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Bell Punch (India) Pvt. Ltd. Vs. Collector of Customs - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)(14)ELT2374TriDel
AppellantBell Punch (India) Pvt. Ltd.
RespondentCollector of Customs
.....machines some time subsequent to the clearance of the goods, as a result of the manufacturers' price list for the period : april 1980, having come to his notice. consequently, after going through the records, he issued a notice to show cause on 27-8-1980 to both the companies separately, purporting to act under the provisions of section 130 (2) of the customs act (hereinafter referred to as "the act") as it then existed. in the show cause notice, all the facts were detailed and the price list of the manufacturers, namely, m/s taito corporation of japan, was also enclosed in support of the tentative conclusion, that the actual price of the machines was far in excess, than the one assessed by the assistant collector, and that he held it to be a case where to assume jurisdiction, and.....
1. The point falling for determination in the two appeals, captioned above, is as to whether the Collector of Customs, exercising powers vested in him under the erstwhile Section 130(2) of the Customs Act, is obliged to confine himself exclusively and strictly to the record or as to whether he can take into consideration some material which may come into his possession subsequent to the orders, having been passed by the officer of Customs subordinate to him and which orders he proposes to review.

2. It would be expedient to reproduce the facts, giving rise to this controversy. The two Companies who are the appellants before us, namely, M/s Automatic Machine Company (India) and M/s Bell Punch (India) are private limited companies, having some of the Directors common, and both of them are having their registered office in Calcutta, and as their letter-heads in the files reveal, in the same premises. Two separate Bills of Entries were submitted on their behalf by M/s G.D. Traders, Custom House Clearing Agents on 29-2-1980; being Bill of Entry No. 1-1517 dated 2l>-2-1980 in respect to M/s Automatic Machine Co. (India) Private Ltd. and Bill of Entry No. 1-1518 dated 29-2-1980 in respect to the other company, namely M/s Bell Punch (India) Private Ltd., both bearing the address "2, Chowringbee Approach, Calcutta".

3. The subject matter of import, in each case was three automatic machines, described as "Speed Race", "Super Block Circus" and "Acrobat". Whereas Bill of Entry No. 1-1517 covered two pieces of "Speed Race" and one piece of "Acrobat", the other Bill of Entry related to one piece of "Speed Race", one piece of "Super Block" and one piece of "Circus". The Invoice value of each set of the three machines was declared to be Rs. 1.950/-.

4. The Assistant Collector, however, found, on the basis of the Report of Appraisers, that the adequate value of each set of three machines ought to be Rs. 9,000 as against declared value of Rs. 1,950. He accordingly assessed the goods to customs duty, at the appraised value of Rs. 9,000. Further, finding it to be a case of mis-declaration, he also ordered confiscation of goods, providing option to the importers to have the same released against a redemption fine of Rs. 9,800 per consignment. A personal penalty of Rs. 2,000 each was also imposed. The two importers did not protest against this enchancement of value and the action taken by the Assistant Collector but, on the other hand, submitted to the same without any demur, and without even seeking any opportunity to show cause. The goods were accordingly cleared after payment of enhanced duty and redemption fine imposed by the Assistant Collector vide his order No. 833-(VII) 18/80A dated 27-2-1980.

5. It appears, however, that the Collector of Customs, having jurisdiction in the matter, acquired intelligence of the correct price of these machines some time subsequent to the clearance of the goods, as a result of the manufacturers' price list for the period : April 1980, having come to his notice. Consequently, after going through the records, he issued a notice to show cause on 27-8-1980 to both the Companies separately, purporting to act under the provisions of Section 130 (2) of the Customs Act (hereinafter referred to as "the Act") as it then existed. In the show cause notice, all the facts were detailed and the price list of the manufacturers, namely, M/s Taito Corporation of Japan, was also enclosed in support of the tentative conclusion, that the actual price of the machines was far in excess, than the one assessed by the Assistant Collector, and that he held it to be a case where to assume jurisdiction, and exercise power under Section 130(2) of the Act.

6. After giving full opportunity to the parties to file their objections, and after affording opportunity of personal hearing, which the importers availed of, through their common Director, Shri S.C.Gupta, the Collector of Customs came to the conclusion that the pleas set forth by the respondents before him, were not tenable and that since they have been given notice of the basis, and the nature of the evidence, which the Collector proposed to take into account, before coming to a final decision, and they having failed to produce any price list in rebuttal and the price list before him being the nearest in time to the date of import, it was a clear case, in his opinion, where the goods had been allowed to be cleared at a grossly undervalued price. He also did not find any merit in the plea that he could not look to any evidence in the nature of price list, which had come into his possession through some other private party, as in his view, since nothing was being done behind the back of the party, and that this price list has been enclosed with the show cause notice, he felt free to rely upon the same. He also found the contention that the price list relating to new products, could not be applied to the subject machines which they pleaded to be old and used ones, unsubstantiated as there was no declaration at the time of import nor any endorsement on the Bill of Entry made by the Customs Officers that they were used or second-hand machines nor any other evidence produced to that effect. It was also noted that there was no such indication in the application made by them to the Joint Chief Controller of Imports & Exports for issue of CCP. He thus felt convinced that this plea was a mere after thought. He also observed in passing that in the background in which the machines have been imported, the plea of lack of mala fide could also not be accepted because it had come on the record that another Director of the two companies, namely, Shri K.K. Chakraborty, had paid a visit to Hong Kong some time before the import of the machines and it could be presumed that he might have manoeuvred during the said visit the under-valuation and in any case they could not plead that when the imports were discussed or arranged, he could not have come to know the actual price of the machines which were manufactured by M/s Taito Corporation of Japan. He also put on record that even the object for which these machines were ostensibly imported, namely as gifts during the International Year of the Child donated by M/s American Pool Leisure Centres, Hong Kong to be installed at the Nehru Park Museum, Calcutta had not been fulfilled, and that although Shri Gupta, the common Director, admitted during personal hearing that the machines had not been utilised for the declared purpose, he declined to reveal the location of these machines, or where they could have been installed.

7. Taking note of all the facts, and finding that the manufacturer's price list, which he had before him, had not been effectively controverted, the Collector held it to be a case, where the machines had been undervalued to the extent shown in the show cause notice and that it was a case where the Assistant Collector had also based his assessment on estimates as he did not have any evidence of market value before him, nor he put any price list on record. He thus ordered re-assessment of the goods on the value shown in the respective show cause notices. The difference in the assessed value, and the actual value, was determined to be Rs. 19,345.67 in the case of M/s Automatic Machine Co. and that of Rs. 17,097.03 in the case of M/s Bell Punch (India) Private Limited. This valuation was confirmed by the Collector's orders dated 23-4-1981, and besides ordering recovery of the differential duty, he also held it to be a case of deliberate evasion of customs duty under garb of gifts for children and ordered personal penalty of Rs. 10,000 each on the two companies described as sister-concerns, acting under Section 112 (a) of the Act, and further directed that the penalties so imposed be paid forthwith.

8. It was this order of the Collector which was taken to the Central Government by means of a Revision Petition filed under Section 131 of the Customs Act, by the two companies separately but on identical pleas. Both the Revision Petitions have been transferred to the Tribunal by virtue of provisions of Section 131B (2) of the Act, to be treated as appeals, and they have been accordingly taken as such for disposal.

9. The order of the Collector is assailed on the ground that the same was based on material which has been collected privately in the form of a price list of the manufacturers through one Mr. Harihar of Madras, and that the Collector erred in ignoring the appellant companies' submissions that the said price list was inadmissible and that otherwise also, the import having taken place on 29-2-1980, the price list dated 24-4-1980 was not relevant piece of evidence on the question of price. They also pleaded that the machines were simply games for children and had been wrongly described as "gambling machines" and that the order demanding additional duty as well as imposing penalty was arbitrary, unjustified and illegal. They further contended that the value as determined by the Assistant Collector was based on enquiries and market value reported by the appraisers and other officers of the Customs Department and there was no basis for further enhancement and that the Collector also erred in disregarding the plea that the machines were used ones and consequently the price list in respect of new machines could not be the basis for determining the assessable value. They also averred that there had been violation of principles of natural justice, and, that they had already suffered not only by paying the enhanced duty and redemption fine, etc. as determined by the Assistant Collector at the time of clearances but further had to pay demurrage charges on account of the goods having been detained in the dock and that the machines were also exposed to hazards of further damage having been subjected to ravages of rain and wind etc. while lying in the docks.

10. At the time of hearing, Shri K. K. Chakravorty, Senior Advocate along with Shri Satya Sheel appeared for the appellants whereas respondent was represented by Shri V.M.K. Nair, Senior Departmental Representative.

11. Although Shri Chakravorty wanted to advert to facts also, and also indicated in the beginning that he would distinguish the case of Bell Punch (India) Private Ltd. separately but eventually the thrust of his arguments was only confined to the point of law, namely, as to the ambit of powers of the Collector, while assuming jurisdiction under Section 130(2) of the Act, as it then existed. He strongly urged that the power of review, or revision whatever it may be described, can be exercised only within the confines of the record, and that in no case it was permissible to the Collector to travel beyond the said record, and that consequently the order in the present case in respect to both the appellants was vitiated because of this illegality inasmuch as the Collector had based his review proceedings as -well as the order, on a price list which was totally extraneous piece of evidence and he emphatically urged that the Collector was not competent to do, and hence the order was not sustainable.

12. The learned counsel also placed reliance on two authorities of the Supreme Court in support of the contention canvassed by him, one being : - State of Kerala v. K. M. Cheria Abdulla & Co. reported as AIR 1965 SC 1585, and the other : Swastik Oil Mills Ltd. v. Deputy Commissioner of Sales Tax, Bombay reported as AIR 1968 SC p. 843. In one case, the ambit of the Madras Sales Tax was in focus, and in the other that of Bombay, but the principle involved was the same and the learned counsel quoted these authorities in support of his argument that revisional Authority could not go, outside the records, while undertaking suo motu review of an order of a lower or subordinate authority.

13. The learned Departmental Representative countered these arguments by pointing out that the power that is vested in the Collector by virtue of provision of Section 130(2) of the Act, not only enables him to examine the 'legality' or 'propriety' of a decision or an order passed by a subordinate officer but also "the correctness thereof and then pass such orders, as he thinks fit. He emphatically urged that the powers of such wide amplitude, particularly in respect to rectification of errors were not appropriately exercisable by reference to records alone and that some errors may not be manifest from the record itself, and that this power of "examining the correctness of an order", inherently implies the authority to take into consideration material which may be outside the record, if this power were to be real.

14. We have given our very careful and anxious thought to the matter because of the issues involved. We find that there is no intrinsic or built-in limitation in the power of the Collector, obliging him to confine himself to the records alone and we do find justification in the point made by the learned Departmental Representative that illegality or impropriety may be borne out from the record, but so far as "correctness" is concerned, that has invariably reference to some other material, and is not capable of being adjudged or assessed on the basis of records alone. There being no bar or indication in the wording of the section itself, such a restriction on the powers of the Collector cannot be read into. We also find that reference to the Supreme Court authorities by the learned counsel is also misplaced because no such restriction or limitation as sought to be placed by the learned counsel, on the powers of the reviewing Authority can be spelt out from a reading of the two cases cited by him. We find, on the other hand, an unequivocal statement of law in the case reported as AIR 1968 SC 843 (Swastik Oil Mills case) to the effect that- "once those powers are invoked, the actual interference must be based on sufficient grounds and if it is considered necessary that some additional enquiry should be made to arrive at a proper and just decision, there can be no bar to the revising authority holding a further enquiry or directing such an enquiry to be held by some other appropriate authority." 15. What their Lordships disapproved in that case was that the review proceedings should not be based on surmises and conjectures and that there should be "some substantial ground for invoking the revisional powers". This ground has essentially to be, so far as power of "correctness" is concerned an outside material. All that, their Lordships stressed, was that for invoking revisional powers (review proceedings in this case), there should be some material, but once the powers are pressed into action then even additional enquiry can be conducted by the revising authority himself or through another appropriate authority. There is no support thus from the Supreme Court ruling for the proposition that the revisional authority is absolutely barred from taking into consideration any piece of evidence, which may not form part of the record.

16. Reverting to the facts of the present case, we find that the price list which the learned Collector took into account was annexed to the show cause notice itself. The appellants, therefore, cannot even urge that they have been taken by surprise or deprived of the opportunity to rebut or controvert the evidence which formed the basis for the order of the Collector. There is thus no violation of principles of natural justice, nor any prejudice caused to the appellants, by Collector's reliance on this price list. The Collector has in a very detailed and well-reasoned order set out the facts which led him to undertake the review and he has given full opportunity to the party to show otherwise, which they failed to do. There is no plea that they have been deprived of the opportunity to place correct price list before the Collector nor do they show even now as to what the price list during the month of import could have been, or was different. The Collector's observations that the trend of the subsequent price list shows that there has been steady decline in the prices has also not been refuted.

The plea that the machines were used and old one and hence the price list of new products, could not be applicable has also not been effectively established. As against that the Collector has based his observation on facts, and papers produced by the appellants themselves, namely, the application for CCP where there is no indication that the machines to be imported were old and used ones. Their plea to that effect has thus been rightly rejected, as an afterthought.

17. We are also constrained to observe that the conduct of the importers in getting the clearances in hot-haste despite what seemingly appeared to be a case of substantial enhancement on the part of the Assistant Collector leads to an unescapable inference, that that valuation was far below the actual price and there was every justification for the Collector to undertake a review.

18. We do not, therefore, find any infirmity in the orders passed by the Collector or in the procedure adopted by him. The imposition of penalty is also justified, on account of the facts highlighted by the Collector, in his order, inasmuch as the machines which were imported on the representation that they were meant to be gifts for children, have admittedly been not used for the declared purpose, so much so that even their location was not divulged during hearing. It is thus a glaring case of misuse and mis-representation and deserving of no leniency. Both the appeals have, therefore, no merit and deserve dismissal and are dismissed accordingly.

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