RAJNATH MOTORS (P) LTD Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) THE issue involved in this appeal filed by M/s. Rajnath Motors P. Ltd. is whether the tyres imported by them were freely importable without licence as tyres meant for truck and whether tyres were under valued.

(2.) BRIEFLY stated the facts are that the Appellants filed a Bill of Entry 924527, dated 10 -10 -1995 for clearance of a consignment of 65 Bridgestone tyres of assorted sizes. In their letter dated 26 -10 -1995 the appellants declared that tyres of Rim size 15" were suitable for DCM Toyota Swaraj Mazda, Canter and Tyres of Rim sizes 15" and 16" were also used on light trucks, Tata 407 and vans of various make and other commercial vehciles. The Additional Commissioner, Customs, in the Adjudication order dated 19 -12 -1995, after referring to the Pattern Digest 94 -95 of Bridgestone Brand of Tyres and the specification as observed from the inscription on the tyre as also on the text attached thereon, came to the conclusion that none of the tyres imported had been classified as bus or truck tyres in the catalogue of the manufacturers as submitted by the Appellant; that these are either Passenger car tyre or tyres for light trucks, vans and station wagons and as such were not freely importable under EXIM Policy. The Additional Commissioner also found that the Mail order catalogue prices, after allowing a deduction of 25%, were high between 2l/2 to 5 times of the declared prices; that even the freight for the impugned consignment was higher than the CIF price declared by the Appellants. The Additional Commissioner determined the valuation of the tyres on the basis of mail order catalogue prices and allowed a discount of 40%. He confiscated the tyres with an option to redeem the same on payment of fine of Rs. 1,00,000/ -; imposed a penalty of Rs. 50,000/ - on the Appellants, valued the goods on the basis of Mail order catalogue after allowing a deduction of 40%. On appeal, the Commissioner (Appeals) rejected the appeal, holding that the Bridgestone "Pattern Digest" and the "Goodyear Buyers Guide" show that truck tyres constitute a different category of tyres and specifications of truck tyres never figure in the Section where specification for tyres for light commercial vehicles are given; that there is a separate section for 'light commercial vehicle' and a separate section for 'bus and truck tyres' and in section dealing with truck tyres, there is no reference to tyres for light trucks or light commercial vehicles; that entry at Sr. No. 8 of the Exclusion list below para 156 of EXIM Policy clearly relates only to Tyres for buses, trucks and earth moving machinery' and as tyres for trucks are commercially recognised as a category distinct from light commercial vehicles tyres, tyres were imported in violation of Section 11 of the Customs Act read with Foreign Trade (Development and Regulation) Act and Export -Import Policy. Regarding Valuation, the Commissioner held that as the appellants failed to submit any evidence to establish that the invoice prices represented the prices at which goods were ordinarily sold and where the invoice falsely suggested that the goods imported were old/used tyres, by describing them as 'stocklot' and did not provide the unit price of the tyres, the Assessing Officer rightly disregarded the declared value and determined the value under the provisions of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

(3.) SHRI K.K. Anand, learned Advocate, submitted that the tyres imported by the appellants could be used in sophisticated cars and commercial vans manufactured for use in developed countries like U.S.A., Japan and Germany; as far as India is concerned the use of such tyres were confined to trucks/buses etc.; that these tyres were meant to be used in light motor vehicles like Toyota, Mazda etc.; that light commercial vehicles are also included in the definition of truck; that the meaning of truck could not be restricted so as to take out from its purview the light commercial vehicles; that in the examination report these tyres have been noted as tyres meant for matadore; that Hongkong Corporation Ltd., Distributor of Bridgestone Tyres, in their letter dated 12 -1 -1996, has clearly clarified that the tyres made by Bridgestone are used as tyres for light trucks in developing countries like India, Burma, Pakistan, Africa etc. and they were supplying these tyres as light truck tyres to these markets. Learned Advocate further submitted that neither in the Customs Act nor in the Import Export Policy definition of truck has been given and accordingly in absence of any definition, Dictionary meaning has to be referred to; that according to Chambers Dictionary, Truck means/ "A motor vehicle of heavier construction than a car designed for the transportation of the commodities, or often a specific commodity; A lorry (Esp USA)"; that further Motor Vehicle Act also refers only to Heavy Goods Vehicle and Light Motor Vehicle; that according to Section 2(21) of Motor Vehicles Act "Light Motor Vehicle means, a transport vehicle or omni -bus the gross vehicle weight of either of which or a motor car or tractor or road roller the unladen weight of any of which does not exceed 7500 kgs." He further mentioned that when a general term is used it will include everything and the reliance was placed on the decision in the case of Commissioner of Sales Tax v. Agarwal and Co. -1983 (13) E.L.T. 116 (Bom.) and Indian Tool Mfg. Co. v. C.C.E., Pune, 1984 (18) E.L.T. 527, wherein it was held that while interpreting a general term used for describing a commodity in any fiscal legislation, general term so used covers that commodity or item or article in all its forms and varieties. Learned Advocate also mentioned that impugned tyres were purchased as a stock lot, the value declared by them was CIF value which includes freight; that the department could not discard the invoice price in absence of any evidence that it was not a correct price; that adopting retail consumer price inclusive of local taxes and charges could not be considered for arriving at the assessable value; that as they have purchased the goods in wholesale and the transaction value is available and there is no allegation of underhand dealings the Department is not right in adopting the price mentioned in Mail order. He relied upon the decision in the case of Collector of Customs, Chandigarh v. Hind Afgan Co., 1986 (23) E.L.T. 270 (Tribunal) wherein it was held that invoice prices are acceptable when there is no proof that the quoted prices in newspapers relates to comparable goods in international market. He also relied upon the decision in the case of Kailash Chander Jain v. Collector of Customs, Cochin, 1996 (86) E.L.T. 529 and Mirah Export Pvt. Ltd. v. Collector of Customs, 1998 (98) E.L.T. 3 (S.C.), wherein it was held by the Apex Court that the burden of proving a charge of undervaluation lies upon the Revenue and "ordinarily the Court should proceed on the basis that the apparent tenor of the agreement reflects the real state of affairs and what is to be examined is whether the Revenue has succeeded in showing that the apparent is not the real and that the price shown in the invoices does not reflect the true sale price." Finally he relied upon the Final Order No. 908/97 -A, dated 20th May, 1997 in the case of Bhagwan Electro Photocopier v. C.C., New Delhi.