[Order per : Archana Wadhwa, Member (J) (for the Bench)]. - Both the appeals of the assessee and one appeal of the Revenue are being disposed of by a common order as the issue involved is identical, though the appeals emerges from two different orders of Commissioner (Appeals). Vide the said orders, the appellate authority has confirmed the enhancement of assessable value done in the bill of entry itself in Appeal No. C/632/2010 and vide separate order, he has upheld the order of the original adjudicating authority vide which, while enhancing the assessable value, redemption fine and penalty stands imposed which is impugned in Appeal No. C/633/2010.

2. For the sake of brevity, we refer to the facts involved as available in Appeal No. C/633/2010.

3. After hearing both sides, we find that the appellant received an offer from M/s. Argain Company Ltd., Taiwan under the cover of their letter dated 25-5-2010, for the purchase of stock lot of LCD TVs. As the said offer is an important piece of evidence, we would like to reproduce the same :

“We are pleased to offer you a Stock Lot of LCD TV’s of 3600 PCs of Samsung, Sony and Sanyo brand on as it is, where it is basis. As it is a stock lot the sizes will remain same but the models will be assorted.

The prices are very reasonable and very competitive as it is a stock lot. The supply can be from any part of the world and the prices are CIF any part in India. The first shipment can be made within 7-10 days of confirming the order.

The entire lot should be lifted by December, 2010. We hope you will be confirming the order soon as as the offer is valid for 3 days only.”

4. On receipt of said offer, the appellants vide their letter dated 27-5-2010, entered into correspondence with M/s. Argain Company Ltd., Taiwan. The said letter is being reproduced below :-

“Sub. : Reg. Stock Lot Offer of LCD TV’s

Thanks a lot for the offer on the Stock Lot in your letter dated 25th May 2010. As you know the quantity of 3600 Pcs will be taking up a lot of investment from our end. The prices given by you are the prices for retail customers. We will be buying big quantity and investing a lot of money in this trade and we require wholesale prices from you. As the quantity is so big there should be a discount of atleast 20% for us. Please look at the offer again and offer us the best prices keeping in mind the quantity. We can confirm to pick up the entire lot if the prices are suitable. All other terms are acceptable to us.

Looking forward to getting a better quotation from your end. Kindly look into the offer and give us your best prices.”

5. Communication between the appellant and the foreign supplier was further undertaken with the foreign supplier’s letter dated 31-5-2010, agreeing to offer discounts of 15% on the prices mentioned earlier inasmuch as the importer was taking up the entire lot. It was also mentioned in the said letter that they are very best prices and are absolutely the least price and would be offered only if the offer is acceptable within 3 days from that date. The relevant part of the said letter is being reproduced as under :-

“All prices are in Singapore Dollars and are CIF any port in India. The first delivery will be within 7-10 days after confirming the order. The time period for picking up the entire lot is by December 2010.

(1) LCD TV’s 32” Samsung/Sony/Sanyo-SS241.25/Set LCD TV’s 40” Samsung/Sony/Sanyo-SS482.25/Set”

6. The appellant accordingly confirmed the said offer vide their letter dated 2-6-2010, as detailed below :

“Sub. : Confirmation of order of LCD TV’s Stock Lot

We thank you for the offer dated 31st May 2010 we would like to confirm the order of 3600 Pcs of LCD TV’s of Samsung/Sony/Sanyo Brand of assorted models/sizes. All terms and conditions are acceptable to us. Kindly Ship the goods to ICD Mordadabad (U.P.)

The first shipment of 40 Ft container of approx 500-600 Pcs and after that every month we will be picking up similar quantity. Kindly confirm the date of shipment as soon as possible and oblige.

We are confident that this is a beginning of a long and healthy business relationship with you. Looking forward to doing business with you.”

7. The foreign supplier concluded the sales contract dated 7-6-2010 with the following terms and conditions :

“Term and Conditions

Prices are based on CIF Nhava Sheva Only.

Shipment From Any port of the World to Moradabad Via Nhava Sheva.

Prices are applicable for Minimum 3,600 pcs Only. Total 3

Brands of assorted models.

Quantity can be up/down (+/-) by 10-20%.

All 3,600 pcs have to be picked up by not later than Dec. 2010

1st lot of approximate 500-600 PCS will be shipped out before end June 2010

After that 300-500 pcs or more per lot.

As this is STOCK LOT, consignment ratio of all 3 brand in different sizes will depend upon availability of stock at the time of loading/shipment.

Payment Terms : 30 days DA from the date of acceptance.

All the above terms are non-negotiable.

If above (ALL) terms and conditions are acceptable to you, kindly sign this contract and fax us the same acceptance. You will be bound by the terms and conditions of this contract.”

8. On conclusion of the contract, the appellant intimated the Revenue about the said sales contract on 15-6-2010, which letter was responded to by the Assistant Commissioner vide his letter dated 26-8-2010, requiring the importer to furnish the following details :

a.       Country of Origin Certificate,

b.      Manufacturer invoice,

c.       Legible copy of the contract executed between the buyer and the seller,

d.      Model No. of the consumer electronic that are intended to be imported

e.       IGM, B/L and packing list,

f.       Certificate of authorized vendor to establish if the exporter/supplier is an authorized vendor/supplier of the manufacturer of Sony and Samsung goods.

In response to the said letter, the appellant addressed a letter to the Assistant Commissioner, Customs, ICD, Moradabad furnishing the requisite information as below :

(a)     Country of Origin Certificate :- Sony, Sanyo and Samsung of LCD TVs are manufactured/assembled in various countries like Bangkok, Malaysia, Indonesia, China, Korea etc. with license from the brand holders. So, therefore country of the Origin Certificate will be different and it is not possible to produce for each pcs.

(b)     Manufacturer Invoices :- The supplier is not a manufacturer or authorized dealer but a Trader who lifts the stock lot remaining unsold with the dealers.

(c)     Legible copy of the contract :- A retyped copy of the faxed contract is enclosed.

(d)     Model No. of the consumer electronics :- The contract has been made for two sizes of LCD TVs 32” and 40” irrespective of the model number. The LCD TVs supplied will not be of any specified model.

(e)     IGM, B/L and Packing List will be produced as soon as we receive the documents.

(f)      Certificate of authorized Vender :- The supplier is only a trader who lifts stock lot from various dealers.

10. Thereafter on import of the goods, the appellant filed two separate bills of entry one dated 13-7-2010 and the other dated 30-7-2010. In the said bills of entries, the goods were described as LCD TVs with the correct size and correct brand. The Revenue further made inquiries from the local dealers of the Sony brand and found that the price declared by the appellants were much on the lower side. NIDB data was also scrutinized and based upon the same, Revenue entertained a view that the value, as declared by the appellant is not the correct value. Accordingly, the value was enhanced on the Bill of Entry dated 13-7-2010 by passing assessment order on the bills of entry itself. The said assessment order was appealed against by the appellant before Commissioner (Appeals) in Appeal No. C/632/2010. In respect of Bill of Entry dated 30-7-2010, show cause notice was issued proposing to enhance the value. The said notice culminated into order passed by the Additional Commissioner confirming the demands, confiscating the goods with an option to redeem the same on payment of redemption fine and imposing penalties. Said order of the Additional Commissioner was challenged before Commissioner (Appeals) in Appeal No. C/633/2010.

11. Commissioner (Appeals) vide two different orders-in-appeal rejected the appeals filed by the importer. Hence, the present two appeals.

12. We have heard both sides at length duly represented by Shri Krishan Kant, learned advocate for the appellant and Shri Govind Dixit, learned DR. On going through the impugned order of Commissioner (Appeals), we find that the enhancement of the value of the goods is primarily done on the ground of mis-declaration in the Bills of Entry and consequently based upon the market inquiry, the Sony dealers inquiry and NIDB data.

As regards the mis-declaration Commissioner has examined four documents i.e. offer of sale dated 25-5-2010, from M/s. Argan Company Ltd. Taiwan, sales contract dated 26-7-2010, the proper intimation to the Assistant Commissioner, ICD Moradabad and Bill of entry dated 30-7-2010. These correspondences between the appellant and the foreign supplier stand reproduced in the preceding paragraphs of the order. The Commissioner has observed that inasmuch as the appellants have not declared the brand/size of the impugned goods, and has not obtained the brand name and model of the goods from the consigner as correct brand, there is mis-declaration and mala fide intention on the part of the importer.

During the course of hearing, we have gone through the terms and conditions of sale contract and found that there is no obligation on the part of the foreign supplier to mention the model numbers of the LCD TVs, to be supplied by him. On the contrary, the said terms and conditions clearly reveals that offer is for stock lot of goods on “as is where is basis” and the brand names are mixed brand names of Sony, Samsung and Sanyo and no different and separate model numbers or brand names would be intimated. Infact the terms and conditions of said contract further goes to clarify that the special discount price is available only if the importer books up or takes up the entire 3600 pieces of three brand of ASSORTED MODEL.

The said conditions made it clear that it was stock lot consignment and the ratio of all three brands in different sizes will depend upon availability of stock at the time of loading or shipment. The offer was also held to be valid only if the importer accepts it within a period of three days and picks up the entire stock by Dec. 2010.

13. Careful reading of the offer, acceptance of the ultimate sales, lead us to come to a conclusion that offer is for limited period and that the same was for the stock lot of goods of various sizes and various models. There is nothing in the said document to show that the goods were of prime quality goods or were of latest models. On the contrary, we find that the appellant had declared the correct quantity, the correct size and the correct brand in the bill of entry. The value of the stock lot goods has to be done on a contract basis entered into between the supplier and the importer, as held by the Hon’ble Supreme Court in the case of Eicher Tractors Ltd. v. CCE, Mumbai [ (S.C.)]. The Commissioner has further referred to the provisions of Section 14 of the Customs Act, 1962 and has quoted that in terms of said section the transaction value of the goods was to be the assessable value, in the ordinary course of business. However, he has further proceeded to refer and rely relied upon provisions of Rule 3(2) of Customs Valuation Rules to substantiate his finding that where the said value is doubted by the customs, the transaction value can be rejected and the assessable value can be determined under the provisions of Customs Valuation Rules. Though the Commissioner (Appeals) is correct in his finding that if there is doubt about the correctness of the transaction value, Customs authorities were within their right to investigate the matter and based upon the evidence so collected, can proceed to decide the transaction value afresh. There can be no quarrel about this legal position.

However, before going to the provisions of Customs Valuation Rules, transaction value has to be rejected as not accurate or wrong/incorrect assessable value based upon the evidence. Mere doubt, without any reason or rhyme cannot be made the basis for rejection of the transaction value, without any reasonable and justifiable evidence. This has been the subject matter of various decisions of the Tribunal as also of various High Courts. One such reference can be made to Radhey Shyam Ratanlal v. Commissioner of Customs, Raigadh - (Tri-Del). It stands held in the said decision that doubt of the proper officer about transaction value are irrelevant, which has to be accepted in terms of provisions of Section 14 of the Customs Act, 1962 unless exceptions under erstwhile valuation Rule 4(2) of the valuation rules are applicable - Reliance was again placed on Supreme Courts decision in the case of Eicher Tractors - (S.C.). Reference can also be made to the Hon’ble Supreme Court decision in the case of Commissioner of Customs v. Bureau Varitas - (S.C.), wherein it was observed that transaction value is the price actually paid for particular transaction in ordinary course of Commerce unless same is not acceptable for reasons stated in Rule 4(1) of the Customs Valuation Rules, 1988.

13. While applying the above principle to the facts of the present case we note that there is virtually no evidence in the present case to reject the transaction value. Various decisions have held that for adopting the various Rules of the Customs Valuation Rules, the transaction value has to be first rejected by strong and tangible evidence. In the present case, apart from contesting that the appellants has not disclosed the model number, the country of origin of the LCD TVs, the Revenue has not produced any evidence to show that any money has flown back to the supplier of the goods in Taiwan or the appellant has paid higher amount to the supplier than the agreed amounts.

14. Apart from that as already observed, the correspondence between the appellant and the foreign supplier clearly reveal that the goods were stock lot goods of various models and were offered for sale on “as is where is basis” and subject to the conditions that the importer books up the entire goods within the stipulated period up to December, 2010. Further on being queried by the AC, the appellant clearly wrote back that as the goods are of various models and various brands and were manufactured in various countries in terms of the agreement between the brand name owners, it is not possible to give the brands, country of original, the model numbers etc. of each and every LCD TVs. In such a scenario, reliance by the Commissioner (Appeals) on the provisions of Explanation (1)(iii)(d) and e) of Rule 3(2) of the Customs Valuation Rules is not proper. The said provisions of law are invocable only when the proper officer has some doubt on the truth or accuracy of the value based on certain reason which may include the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production. As already observed by us, the goods being stock lot, it was neither possible nor practical for the importer to declare the country of origin or year of manufacture of each and every piece. This non possibility already stand intimated to the AC, even prior to the import of goods. Otherwise there is no mis-declaration in respect of description, quantity or brand of goods.

14. For the reasons referred above, we find no merits in the Revenues stand. Consequently the impugned orders are set aside and appeals allowed with consequential relief to the appellant.

15. As the Revenue’s appeal is only against reduction of the redemption fine and penalty, and inasmuch as we have held in favour of the assessee on merits, the said appeal of the Revenue is required to be rejected. We order accordingly.

16. All three appeals are disposed of in the above manner.

(Dictated and Pronounced in the open Court)