BHAVAN ENTERPRISES Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE appellants had filed Bill of Entry dated 18.7.2003 for clearance of "LWC Paper Width 430mm 55GSM" imported from Singapore. They classified the item under Entry 4810 22 00 of the Customs Tariff as applicable to light -weight coated paper. The Customs authorities noted the markings "Thermo Script.. - Mitusbishi High Tech Paper Bielfeld GMBH" on the paper reels on examination and got a sample of the goods tested in the Customs House Laboratory. The Chemical Examiner reported thus: "The sample is in the form of white sheet of paper. It is coated on one side with inorganic substance. It is composed of chemical and mechanical pulp. It has the properties of thermal paper". The authorities made further investigations into the import, from which it appeared to them that the goods had originated from Germany. Having found the goods to be Thermal Sensitive Paper classifiable under Entry 4811 90 94 of the Customs Tariff, the authorities held it to be chargeable to anti -dumping duty (AD duty) in terms of Notification No. 102/2002 -Cus. dated 7.10.2002 whereunder AD duty was leviable on thermal sensitive paper originated or exported from the European Union, at the rate equivalent to the difference between US 2947.92 per MT and landed value per MT of the imported paper. It appeared to the Customs authorities that the appellants had misdeclared the goods as LWC Paper to avoid payment of AD duty amounting to over Rs. 14.00 lakhs (sic) and that, on account of such misdeclaration, the value declared by the party was liable to be rejected. The enquiries revealed that value of such paper in international market was EURO 1800 per MT (CIF). The authorities wanted to take this value as the basis for determining the assessable value of the subject goods. On the basis of the investigative results, the Department issued a show -cause notice to the appellants for (a) classifying the goods as Thermal Sensitive Paper falling under Entry 4811 90 93 of the Customs Tariff; (b) enhancing its value under Rule 8 of the Customs Valuation Rules, 1988 on the basis of the aforesaid price [EURO 1800 per MT -CIF, Chennai] of thermoscript paper manufactured by M/s. Mitsubishi Corporation India Pvt. Ltd; (c) confiscating the goods under Section 111(m) of the Customs Act and (d) imposing penalty on the noticee under Section 112(a) of the Act. These proposals were contested. The original authority, in adjudication of the dispute, passed an order upholding the above proposals of the Department and confiscated the goods with option for redemption on payment of fine of Rs. 4.00 lakhs, besides imposing a penalty of Rs. 2.00 lakhs on the proprietor of the appellant -concern. The Commissioner (Appeals) affirmed the order of the lower authority, in an appeal filed by the party. Hence the present appeal.

(2.) HEARD both sides. Learned Counsel for the appellants submitted that the allegation of the Department was that the appellant had misdeclared the goods with intent to evade payment of AD duty. But Section 111 and 112 of the Customs Act, relating to confiscation and penalty, were not applicable in respect of AD duty as held by the Tribunal in the case of Supreme Woollen Mills Ltd. v. Commissioner . Even otherwise, counsel argued, it was not correct to say that the appellant had misdeclared the goods with intent to evade payment of Customs duty inasmuch as both LWC Paper and thermal paper carried the same rate of Customs duty at the time of importation. As regards valuation of the goods, counsel submitted that the assessable value was sought to be enhanced merely on the basis of a statement of M/s. Mitsubishi Corporation of India Pvt. Ltd. and not on the basis of any authentic documentary evidence of contemporaneous import of like goods at the unit price of EURO 1800 per MT. In this connection, counsel referred to the Tribunal's decision in Adani Exports Ltd. v. Commissioner 2000 (16) ELT 715 (Tri.), wherein certain informal quotations of the local office of a foreign supplier were held not to be treated as contemporaneous import price. Counsel pointed out that the said decision of the Tribunal was affirmed by the apex Court in Commissioner v. Adani Exports Ltd. 2002 (146) ELT A -213 (SC). Relying on Adani Exports (supra), counsel argued that Mitsubishi Corporation's statement of price was not to be treated as evidence of contemporaneous import price for acceptance as basis in the determination of the assessable value of the subject goods. Therefore, the enhancement of value proposed in the impugned order was only liable to be rejected and the goods should be assessed on the basis of the transaction value. Consequently, the finding of misdeclaration of value of the goods was liable to be rejected. In any case, the assessee cannot be said to have undervalued the goods with intent to evade payment of AD duty inasmuch as, the lower the assessable value of the goods, the higher the AD duty payable thereon. Counsel finally argued that the aforesaid facts did not attract Section 111(m) of the Customs Act and hence the goods in question was not liable for confiscation and, for that matter, no penalty was liable to be imposed on the importer under Section 112(a) of the Customs Act. Learned SDR reiterated the findings recorded by the original authority and the first appellate authority.

(3.) AFTER examining the records and considering the submissions, we observe that, in view of the Chemical Examiner's report, which was not contested by the assessee, there can be no gainsaying that the paper imported by the assessee was thermal paper. Admittedly, they declared the goods as LWC Paper [light -weight coated paper] and classified it under the Tariff Entry 4810 22 00. Thermal paper was classifiable under Tariff Entry 4811 90 94. Hence, obviously there was misdeclaration of the goods attracting Section 111(m) of the Customs Act for confiscation of the goods. Cases of misdeclaration of value are also covered by the same provision. But, in the present case, we have not found good reason for sustaining the enhancement of value done by the lower authorities inasmuch as they have not cited any authentic evidence of higher contemporary import price for identical goods. M/s. Mitsubishi Corporation's statement that thermal sensitive paper manufactured by them were currently sold at EURO 1800 per MT can only be treated as a hearsay, with no evidentiary value. The lower authorities have not cited any instance of real transaction at the above price of EURO 1800 per MT, nor have they had any Bill of Entry covering contemporaneous import of thermal paper at the above price. The lower authorities have not stated any reason for rejecting the transactional value of the subject goods either and, therefore, the value declared by the assessee is liable to be accepted for assessment purpose. In the result, any allegation of misdeclaration of value is untenable. But we have already found that the assessee misdeclared the goods, thereby attracting Section 111(m) of the Customs Act. This situation does not get altered on account of the rates of Customs duty for LWC Paper and thermal paper being the same.