[Order per : Justice U.L. Bhat, President]. - Appellants imported one consignment of 20,000 Gross Bolt Ring (Spring Ring) and 5,00,000 number of Chain of Hongkong origin from a Hongkong supplier and presented a Bill of Entry dated 11-8-1989 through the Clearing Agent at the declared value of HK $ 1.00 per gross of Bolt Ring and HK $ 7.3 for 100 Meters of Chain. On objection being raised about the value, appellants waived show cause notice but gave written submissions. Representative samples were also taken and weighed. The additional Collector accepted the declared value in relation to Bolt Ring but loaded the value of Chain from HK $ 7.3 per 100 Meters to Rs. 56.36 per kg. weight. This order is now challenged.

2. The Additional Collector noticed that in regard to chain, unlike in the previous importation, specification and design number of the chain had not been declared by the appellants. On weighment and calculation it was found that the declared value was Rs. 25.58 per kg. which was even less than the price of Rs. 28.18 per kg. for brass scrap imported at the Calcutta Port. Metal Bulletin (UK) also showed the price of brass scrap “Honey” at the material time was US $ 1700 per MT i.e. Rs. 28.18 CIF per kg. The Additional Collector concluded that since the price of brass scrap was Rs. 28.18 per kg. the price of finished product, namely Chain must be much more and adding 100% manufacturing cost, arrived at the CIF value of Rs. 56.36 per kg. under Rule 8 of the Customs Valuation Rules, 1988. He also confiscated the goods under Section 111(m) of the Customs Act, 1962, permitting the appellants to redeem the same on payment of fine of Rs. 25,000/-. He also imposed penalty of Rs. 10,000/-.

3. The main dispute relates to the valuation of 5,00,000 pcs. of Chain imported by the appellants. Since the Additional Collector found mis-declaration of value, the consequences of confiscation, redemption fine and penalty followed.

4. Learned Counsel for the appellants contended that both Bolt Ring and Chain imported by the appellants were covered by the same invoice and since the invoice value of Bolt Ring has been accepted, necessarily the invoice value of Chain must be accepted. Learned Counsel further contended that in the absence of finding that there was special relationship with the supplier and in the absence of any evidence to show that more than the invoice price had been paid to the supplier as also in the absence of evidence regarding contemporary imports at higher value, the adjudicating authority should have accepted the invoice value for Chain also.

5. Burden of displacing the invoice price is certainly on the Department. It can be displaced on values of comparable imports of identical or similar goods. This proposition is based on the principle that the invoice value reflecting the true transaction value should, ordinarily be accepted, except in the presence of special circumstances like the transaction not being at arms length, special relationship between the importer and supplier, comparable imports at higher price or other reliable circumstances. This is so, if the invoice and other relevant documents are ex facie reliable and proper.

6. In Shivshakti Enterprises v. Collector of Customs - (Tribunal) imported goods declared to be “Metal fittings rivets” were actually found to be snap fasteners and not rivets. For that reason, the Tribunal held that the declared price cannot be said to be the transaction value of snap fasteners and the question of its acceptance did not arise (Paragraph 8). In Universal Commercial Corporation v. Collector of Customs - 1994 (69) E.L.T. 50 (Tribunal), the importer declared the imported goods to be “Condenser Units” of Singapore origin. The goods were found to be full air-conditioners without outer metal cover and selector switch of USA origin. It was observed that the plea based on transaction value will hold good only if the goods imported are the same as indicated in the invoice. In Final Order Nos. 2275-2277/96-A, dated 5-7-1996 passed in Appeal Nos. C/265-267/94-A, the Tribunal held that the proposition that the transaction value as shown in the invoice has some sanctity and the burden is on the Department to collect evidence to show that the invoice value is not genuine or below ordinary price in International Trade at the time and place of import cannot be applied to cases of import where the description is substantially inadequate, incomplete or erroneous and in such cases, the question of accepting transaction value does not arise. The Tribunal in the above case further indicated that the Bill of Entry must refer to description of the goods and the description is complete and adequate if it refers to the correct specification, brand name and other particulars.

7. The value to be attached to invoice price may depend on a variety of circumstances. Inadequate, incomplete or incorrect or misleading description may affect the reliability of the invoice price. It must be appreciated that customs authorities do not inspect and examine all the goods imported and conduct only sample checks. Incorrect, inadequate or incomplete description in cases where the goods are not inspected and checked may mislead customs officers. It may depending on the facts and circumstances, also indicate a deliberate design to suppress the true state of affairs and to mislead customs officers. In such cases the invoice and the price declared in the invoice will have very little weight and the Department is not required to show that the invoice price is defective and cannot be accepted; in such case there is only the question of finding out the ordinary price in International Trade at the time and place of import, for which any reasonably reliable method cannot be followed.

8. In the case at hand all the import documents contain a bald description of the goods as “Metal Fittings, Bolt Ring and Chain”. The import documents do not state the design or numbers or other particulars. In their letter dated 11-9-1989, to the Assistant Collector, the appellants stated as follows :-

“The value of the items depends on the cost of manufacturing of items, viz., design, numbers etc.”

It is thus clear that the description which has significance in the matter of quality, size, standard and valuation has not been furnished in the import documents. It was not even disclosed that the goods were made of Brass. That was found only at the time of inspection. The declared description was deliberately inadequate and incomplete. In this light, the invoice price has no sanctity and it cannot be said that invoice price, unless displaced by sufficient materials, has to be accepted.

9. Neither the importer nor the Department has any case that there were comparable imports, the prices of which could be adopted as the basis for verifying the correctness of the declared value or for determining the value under the Act and the relevant Rules. Metal Bulletin (UK) showed the price of Brass Scrap “Honey” to be US $ 1700 CIF PMT (i.e. Rs. 28.18 CIF per kg.). The declared price of Brass Chain was HK Dollar 7.3 for 100 Mtrs. This was found, on weighment and calculation, to be equal to Rs. 25.58 CIF per kg. This would show that the finished goods [were] priced less than the metal scrap. The Assistant Collector took the basis of scrap value of Rs. 28.18 per kg., added 100% towards cost of manufacture and arrived at the value of Rs. 56.36 per kg. CIF. According to learned Counsel for the appellants, the value is defective for two reasons. He contended that the Brass material in the goods was of very inferior quality and the Metal Bulletin price adopted was for “Scrap Honey” which is metal of high quality. Besides the mere assertion, no material has been produced to substantiate these two alleged factors. The second defect pointed out is that addition of 100% as manufacturing cost is without basis and arbitrary. It is true that the Assistant Collector had no specific evidence in this behalf; but the estimate made by the Assistant Collector appears to be reasonable and modest.

10. In Metal & Alloys Industries v. Collector of Customs - (Tribunal), there was import of Nickel Alloy Tubes in Small quantity. There were earlier imports at prices ten to thirteen times the value declared by the appellants. The Collector did not adopt such higher prices, but proceeded on the costing method, by ascertaining the international prices of the constituent metals and adding average manufacturing cost of 150%. The Tribunal rejected the contention that since the goods were manufactured from scrap, manufacturing cost would not exceed 100% as the goods did not come directly from the manufacturer but from a middleman and there was no material to show that the goods were manufactured from scrap.

11. The High Court of Calcutta in Sneha Traders Pvt. Ltd. v. C.C. - , referring to the Metal Bulletin observed as follows :-

“The prices of Zinc Metal are also quoted in Daily Metal Bulletins of London Metal Exchange (in short, LME). In fact, the prices quoted by LME have got an important bearing on the international market price of the said goods.”

In Sippy Pramod Steel Alloys Pvt. Ltd. v. Collector of Customs - (Tribunal), Copper Dross was imported and the Additional Collector relied upon the Metal Bulletin relating to the value of Copper Dross and arrived at the assessable value. This method was challenged by the appellants alleging that the Bulletin provided only a guideline relating to the price of the metal and is meant only as a basic guideline for the calculation of prices which depend upon several other factors. The Tribunal held that in the absence of evidence of value of identical or similar goods imported contemporaneously and in view of the evidence produced by the appellants showing that similar prices had been accepted by the Bombay Custom House for identical prices, the value determined merely based on the Metal Bulletin prices is not in accordance with law.

12. Metal & Alloys Industries was decided by a three-Member Bench and Sippy Pramod Steel Alloys Pvt. Ltd. was decided by a two-Member Bench. The former decision was specifically placed before the Bench which decided the latter case. Yet the Bench did not distinguish the earlier decision. The importance of Metal Bulletin prices in international market price has been emphasised by the High Court of Calcutta. In the circumstances, we are obliged to follow the decision in Metal & Alloys Industries case.

13. There is no material to show that the imported Brass Chain was manufactured from Brass Scrap and not prime Brass material, that would be considerably more valuable than Scrap. Yet the Additional Collector made an assumption in favour of the appellants and based the value on the value of Brass Scrap. Manufacturing cost was taken to be only 100% of scrap price, which also appears to be eminently reasonable. If at all, he has erred in favour of lower valuation. We find no ground to interfere with the value determined by the Additional Collector.

14. The circumstances of the case do not leave any room for doubt regarding the deliberate and wilful misdeclaration of value. Hence the value determined, and the order for confiscation, redemption fine and imposition of penalty are justified.

The appeal is dismissed.