UNI-SANKYO LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners are a Company incorporated under the Companies Act, and have established a factory at Hyderabad in collaboration with M/s. Sankyo Company Limited, Tokyo, for manufacturing of "Fungal Diastase" and certain other products. The petitioners were granted an import licence dated October 19, 1968 for importing complete machinery for the manufacture of Sanzyme. The machinery was imported from time to time and the petitioners cleared the consignment as per the procedure of the customs authorities. The material arrived at India in the Port of Bombay on or about February 20, 1970 and April 25, 1970, and the necessary bills of entry in connection therewith were filed by the petitioners and import duty paid on the basis of value shown in the said bills of entry. The duty paid by the petitioners was on the basis of provisional assessment made on the strength of invoice value. Certain correspondence took place between the petitioners and the Appraising Officer, Special Valuation Branch, Bombay, in respect of value of the imported goods and ultimately on April 11, 1972, the Assistant Collector of Customs informed the petitioners that he proposes to load the ex-works invoice price by 15 per cent under Customs Valuation Rules. The Assistant Collector stated in the said letter that with regard to the import of Capital Plant and Equipment the petitioners have submitted a certificate dated July 19, 1971 of the Chartered Accountant from which it is noticed that the collaborators have not charged any margin of profit in respect of the Plant and Equipment supplied by them. The Assistant Collector informed that such marginal profit is an element of value as defined in Section 14(1)(a) of the Customs Act, 1962, and therefore, it is necessary to load the invoice price by 15 per cent. The Assistant Collector further informed that in case the petitioners desire that invoice value should be accepted, then the petitioners should submit proper evidence and on failure of the petitioners to submit evidence the course of loading invoice value by 15 per cent would be adopted. Inspite of this letter, the petitioners led no evidence to establish that the invoice price includes the marginal profit. The Assistant Collector, by letter dated July 5, 1972, informed the petitioners that the decision conveyed by letter dated April 11, 1972 is confirmed. To arrive at the conclusion that the invoice price did not include the marginal profit, the Assistant Collector relied upon the Auditor's certificate dated July 19, 1971 which specifically indicated that the collaborators had not charged any marginal profit.

(2.) The petitioners carried an appeal against the order of the Assistant Collector before the Appellate Collector of Customs, Bombay. Along with the appeal memo, which was presented on September 23, 1972, the petitioners produced a letter dated August 18, 1972 from the Auditors of the Collaborators clarifying that the invoice price includes the normal profit as that is the normal practice of trade. The petitioners on August 28, 1973, produced order acknowledgment of the collaborators placed with manufacturers and claimed that the said acknowledgment would show that there is a difference between the price charged to the collaborators and charged by the collaborators to the petitioners, and such difference would reflect the marginal profit. The appellate authority by its order October 25, 1973, dismissed the appeal and that order was further confirmed in revision preferred by the petitioners before the Government of India. The order on revision application was passed on March 25, 1975. The Assistant Collector, thereafter on April 19, 1977 called upon the petitioners to deposit the customs duty amounting to Rs. 64,155.20 as found at the time of the final assessment. The petitioners have approached this Court by filing the present petition on December 6, 1977 under Article 226 of the Constitution of India and the petitioners are challenging the legality of the orders passed by the customs authorities as well as the show cause cum demand notice served on April 19, 1977.

(3.) Shri Taleyarkhan, the learned counsel appearing in support of the petition, has raised two or three contentions to challenge the legality of the orders and the demand notice. The learned counsel urged that the authorities below were totally in error in ignoring the clarification received from the Auditors of the collaborators and the orders passed upon the certificate of Auditors issued on July 19, 1971 cannot be sustained. The learned counsel also submitted that the appellate authority and revisional authority have ignored the clarification as well as the acknowledgment orders produced by the petitioners before the appellate authority. The learned counsel also submitted that the Assistant Collector was in error in loading the price by 15 per cent. The last submission is that the demand notice was barred in view of provisions of Section 28 of the Customs Act, and on that count the notice is required to be struck down. In my judgment, there is no merit in any of the contentions urged by the learned counsel.