P.C. Jain, Member (T)

1. Briefly stated, facts of the cases are as follows:

1.1. First appellant herein, submitted a Bill of Entry on 11.7.1995, in respect of consignment imported on 14.6.1995 at Air Cargo Complex (A.Cg.C), Calcutta. Along with the Bill of Entry, the appellant submitted an invoice dated 12.6.1995 of M/s Mohash Trading Co., Singapore. It declared the goods, quantity and prices as follows:

Description of goods Qty. Unit F.O.B. Value

(in Singapore dollars)



(i) Dot Matrix Printers



(a) Pound Sterling 1170 10 pcs 200

(b) Pound Sterling 1070 10 pcs 180



(ii) 586 Mother Board (Pentium) 52pcs 125

1.2. The appellant submitted requisite license for clearance of Mother Board and claimed clearance of printers under OGL, Matrix printers were declared to be of French origin (Epson brand) while Mother Board of Japanese/Taiwanese origin. Goods were shipped from Singapore.

1.3. On perusal of the import documents of the instant consignment and after consulting experts in the trade and past record of valuation maintained by the Appraiser, value of the goods was enhanced to S $ 262 in respect of Mother (pentium) Board as recorded in file, consent of the appellant Co.s Director Shri Bimal Khemka, second appellant herein, was obtained; orders of the Assistant Commissioner (AC) A.Cg.C under the control of Commissioner of Customs (CC), Calcutta was obtained, and assessment was made accordingly. The appellants agreed to pay duty of Rs. 1,92,422.30 on such enhanced value as against the duty of Rs. 99107.00 payable on the declared value.

1.4. It is alleged by the Revenue that on investigation, it was found that the appellants vide B/E dated 10.5.1995 had cleared another consignment of the following goods:

________________________________________________________________________________

Item/description Qty. Unit FOB value decld. Enhanced

value

(S.$) (S.$)

________________________________________________________________________________

HP Printers C2003A 50 210 306

Epson 1070 Printers 5 180 not enhanced

Epson 1170 Printers 5 200 --do

________________________________________________________________________________

The goods were of Japanese origin. Shipment was from Singapore. Invoice dated 25.4.1995 of M/s Favourmatic Technology (P) Ltd., Singapore.

1.5. It is further alleged that investigation revealed that even the enhanced values in respect of two items of the latter consignment, and of one item in respect of the consignment already cleared were much less than the values assessed at other ports. The consignment imported on 14.6.1995 was therefore detained.

1.6. After issue of show-cause notice by the Commissioner of Customs (Preventive) [C.C. (P)] and on adjudication by him, the following prices have been assessed as fair:

_____________________________________________________

Description Prices adjudicated

_____________________________________________________

Epson Printer Pound Sterling U.S. $ 430 FOB

Q1170

Epson Printer Pound Sterling U.S $ 317 CIF

Q1070

586 mother Board (Pentium) U.S. $ 140

1.7. As regards the consignment already cleared, it was found that the importation made earlier was contemporaneous to the present consignment. Hence the adjudicating officer fixed the same prices, as in para 1.6. above in respect of Epson Printers Pound Sterling Q 1170, Pound Sterling Q 1070. In respect of HP Printers C2003A, he fixed the price at U.S. $ 362.50 C & I. He confiscated the concerned goods of the second consignment and held the concerned goods of the first consignments liable to confiscation but gave an option to the appellant to redeem the goods of the first consignment on payment of fine of Rs. 4,50,000/-. He directed differential duty to be calculated on the basis of prices fixed by him in respect of the concerned goods. He also imposed a penalty of Rs. 5 lakhs on Shri Bimal Khemka and Rs. 1 lakh on the first appellant.

Hence these Appeals before the Tribunal.

2.1. Ld. Consultant, Shri D.K. Saha has in the first instance raised questions of lack of jurisdiction or exercise of excess jurisdiction by the adjudicating officer, CC(P). He has pointed out that the goods were received in the A.Cg.C., which is specifically under the jurisdiction of C.C., Calcutta. There was an initial doubt about the declared value of the imported goods. The Appraiser gave an estimate of the correct value of the imported goods on consultation of his past record as also on consultation with experts in the Trade, as indicated from the notings in the relevant file and obtained the orders of the ACC concerned for enhancement of value of two of the items out of three items imported, after the appellants had waived the show-cause and oral hearing and consented to enhancement of value. In these circumstances, the ld. consultant submits an adjudication on valuation of the goods by a competent officer has already taken place and there cannot be a second adjudication on the self-same issue between the same parties in respect of the same consignment. It is immaterial whether the goods have been released or not by the Customs authorities. It will be an adjudication twice over on the same cause of action. This order could be revised in accordance with the procedure under Section 129D and not dtherwise, on an order passed by the C.C., Calcutta and not by C.C.(P) and on filing an application before C.C. (Appeals). This argument, he submits, is equally valid for the earlier consignment already cleared on adjudication of valuation of goods by the concerned A.C.C. He relies on the aforesaid proposition on Bombay High Courts and Tribunals judgment in the cases (i) UOI v. Popular Dye Chem 1987 (28) ELT 63 (Bom) : 1988 (18) ECR 48 (Bom) and (ii) Ajay Exports v. CC Madras 1986 (26) ELT 873 (T) : 1986 (9) ECR 623 (T) respectively.

2.2. It is further urged that the C.C.(P) including the A.C.C. (R & I) working under the former have no role whatsoever in the assessment procedures of goods, duly manifested and validly unloaded in Calcutta port/A.Cg.C. A.C.C. (R & I)s letter dated 11.9.1995 to the Airport assessing authority not to release the goods is an inter-meddling with the functioning of the proper assessing officers. Such a course of action has been viewed with contempt by Calcutta High Court in the case of Vipul Ishwarlal Vora v. CC reported in 1992 (60) ELT 248 (Cal). He also relies on (i) and . In this connection, he has also drawn attention to the Standing Order No. 35/89 dated 12.7.1989 issued by Shri R. Gopalnathan, then holding dual charges of C.C., Calcutta and C.C., (P), West Bengal (and now Chairman CBE&C). It is worthwhile at this stage to reproduce the entire said Standing Order:

...89A (G) Dated the 12th July, 1989

STANDING ORDER NO: 35/89

It has been represented in the Public Grievance Committee that after a consignment was ordered to be released by the Customs House, the officers of the Preventive Collectorate have seized the same. This has understandably created lot of confusion and also embarrassment to the Customs administration as a whole. The importers have also complained of consequent harassment. This kind of situation could have been avoided if all the concerned Customs officers had confined their activities to the spheres of work defined for each.

To ensure that such embarrassing situation do not reoccur in future, it is hereby ordered that the following procedure would be followed by the officers and staff of both the Custom House as well as the Preventive Collectorate dealing with suspect consignment and importers:

1. Consignments, for which Bills of entry or baggage declaration have been filed in the Custom House or at the Airport or Air Cargo Complex, would be dealt with by the officers of the Custom House. If any of such cases require any detailed investigation, such cases may be referred by the Appraising Groups, Docks and Airport Officers and Staff to SIB and DIU (Apprg.) Units.

2. In respect of cargo and baggage for which no Bills of Entry or baggage declaration has been filed, the officers of the Preventive Collectorate will have full liberty to conduct any investigation. They would also have full liberty to proceed against any cargo and baggage which are concealed or unmanifested.

3. In cases where the officers of the Custom House have allowed the cargo or baggage to be cleared after examining the related Bills of Entry or baggage declaration but the officers of the Preventive Collectorate consider that these require further investigation, they should bring such cases to the notice of the concerned Dy. Collector of the Custom House immediately, which should also be followed up with a written note. In all such cases, the concerned Dy. Collector of the Custom House would take immediate necessary action to review the earlier action taken by the Custom House. In rare cases when the concerned Dy. Collector is not available, the matter may be directly brought to the notice of the Collector of Customs himself keeping in view the urgency involved.

The procedure outlined above would be strictly followed by all the officers and staff of both the Collectorates and any deviation therefrom would be strictly viewed.

Sd/-

(R. Gopalnathan)

Collector of Customs, Calcutta

& Collector of Customs (Prev.) West Bengal

3.1. Ld. SDR, Shri T. Prem Kumar urges that C.C.(P), West Bengal and the officers working under him have jurisdiction over the whole of State of West Bengal. In this connection, he draws attention to Notification No. 250/83-Cus dated 27.8.1983 issued by the Central Government under Section 4 of the Customs Act (hereafter the Act). He also draws attention to the jurisdiction of C.C. Calcutta as spelt out in Notification 251/83 dated 27.8.1983 (as amended). He submits that undisputedly A.Cg.C. Calcutta Airport is within the State of West Bengal and, therefore, within the jurisdiction of C.C.(P), West Bengal. It cannot be tenable proposition that C.C.(P), West Bengal had no jurisdiction in the present matter. He further submits that concept of concurrent jurisdiction of two different authorities is well-known and well-established in different laws. He relies on a Delhi High Courts judgment in the case of Duncan Agro Industries reported in .

3.2. As regards the plea that since orders of adjudication had been passed by the A.C.C. concerned on the question of valuation, those orders could be revised under the provisions of Section 129D of the Customs Act is no longer valid in view of the Apex Courts judgment in the case of Union of India v. Jain Shudh Vanaspati Ltd. reported in 1996 (86) ELT 460 (SC) : 1996 (66) ECR 666 (SC).

4.1. We have carefully considered the pleas advanced from both sides. On the first blush, we were inclined to agree with the submission of the ld. SDR that the Central Government has conferred concurrent jurisdiction on C.C.(P), West Bengal and C.C., Calcutta and there is nothing legally wrong in conferment of such concurrent jurisdictions by the Central Government. Precedent of Duncan Agro (supra) cited by the ld. SDR, fully supports the view advanced by him. But on the closer and deeper consideration of the facts and circumstances of this case, we are of the view that the action of the C.C. (P), West Bengal and his subordinate officer A.C.C. (R & I) is invalid because that action ousts a valid exercise of jurisdiction by the officers under the control of C.C., (Calcutta). In our view, law confers no powers on the C.C., (P) or the officers working under him to snatch a case from officers of the C.C, Calcutta and overrule their actions. This is the crux of the facts and circumstances of this case. To elucidate, goods of the consignment arriving in Calcutta on 14.6.1995 were duly manifested in the import manifest, referred to in Section 30 of the Act and that manifest was accepted by an officer of Customs in terms of that Section. A Bill of Entry was filed in the A.Cg.C. and noted therein. The goods were examined and assessed after due application of mind with particular reference to the value of the imported goods by the concerned A.C. All these officers, it is not disputed, validly exercised their jurisdiction conferred upon them under the Act and that these officers were working under the control of the C.C., Calcutta and not under C.C.(P), West Bengal. It is after this stage that A.C.C. (R & I), either on his own initiative or on the direction of C.C, (P), appears to have written a letter to the officers of the A.Cg.C. not to release the consignment. This initial action of the A.C.C (R & I) in our view is illegal inasmuch as it ousts, in this case, the jurisdiction of the officers working under the control of C.C., Calcutta. We do not say that such a transfer of a case, in any peculiar facts and circumstances cannot be done at all. It can be done by a superior authority like the CBE&C or Central Government in exercise of their powers or by devising a general suitable working arrangement between officers of equal rank i.e. C.C. (P), West Bengal and C.C., Calcutta here. It is in the light of this guiding principle that Shri Gopalnathans standing order dated 12.7.1989 acquires significance. Unless the aforesaid wholesome principle is followed, the trade and industry will be left in a lurch as it h-is happened in this case.

4.2. Weakness in the Standing Order dated 12.7.1989, as pointed out by the ld. SDR ;s that it has been issued by one person holding dual charge of the C.C., Calcutta and C.C. (P), West Bengal. We agree with him. It is desirable that such a Standing Order/Notification is issued by the CBE&C or the Central Government in exercise of its statutory powers to settle the jurisdictional controversy and curb the over-zealousness of one Commissioner or the other.

4.3. Assuming, but without holding so, that A.C.C. (R & I) and C.C. (P)s thinking about an attempt to clear the goods by substantial undervaluation is correct, nothing prevented the officers to bring the alleged facts to the notice of the concerned C.C, Calcutta who could either follow the procedure laid down under Rule 129D of the Act or could himself issue a notice under Section 124 if he felt that it was a case of fraud following the ratio of fain Shudh (supra). Once a jurisdiction had been validly exercised by the officers working under the control of C.C., Calcutta, it would continue with that Commissioner alone because there is no sanction of law in ousting that jurisdiction. On this ground alone, the impugned order is liable to be set aside.

5.1. Next contention of the ld. consultant is that proper course for the Revenue was to follow the procedure laid down under Section 129D, once the goods in both the cases had been cleared [in one case actually cleared and in another case liable to be cleared] by the Customs authorities after proper adjudication by the concerned A C.C. on the question of valuation of the goods. He submits that the Apex Court has sanctioned issue of a show-cause notice under Section 124 only in case of an allegation of a fraud committed by an importer. The Apex Court, in fain Shudh, approved the issuance of a show cause notice under Section 124, rather than following the procedure under Section 129D, on the finding that painting of stainless steel container so as to make them look like that of mild steel was an allegation which prima facie was a fraud on the part of fain Shudh as alleged in the show cause notice. This fact of painting of the stainless steel containers was allegedly within the knowledge Jain Shudh. In the instant case, submits the ld. consultant, allegation of fraud is prima facie unsustainable on the evidence relied upon by the C.C. (P), West Bengal in his show-cause. The appellant could not be aware of that evidence, collected after investigation by the Preventive Officers, in these circumstances, it is strongly urged that procedure under Section 129D should have been followed rather than issuing a fresh show cause notice under Section 124.

5.2. Opposing the contention, ld. SDR submits that issuance of notice under Section 124 is now sanctioned by the Apex Courts ruling in Jain Shudh (supra). It has been further held, he submits, that notice under Section 28 is valid after clearance of the goods under Section 47 of the Act.

5.3. We have heard both sides. We note that the show cause notice issued by CC(P) is not a notice under Section 28 simpliciter. It had also proposed action for confiscation of goods and for imposition of penalty. But for a decision whether notice under Section 124 is a valid exercise of power on the ratio of Apex Courts ruling in Jain Shudh (supra) or the procedure under 129D was required to be followed by Revenue authorities. We have to compare the facts of this case with that of Jain Shudh;. Two very distinct features mark this case as distinct from the facts of Jain Shudh. In this case, adjudication on valuation of the goods had taken place specifically in the instant case as against no adjudication in Jain Shudh. This was a case of assessment on the basis of declarations made in the Bill of Entry. Second distinct feature, as pointed out by the ld. consultant, is that there was a prima facie sustainable allegation of fraud in fain Shudh whereas there could be no such allegation. Declaration of value was made by the appellant on the basis of available documents. There is no allegation that they concealed any documents or information or that knowingly they submitted any wrong information. Allegation is that valuation of goods is different on the basis of contemporaneous imports as per the evidence in the hands of the Revenue. These allegations cannot be constitute fraud on the part of the appellant. In view of the foregoing discussion, we are of the view that ratio of Apex Courts ruling in Jain Shudh would not apply to the facts and circumstances of this case. Consequently, Revenue should have followed the procedure under Section 129D of the Customs Act. Notice issued under Section 124 is not tenable at all in the facts and circumstances of this case. We hold that this is another ground for setting aside the impugned order. We order accordingly.

6.1. Now we shall look into the question of valuation of goods in the two consignments, although this issue is only of academic interest in view of our finding above.

6.2. Lower authority has made some observations regarding the interpretation of Section 14 of the Act and the rules made thereunder:

Sections (1A) of Section 14 enjoins that "subject to the provisions of Sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rule made in that behalf.

It follows, therefore, Customs Valuation Rules 1988 (CVR1988) require to be followed in determining the price on the basis of which duty of Customs has to be charged.

6.3. Rule 3 of the said CVR 1988 stipulates that:

(i) value of the goods shall be the transaction value; (ii) if the value cannot be determined under the provisions of Clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these rules.

6.4. Rule 4 defines transaction value and the conditions for its acceptance. Sub-rule (1) states that "the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules." Sub-rule (2) of Rule 4 lays down the conditions for acceptance of the transaction value. All the conditions are negative conditions. In other words, if any of the conditions is satisfied, transaction value will not be acceptable. If none of conditions in Sub-rule (2) is satisfied, then transaction value shall be acceptable.

6.5. From the definition of transaction value in Sub-rule (1) of Rule 4 of the CVR, 1988, it is clear that when the goods are sold for export to India, the price actually paid or payable shall be the transaction value, because it is not anybodys case here that any of the provisions of Rule 9 ibid apply in this case calling for adjustment of the price at which goods have been sold i.e. the price which is paid or payable. Price actually paid or payable is reflected in the invoice issued by the foreign seller of the goods in favour of the buyer (importer) of the goods, unless any agreement or contract, if any, between the two discloses some other payment or any other evidence is brought on record by the Revenue.

6.6. C.C. (P) in the impugned order has observed as follows:

Further that initial burden to prove the correctness of the declared value is on the importer becomes clear from a plain reading of Rule 10(1) of CVR, 88

Thereafter, Rule 10(1)(a) and (b) has been quoted by the adjudicating authority and a following inference has been drawn therefrom:

It follows that when the importer is not able to show that the price at which the goods have been imported is the price at which goods are normally offered for sale in the course of international trade, the declared value is not accepted. Further, the burden is initially on the importer to show that his declared price has the attributes of transaction value and failure to do so will result in rejection of the declared value. In view of the overwhelming evidences of higher values cited in the show cause notice, I have no hesitation in rejecting the declared values of the importers, as these, to my mind cannot be considered as transaction value....

6.7. Ld. consultant for the appellant has submitted that the approach of the adjudicating authority is illegal and contrary to the settled principle that transaction value cannot be rejected unless there is some evidence that any clandestine remittance has been made by the appellant or that there is any other consideration between the supplier of goods and the importer or the transaction is between related persons. He relies on Calcutta High Courts judgment in the case of Sandeep Agarwal v. Collector of Customs reported in .

6.8. Opposing the contention, ld. SDR reiterates the finding of the adjudicating authority. He submits that the appellant himself has admitted about the incorrectness of the transaction value when he agreed to enhancement of values in respect of certain items on the basis of which order had been passed by the A.C.C. On the basis of this admission, transaction value as shown in the invoice has no sanctity and has, therefore, been rightly ignored by the adjudicating authority.

6.9. In his rejoinder, ld. consultant, Shri D.K. Saha has pointed out that the authority cannot make a capital out of the consent to enhancement of values given by the appellant. That consent was given to avoid further loss of profit to the appellant, since the goods were required urgently. Resisting the proposed enhancement in values would have resulted in long drawn litigation and consequent loss of business. By consenting to enhancement, appellant did not agree that the declared prices were not genuine.

6.10. We have carefully considered the pleas advanced from both sides. We note that there is no evidence of any clandestine remittance of extra money than that shown in the invoice, or of any other consideration between the appellant and the seller. No mutuality of interest in the business of each other has been shown. There is no finding by the adjudicating (authority) that any of the conditions in Sub-rule (2) of Rule 4 has been satisfied for discarding the transaction value. It is incorrect for the adjudicating authority to hold that if any document referred to in Rule 10(1) of the CVR, 1988 is not furnished by an importer, then (the value declared as transaction value can be discarded. There is nothing in the language of Rule 10 either expressly or by implication to draw such an inference. Transaction value, as stated aforesaid, can be discarded for the reasons given in Sub-rule (2) and not for any other reason except in circumstances stated below.

6.11. We also observe that valuation of the imported goods under CVR, 1988 under Section 14(1A) is subject to the provisions of Sub-section 14(1). If, therefore, there is adequate evidence that such goods or like goods are being imported at the time and place of importation at some other price ordinarily where price is the sole consideration, then valuation under Section 14(1A) under the CVR, 1988 may not be resorted to. But to resort to Section 14(1) and to discard Section 14(1A), there has to be a strong reason for the same. In order to attract Section 14(1) the evidence of contemporaneous imports of identical or similar goods should be available. We observe that in the present case, the evidence relied upon by the Revenue is neither in respect of identical goods nor in respect of similar goods. One of the common conditions for the goods being identical or similar, as defined in Rule 2(c) and 2(h) respectively of CVR, 1988 is that they are produced in the country in which the goods being valued were produced. It is admitted in the impugned order that goods imported are of different origin than those on which the adjudicating authority has relied. We also observe that the sales are not to independent persons in relied upon documents, e.g., it is either from Reddington Singapore to Redington (India) or from manufacturer to their sole-selling agents in India. There is no evidence of sales to independent buyers in India. As further pointed out by the appellants ld. consultant that the imported goods do not carry any warranty, nor has any testing been done on the imported goods as is apparent from the purchase order placed by the appellant, we agree that the prices relied upon by the Revenue cannot be the basis of valuation.

7.1. In view of the foregoing discussion, valuation of goods adopted by the adjudicating authority is not on any firm, sound and acceptable basis. Valuation as adopted by the Assistant Commissioner of Customs and agreed to by the appellants is sustained. Confiscation of the goods is set aside and consequently fine in lieu of confiscation is set aside. Penalties imposed are also set aside as not warranted in the facts and circumstances of the case.

7.2. Appeals disposed of in above manner.