[Order per : C. Satapathy, Member (T)]. - Heard both sides at length. Appellant No. 1 and Appellant No. 2 had each imported 74.10 MTs of the impugned goods and decleared the same as Trichloro 1-3-5 Triazine at unit price of Singapore $ 750 PMT CIF. The impugned goods were of Chinese origin but the same were imported from M/s. Sun Flower General Trading Co., Ajman, U.A.E. and G.A. International, Dubai, U.A.E. The related five Bills of Entry were filed between 30-7-1994 and 2-12-1994 through the same CHA. The goods were allowed provisional clearance against PD Bond pending chemical test and verification of value. On subsequent test, such goods were found to be ‘Cyan uric Chloride’.

2. On verification, the Customs authorities have ascertained the value of large number of imports of Cyan uric Chloride of Chinese origin imported at unit price of US $ 1860 PMT to US $ 1950 PMT during the period June, 1994 to November, 1994 as against the price declared by the appellants which was Singapore $ 750 equivalent to US $ 500 PMT only. As such, the Customs authorities have ordered assessment of the impugned goods at the lowest comparable price of US $ 1860 PMT CIF. The lower appellate authority has passed a detailed order considering all aspects of the case as well as various case laws while rejecting the appellants’ claim and upholding the valuation ordered by the lower authority. Hence this appeal.

3. The main thrust of the arguments by Shri V.S. Nankani, learned Advocate appearing for the appellants is that in the absence of any allegation of appellants paying any amount over and above the invoiced price to the suppliers, the declared value should have been accepted by the authorities below for assessment purposes. He further states that in the light of the decision of the Hon’ble Supreme Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai - (S.C.), the authorities below were required to accept the declared value under Rule 4 of the Customs Valuation Rules, 1988 instead of determining the value under Rule 5 on the basis of comparable goods. He also relies on an extract from the book “Customs Valuation Law & Practice — 2003” to argue that the price below prevailing market price is acceptable as per the Advisory Opinion 2.1 of the WTO Committee. The said extract is reproduced below :-

“The Committee opined that the mere fact that a price is lower than prevailing market prices for identical goods should not cause it to be rejected for the purpose of Article 1 (Rule 4), subject of course to the provisions of Article 17 [Rule 19(2)] of the Agreement.”

4. On the other hand, Shri Hitesh Shah, learned SDR arguing for the department makes the following submissions :-

(1)     The value declared by the appellants is equivalent to US $ 500 which is ridiculously low and unrealistic compared to the comparable imports of the same origin during the same period at prices ranging from US $ 1860 to US $ 1950. He also states that the impugned goods of Chinese origin have been imported from Ajman and Dubai in U.A.E. and no invoices from the manufacturer have been produced. As such, the Hon’ble Supreme Court’s decision in the case of Commissioner of Customs, Bombay v. Shibani Engineers Ltd. [ (S.C.)] is squarely applicable to this case wherein it was held that Customs authorities are right in rejecting declared values which are totally unrealistic.

(2)     The decision of the Hon’ble Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai - (S.C.) is distinguishable as in that case the impugned goods was one time sale of five years old stock on which discount of 77% on the list price was allowed. The Hon’ble Supreme Court’s decision in that case, to accept the declared price with 77% discount on 5 years old stock being one time sale cannot be applied to the present case. In the case of Eicher Tractors (supra), the Hon’ble Supreme Court was satisfied that the same discount would have been offered to any one else wishing to buy the same stock and hence there was no question as to why the declared value in question was not acceptable under Rule 4(1) of the Customs Valuation Rules, 1988. The present case has no similarity whatsoever to the case of Eicher Tractors.

(3)     In the case of Rajkumar Knitting Mills (P) Ltd. v. Collector of Customs, Bombay - (S.C.) the three Judges Bench of the Hon’ble Supreme Court has held as follows :-

“The words “ordinarily sold or offered for sale” have to be read along with the words which precede and the words that follow these words. If thus read these words mean that for the purpose of assessing the value it is necessary to ascertain the price at which the said or like goods are sold or offered for sale for delivery at the time and place of importation and exportation in the cases of international trade. The words “ordinarily sold or offered for sale” do not refer to the contract between the supplier and the importer, but to the prevailing price in the market on the date of importation or exportation.”

The learned S.D.R. contends that in Rajkumar Knitting Mills (supra), the three Judges Bench of the Hon’ble Supreme Court have interpreted Section 14(1) of the Customs Act, 1962 and the same is binding on Courts and Tribunals as words in the said Section 14(1) have not undergone any change till date.

(4)     In Pan Asia Enterprises v. Collector of Customs, Bombay - (Tribunal), it was held that declared values are not acceptable if the same are grossly undervalued. This decision of the Tribunal has been upheld by the Hon’ble Supreme Court by dismissing the civil appeal vide Pan Asia Enterprises v. Collector - (S.C.).

(5)     Plast Fab v. Collector of Customs - (Tribunal) has held that valuation has to be in accordance and subject to the provision of Section 14(1) of the Customs Act, 1962 when goods are invoiced in a 3rd country and the declared value is much below the value of comparable goods. In that case declared value was $ 950 PMT against the value of comparable goods which was $ 1675 PMT.

(6)     Three Member Bench of the Tribunal in the case of India Infusion Ltd. v. Collector of Customs - (Tribunal) has approved valuation on the basis of value of comparable imports under Rule 5 of the Customs Valuation Rules, 1988 holding that transaction value in terms of Rule 4 ought to be consistent with the provision of Section 14(1) of the Customs Act, 1962.

(7)     In Chandni International v. Commissioner of Customs (Import), Mumbai - (Tribunal) = 2003 (55) R.L.T. 635 (CEGAT-Del.) and in Pasupati Traders v. Commissioner of Customs (Import), Mumbai - (Tri.- Mumbai) also, the Tribunal has approved of valuation on the basis of value of comparable goods contemporaneously imported.

5. After hearing both sides and perusal of case records and the cited case laws, we find that the appellants have imported goods of Chinese origin from traders in U.A.E. Ordinarily the price of Chinese goods brought from U.A.E. should be more than goods imported directly on account of the traders margin and higher freight compared to similar goods imported from China directly. On the contrary, the price declared is equivalent to US $ 500 only as against contemporaneous imports of comparable goods imported from China in the price range of US $ 1860 to US $ 1950. It is not the case of the appellants that the impugned goods are akin to the kind of goods dealt in the case of Eicher Tractors (supra) where 77% discount was allowed by the manufacturer on one time sale of five years old stock. As such, the present appeals are clearly distinguishable from the case dealt in Eicher Tractors (supra). Moreover, the decision of the three Member Bench of the Hon’ble Supreme Court in the case of Rajkumar Knitting Mills (supra) interpreting Section 14(1) of the Customs Act, 1962 is binding on us in view of the fact that the relevant words of Section 14(1) have not undergone any change and there is no contrary decision of any Larger Bench of the Hon’ble Supreme Court. Section 14(1) of the Customs Act, 1962 (which is incidentally in line with Article VII of GATT and Article VII in Annex I to GATT, to which India is a signatory) requires customs valuation to correspond to ordinary competitive price in international trade. Transaction value method is one of the methods of valuation under the Customs Valuation Rules, 1988 (which follows the Agreement to implement the said Article VII of GATT). The transaction value has been defined to be the actual price paid or payable. The declared value may not represent the transaction value in every case. When the declared value is ridiculously low compared to the ordinary competitive price of comparable goods contemporaneously imported, such declared values cannot be adopted as customs value. In such cases, the transaction value method is clearly inapplicable as the declared value does not conform to the requirement of the said Section 14(1). Valuation by adopting value of comparable goods contemporaneously imported is an equally efficacious method of valuation. Such valuation is also perfectly legal as has been held by the Hon’ble Supreme Court and various Tribunal Benches vide various decisions cited by the learned S.D.R. and listed in Paragraph 4 above.

6. The argument that in the absence of any evidence of the appellants remitting any amount over and above the invoiced price, other methods of valuation cannot be adopted is not acceptable. In fact, where evidence of extra payment is available, then the transaction value method itself would be adequate to deal with such a case. Since transaction value is defined as the actual price paid or payable, the customs value would in such cases be the invoice price plus the extra payments made and the transaction value method would still be applicable. On the other hand, where the declared value is ridiculously low and does not correspond to the ordinary competitive price in international trade, then the other methods of valuation under the Rules are to be used to arrive at the customs value as has been done in this case adopting the lowest of the values of comparable contemporaneous imports.

7. The law provides for six different methods of valuation for the simple reason that the transaction value method may not be proper in all cases and the Customs authorities cannot be forced to accept the declared value in every case notwithstanding how ridiculously low these are. It may not also be possible in every doubtful case for the customs officers to establish payments made over and above the invoice price without information from the originating and intermediate countries which may not always be forthcoming. When the extra payments can be established, the transaction value method itself can be used, otherwise one of the other methods can be used. Therefore, the precedent decisions of the Tribunal cited by the learned SDR approving valuation on the basis of comparable value of contemporaneous imports are sound and the same fully support the basis of valuation adopted in this case. Moreover, the different methods of valuation, whether based on transaction value, or comparable value (of identical/similar goods), or deductive value based on resale price, or computed value based on cost and profit etc. are designed to arrive at an equitable customs value for the purpose of charging customs duty. The importers cannot have a grievance so long as one of these methods is fairly used, unless he is trying to secure a grossly undue duty advantage as in this case by declaring a value which is 25-30% of the value declared by competing importers importing similar goods. Equity considerations justify levy of duty to the same extent on similar goods.

8. As regards the Advisory Opinion 2.1 of the Technical Committee on Customs Valuation cited by the learned advocate for the appellants, we note that the citation is out of context as in this case Article 1 (Rule 4) method of valuation has been discarded. In any case, the said Opinion recognizes power of the Customs authorities to satisfy themselves as to the truth and accuracy of any declaration made by the importers under Article 17 of the Agreement on Customs Valuation [Rule 10(2) of the Customs Valuation Rules, 1988]. The opinion merely says that it is permissible to have different transaction values of comparable goods under the Transaction Value method. As seen in this case also, the comparable goods were found to have been imported at different prices in a price range of US $ 1860 to $ 1950 PMT. However, the said Advisory Opinion cannot be taken to support a ridiculously low price of US $ 500 PMT. We also note that the Advisory Opinion given by the Technical Committee on Customs Valuation does not bind any country nor it has the same status as of the Decisions of the WTO Committee on Customs Valuation. The Advisory Opinions have no legal force and are not acceptable on the face of contrary decisions rendered by the Tribunal and the courts in India.

9. In view of our finding as above and cited case laws, we are of the opinion that the valuation approved by the lower Appellate Authority after taking into consideration all submissions made by the appellants in his detailed order is proper and the same does not require any interference. Accordingly, we dismiss these appeals.

(Pronounced in Court on 23-8-2005)