1. As common questions of fact and law are involved in all these appeals/Cross Objections and the issues to be decided are identical, these matters are taken up together and are being disposed of by this common order. All the appeals are against the order passed by the Collector of Customs (Appeals), New Delhi dated 30-8-1983.
2. The respondents herein are importers of Apricot Dry/Pista Kernel/ Figs Dry as detailed in the Annexure to this order. They filed Bills of Entry and valued the goods as per the invoices relating to the consignments. The Assistant Collector examined the assessments and on the basis of the wholesale market rate quoted by the "Economics Times', and the "Financial Express", worked out the deduced landed cost for purposes of customs duty. These rates are also given in the Annexure to this order. The respective respondents were required to show cause as to why the goods imported should not be valued and assessed to duty at higher rates based on the D.L.C. worked out on the newspaper figures.
The party contended that recourse cannot be taken to Section 14 (l)(b) of the Customs Act, 1962, since no facts had been given in the show cause notice to hold that the buyer and the seller had interest in the business of each other and that the price was not the sole consideration. They also urged that the newspaper rates would not depict the correct wholesale rates. The Assistant Collector, after enquiry, held that the deduced landed cost was arrived at by allowing a margin of profit at 15% and post-importation charges at 10% and after deducting the import duty from the prices appearing in the newspapers.
The difference between the deduced landed cost and the actual value paid by the party was so large as 87%. The Assistant Collector fixed the assessable value of the goods at the rates as mentioned in the Appendix.
3. The respondents preferred appeals to the Collector of Customs (Appeals), New Delhi. The learned Collector (Appeals) found that the Assistant Collector should have had sufficient material to prove that there was manipulation of the invoices. He also held that there must be grounds for back calculation (ignoring the invoices) produced by the importers with valid reasons and data stated in the show cause notices.
The learned Collector (Appeals) was of the view that there was no proof that the goods for which prices were quoted in the newspapers were of comparable quality to the goods under assessment. He therefore held that the orders of the Assistant Collector could not be sustained and allowed the appeals. The Revenue has preferred these appeals.
4. Shri M. Chandrasekharan, Advocate appeared for the appellant and urged that if Section 14 (l)(a) of the Customs Act was not applicable then alone Section (14)(1) (b) could be attracted. He relied on the decision reported in 1984 (15) E.L.T. 137 (Tribunal) (O.E.N. (India} Ltd., Cochin v. Collector of Customs and Central Excise, Cochin] where it was held that in certain situations the Custom House authorities had no other option but to resort to fix the values of the goods under Section 14(1) (b) applying the best judgment formula. The learned counsel urged that there was no proof of other contemporary imports.
According to him the reports in the newspapers could be relied on for purposes of determining the value. He relied on the decision reported in 1978 E.L.T. (J 260) (Vacuum Oil Company v. Secretary of State).
There is an observation regarding ascertainment of wholesale cash price with reference to publication in the Press. The learned counsel submitted that in these cases the difference between the prices quoted in the newspapers and the price declared by the party were to the tune of 80% and more. The counsel also relied on the rulings reported in Maheshwari Trading Corporation, Delhi v. Collector of Customs, New Delhi),(Tribunal) (Steel Rolling Mills of Bengal Ltd., Calcutta v. Collector of Central Excise, Calcutta) and 1985 (19) E.L.T. 257 (Tribunal) (Virchem Corporation, Bombay, v. Collector of Customs, Bombay) regarding the burden of proof and shifting of onus.
The burden is initially on the department and it may shift from one side to the other during the course of proceedings when the evidence is collected or laid by the parties.
5. Shri Nankani, Advocate, appeared for the respondents and stated that the Appeals Nos. 156 to 167/84-A were barred by time since the order was passed on 24-8-83, communicated on 6-12-83 and that the department had filed the appeal only on 5-3-1984. He also raised an objection that the appeals that were originally filed were without any verification, and the mandatory provisions of 129-A (6) of the Customs Act had not been followed. He drew our attention to the decisions reported in AIR 1973 Patna 389 (Ram Padarath Singh v. Baidyanath Prasad Ors.), AIR 1944 Patna 207 (Jadav Gillua v. Suraj Narain Jha and Ors), and AIR 1975 Patna 107 (Deo Sharon Mahto v. Ram Bilash Singh and Ors.). On the legal aspects he emphasised that there was no proof under Section 14(l)(a) and that in the absence of any special relationship between the buyer and the sellers, the concept of deduced landed cost should not have been invoked. The respondents have filed the certificate from the Afghan Government regarding the imports and if the appellants had any grievance, the Embassy authorities should have been contacted or particulars drawn from foreign Chamber of Commerce to disapprove the valuation claimed by the respondents. The show cause notice also lacked all these particulars.
(ii) Whether those appeals are defective for want of verification and hence not maintainable? (iii) Whether the assessable value as determined by the Collector in the appeals is not correct? 7. The order of the Assistant Collector is dated 24-10-1983 which was communicated to the department on 6-12-1983. The appeal has been filed on 5-3-1984 within time. The department has satisfied us by filing an affidavit by the Collector showing that the order was communicated to them by the Assistant Collector on 6-12-1983. This point was found in favour of the appellant.
8. In respect of these appeals, the learned counsel for the appellant submitted that the appeals were originally filed without proper verification and that the verification was obtained subsequently. It is urged that the appeals are therefore liable to be rejected under Rule 6(1) of the Customs (Appeals) Rules, 1982. Cross-objections have been filed raising such objections. We have to find out whether the verification which was obtained subsequently was a mere irregularity or whether the appeal is liable to be rejected on that ground. The learned counsel for the respondents relied on certain rulings of Patna High Court (cited supra) and urged that the appeals are liable to be rejected. It must be stated that the rulings relied on by him are not applicable to the present facts for those citations concerned defects under the Bihar Panchayat Elections Rules, 1959 wherein verification was mandatory and in the absence of proper verification the Election petition had to be dismissed. There was no provision for amendment of the verification either. Rule 6A of CEGAT (Procedure) Rules, 1982 contemplates verification. But there is no provision specifying that in the absence of a proper verification the appeal was liable to be rejected. In AIR 1931 Allahabad 507 (Wall Mohammad Khan v. Ishak All Khan and Ors.) it was held by the Special Bench that the absence of verification would not affect the jurisdiction of the court. In AIR 1961 Bombay 292 (All India Reporter Ltd., Bombay with Branch office at Nagpur and Ors. v. Ramchandra Dhondo Datar) the omission to verify was held to be a mere irregularity. This ruling holds that if defects in regard to the verification are Cured on a day subsequent to the date of filing the suit, the date of institution of the plaint is not charged to the subsequent date. It is curable and it is a mere irregularity.
The defect of absence of proper verification of the plaint is one of procedure and is mere irregularity. In view of the above reasoning we are of opinion that the appeals are not liable to be rejected on the ground of limitation.
9. The main question to be considered in this case is in regard to the valuation. A narration of the facts set out above indicates that the department has relied on the figures published in the Economic Times and the Financial Express. It must be mentioned that the term" Value" in regard to the imported goods is governed by Section 14 of the Customs Act, 1962. Section 14(a) provides that the value of the goods shall be deemed to be (1) the price at which such or like goods are ordinarily sold, or offered for sale for delivery at the time and place of importation or exportation, as the case may be; (3) where the seller and the buyer have no interest in the business of each other, and (4) the price is the sole consideration for the sale or offer for sale.
As laid down by the Supreme Court in 1983 E.L.T. 2177 (Satellite Engineering Ltd. v. Union of India and Ors.) it is clear that the value of the goods for the purpose of levying duty shall be fixed with reference to the price at which such goods are sold in the course of international trade. In other words, the transaction must be at arm's length and not entered for extra commercial considerations, Section 14(b) covers residuary instances where the price is not ascertainable under Section 14(a). Under Section 14(b), when the price is not ascertainable, the nearest ascertained equivalent of the value has to be determined under the rules. A reading of Section 14(a) and 14(b) discloses that recourse to Section 14(b) can be had only when the value could not be determined under Section 14(a). In other words, there must be a specific finding by the lower authorities that the value could not be determined under Section 14(a) on the materials placed by the importer or available to the department. In the present case we find that there have been contemporary imports by the appellants as also by others. It is well-known that import of dry fruits from Afghanistan is a regular feature and the department cannot be heard to say that there were no similar imports at or about that time. Further, recourse to deduced landed cost is a concept under the Sea Customs Act, 1878 and has no relevancy after the introduction of Section 14. It is seen from the Notes on Clauses that Section 14 replaces the old Section 30 in order to conform to the provisions of the GATT, to which India is a signatory. So the concept of real value is no longer in force. The respondents produced the invoices as also the certificates of the Afghan Government confirming the value. If the department felt aggrieved, they should have contacted the Embassy officials or foreign Chamber of Commerce and ascertained the value of such goods. Further, there is no proof that the price quoted in the Financial Express or the Economic Times refer to comparable goods. The price published in financial journals relate to wholesale sales in the local markets. The requirement of Section 14(a) is that the sale has to be in the course of International trade. Unless the legal nexus is established, it cannot be taken that the price set out in these publications alone would correspond to the price in the course of international trade.
10. The department has mainly relied on the difference in the value and have urged that the value worked out as per the newspapers was about 81% higher than the prices mentioned in the invoices. If the department wanted to make this as a ground, they should have set out this in the show cause notice. We notice that the same has not been done in certain cases. The Collector of Customs has given cogent and convincing reasons why the value claimed by the department should be accepted. There is no reason to discard the prices set out in the invoices. In the absence of any finding that the department has no other option but to have recourse to Section 14(b), we are inclined to accept the findings of the Collector of Customs (Appeals).
11. For the reasons stated above, we find no merit in all these appeals and dismiss the same. The Cross Objections are also dismissed in the light of the observations contained in this common order.