[Order per : K.S. Venkataramani, Member (T)]. These are two appeals preferred against the order dated 28-11-1988 passed by the Additional Collector of Customs, Calcutta by which he had ordered confiscation of the consignment of Mechanism for battery operated toys imported by appellants M/s. Kakar Toys Industries under Section 111(d) and 111(m) of the Customs Act, 1962 levying a fine in lieu of confiscation of Rs. 1,00,000/-, besides imposing a penalty of Rs. 20,000/- on them under Section 112 of the Customs Act, 1962. By the same order, the Additional Collector also ordered absolute confiscation of the plastic moulded components of toys imported by appellants M/s. Mahendra Mechanical Industries and also imposed a penalty of Rs. 10,000/- on them. The facts in brief are that the Custom House agents of appellant M/s. Kakar Toys Industries filed Bill of Entry on 11-5-1987 of a consignment containing parts of toys imported from M/s. Alltoys Co. Ltd., Hong Kong. Similarly lateron, on 24-8-1987, the same Custom House agents filed Bills of Entry on behalf of appellant M/s. Mahendra Mechanical Industries for a consignment of plastic moulded component parts. Here also, the supplier from Hong Kong was the same, namely, M/s. Alltoys Co. Ltd. On examination of the consignment of appellant M/s. Kakar Toys Industries, the Custom House found that most of the parts which go to make the complete finished toys were present in the consignment. Although certain parts were not imported, but the Custom House was of the view that this would not affect the basic character of the imported goods. In regard to the goods covered by the Bill of Entry filed for appellants M/s. Mahendra Mechanical Industries, the Custom House suspected that the other consignment contained the balance components from the consignment of M/s. Kakar Toys Industries, which, when put together, would make complete toys. On making enquiries, it was found from the Custom House agents that they had not received any documents from M/s. Mahendra Mechanical Industries for the clearance of the goods. The Custom House, therefore, seized the consignment imported by M/s. Mahendra Mechanical Industries and examined the goods in the presence of their Custom House agents. This was done in view of the inordinate delay in filing of the Bill of Entry and other documents by the Importer. On examination, out of 172 cartons imported, 18 packages contained only empty gift cases for packing the toys. The other packages were found to contain what according to the Custom House, were the missing components of toys from the consignment imported by appellants M/s. Kakar Toys Industries. A detailed examination of the two consignments led the Custom House to believe that the mechanism imported by M/s. Kakar Toys Industries was complementary to the moulded component parts imported by M/s. Mahendra Mechanical Industries and when clubbed, the two consignments would go to make complete fully finished toys. From this, enquiries were made by the Custom House regarding the price of comparable toys at Hong Kong, which showed that the value declared for the consignment by the appellants was much below the value of comparable goods. The Custom House, therefore, was of the view that all the components imported by the two parties are made in such a way that unless the two lots are brought together, they are of no use. Therefore, the Custom House clubbed the two consignments together and proceeded against the two appellants for violation of Import Trade Control Regulations because the fully finished toys are banned items under the Import Policy being in the nature of consumer goods and the appellants were also proceeded against for under-valuation. Meanwhile, appellants M/s. Mahendra Mechanical Industries also wrote to the Custom House relinquishing their title to the goods on the ground that they cannot afford to pay the demurrage charges and duty. The Additional Collector adjudicated the case resulting in the impugned order against which the present appeals have been preferred.
2. Shri N.C. Sogani, the learned consultant appearing for appellants M/s. Kakar Toys Industries submitted that there was no valid ground for clubbing the two consignments because the import had been effected by two separate firms having no relation with each other. Appellants M/s. Kakar Toys Industries, the consultant urged, had no concern with appellants M/s. Mahendra Mechanical Industries. He cited and relied upon in this connection the decision of the Calcutta High Court in the case of Collector of Customs, Calcutta v. Mitsuny Electronic Works -, wherein the High Court held that consignments cannot be clubbed if by sheer coincidence of the consignment arrived at a time; that was also a case where the Custom House also sought to club the imports made by the Export Houses which were imported together although the Export Houses were separate entitles. As regards valuation, the learned consultant referred to the correspondence of the appellants with various suppliers and their ultimately placing the order with M/s. Alltoys Co. Ltd., Hong Kong. Appellants have a factory in which they have the equipment to manufacture the components not imported by them. In fact, during the enquiries conducted by the Custom House, their factory had been visited by the Preventive Officers of the Delhi Collectorate and the facts verified. On valuation, it was further pointed out that the value adopted by the Custom House was erroneous because the department had clubbed the prices of the goods imported by the appellants and those by M/s. Mahendra Mechanical Industries and had worked out the FOB price of complete toys and have compared the price so arrived with that of complete toys manufactured by other manufacturers and the value has been enhanced on these basis. No comparison has been made on the value of the mechanism by the appellants relating to the value of comparable mechanism. There was also no direct evidence regarding under-valuation. The learned consultant urged that the very basis of the enhancement of the value was the clubbing of the consignments and when it is shown that there is no valid ground for such clubbing, there cannot be any charge of under-declaration of the value also.
3. Shri S.S. Sindhi, the learned counsel represented the appellants M/s. Mahendra Mechanical Industries. He also contended that there is no evidence to show that they and the other appellants in this case are in any way linked up. The two are, according to the appellants, separate firms. The learned counsel also referred to the adjudication order which itself observed that there is no direct evidence of such relationship. The learned counsel further pointed out that M/s. Mahendra Mechanical Industries had abandoned the goods in terms of Section 23(2) of the Customs Act, 1962 by their letter dated 15-9-1987, which was prior to the issue of the show cause notice. The learned counsel concluded that in the circumstances, there was no jurisdiction for a personal penalty on the appellants M/s. Mahendra Mechanical Industries.
4. Shri S. Krishnamurthy, the learned SDR appearing for the department contended that appellants M/s. Mahendra Mechanical Industries had imported complete toys alongwith the packing material. He further referred to the very significant circumstances regarding the import, namely, the goods were from the same supplier in Hong Kong by the same vessel. The orders were also placed by both the parties at the same time and the related invoices have consecutive serial numbers. Therefore, it was not a mere coincidence but a planned import of complete toys in split-up consignments and being consumer goods under Serial No. 122 of Appendix 2, Part-B of 1988 Import Trade Control Policy, the goods were banned for import. The Custom House had found by enquiries that the value of comparable toys was much higher and, therefore, had rightly enhanced the assessable value.
5. We have carefully considered the submissions made by the learned consultant, the learned counsel and the learned SDR. The origin of the case is the clubbing of the two consignments by the Custom House and the charges of un-authorised import and under-valuation followed from such clubbing. This is the admitted position even according to the Additional Collector’s adjudication order. It is seen that the Additional Collector has himself observed in paragraph 13 of his order that no direct link between the two factories has been established. But reliance, however, is placed on a series of significant similarity between the two consignments. These are that appellants M/s. Kakar Toys Industries have imported only mechanism whereas appellants M/s. Mahendra Mechanical Industries only the plastic components of toys which, according to the Custom House, is a peculiar circumstances of matching. Secondly, in both the consignments, items have been imported in certain specified quantities and the two consignments match so well as to make one that is to say the toy is complete as the finished product. The further aspect was that to assemble the separate parts did not require any process of manufacture, but a simple operation of fitting the items with a screw driver would suffice. The Custom House also noted the fact that in the consignment of appellants M/s. Mahendra Mechanical Industries, there were 18 packages containing empty boxes for the finished product of the complete toys and most of the parts imported also bored the inscription ‘Made in Hong Kong’ or Made in Japan indicating that the two consignments was the breaking up of one toy. Added to this was the circumstance that the goods were from the same supplier carrying by the same vessel against the order placed at the same time and the invoices bearing consecutive serial numbers. No doubt, these are all very significant features which cannot be ignored. But the question is whether there is sufficient evidence to say that the two consignments are the split supplies which, if put together, would go to make complete toys which are banned for import. It is, in this connection, we observe that appellants M/s. Kakar Toys Industries have produced the whole of their correspondence with the supplier M/s. Alltoys Co. Ltd. and they have also produced correspondence which show that they were in touch with other suppliers of these components like Universal Trading Co., Hong Kong, Sing Shine Co. Ltd. and Wealthy Toys Company. Copies of this correspondence are available in pages 24-40 of the Paper-book filed by this appellant and from this, it is seen that there was a final indent dated 22-12-1986 and its acceptance by the supplier in January 1987 with reference to that indent. Another evidence which is available on record is the un-rebutted submission of this appellant that the officers of the department at Delhi had in fact, visited their factory and the appellants had explained the position to them and also indicated their production capacity. We also note that while the other appellant M/s. Mahendra Mechanical Industries did not come-forth immediately to file Bill of Entry and clear the consignment, the appellants M/s. Kakar Toys Industries were expressing urgency for the clearance of their consignment. In the same light, we note that this appellant has further persued vigorously the case for clearance of their consignment in spite of the order of absolute confiscation of the other consignment imported by M/s. Mahendra Mechanical Industries, although that other consignment, according to the Custom House is complementary to the consignment of this appellant. In this background, we observe that there are certain precedent decisions of the Tribunal and the High Court regarding the criteria to be adopted for such clubbing. In the case of Collector of Customs, Calcutta v. Mitsuny Electronic Works - , the Hon’ble High Court of Calcutta had held that one has to look the respective import licences and not to the fact that if all the consignments covered by all the Bills of Entry are assembled together, there will be a complete machine. Similarly, the Tribunal in the case of M/s. Sharp Business Machines (Pvt.) Ltd. v. Collector of Customs, Bangalore - (Tri.) = 1989 (21) ECR 229 held that various consignments cannot be clubbed to determine the nature of the goods imported. That was a case where the same importer filed separate Bills of Entry in two separate consignments of goods from different suppliers which when put together would, according to the Custom House, make for complete plain paper copying machine. Similarly, in the case of Susha Electronics Industries v. Collector of Customs & Central Excise, Rajkot - , the Tribunal held that clubbing of two consignments of T.V. components, one at Kandla Port and another at Air Cargo Complex at Ahmedabad is not valid. There also, the two consignments were separately imported by the same importer and it was the department’s case that when clubbed together, these would form a complete T.V. set. Therefore, in this case, when the two consignments are imported by two different firms, which even according to the department have not been established to be related to one another, and when evidence is available to show that one of the company, namely, M/s. Kakar Toys Industries had independently settled the price with the present supplier, after correspondence and after enquiries with other suppliers, then in such circumstances the two cannot be clubbed together in the way the Custom House has done, in the absence of material evidence to support such clubbing on the basis that the two firms are only in the nature of a facade for evading the prohibition of the import. So far as the other appellants M/s. Mahendra Mechanical Industries are concerned, they have already abandoned the goods in terms of Section 23(2) of the Customs Act, 1962, according to which the owner of any imported goods may, at any time, before an order for clearance of the goods for home consumption has been made, relinquish his title to the goods and thereupon, he shall not be liable to pay the duty thereon. This appellant has relinquished the title to the goods by their letter dated 15-9-1987 after filing the Bill of Entry and before the Show Cause Notice was issued and before the adjudication proceedings had been started. The goods imported by them are now under absolute confiscation. As regards the personal penalty on them, we find that it is also linked to the main plank of the department’s case that the import by the two appellants forms part of one and the same finished goods, but when we have found that such clubbing of the two consignments is not borne out by evidence on record, there is no other ground in the impugned order on which the penalty on this appellant is maintainable. So also on the question of valuation because of the finding that the two consignments cannot be clubbed, the charge of under-valuation cannot succeed because it is also based on the premises that the two consignments being one and the same should be clubbed to form the basis of import of the banned item, namely, fully finished toys.
In the result, the appeal of M/s. Kakar Toys Industries is allowed. The personal penalty on appellants M/s. Mahendra Mechanical Industries is set aside. The order of absolute confiscation of the consignment imported by them is maintained. The appeals are disposed of in the above terms.