1. Originally preferred as a revision application before the Central Government, on transfer to this Tribunal the same is being treated as an appeal and being disposed of accordingly.
2. For a proper appreciation of the issues involved, it is necessary to. briefly set out the facts of the case. The appellants, M/s. Joy Foam (P) Ltd., Madras imported one production line for manufacturing of flexible polyure-thane foam consisting of one Center CF-4 Foaming machine alongwith some spare parts. The appellants declared to total C.I.F. value for the said goods as NKR 4,46,800 equivalent to Rs. 7,29,967/-. The appellants had declared this value with reference to the proforma invoice dated 26-6-79 received by them from the foreign suppliers which was in, conformity with the invoice dated 23-11-79 under cover of which the import was made. During the course of finalising the assessment, the assessing officer wanted to refer to the technical literature and the price list, if any, for the said goods.
The appellants produced necessary literature which consisted of two parts. The first part explained at some length the specifications and other technical particulars of the machine and the spares while the second part showed the price of the machine and the spares. On comparison of the prices for the machine and the spares as declared in the bill of entry, the assessing officer found that the appellants had mis-declared the value of the goods for assessment purposes. It was found that the value of the machine as given in the price list was NKR 4,20,000 (f.o.b.) whereas the same was shown as NKR 2,85,800 (f.o.b.) in the proforma invoice dated 26-6-79. and the covering invoice dated 23-11-79. It was further observed that the appellants had not imported some spare parts which were customarily supplied with the machine.
However, they had imported some other spare parts alongwith the machine. Taking all these facts into consideration, the. Assistant Collector adjudicated the case and held that the assessable value of the goods, namely, the machine and the spare parts imported by the appellants to be NKR 6,01 ;470 equal to Rs. 9,90,703/- (conversion rate : 61.10 NKR=Rs. 100/-) as against the declared value of NKR 4,46,800 equal to Rs. 7,29,967/-. Accordingly, the appellants were called upon to pay duty on the enhanced value of Rs. 9,90,703/-. The appellants challenged the order of the Assistant Collector before the Appellate Collector of Customs, Madras. The learned Appellate Collector, after going through the evidence placed before him, upheld the findings of the lower authority and rejected the appeal.
3. During the course of hearing of the appeal before us, Shri Y.N.Chopra, the learned consultant appeared with Shri Verghese Eapen, Director of the appellent Company. It was emphasized by Shri Chopra that the goods had been imported after negotiation with the foreign supplier, M/s. Laader Berg Limited (hereinafter to be called the Norway party). The lower authorities had erred on placing reliance on the price list which was not dated and which did not show clearly that it was valid for assessment purposes at the time the goods in question were imported. In fact, the appellants themselves had produced the technical literature-cum-price list and if they had any intention of keeping back any information from the Customs authorities they would not have produced the price list which was made the basis for valuation of their goods. It was further contended that at about the same time the appellants imported the machine and spare parts, another manufacturing unit in Himachal Pradesh, haying their Head Office in Delhi viz. M/s. Bharat Petrofoam (P) Ltd. (hereinafter to be called as Delhi party) had also imported an identical machine which was cleared through the Bombay Customs. It was submitted that the price for the machine declared before the Bombay Customs was comparable to the value of the machine imported by the appellants and since there was evidence of another independent importation of like goods, the appellants were entitled to be assessed to duty at the declared price. It was further contended that the Department had not adduced any evidence to show that the appellants had any special relationship or financial interest in the Norway party. No evidence had also been produced to show that the appellants had clandestinely remitted any foreign exchange towards the cost of the machine and its spares to the foreign suppliers. It also proved their contention that the price list could not be made the basis for valuation of the goods. It was emphatically pleaded that in the face of a contemporaneous import at the same price for goods similar to the ones imported by the appellants and in the absence of any incriminating evidence, the Department was not justified in arbitrarily raising the assessable value of the goods.
4. Shri N.I. Ramanathan, the learned representative of the respondent, stated that the lower authorities were fully justified in adopting the assessable value of the goods with reference to the prices shown in the price list produced by the appellants themselves. The price lists are usually not dated. In any case, the appellants had not produced any evidence before the lower authorities that the said price list was not valid for the goods imported by them. In particular, Shri Ramanathan drew our attention to a letter dated 19-1-79 addressed by the Delhi party to the foreign supplier. This letter made it clear that on the recommendation of the Delhi party the foreign supplier had agreed to allow "a vary special reduction" in the prices charged to the appellants. Such 'a very special reduction' was allowed ostensible to enable the appellants to promote the sale of similar machines in the country. However, in the course of the hearing, Shri Eapen confirmed that so far as he was aware, in addition to one machine imported by the appellants and the other by the Delhi party, no other machine had been imported into India. At this stage it was put to Shri Chopra to point out the relationship between the appellants and the Delhi party because the latter Company had apparently played a key role in getting the appellants the machine and its spares at specially reduced. prices.
Shri Chopra explained that the Delhi party holds 51% of the equity capital of the appellant Company. Apart from this, the Managing Director and two other Directors of Delhi party (all brothers) are also Directors in the appellant Company. Another interesting fact which was revealed at this stage was that the three Directors of the Delhi party were appointed as Directors of the appellant Company's Board of Directors some time between the negotiations for purchase of the machine with the foreign supplier in Norway had commenced and before the actual importation of the goods was effected. However, the exact date on which the three Directors from Delhi party were inducted into the Board of the appellant Company was not readily available.
5. We have given our very careful consideration to the submissions made by both sides. In the normal course, a price list for goods is adopted as basis for valuation of the goods, more so, when the said price list is produced by the importers themselves. Having produced the price list, the appellants cannot take the plea that they had produced the literature to the Customs authorities only with regard to specifications of the machine and its spares and not for the purposes of valuation of the goods with reference to the prices shown in the same literature. It appears to us that the appellants are trying to wriggle out of the situation created by themselves in producing the literature which goes against their stand. We are not satisfied with their submission that only the specifications portion of the literature should be relied upon and the price list portion thereof should be discarded as evidence. Furthermore, the correspondence between the Delhi party and the foreign party leaves no doubt that the prices charged to the appellants were favoured prices. As regards the evidential value of the goods imported by the Delhi party through Bombay port in support of the appellants case is concerned, the same is of no help to them. As per their own admission, 51% of the appellants equity capital is held by the Delhi party. In other words, the Delhi party has full legal control by virtue of higher equity participation in the appellant Company. There is, therefore, a clear and unmistakable nexus of financial interests between the Delhi party and the appellant Company. We are, therefore, not inclined to give to the appellants any benefit of lower assessable value adopted by the Bombay Customs in respect of the importation of allegedly similar goods by the Delhi party. It is also pertinent to observe that although the appellants have produced a copy of the bill of entry of the goods imported by the Delhi party at Bombay, they have not been able to produce the packing list and the attested invoice for the goods imported there. In the absence of these vital documents, no useful comparative study can be made for the valuation purposes in respect of the goods imported by the Delhi party through Bombay Customs qua the importation made by the appellants through the port of Madras. As the prices adopted by the lower authorities have been based with reference to the price list and after giving due allowances to other relevant factors, we do not see any fault in the appraised value adopted by the lower authorities. We have reason to believe that the appellants deliberately kept back the fact of their financial tie-up with the Delhi party because that would have gone against them. All the time they were harping at their independent relationship with the Norway party while their relationship with the Delhi party was really very vital. In the result, we hold that the action taken by the lower authorities in enhancing the assessable value of the appellants' goods is correct in law and based on facts on record. We, therefore, see no reason to interfere with the findings contained in the order dated 20-4-81/16-6-81 passed by the Appellate Collector of Customs, Madras. In the result we see no merit in the appeal and dismiss the same.