are willing to undertake and fulfil all the formalities and other requirements relevant for that purpose.
4. Shri B.K. Singh, learned SDR while countering the argument submitted that the appellant’s unit is Joint Venture of M/s. Usha Rectifier and Allied Signal Inc., U.S.A. (supplier) and accordingly they were required to give declaration with reference to previous imports. But in the instant case while filing the declaration pertaining to Bill of Entry dt. 21-8-1991, they have shown the position pertaining to previous imports of identical/similar goods is nil against serial No. 22 which is contrary to the facts. Since there was a mis-declaration of the price and supplier is also interested in the business of the appellant as it is Joint Venture and price is not the normal one since that can be influenced by the supplier and accordingly the Department was justified in discarding invoice value. Since there has been no import of the goods and in the absence of contemporary imports invoice of three years can be reasonably relied upon as it was the best piece of evidence which was available. He said that the evidence adduced by the party i.e. offer from M/s. Crompton Greaves Ltd. for disposal 675 Kgs of amorphous metals cannot be relied upon because of the fact that no importation has taken place during the period of three years as it was admitted by the party and further quality of the goods was also not mentioned in that offer. He said that when there are good and sufficient reasons price prevalent during the immediate past year can be taken as basis in determining the assessable value, and since the description of the goods in the invoice relied upon by the department being same as the description in invoice of the importer, invoice relied upon by the Department can be treated as contemporary imports in spite of sufficient gap between two imports relying upon decision of the Tribunal in the case of Aarkeyess Imports Corporation v. Collector of Customs -1988 (37) E.L.T. 118 and in the case of Nilinite Corporation v. Collector of Customs -1993 (64) E.L.T. 207. He said that subsequent imports cannot be taken as basis since they were not adjudicated in view of the fact that the appellants have become 100% export oriented undertaking and same benefit cannot be extended to the goods in question since the appellants have assumed status of 100% export oriented undertaking subsequent to the adjudication proceedings.
5. In reply Shri Santhanarri, learned Advocate submitted that there was no allegation of the joint venture in the show cause notice and since the value was not determined based on the charge of mutuality of interest, the Departmental Representative cannot make out new case at this stage and the authority cannot go beyond the show cause notice. There was no misdeclara-tion of this fact as the position of joint venture was known to the Department since beginning and further joint venture itself will not vitiate proceedings since transaction took place in the normal course of business. He said that the appellants’ unit is separate legal entity which came into existence m October, 1988 and it was not part of M/s. Usha Rectifier in 1987 as it was alleged and the appellants could not have shown the previous imports of M/s. Usha Rectifier which was altogether different concern.
6. On a careful consideration of the arguments advanced on both sides with reference to the facts of this case, we find that there is lot of force in the arguments advanced by the appellants-Counsel. The appellants were not required to give declaration of previous imports made by M/s. Usha Rectifier since the appellants’ Company was neither in existence nor it can be considered to be part of the Usha Rectifier. Hence it cannot be considered as misdeclaration as it was rightly argued by the appellants-Counsel. Under Section 14 of the Customs Act, 1962, the value for the purpose of assessment of duty would be the deemed value as provided under that Section. Accordingly for comparison of the value, the goods should be the same in respect of physical characteristic, quality, reputation, country of origin and timing of imports. In the instant case, the Collector has compared the price of the goods against the goods imported by other importer in 1987 that too against small quantity. The material evidence that he has gathered may be sufficient for suspecting value shown in the invoice. Even an inference can be drawn but that itself is not sufficient to hold for misdeclaration or undervaluation in the absence of corroboratory or contemporary evidence. It is well settled that the burden lies squarely on the Department in discharging charge of undervaluation. Undervaluation must be proved by corroboratory evidence. There is nothing on record to show that dealings between importer and the supplier are not at arm’s length or that the price charged by the supplier is not fully commercial one. Assessed value cannot be determined on the basis of mere assumption and presumptions. Suspicion however, grave will not substitute for positive proof. We are not convinced with the arguments advanced by the Departmental Representative that invoice prior to three years should be taken as basis in determining the value as there was no import during three years. In the absence of any other consideration and corroborative evidence import made by others that too of small quantity cannot be considered as contemporary evidence in determining the assessable value. In the facts and circumstances of this case, we do not find any justification to reject the invoice value. In the view we have taken, we set aside the impugned order and the appeal is allowed with consequential relief.