COLLECTOR OF CUSTOMSversusM/S. TELEVISION AND COMPONENTS LTD. AND ORS.

                      COLLECTOR OF CUSTOMS                                       A

     M/S. TELEVISION AND COMPONENTS LTD. AND ORS.

                           FEBRCARY 24, 2COO

            jS.P. BHARUCHA AND MRS. RU\fA PAL, n]                                B

       Customs Act 1962/Customs Valuation (Detennination of Price of Im--
ported Goods) Rules 19/il:f- Sections 14, 10/i and 111 /Rule 3-lmport of Tape
Desk Mechanisms from two finm~uplicate invoices and orders bearing
same number and date disclosing different values recovered during                C
raids-Giarge of under-invoicing and mis-declaration of value of goods and
consequent evasion of customs duty- Transaction Value-imposition of dif-
ferential customs duty-Held, valid.

       Import and Export (Control) Act, 1947- Section 3(2)-lmport Control
Order, 1955---Clause 3-Tape Desk Mechanisms removed from OGL                     D
lists-Licence required for impo~Amendment of Letters of Credit opened
on misrepresentation to avail exemption--lmport of goods without requisite
licence- -Violation of-Held, the adjudicating authority should decide the
violation- Scope of adjudication spelt out.

      Penalty-- <'omposite penalty levied by Collector for violation of Import
                                                                                 E
Control Order and mis-declaration in value of goods- Held, quantum of
penalty will have to be re--detem1i11ed by the Collector after detennining the
issue on the licensing aspect by the adjudicating authority.

       Respondent-company imported Tape Desk Mechanisms (TDMs) F
from a foreign firm Y at S$ 250.00 per set. The import consignment was
intercepted by Directorate of Revenue Intelligence (DRI) on receiving
information of under-invoicing of the TD Ms and violation of provisions of
Import Control Order, 1955 for investigation. High Court, on a Writ
Petition filed by the respondent challenging the investigation, directed the
DRI to complete the investigation within two months. The DRI conducted G
raids at oflice and factory premises of the respondent and recovered
several documents. Statemenh from Managing Director and other persons
including the clearing agent were gathered under Section 108 of the Cus-
toms Act, 1962. TDMs were seized by the DRI. The High Court, on a
petition filed by the respondent challenging the seizure directed H
                                    1139
                                                                                     A

    1140                  SUPREME COURT REPORTS                   [200011 S.C.R.

A provisional release of TD Ms against security.

          The DRJ recovered in raids, identical orders bearing same numbers
    and dates, pertaining to the months of December 1988 and January 1989,
    placed by the respondent with another firm M as placed with firm Y for
    supply of TDMs at S$ 343.50 per set. In March 1989, by a public notice,
B   TDMs were removed from Open General Licences (OGL) list thereby
    requiring licences for import und[r Import and Export Policy. However,
    the public notice allowed imports of TDMs without licence where ir-
    revocable letter of credit (LJCs) were opened before the date of the public
    notice provided shipments are made within a period of 90 days from the
c   date of the public notice. To avail of the exemption, the Revenue found that
    the respondent obtained amendment of the UC by its banker, which was
    originally opened in favour of firm M in January 1989, in favour of firm
    Y on misrepresentation that firm Y was an agent of firm M. The Revenue
    found that firm Y is independent of firm M and the order placed with firm
D   Y in January 1989 is a fabricated one. The Revenue also found that the
    orders were placed with firm Y after March 1989 with a new UC, which
    required a licence for import, which the respondents did not have. The
    Revenue further found that the fall in declared value of TDMs from S$
    343.50 to S$ 250.00 did not reflect the real value of TD Ms.

E          Collector of Customs hsued a show-cause" notice alleging inter alia
    that the i·espondent is liable to pay the difference of duty in respect of the
    TDMs calculated at S$ 343.45 per set instead of S$ 250.00 and contraven-
    tion of Import Control Order. Collector, by an order, held that the respon-
    dent evaded customs duty of Rs. 32,03,594 and that the entire consignment
F   was liable to confiscation under the Act on the ground of evasion and
    illegal import of TD Ms without an import licence, which is in contraven-
    tion of the provisions of the Import and Export (Control) Act and Import
    Control Order, 1955. Since the goods had been released on the directions
    of the High Court, the Collector ordered the respondent-company to pay
    the evaded differential customs duty and a penalty of Rs. 40 Lakhs, being
G   redeemable value of the goods and a further penalty of Rs. 5 lakhs each
    by the respondents-Managing Director and Director. In Appeal by the
    respondent, Tribunal set aside the imposition of differential duty and
    penalty. The Tribunal further remanded back to the Collector directing
    re-adjudication of the licensing aspect as per the directions of the High
H   Court and the contention of the Revenue.
     COLLECTOR OF Cl.J~IOMS v. IBLEVISION A."110 COMPONENTS LID.       1141

      In appeal to this Court, the Revenue contended that the respondent       A
imported the TDMs by under-invoicing that the mis- declaration in value
resulted in evasion of customs duty, and that the import of TDMs con-
travened the provisions of the Import and Export (Control) Act, 1947 and
the Import Control Order, 1955 as the import was made without a licence
as required.
                                                                               B
      The respondents contended that there was no mis-declaration in
value and under-invoicing, and that the TDMs supplied by firm Y and firm
M are different models.

      Partly allowing the appeal, the Court                                    c
      HELD : 1.1. The finding of the Collector that the TDMs imported
from Y should be valued at S$ 343.45 instead of S$ 250.00 was justified in
fact and was keeping with the relevant statutory provisions. [1146-C]

       1.2. The argument of the respondents that the TDMs supplied by firm     D
Y and firm M are different models was never established and was contrary
to the evidence. The respondent- company utilised UC to import 500 sets
of TDMs from firm M @ S$ 260 per set and 3000 sets of TDMs at S$ 250
from firm Y. No change had in fact been effected in the UC in respect of
the nature of the goods for which the UC was initially opened. In other        E
words, the type and rate of TDMs of S$ 343.45 remained the same. In
availing of the UC, the parties thereto must be taken to have done so in
fulfilment of the original order placed on firm M where the rate mentioned
was S$ 343.45 per s~t. Secondly, from Y's invoice, which was filed with the
Customs authorities, also described the TDMs of the similar model. It was
also admitted by the respondent-Managing Director in his statement under       F
Section 108 of the Act that in fact no order had been placed on firm Y on
5.1.1989 and the only genuine order was the one placed on firm M. Since
Firm Y's supply of the 3000 sets of TD Ms was as per firm M's order, it must
be taken to have supplied the same goods at the rate of S$ 343.45 per set.
Thirdly, the TDMs which were supplied by firm Y were the same as those
for which the order had been placed on firm M and this is supported by the     G
statements recorded under Section 108 of the Act. The clearing agent, in his
statement under Section 108, stated that the price of TDMs, shown by the
respondent, was unusually low. The Collector correctly determined the
value of the TDMs supplied by firm Y to "such or like" the goods for which
the order was placed on firm M within the meaning of Section 14(1) of the      H
    1142                  SUPREME COURT RHORTS                     [2CCOl l S.C.R.
A Customs Act, 1962. The finding of the Collector is also justifiable under
    Section 14(1A) of the Act. (1149-B-H; 1150-G; 1151-G]

         Collector of Customs, Calcutta v. Sanjay Chandiram, [1995] 4 SC 222
    and Naresh J. Sukhawani v. Union of India, (1996) 83 ELT 258 SC, relied
    on.
B
          1.3. Firm Y supplied the TDMs which was m, per the order placed
    on the firm M at SS 343.45 per set. The 'price payable' for the goods
    remained at S$ 343.45 per set which is the transaction value within the
    meaning of Rule 3 of Customs Valuation (Determination of Price of
C   lmported Goods) Rules 1988. The finding of the Collector that the unit
    price of the TDMs is S$ 343.45 and further order regarding payment of
    differential duty is upheld. (1152-D-H]

          2. With regard tu import of the TDMs without a licence as per
    Import Control Order, 1955, the adjudicating authority should have to
D   decide (i) whether in law, a licence subsequently produced in respect tu
    items already imported b acceptable in law; (ii) if so, whether the licences
    in fact covered the items imported and are otherwise valid. (1153-Fl

           3. The penalty levied by the Collector was a composite one, which
E was imposed both on account of violation of Import Control Order and
    mis-declaration of value and evasion of customs duty. It is not possible to
    apportion the quantum of penalty between the contravention found. There-
    fore, while upholding the Collectors' finding Oil the isslle of mis-declara-
    tion and evasion, the question of quantum of penalty is lell tu be
    re-determined by the Collector after determining the issue Oil the licensing
F   aspect. There is no finding by the Tribunal that the penalty imposed was
    unreasonable. In the circumstances of the case, the quantum of the penalty
    was justified. (1153-H; 1154-A-B]

           4. The decision of the Tribunal is set aside in so far as it relates to
G the finding on mis-declaration and evasion. The order of the Collector
    directing payment of differential duty is affirmed. On the question of the
    violation of the Import Control Order, the adjudicating authority will
    decide the matter. Depending on his decision, the quantum of penalty will
    thereafter be determined by the Collector in the light of the findings.
H                                                                    [1154-C-D]
COUEC'l'UR UF CL'SfOMS v. TEHVISION AND COMPONENTS L:ID. [RUMA f AL,   J.; 1143
      CIVIL APPELLATE JL'RISDICTION : Civil Appeal Nos. 9026-                     A
9028 of 1996.

      From the Judgment and Order dated 24.3.95 of the Central Excise
and Gold (Control) Appellate Tribunal, New Delhi in P.O. Nos. 244-246
of 1995 in A. Nos. C/725/92-A, C/726· 727/92-A.
                                                                                  B
     RN. Salve, Solicitor General, K.N. Bhat, Additional Solicitor
General, Wasim A. Quadri, Y.K. Verma, A. Subba Rao, Nikhil Sakhar-
dande, P. Parmeshwaran and S.K. Agnihotri for the Appellant.

       A.B. Rohtagi, Joseph Vellapally, Ms. Aparna Rohtagi, K.B. Rohtagi,         C
Mahesh Kasana, Mahesh Rohtagi and S.Y. Deshpande for the Respon-
dents.

     The Judgment of the Court was delivered by

      RUMA PAL, J. (1) The issues in these appeals arise out of the import        D
of Tape Deck Mechanisms (TDMs) by the respondent No.1. According to
the appellant, not only were the TDMs imported at a gross under-value
which resulted in a non-payment of the appropriate customs duty but they
were also imported contrary to the provisions of the Import and Export
(Control) Act, 1947 and the Import Control Order 1955.
                                                                                  E
      (2) The TDMs had been imported by the respondent No. l at S $
250.00 per set from Yamato Industrial Co. Ltd. (referred to hereafter as
'Yamatos). Acting on intelligence that the imported TDMs were
fraudulently under-invoiced and that the provisions of the Import Control
Order, 1955 had been violated, the consignment was intercepted by the             F
Directorate of Revenue Intelligence (DRI) at Kandla Port. Investigations
were started by the DRI. The respondent No. 1 challenged the investigation
under Article 22.6 before the High Court at Gujarat. The writ petition was
disposed of by directing the DRI to complete the investigation and issue
the show cause notice within two months.
                                                                                  G
      (3) Raids were conducted at office and factory premises of the
respondent No. l by the DRI and several documents recovered. Statements
of the Managing Director, the Director and Assistant Manager as well as
the clearing agent uf tht! rt!spondt!nt No. 1 were recorded under Section
108 of the Custom' Act, 1962 (referred to as the 'Act').                  H
    1144                  SUPREME COURT REPORTS                  [2000) 1 S.C.R.

A          (4) The TDMs were seized. The respondent No.l appears to have
    filed a Second Writ Application in the High Court at Gujarat challenging
    the seizure of the TDMs. The High Court directed the provisional release
    of the TD Ms against security. The goods were accordingly released but the
    investigation continued.

B         (5) On the basis of the documents recovered and statements under
    Section 108, a detailed show cause notice was issued to the respondents on
    15th June 1990 alleging inter alia that the respondent No.1 was liable to
    pay the difference of duty in respect of the TD Ms calculated at the rate of
    S $ 343.45 per set instead of S $ 250.00 as well as alleging contravention of
C   the Import Control Order. The respondent No.l replied to the Notice. The
    Collector gave the respondents a hearing.

          (6) The Collector after considering the evidence found that there was
    a deliberate mis-declaration of value, manipulation of documents, attempt
    to evade payment of full customs .duty and attempt to circumvent the
D   Import Control Regulations by the Respondent No. 1 and its Directors.
    According to the Collector, the TDMs imported by the respondent No.1
    at S $ 250.00 per set were of the value of Singapore Dollar 343.45 per set
    and that the respondent No.I should have declared the value of the TDMs
    at Rs. 88,34,698 as against the declared value of Rs.64,30,847 . He, there-
E   fore, concluded that the respondent No.I had sought to evade duty to the
    extent of Rs. 32,03,594.00 and that the entire consignment was liable to
    confiscation under Section lll(m) of the Act. The Collector also held that
    the TD Ms required an import licence and since no import licence had been
    produced, the goods were liable for confiscation under section 111(d) of
p   the Customs Act read with Section 3(2) of the Import and Export (Control)
    Act, 1947 and Clause 3 of the Import Control Order, 1955.

          (7) Having regard to his findings and the fact that the goods had
    already been released pursuant to an order of the High Court, he directed
G   the respondent No.l to pay the differential duty of Rs.32,03,594.00 and
    imposed penalty of Rs.40 Lakh on the n;spondent No.I under section
    112(a) of the Act (as the redeemable value of the goods) and Rs.5 Lakh
    each on the Managing Director and Director of the respondent No.1.

           (8) The respondent No.l and its Directors preferred an appeal
H before two Members of the Tribunal.
COi LK'IORUFCUSfOMSv. TF:LEVISIONANDCQMPONENfSLID. [RUMAPALJ.J       J l45

      (9) During the pendency of the appeal the Gujarat High Court on a A
Writ Application filed by the respond1;;nt No.1 passed an order on 26th
June, 1992 to the following effect:

            "Notice. Mr.B.B. Naik, learned counst:l, waives service of
        notice.
                                                                             B
        We heard Mr. S.I. Nanavati, learned counst:l for the petitioners
        and Mr. H.M. Mehta, senior Central Government standing coun-
        sel, for the respondents.

            We have been informed that as against the adjudication order, C
        dated 26th February, 1992, the petitioners have already pn:forred
        an appeal. The only grievance i~ that r.:spondent No.2 is not
        permitting the petitioners to produce the import licence. His
        grievance could be ameliorated by directing respondent No.2 to
        accept the import licence within two weeks from today and respon-
        d.:nt No.2 shall proceed with the matter in accordance with law. D
        This petition is disposed of in the abov1: terms. Notice is dis-
        charged. No costs."

       (10) As far as the appeal befon: th..: Tribunal was conctrned, on a
difference of opinion between the two members as to whether the order of E
the Collector should be upheld or not, the matter was referred to a third
Member. The third Member concurred with the view that the order of the
Collector in so far as it assessed the value of the TD Ms at Singapore Dollar
343.45 was wrong. Consequently, the imposition of differential duty was set
aside. On the question of the violation of the Import Control Order, the
Tribunal acted on the basis of the High Court order and the concession of F
the departmental rcpresentative that the issue was one which the "original
authority" would have to look into and decide and remanded the matter
back to the Collector with liberty granted to the parties to produce any
fr.:sh evi.dencc bdore the adjudicating authority in this connection. In vit.;W
of this order, the penalty imposed by th.: Collector on the rtspondents \\as G
also set asidt.

        (11) These appeals were thereafter preferred. No stay having been
granted, the order of the Tribunal directing a re-adjudication of the
lict:nsing aspect was taken. up by the Commissioner of Customs on 27th
September, 1995. Before the Commissioner, additional licences w<:re H
    1146                  SUPREME COURT REPORTS                  (2G:l0} l S.C.R.
A   produced by the respondent No. 1. It was noted that since it was already
    found by the Collector that the licence covered the goods in question, and
    that the issue had not been pursued before the Tribunal, the licences
    should be accepted. The order, some what ambiguously, concludes with the
    sentence:

B           "However, if the Department now decides not to accept the licen-
            ces the party may be given another hearing to argue the merits of
            the case from the ITC angle.•

           (12} The first question raised before us by the appellant relates to
    the finding of mis-declaration of the value and the evasion of customs duty.
C   In our opinion, the finding of the Collector that the TDMs imported from
    Yamato should be valued at S $ 343.45 instead of S $ 250.cn was justified
    in fact and was in !teeping with the releVC!Jlt statutory provisions on the
    subject. As for the finding on facts, the relevant and admitted facts are
    required to be set out chronologically.

D        (13) The respondent No. 1 had placed several orders in July, Sep-
    tember, October and December 1988 on Mis Mohan lmpex for supply of
    TD Ms. None of the orders mentioned the model or the make of the TDMs.
    Each of the earlier consignments had been obtained by respondent No. 1
    from Mis Mohan lmpex @ SS 343.45 per set.
E         (14} As far as the consignment in question is concerned, the ORI
    recovered two identical proforma invoices bearing the same number, both
    dated 29.12.98 for supply of 3G(l() sets of TDMs. Both were invoices of 'W'Js
    Mohan lmpex but the price quoted in one was S $ 343.45 per set llJld the
    other for S $ 250.C:l per set. The respondents have not been able to explcin
F   this duplication of invoices.

        (15} The respondent No. 1 then placed an order on M/s Mohan
  lmpcx being Order No.TC-89-004 dated 5th January 1989 for supply of
  30CO sets of TDMs at SS 343.45 per set. The ORI recovered an identical
  order bearing the same number and date placed by respondent No. 1 on
G Yamato but @ S $ 250.00 per set. The respondent No. l's Director
  admitted in his statement under Section 108 that no order was placed on
  Yamato on 5.1.89 and this was a fabricated document.

        (16) A letter of credit was established by respondent No. 1 through
  the Bank of India in favour of Mis Mohan Impex for supply of "Electronics
H components for VCRs, viz. Tape Dec!t Mechanisms as per order No.TC-
COLLECTOR OF CU!ITOMS v. TELEVISION AND COMPONENTS LID. (RUMA PAL, J.)   1147

80-c:J4 dated 5th January 1989".                                                 A
      (17) It is not in dispute that till 21st March 1989, TDMs were covered
by Open General Licences (OGL) under the Import and Export Policy of
April 1988 to March 1991. By public notice dated 21st March 1989 the
lmpoft and Export Policy was amended by removing TDMs from the list
of items covered by OGL. Therefore, the import of TD Ms after 21st March         B
1989 required a licence in terms of clause 3 (1) of the Control Order. The
public notice, however, allowed certain imports of TDMs without licence
subject to the fulfilment of conditions detailed in paragraph 4 of the notice,
as under:·

        "In respect of raw materials, components and consumables taken
                                                                                 c
        out of Open General Licence in terms of this Public Notice import
        under Open General Licence by eligible importer shall not be
        permitted except to the extent of irrevocable letters of credit
        already opened and established before the date of this Public
        Notice for which shipments are made within a period of ninety            D
        (90) days from the date of this Public Notice."

       (18) The respondents sought to avail of this exemption. To this end,
on 26th May 1989, the respondent No. 1 wrote to the Reserve Bank of
India through the Bank of India stating that it had been informed by M/s
Mohan lmpex that the material 'will not be ready for shipment before July        E
1989. Since we are urgently in need of the Tape Deck Mechanism to ensure
smooth production, we advised the beneficiary to arrange for immediate
shipment. Accordingly, our beneficiary could fmd out a Japanese supplier
who is in a position to give immediate delivery'. It was also stated that the
supplier, Yamato had written stating that they were 'holding the goods           F
ready' and that L/C should be amended accordingly. The implication of
this letter is that Yamato was to supply the same material for which the
order had been placed on M/s Mohan lmpex and that Yamato was the
agent of M/s. Mohan lmpex.

      (19) Incidentally, the respondent No. l's Director subsequently ad· G
milted that the amendment of the L/C had been obtained on a mis-repre-
sentation that Yamato had been introduced to the respondent No. 1 by Mis
Mohan Impex in May 1995. In fact, the respondent No. 1 and its Directors
were personally known to Yamato and its partners for several years and
Yamato was wholly independent of M/s. Mohan Impex.                        H
                                                                                      }.
                                                                                      "

    1148                  SUPREME COURT REPORTS                    (2000] 1 S.C.R.

A          (19-A) The Collector held that the consent of the Banlc of India and
    Reserve Bank of India to the amendment of the Letter of Credit by
    substituting Yamato in place of M/s. Mohan lmpex and change in the Port
    of shipment in place of origin of the TDMs was obtained by suppn:ssion
    and mis-representation of essential facts. It was also held that the lettt:r of
    credit which was operated for payment of M/s. Yamato was in fact a new
B   letter of credit and therefore the import of the TD Ms from Yamato was
    not covered by clause 4 of the Public Notice dated 21st March, 1989.
    Before the Tribunal the advocate for thi: respondents did not press for the
    validity of the letter of credit from January, 1989 and conceded that it may
    be deemed as if the letter of credit was opened in May 1989 as held by the
c   Collector.

          (19-B) In view of this, the entin: consignment of TD Ms required an
    import licence under clause (2) of the Import and El<port (Control) Act,
    1947 and clause 3 of the Import Control Order, 1955 prior to the import

D          (20) Returning to the narration of facts relevant to the issue of
    valuation. After the issuance of the Public Notice, then: was a purported
    fall in the declared value of TDMs from S $ 343.50 to S $ 250.00 per set.
    Yamato is a Japanese concern. Yet on 17.5.1989 Yamato is alleged to have
    given a fresh proforma invoice to the respondent ~o.1 quoting the price in
E   Singapore Dollars per set instead of quoting the price in yen. As said by
    the Collector "Out: to the change in the Import Policy, the importers had
    a special interest in ensuring that the unit price w~ brought down so that
    the quantity of import could be increased.'

          That this dramatic "fall" in value of the TD Ms did not reflect the real
F   value of the TDMs is borne out by the evidence both documentary and
    oral.

          (20-A) At the outset it is clear that if the shipment by Yamato was
    pursuant to the fabricated order dated 5th January 1989 placed on it, the
G   value declared by it cannot be accepted as genuine. See Collector of
    Customs, Calcutta v. Sanjay Chandiram, [1995) 4 SCC 222. Therefore the
    value of the TDMs would have to be determined according to the law
    applicable.

           (20-B) Section 14(1) of the Act provides for valuation of goods for
H purposes of assessment by reference to the price at which "such or like
COLLFCTOI{ OF CUSTOMS v. TELEVISION AND COMPONENTS LTD. [Rt:MA PAL, l)    1149

goods" are ordinarily sold at the time and place of importation in the cause      A
of international trade.

       (20-C) Much of the arguments of the respondents before the Collec-
tor, the Tribunal as well as this Court proceedi:d on the basis as if it were
established that the TDMs which were to have been supplied by M/s.
Mohan lmpex were different from the TDMs in fact supplied by Yamato.              B
lt was argued that M/s. Mohan Impex was to supply TDMs of National
Model whereas M/s. Yamato had supplied VCRs of NEC model. To this
end, several documents in connection with the price of NEC model TDMs
wen: also sought to be relied upon by the respondents. The basis of the
argument was never established and was contrary to the evidence.                  C
        (21) Firstly, the respondent No. 1 utilised the letter of credit to
import 500 sets of TDMs from M/s Mohan Impex @ S$ 260 per set and
30CO sets of TD Ms at S$ 250 from Yamato. The 500 sets from M/s Mohan
Impex arrived at Bombay and the 3000 sets from Yamato arrived at Kandla.
~o change, howcwr, had in fact been effected in the Letter of Credit in           D
respect of the nature of the goods for which the letkr of credit was initially
opened, namely, ''electronics components, namely, Tape Deck
Mechanisms, as p.:r order No. TC-89-004 5:89". In other words, the type
and rate of TD Ms of S $ 343.45 remained the same. In availing of the letter
of cr..:dit, ~he partie~ tht>reto must be t "kt'u to have done sn in fulfilment   E
of •he original ord.::r placed on th" M· >hau lmpex whae the r"te mentiQned
was S $ 143.45 p..:r s..:t.

      (22) Secondly, Yamato's invoice which was filed with the Customs
authorities also described the TDMs as 'electronic components for VCRs
viz. Tape Deck Mi::chanisms as per order No. TC/89/004 dated 5.1.89'. As          F
already noted, it was admitted by the respondent No. l's Director in his
statement under Section 108, that in fact no order had been placed on
Yamato on 5th January 1989 and the only genuine order was the one placed
on M/s Mohan Impex. Since Yamato's supply of the 3000 sets of TDMs
was "as per" Mohan Impex's order, it must be taken to have supplied the           G
same goods .i.t the rate of S $ 343.45 per set.

      (23) Thirdly, that the TDMs which were supplied by Yamato were
the >ame as those for which the order had been placed on M/s Mohan
Impex ~ further supported by the statt:ments recorded under Section 108
of the Act. (See in this connection : Naresh J. Sukhawani Vo Union of btdia, H
    1150                 SUPREME COURT REPORTS                  (2000] 1 S.C.R.
A (1996 (83) ELT 258 (SC).) The respondent No. l's Director and Assistant
    Manager confirmed before the DRI in their statements under Section 108
    of the Act that the TDMs which were sent by Yamato were the same as
    those for which the orders were placed on Mis Mohan Impex. The Assis·
    tant Manager of the respondent No. 1 stated that the order with M/s
    Mohan Impex was subsequently 'transferred" to Yamato and not thmt a
B   fresh order was placed. Even the Managing Director of respondent No. 1
    had this to say:

            "I also state that whatever item was entered into contract with Mis
            Mohan Impex for the l/C opened with them in January '89
C           remained same (but for the make) - even in our fresh contract with
            Yamato Japan. Thus, there is no material change in our fresh
            contract with Mis Yamato."

          (24) Now, the TDMs supplied by Yamato bore no marking and the
    order on Mis Mohan Impex did not mention the model Interestingly, the
D   clearing agent of the respondent No. 1 in his statement under Section 108
    said:

            "On the basis of common experience, it is stated that it is a fact
            that though importer had been telling the customs at !(ar.dla port
            that these T.D.M.'s are not of national 0-30, there cannot be any
E
            proof of these as it is undisputed that TOM (Tape Dec!t
            Mechanism) of National G-30 is 100% identical to the unes being
            now cleared by the importer. I can only say on the basis of my
            experience of exclusively handling this item (V.C.R./T.V. and their
            components) for some importers and other sister concerns thllt as
F           per sample drawn and being submitted to D.R.I. today, it is HID%
            same and identical to National G-30 but for only G-30 Mar!tin~
            not being shown on these sets. Anyone in this trade can also know
            the same as it is a trade information of such and such manufac-
            turer."
G        (25) Again the clearing agent stated that the price of the TDM as
    shown by respondent No. 1 was unusually low. He said:

            ''I am very. well aware that.in past consignments, the same was
            never so low at S $ 250 per set. Tape Deck Mechanism has never
H           been passed by me for any importer for any model. I had told the
COLLECIOROFCUS"IOMSv. TELEVISIONANDCOMPONENTSLTD.(RUMAPAL,J.j            1151

       · importer that this value was too low but they stated that they would    A
         manage by showing that these goods were different. The party also
         said they would produce some engineer to show that these were
         different while I on the basis of my experience told them that these
         goods did not look different from what I have been clearing on
         their behalf. But they said they would try to bring some engineer."     B
     (26) The respondents sought to rely upon an invoice dated 10th
Mnrch 1989 passed by NEC to Yamato for which the price was shown at
approximately@ 237.c:> S $per set. The invoice further showed that the
shipment was. to be made to India. The significance of the date was not
lost on the Collector who noted that it could not relate to the shipment in      C
question as admittedly the contract for supply of TDMs was placed on
Yamato by respondent No. 1 only in May 1995. The Collector also dis-
counted· the evidentiary value of two other invoices produced by respon-
dents in respect of NEC model of TDMs on the ground that they related
to imports of 8 to 10 months after the date of import of the consignment
in question.                                                                     D

      (27) The Collector on the other hand relied upon earlier invoices
showing the value of TDMs S S 343.45 per set. There is nothing on record
to show thr.t the earlier invoices did not refer to TD Ms of the type supplied
by WJs Yamato. The A~sistant Manager of respondent No. 1 bad admitted            E
th& respondent No. 1 had effected many shipments of the same TDM (4
to 5 shipments) e&lier.

     (28) The Collector, in the circumstances narrated, correctly deter-
mined the value of the TDMs supplied by Yamato to be "such or like" the
goods for which the order was placed on Mis Mohan lmpex within the               F
meaning of S.14 (1) of the Act.

      (29) The fmding of the Collector is also justifiable under Section 14
(lA) of the Act. Section 14(1A) provides for the determination of the price
in accordance with rules made in this behalf subject to the provisions of
sub-section (1). The rules which have been framed in this connection are         G
the Customs Valuation (Determination of Price of Imported Goods) Rules
1988 (hereinafter referred to as the Valuation Rules).

     (30) Rule 3 of the Valuation Rules provides for the determination
the method of vllluation and states that:                              H
    1152                  SUPREME COURT REPORTS                    J20GO] l S.C.R.
A            "For the purpose of these rules:- (i) the value of imported goods
             shall be the transaction value;

             (ii) If the value cannot be determined under the provisions of
             clause (i) dbove, the value shall be dt:terrnined by procet:ding
             si::qui::ntiaily through Rules 5 to 8 of these rult:s."
B
           (31) Rule 4 sub-rule (2) provides that the transaction value of im-
    ported goods shall bi:: acccptt:d. Thi:: transaction valui; has been defined in
    sub-rule (1) of Ruic 4 as the price actually paid or payable for the goods
    whi::n sold for export to India subject to certain adjustments with which we
C   are not concerned.

          (32) Yamato ~upplit:d the TDMs ·'as pa Ordt:r :-;o. TC/89/004 dated
    5.1.89 which was thi; ordt:r placed on M/s Mohan lmpcx for supply of
    TDMs at S $ 343.45 pt:r set. The: 'price payabk for tht: goods remainc:d
    S $ 343.45 per st:t. The transdCtion in this case cwn at the time of import
D   n:fom:d to the order placc:d on M/s Mohan lmpcx. The pnce payable in
    respect of that transaction for the TDMs was S $ 343.45 per set. It may,
    therefore, be stated that the transaction value was S $ 343.45 per TD M set
    within the meaning of Rule 3.

          (33) The n:asoning of the two Members of the Tribunal who st:t aside
E
    the ordt:r of th.: Colkctor proci::eded on the fallacious premise that the
    Collector could not 'adopt two different dates, one from the date- ot L;'C
    and other from the date of the valuation'. They also relied on thc: invoice
    dated 10th March J989 issued by NEC as well a statement of tht. Collector
    quoted out of conh:xt to come to the conclusion that it was e 11dc:nt that
F   the value of TD Ms had substantially fallen.

           (34) The two Members misread the order of the Collector compkte-
    ly. The Collector had refem:d to the datt: of L/C only in conni:ction with
    applicability of paragraph 4 of the Public Notice and not in conn ;ctiun with
G   the valuation at alL They also misconstrued the statement of th•: Collt:ctor
    reiating to the fall in prices. What he had said was that the fall m price of
    TD Ms was manipulated because of the change in the impon policy by
    which the import of TD Ms was restricted considerably.

           (35) We would, therefore, uphold the fmding of the Co'lector that
H the unit price of the TD Ms for S $ 343.45 as also his fur her order
     COLLECTURm CUS1'0MS v. TELEVISION AND COMPONENTS i..TD. [RUMA PAL. J.]   1153

     regarding paymt:nt of differential duty.                                          A
            (36) The oecond issue raised by the appellant before us is whether
     the question of acceptability of the licences covering the import of the
     TDMs should have been remanded by the Tribunal. According lo the
     appellant, the import of TDMo clearly contravened the Import and Export
     (Control) Act, 1947 and the Import Control Ordtor 1955. It is submitt.:d          B
     that the import of the TD Ms having been made without a licence there was
     no quescion of submission of a licence subseqm:nt lo the import. According
     to the respondents the appellant should not be allowed to raise the issue
     because the appellant had participated in the proceedings before the
     Commissioner after the remand and that the hearing was proceeding.                C
           (37) We accepc the submission of che rnspondents, not on the ground
     put forward but because the appdlant's repn:oentative before tht: Tribunal
     had conceded that the issue should be decidt:d by the original authority in
     terms of thc order of the High Court. Ni.:vertheless, w1: would likc to clarify
     thc scope of the issue before the adjudicatmg authority.                        D
            (38) It is not clear on what basis the High Coart was persuaded to
     allow the import licence to be produced subsequent to the importation of
     tht.: goods. Howevcr, in directing the matter to be proceeded with in
     accordance with law, it is clear that the High Court did not decide finally
     whethl:r the licences could, at all, be relied upon by the respondent No. l       E
     for avoiding their liability for contravention of clause (3) of the Control
     Order. The adjudicating authority will, thert:fore, have to decide (i)
     whether in law, a licence subsequently produced in respect of items already
     imported is acceptable in law, (ii) If so, whether the licences in fact covered
     the items imported and are otherwise valid.                                       F

            (39) This brings us to the question of penalty. It is to be remembered
     that the Collector had imposed a penalty of Rs. 40 lakhs on the respondent
     No. 1 as being equivalent to the redemption value of the TD Ms which were
     not available for confiscation and Rs. 5 lakh each on the respondent No.
     l's Directors. The penalty was a composite one in the sense that it was G
     imposed both on account of violation of the Import Control Order and
     because of mis-declaration of value and evasion of customs duty. The
     majority set aside the penalty on the respondent No. 1 because they
     negatived the finding of under valuation and evasion and also in view of
     the order of remand. It is not possible to apportion the quantum of penalty H

.•
    1154                  SUPREME COURT REPORTS                   (2C:?:>) 1 S.C.R.
A between the contraventions found. Therefore, although we have upheld the
    Collector's finding on the issue of mis-decfuration and ewsion, the questioa
    of quutum of penalty will have to be re-determined by the Collector after
    determining the issue on the licensin:; aspect.

           (<O) We ma!te it clear th2.t there WllS no fimdina by the Tn1nmal tJmt
B   the penalty imposed was umezsonable. On the other band, the disscntins
    Member who had opined against the remand, had held, in our opwon
    correctly, that in the circumstmces of the case the quantum of ilie penalty
    was justified.
           (41) The appeal is accordingly partly allowed. The decision of the
C Tribunal is set aside in so far as it relates to the finding on mis-declaration
  and evasion. The order of the Collector directing payment of differential
  duty is affirmed. On the question of ilie vioktion of the Import Control
  Order, the adjudicating authority will decide the matter in the liaht of the
  questions earlier framed. Depending on his decision the quantum of penal-
D ty will thereafter be determined by the Collector in the 1i3bt of the fimdin3s
  in this judgment. The respondents will pay the costs of the appeals to the
  appellant assessed at Rs. sc:?:l.

    B.S.                                                 Appeal partly alkr.r.:d.