[Order per : S.S. Sekhon, Member (T)]. - Brief facts of the case are that the appellant firm filed a Bill of Entry Sl. No. 791, dated 12-5-98 for clearance of a container of ‘Damar Batu with dust’ imported under Invoice No. 373/97, dated 22-4-98. At the time of assessment, the value, as per the order of Commissioner of Customs in File No. 54/98-AGI, was enhanced to US $ 600 per ton from U.S. $ 480 declared. Thereafter, appropriate duty amount was debited under DEPB Licence Scheme by the Department. After completing Departmental formalities, the group appraiser directed release of the consignment after examination of the goods. When appellant’s representative went for examination, after they were informed that DRI office had seized the goods under Section 110 on 21-4-98. On approaching DRI office, with all the documents on 1-6-98, they were directed to come on 15-6-98. A show-cause notice was issued on 16-10-98. The Addl. Commissioner heard the case and adjudicated. The goods were confiscated under Sections 111(d) and (m) of the Customs Act and value determined by the Commissioner was again enhanced from U.S. $ 600 to U.S. $ 710 and a fine of Rs. 25,000/- was imposed for redemption of the goods for the misdeclaration and penalty of Rs. 15,000/- also imposed. Aggrieved by this order, the appellant filed an appeal before Commissioner of Customs (Appeals). The said appeal was dismissed by the Commissioner of Customs (Appeals). Being aggrieved by the Commissioner of Customs (Appeals), the appellant has filed this appeal.

2. We have heard both sides. On considering the submissions made from both sides, we find that -

(a) The relevant Bill of Entry No. 791 was filed on 12-5-98. In this Bill of Entry, an order of assessment under Section 47 has been made after obtaining the order of the Commissioner and the Bill of Entry assessed after loading of the value from U.S.$ 490 to U.S.$ 600. After such assessment, the relevant duties were calculated to be discharged. The Bill of Entry was handed over to the appellant for discharge of duty which was done. The goods were however seized by DRI on 21-4-98. Therefore, it is not understood how the Commissioner assessed the Bill of Entry at the value of U.S.$ 600 when the matter was under seizure and investigation by the DRI Officer;

(b) A show-cause notice was issued only on 16-10-98. A perusal of this show cause notice shows that the value was proposed to be enhanced further to U.S.$ 710 from U.S.$ 600 per M.T. already determined by the Commissioner and the Bill of Entry assessed. It was also proposed in the notice as to why the goods should not be confiscated under Section 111(d) as the goods were prohibited for import;

(c) The goods declared ‘Damar Batu’ which the investigation revealed to be amplified as ‘Sarjarasam’ and they relied upon page 408 McGraw-Hill Dictionary of Scientific and Technical Term, Third Edition described Damar as “a type of hard resin obtained from evergreen trees of the genus Agathis”. It is also described as a type of soft, clear to yellow East Indian resin, derived from several trees of the family Dipterocarpaceae. It is also known as Gum Damar;

(d) Show cause notice also relied upon Chapter 13 to the Explanatory Notes, therefore, it appeared that the import was of ‘crude drugs’ which were allowed to be imported only with Actual User Condition. ‘Sarjarasam’ or ‘Gum resin’ is having botanical name “Veteria Indica Linn” and “Vatria Indica Linn” is nothing but ‘Sarjarasam’ as per the Ayurvedic formulary of India Part-I, First Edition, Government of India Publication. Further the scientific and/or English name of drug corresponding to ‘Sarjarasam’ is ‘Vateria Indica Linn’ belonging to the family of Dipterocarpaceae. ‘Damar Batu and Sarjarasam’ being same appeared to be correctly classified as a crude drug for the purpose of classification of Export-Import item and therefore, it appears import of ‘Damar Batu/Sarjarasam’ required a specific Import Licence or can be imported subject to Actual User Licence. In the instant case, the importer M/s. Hitaishi Fine Crafts Industries Pvt. Ltd., Calcutta did not appear to be manufacturer of Ayurvedic drugs and as such the import does not merit consideration as actual user. Damar Batu is mostly available in Thailand, Myanmar, Indonesia and is not abundantly available in India to cater the demand for its various users in India and therefore, its import is very regular under import licence;

(e) The Additional Commissioner found as follow :-

“27. It is observed that during the material period of assessment of the Bill of Entry, all Damar Batu consignments of Thailand origin/Indonesian origin were under investigation by Directorate of Revenue Intelligence, Calcutta in respect of value and licensing angle. Pending completion of such investigation, it was suggested by the Directorate of Revenue, Intelligence, Calcutta that provisional adjustment of value should be made upto U.S. $ 600 per MT (C.I.F.) (in case of Thailand origin) and U.S.$ 325 per MT (C.I.F.) (in case of Indonesian origin). Accordingly, to maintain uniformity of practice, the declared value of the subject goods was enhanced up to U.S.$ 600 per MT with the consent of the importer and Bill of Entry assessed duty free under D.E.P.B. Scheme by debiting the duty amount of Rs. 1,74,310/- in D.E.P.B. Licence No. 0051102, dated 7-4-98. The goods could not be physically cleared by the party because of the reasons reported by the Directorate of Revenue Intelligence, Calcutta that the subject consignment of 16 per MT Damar Batu was imported by M/s. K.L. Thakkar from Thailand under Invoice No. 373/97, dated 23-10-97 for U.S.$ 4640.00 (i.e. U.S.$ 290.00 per M.T., C.I.F.). As per Bank documents goods were declared as Damar Batu (Sarjarasam). As the case was investigated by the D.R.I., Calcutta, the original importer M/s. K.L. Thakkar did not file the Bill of Entry for clearance of the said goods. The D.R.I., Calcutta found that the goods contained in the said container were misdeclared in respect of value. Accordingly, the D.R.I., Calcutta issued notice under Section 110 of the Customs Act, 1962 on 21.4.98 to the custodian of the goods (Manager, C.W.C., C.F.S.). Subsequently, M/s. Hitaishi Fine Crafts Industries Pvt. Ltd., Calcutta had filed the subject Bill of Entry Serial No. 791, dated 12-5-98 claiming as importer of the said goods in which the D.R.I., Calcutta issued notice under Section 110 of ibid. M/s. Hitaishi Fine Crafts Industries Pvt. Ltd. had also submitted invoice from the same suppliers declaring the said goods as Damar Batu with Damar Batu dust at U.S.$ 490 per MT, CIF, Calcutta. Therefore, the original description and value, as shown in the Invoice No. 373/97, dated 23-10-97 has been misdeclared in Invoice No. 373/97, dated 22-4-98 as submitted by M/s. Hitaishi Fine Crafts Industries Pvt. Ltd. During the material period of import of the subject consignment the price of Damar Batu of Thailand origin was much higher than the declared invoice price as revealed in the D.R.I., Calcutta’s investigation.

29. In view of the foregoing paragraphs, it appeared that the invoice submitted by the importer was highly under valued and misdeclared the description :

‘I also find from the test report that the goods are brown coloured irregular lumps and powder together with extraneous matter. It contains Damar Batu type of natural resin in lumps with dust (about 10%). Damar Batu is a plant oriented natural product. It is brittle in nature, obviously there must be some powder/dust alongwith lumps. 10% Damar Batu dust as ascertained in the test report is within the normal range and cannot be the guiding factor for valuation purpose.’

30. Regarding licensing aspect I find that during investigation, D.R.I. found that the subject goods were declared by the supplier as Damar Batu (Sarjarasam). Subsequently, the description was changed to Damar Batu with dust only to avoid licensing aspect. As discussed earlier, the imported goods are falling under Crude Drugs, the import of which is allowed with actual user condition or under special import licence.

31. The importer’s contention that the show cause notice issued after assessment of Bill of Entry under Section 47 of Customs Act, 1962 is invalid, is rejected in view of the facts that the order of clearance by the proper officer was not given in this case. Moreover, this is a case of deliberate suppression of facts and hence as per decision in the case of Titanide Coating (P) Ltd. v. Assistant Collector of Customs, [ (Kar.)] and Micro Electronics v. Collector of Customs, [ (Tribunal)], the show cause notice is valid as per law.”

(f) The Commissioner of Customs (Appeals), on the following grounds, rejected the appeal :

“I have gone through the records, facts of the case, grounds of appeal and also considered oral and written submissions made by the appellants during the course of personal hearing on 18-8-2000. On going through the impugned order, it is observed that lower authority has clarified the meaning of “Damar Batu” in terms of Mcgraw-Hill Dictionary of Scientific and Technical Term, wherein it has contained that Damar Batu is also known as Sarjarasam and Gum Damar. Since Sarjarasam appears in the list of crude drugs the import of which is allowed subject to actual user conditions as per relevant Import-Export Policy, the contention of the appellants that the impugned goods are covered under OGL is not tenable. It is also observed from the test report that the impugned goods are “Damar Batu with dust” (about 10%). 10% Damar Batu dust as revealed in the test report is written the normal range. Thus, “Damar Batu with dust” and Damar Batu (Sarjarasam) cannot be differentiated and cannot be a guiding factor so far as valuation is concerned, as contended by the appellants. I also observe that ...............…………...value of the impugned goods has been re-determined by lower authority under Customs Valuation Rules, 1988 after considering various contemporaneous evidence which appears to be appropriated. Appellants’ contention that show-cause notice issued after assessment of Bill of Entry is also not tenable since impugned goods were under Customs control and order of clearance was also not given. In this context, relevant case laws have also relied upon by adjudicating authority in the impugned order.”

(g) The Hon’ble Supreme Court in the case of Mohan Meakin Ltd. v. Commissioner of Central Excise, Kochi reported in [ (S.C.)] have observed as under :-

“6. In the instant case, it is an admitted fact that after issuing a notice as contemplated under Section 124 of the Act, to the importer of the goods in question and adjudication proceeding under Section 125 had been conducted and the goods in question were released on payment of redemption fine, in such an event it matters little whether the adjudication was under which sub-clause of Section 111 because whichever is the sub-clause, there was an obligation on the adjudicating authority to find out the market value of the goods so imported and to collect all duty and other charges payable on the goods in question before releasing the goods on payment of redemption fine. Having released the goods thus into the market and permitting the sale of the same, in our opinion it is not open to the Collector to initiate another proceedings under another clause of Section 111 to recover the so-called differences in valuation of the imported goods from the ultimate bona fide purchaser for value. If the Collector failed to make a proper enquiry as to the market value of the goods and released the same after a half-hearted adjudication, we fail to see why a subsequent purchaser be saddled with the liability of undervaluation, more so in the background of the fact that the appellant had no role to play either in the import or earlier adjudication proceedings.”

The Larger Bench decision of the Tribunal in the case of C.C., Cochin v. Arvind Export (P) Ltd. & Ors. [ (T-LB) = 2001 (44) RLT 32 (CEGAT-LB)] have held that an order passed under Section 47 on Note Sheet and communicated to assessee by way of endorsement on Bill of Entry is an appealable adjudication order and not an administrative order. In view of the above two decisions in the facts of this case, when no evidence is forthcoming that the assessments were provisional, the assessment of duty at U.S.$ 600 for the declared goods i.e. Damar Batu with Dust should be constituted having been issued after due enquiry and investigation. As per para 27 of the Additional Commissioner’s order extracted herein above, indicates that the Department was fully aware of the circumstances of like imports and the valuation angle etc. and therefore they should not have resorted to final assessment. Since the goods were finally assessed and once they have passed an order on assessment at U.S.$ 600 per MT and the Bill of Entry has been returned to the importers for discharge of duty, it can be safely concluded that the loading of value at U.S.$ 600 was arrived at after due enquiry and engaged a state of investigation as regards valuation by the Commissioner. Therefore, in view of the two decisions extracted herein above, we do not find any reason in law to approve the re-invokation of the provisions of Section 111 of the Customs Act by the issue of the said show-cause notice and the proceedings started by the Additional Commissioner.

(h) We find that the evidence, to indict the import under Section 111(d), was always available and there has been no mis-declaration by the importer on the documents filed by him to the Department. Therefore, the confiscation under Section 111(d) was not called for. As regards the loading of value, a proper officer senior to Additional Commissioner viz., the Commissioner was seized of the valuation aspects and after due process had approved and loading the value, considering in the instant case the nature of the goods. There is, therefore, no reason to cause any further loading of the value to U.S.$ 700 without reviewing the Commissioner’s order following the Larger Bench decision.

(i) We find no ground in the appeal filed before us to justify the value of U.S.$ 490 as declared merely because contemporaneous import of comparable goods i.e. Damar Batu Dust could not be found by the Department. Scientific Dictionary indicates Damar Batu to be Sarjarasam. Therefore, the comparison of a consignment in the present case with an import of Damar Batu (Sarjarasam) as made by the Commissioner, to load the value up to U.S.$ 600 could have been made. The appellant before us is contesting that the comparison could not be made due to physical characteristic of quality, reputation to be different, but they have not produced any material evidence to substantiate their claim before us. Their plea is of non-supply of Mcgraw-Hill Dictionary of Scientific and Technical Terms and therefore non-reliance on the same is not acceptable. Since it is well known standard work and extracts are available in the show cause notice and the appellant has not produced any material to show that the extracts as given in the show cause notice are not correct. The plea is not accepted to have caused a grave prejudice to the appellants. Since the Commissioner’s order after loading of value to U.S.$ 600, as arrived at by him, on the note sheet and communicated on the Bill of Entry, was not challenged by the appellants and that was an order passed by the Commissioner and communicated and executed on the Bill of Entry. It would be an appealable adjudication order, as held in C.C., Cochin v. Arvind Export (P) Ltd. [ (T-LB) = 2001 (44) RLT 32 (CEGAT-LB)]. No appeal/review was filed against the order of loading of value to U.S.$ 600. Thus the valuation at U.S.$ 600 had attained finality. We, therefore, cannot upset the same.

(j) Since we are not finding a case permissible to be made, in law under Section 111(d) of the Customs Act, 1962, by following Mohan Meakin Ltd. [ (S.C.)], therefore, in the instant case, we are not giving a finding on the submissions made on the charges of the Import Export Policy.

(k) We find, therefore, no case for confiscation, redemption fine and penalty as arrived at by the lower authorities, especially when, Commissioner, the highest authority in the Custom House, did not consider the facts to be calling for confiscation, redemption fine and penalty, even though he did not accept the declared value to be correct and ordered its loading.

3. In view of our findings the appeal is allowed partly by considering the value to U.S. $ 600 per MT to be final. However, we set aside the order of the redemption fine of Rs. 25,000/- and penalty of Rs. 15,000/- as imposed. Appeal is thus disposed of in the above terms.