1. The brief facts of the case as contained in the Memorandum of Appeal and as stated during the course of the hearing by Shri Sogani are briefly as follows : On 15-1-83, the Appellants entered into a contract with M/s.
Induscandia Erikson & Co. AB (hereafter to be called the foreign supplier) for one Roland RZK.-111 Offset Press with standard equipment. The year of manufacture of the said goods was 1975. The c.i.f. value for the Press along with standard equipment was contracted at Rs. 3,19,200/-. In pursuance of this contract, the appellants opened a letter of credit through Syndicate New Delhi on 25-2-83. At the time of opening of the letter of credit, the goods in question were covered by the O.G.L. under the Import Policy for the year 1982-83. In terms of the letter of credit, date of shipment was stipulated as 15-6-83 and date of negotiation of document as 30-6-83. Later on, vide letter dt. 5-5-83, the foreign supplier informed the appellants that due to difficulties, the goods should be ready for shipment by 30-7-83. Accordingly, they suggested to the appellants to extend the letter of credit to a suitable date. In the alternative, offer was made to supply some other machines in case the earlier schedule of shipment was to be maintained. On 12-5-83, the appellants informed the foreign supplier to stick to the originally contracted machines and also to ensure that the same were shipped not later than July 1983. Supplier's telegram dated 19-5-83 intimated the appellants that the goods would be ready for shipment before August 1983 and requested the extension of validity of the letter of credit. On 31-5-83, the appellants got the letter of credit amended providing for extension of shipment date to 30-7-83 and negotiations date up to 14-8-83. The goods were finally shipped on 26-7-83. The Bill of Entry for the goods was noted in the Custom House on 18-11-83. On 22-12-83, the Custom House issued a show-cause notice to the appellants alleging (1) the goods in question were not covered by the O.G.L. because the letter of credit opened by the appellants on 25-2-83 was subsequently amended on 31-5-83. The machinery could not be treated, therefore, to fall under OGL in terms of Import Policy for 1982-83.
(2) the appellants had under-invoiced the goods in question by declaring the value thereof as Rs. 3,19,841/- c.i.f.
2. As a similar printing machine imported by another party had been noticed by the Custom House which was invoiced at Rs. 5,06,869/- c.i.f.
the appellants were alleged to have under-invoiced the goods to the extent of Rs. 1,87,028/-.
3. The Appellants were charged with an offence attracting provisions of Section 1ll(d) of the Customs Act, 1962 read with Section 3 of the Imports & Exports (Control) Act, 194?.
4. After hearing the party, the case was adjudicated by Collector of Customs, Bombay. The said Collector, vide his order dated 16-1-84 held that the correct assessable value of the appellant's goods should be Rs. 5,06,869/-and not the one declared by them in the bill of entry. He also held that the goods in question were not covered by the O.G.L. and ordered their confiscation under Section lll(d) of the Customs Act, 1962, read with relevant provisions of the I.T.C. Act. The learned Collector ordered confiscation of the goods for violation of the aforesaid section and gave the appellants option to clear the goods on a fine of Rs. 1,00,000/- only.
It is against this order of Collector of Customs, Bombay that the present appeal has been filed.
5. Shri Sogani submitted that the facts of the present appeal were more or less similar to the ones covered by appeal No. CD(SB) 345/84-A disposed of vide order No. 573/1984-A dated 7-8-84 (1985 ECR 646-CEGAT in the case of Rakesh Press, New Delhi v. Collector of Customs, Bombay).
6. Shri Sogani first took up the question of the eligibility of the goods in question under the OGL. He submitted that the only ground on which the benefit of the OGL had been denied to the appellants was that although they had opened a letter of credit on 25-2-83, the same ceased to be an irrevocable commitment by virtue of the fact that thes aid letter of credit was amended on 31-5-83. He submitted that the original letter of credit was never revoked or rescinded. Considering the difficulties of the shipper, the same was amended on 31-5-83 only with the limited purpose of allowing shipment of the goods up to 31-7-83.
There was no other change, whatsoever, With regard to the stipulated price for the goods. According to Shri Sogani, when a letter of credit had been opened, its subsequent amendment for allowing a change in the date of shipment should not be construed to mean that the earlier letter of credit had expired and a new letter of credit had been opened. Shri Sogani invited our attention to para 7 of the conditions covering import under OGL for 1982-83 policy. He submitted that as a firm letter of credit had been opened before 28-2-83, the machinery in question continued to enjoy the concession of the OGL. The appellants could ship the goods till 31-3-84 and in fact, the same were shipped as early as 26-7-83. He prayed that the findings of the learned Collector on this point were not sustainable in law and deserved to be set aside.
7. The learned SDR, Shri Jain, appearing for the Respondent Collector, submitted that the view taken by the Collector of Customs in his adjudication order was correct and should be upheld.8. We have heard both sides. It is an admitted position between the two parties that a firm letter of credit was opened for the goods in question on 25-2-83. While it is the appellant's case that subsequent amendment of the same on 31-5-83 does not vitiate the basic validity of this commitment, the learned Collector has held that the subsequent amendment of the letter of credit amounts to opening of a new letter of credit.
9. We have carefully considered this point. We see force in the contention of the learned Consultants for the appellants that a firm commitment had been entered by the appellants with their foreign supplier on 25-2-83 when they opened the letter of credit. The subsequent amendment to the said letter of credit effected on 31-5-83 only alters the date of shipment on genuine grounds of shipping difficulty. For all intents and purposes in law, the letter of credit of 25-2-83 remains valid and it would be wrong to conclude that the subsequent action of the appellants amounted to opening of a new letter of credit. On this short point we set aside the findings of the Collector and hold that on the date of shipment of the goods, viz.
264-83, the letter of credit opened on 25-2-83 held good. In this view of the matter, the appellants have been wrongly penalised to have contravened the provisions of Section 1ll (d) of the Act read with the relevant provisions of the I.T.C. Policy. We, therefore, see no hesitation in setting aside the order of confiscation of the goods for infringement of the aforesaid provisions and hold that the goods were covered by the OGL and direct that the redemption fine of Rs. 1,00,000/-be remitted.
10. With regard to the question of valuation of the goods, the contention of Shri Sogani is that a representative of the foreign supplier had come to India and, as a result of negotiations, a contract was entered into on 15-1-83. The value agreed to by this contract was mentioned in the letter of credit opened on 25-2-83 and was also shown in the subsequent documents and in the bill of entry. Shri Sogani invited our attention to several orders of this Tribunal which have been referred to in the Rakesh Press judgment. He submitted that for valuation of the goods imported by the appellants, the Custom House had compared the value of the appellants' goods with those imported by another importer, viz. M/s. Pravin Offset Printers. He submitted that the appellants' goods were manufactured in 1975 whereas those imported by M/s. Pravin Offset Printers were manufactured in 1974. He invited our attention to some of our earlier judgments where we had occasion to deal with similar issues. He submitted that the valuation of machinery and capital goods requires special skill and various complex factors come into play. According to him, the method adopted by the learned Collector for valuing of the goods with reference to the imports effected by Pravin Offset Printers was ad-hoc and without any cogent basis. He submitted that this aspect of valuation had been discussed at some length in the case of M/s. Rakesh Press, which in turn had taken note of several earlier orders of the Tribunal (c.f. para 5 of order in the case of M/s. Rakesh Press). Shri Sogani submitted that value declared in the bill of entry was the correct assessable value of the goods as envisaged under the law. This was borne out from the faithful conduct of the importers, starting from the entering into a contract and culminating in the filing of the bill of entry. The lower authorities had failed to lead any evidence that the appellants had remitted clandestinely any amount towards the value of the goods over and above the value declared in the bill of entry. He submitted that we had clearly held in the case of M/s. Rakesh Press that burden of proving the charge of under-valuation lies squarely on the department which must do so with cogent supporting evidence. Shri Sogani submitted that the department had failed to do so in the present case and the order of the learned Collector deserves to be set aside as it was arbitrary and ad-hoc in character.
11. Shri Jain, the learned S.D.R. stated that the Collector had correctly set out in his order the reasons for rejecting the value declared by the appellants and the basis on which the same should be valued.
12. We have heard both the sides with regard to the valuation aspect.
The judgment of this Bench in the case of M/s. Rakesh Press, New Delhi, sets out in detail approach to be followed with regard to valuation of machinery goods. The order also brings out what would normally constitute acceptable evidence to prove a charge of under valuation.
Applying the ratio of our order in the case of M/s. Rakesh Press and Ors. judgements of the Tribunal cited therein, we are afraid that the charge of under-valuation levelled against the appellants in the present case does not stand sustainable. There is considerable force in the argument advanced by Shri Sogani that the basis of valuation adopted by the learned Collector is ad-hoc, if not totally arbitrary in character. In the result we accept the plea of Shri Sogani in this behalf and reject the finding of the learned Collector with regard to the charge of under-valuation adjudged against the appellants.
13. In the result appeal succeeds on both counts. Consequent relief flowing from this order should be allowed to the appellants.