ORDER
K.S. Venkataramani, Member (T)
1. This appeal is against the order dated 28-8-1987 passed by the Collector of Customs (Appeals) Calcutta by which he had upheld the order dated 7-10-1986 passed by the Deputy Collector of Customs, Special Investigation Branch of the Calcutta Customs House ordering absolute confiscation of the consignment of Nutmeg Oil under Section 111(d) and 111(m) of the Customs Act, 1962 for unauthorised import and for under-valuation of the goods. The appellant is stated to be a proprietory firm whose proprietor has since expired and this appeal is being pursued by his wife. The appellants imported a consignment for which a Bill of Entry was filed on 24-4-1985 declaring the CIF value of Rs. 26,066/-. The Customs House found that the declared value of £ 1.75 per kg. in the packing of 25 kg. was not the correct value because on enquiry with the local agent of the supplier from U.K., M/s. H.E. Daniel Limited, it was found that the value of the goods is actually £ 2.95 per kg. This, the Customs House found would have resulted in a loss of revenue to the extent of Rs. 34,198.46. Initially, a Show Cause Notice was issued to the appellants charging them with under-valuation which was dated 27-1-1986. Subsequently, the Customs House received a circular of the Joint Chief Controller of Imports and Exports, Calcutta debarring the appellants from receiving import licence because the licensing authority had found that the factory owned by the appellants was not even set-up at the address given. A second Show Cause Notice was, therefore, issued asking them to show cause why the goods should not be confiscated under Section 111(d) as the import was unauthorised. This was because the appellants’ claim for clearance of the goods as actual importer under OGL, Appendix 6 to the I.T.C. Policy – April-March 1984-85 was found to be untenable. The Deputy Collector considered the reply to the first Show Cause Notice issued and adjudicated the case on that basis as the appellants did not respond at all to the second Show Cause Notice. He held that the higher value was applicable to the consignment and also held that the import was unauthorised and confiscated the goods absolutely. The Deputy Collector’s order was upheld in appeal.
2. The learned consultant, Shri N.C. Sogani, appearing for the appellants contended that Nutmeg Oil imported was a perfumery compound and the appellants were entitled to its import because they held a Small Scale Industries Registration Certificate issued by the Government of West Bengal, Directorate of Industries. Being the actual user (industrial), the appellants had validly effected the import. Shri Sogani urged that the appellants herein had fulfilled the condition under Para 21(a) regarding the conditions governed with the import under OGL. He further pointed out that it was not as if in the Policy that the goods can be imported only by actual users because in the List 8 of the Appendix, Nutmeg Oil is not one of the items restricted for import only by actual users. According to the learned consultant, the item would be covered by Part-III of the list which allows imports by actual users and others for stock and sale. As regards the order of the Joint Chief Controller of Imports & Exports debarring the appellants from obtaining import licence, this order was issued in 1986, subsequent to the present import for which the contract, letter of credit and the date of arrival of the goods and filing of the Bill of Entry was all done before the date of issue of the debarring order by the licensing authority. Therefore, the confiscation of the goods is illegal, according to the appellants. On valuation, Shri Sogani submitted that the letter dated 1-4-1985 of M/s. Daniel Ltd. of U.K. to the Calcutta firm of M/s. United Trades Agency (Calcutta) would clearly show that M/s. United Trades Agency was not the sole indent agents of M/s. Daniel Limited. This letter would also show that there was no regular price list issued by the supplier because of the fluctuation in the sterling currency. Therefore, the department enhancing the value of the consignment based on the evidence of the United Trades Agency (Calcutta) was illegal. M/s. United Trades Agency was only temporarily functioning as the agency for booking orders. The reliance placed by the department is also on a cable regarding the price which is much subsequent to the import and no import at the price contained in the cable relied upon by the department has been effected. The personal penalty on the appellant firm, whose sole proprietor has since passed away, is in any case harsh. The learned consultant also submitted that in case the absolute confiscation is upheld, the appellants should be refunded the amount of duty of Rs. 46,919.12 already paid by them on the consignment.
3. Shri G.V.Naik, the learned Jt. C.D.R. appearing for the department contended that the actual user condition is essential for purposes of eligibility for import under OGL. The order of the Joint Chief Controller of Imports & Exports clearly brought out the factual position that the appellants did not at all set up a factory at the address given and could not have used the material at all, and there was evidence of misuse of the imported material. The department had every right to rely upon this evidence to hold the import as unauthorised. The learned Jt. C.D.R. pointed out that by local enquiries with the Calcutta agents of the supplier, it has been established that there has been under-valuation which is further proved by the cable from the supplier obtained by the Customs House.
4. Two issues involved in this appeal are, firstly, whether the nutmeg oil imported has been undervalued or not, and secondly, whether there has been violation of condition for import under Open General Licence. In regard to the question of valuation on a consideration of the submissions made in this behalf, we are unable to accept the plea that M/s. United Trades Agency, Calcutta is not really the sole indenting agent for which reliance has been placed in the letter dated 1-4-1985 from U.K. supplier M/s. Daniel to M/s. United Trades Agency. But a perusal of that letter shows however, that the suppliers had asked them to book orders pending an agreement on normal agency commission. It was in this capacity that M/s. United Trades Agency had furnished the information regarding the price of nutmeg oil to the Custom House and hence reliance placed thereon by the Customs House is well founded, for, it is not material that it should be obtained only from a sole indenting agent. The appellants also failed to establish this aspect by examining G. Choudhury of M/s. United Trades Agency who had also furnished price list of other foreign suppliers whom also they represented, namely Charabot & CIE, M/s. Lautier, USA giving the present agent of the latter supplier also. Since price list for the product is thus seen available with the other suppliers, the claim made that M/s. Daniel the supplier of present consignment did not have any such price list fails to carry conviction. They themselves say in their letter dated 1-4-1985 to M/s. United Trades Agency (Calcutta) that normally price lists are available and the non-availability was only for the time being. Equally unacceptable is the argument that the price of £ 2.95 per kg. is not that of import at the same time as the present consignment. We find that the Bill of Entry has been filed by the appellants in April, 1985 and hence in the proceedings initiated against the appellants thereafter the price adopted by the Customs House as ascertained from the same supplier is near enough in point of time to be accepted. In the result, it has to be held that the charge of under-valuation has rightly been held to be established.
5. As regards the second question regarding the confiscation of the goods, the department has clearly brought out in the supplementary Show Cause Notice that the import licensing authorities had found on inspection that the appellants had not even set up the factory at the given address, that the appellants had obtained licences by producing false consumption certificate and had misutilised the imported material. It is seen from the record that no reply at all had been given to this supplementary Show Cause Notice by the appellants even on being given sufficient opportunity. The Chief Controller of Imports & Exports finding on evidence can be validly made the basis of adjudication by the Customs authority when deciding a factual issue whether the appellants are actual users or not, more so, when the adjudicating authority has specifically put it to the appellant in the Show Cause Notice and for which as we have seen, no reply was given. The adverse inference drawn is, in the circumstances, well founded and in this context it will be of no avail for the appellants to plead that they have satisfied the actual user condition since they hold SSI certificate or to take an entirely new point in the submissions before us that the item is not for import only by actual users. In the circumstances, the import required a valid licence which the appellants did not possess and accordingly, the order confiscating the goods as an unauthorised import is correct in law and is upheld. As regards personal penalty, since the appellant was a proprietory firm whose proprietor has since expired, we are inclined to hold that the penalty need not be sustained and is, therefore, set aside having regard to the facts and circumstances of the case. It was also submitted before us that in the event of the confiscation being upheld, the duty amount already deposited by the appellants may be refunded which we feel is a reasonable request and the Customs House may take action accordingly. The appeal is disposed of in the above terms.