1. Valuation of imported goods — Reliance on foreign quotation — Dispute over valuation basis and procedural history of remand. (Para 1 , 2 , 3 , 4 )
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2000 Supreme(SC) 140
SUPREME COURT OF INDIA
N.Santosh Hegde : S.P.Bharucha
Sounds N.Images
Versus
Collector Of Customs
Case No. : 5301 of 1997
Date of Decision : 1/19/00
The burden of proof to establish the correct value of imported goods lies with the Customs authorities, not the importer. Valuation cannot be based on a foreign party's quotation if the importer is denied the right to cross-examine the source.
Headnote:(A) Customs Valuation - Burden of proof - Onus lies on the authorities to establish by methods known to law and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is - Such onus cannot be shifted to the importer. (Para 5)
(B) Evidence - Admissibility of foreign quotations - A fax message setting out a quotation by one party in a foreign city to another party in the same city cannot be made the basis of valuation of goods imported, particularly when the importer's request to cross-examine the alleged offerer is declined. (Para 5)
Facts of the case:
The authorities valued unbranded condensers based on a fax copy of a quotation issued by one party in a foreign city to another party in the same city. The source of the quotation was not revealed, and the importer's request for cross-examination was denied. Despite a remand from the appellate tribunal to redetermine valuation in light of the burden of proof and disclosure, the authorities relied on the same quotation without allowing cross-examination.
Findings of Court:
The court held that the valuation based on the foreign fax quotation was unsustainable, especially since the importer was denied the opportunity to cross-examine the source.
Issues: Whether the valuation of imported goods can be based on a fax quotation between two foreign parties when the importer is denied cross-examination, and whether the burden of proof for establishing the correct value can be shifted to the importer.
Ratio Decidendi: The burden of proof to establish the correct value of imported goods rests solely with the authorities. A quotation between two parties in a foreign city cannot be the basis for valuation if the importer is not permitted to cross-examine the source.
Result: Appeal allowed. The order under appeal is set aside. The goods in appeal shall be valued upon the basis of the value declared by the appellants.
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Table of Contents
2. Importers challenged the validity of a foreign quotation and sought cross-examination; Customs contended the burden of proof lay with the importer. (Para 1 )
3. Reliance on a foreign quotation between third parties is insufficient for valuation, especially when the right to cross-examine the source is denied. (Para 5 )
4. The burden of proving the correct value of imported goods rests with the Customs authorities and cannot be shifted to the importer. (Para 5 )
5. Appeal allowed — Order set aside — Goods valued based on the value declared by the appellants — Costs awarded. (Para 6 , 7 )
6. Can a quotation between two foreign parties be used for valuation of goods imported into India?
A fax message containing a quotation from one party in a foreign city to another party in the same city cannot be the basis for valuation of goods imported into India. (Para 5 )
7. Who bears the burden of proof regarding the valuation of imported goods?
The onus is on the Customs authorities to establish, using methods known to law and in a satisfactory manner, that the value of imported goods differs from the importer's declaration. (Para 2 , 5 )
8. Is the right to cross-examine the source of valuation evidence essential?
Yes, denying the importer the opportunity to cross-examine the alleged offerer of a quotation makes the reliance on such a document as a basis for valuation impermissible. (Para 5 )
(1) WHAT we are concerned with here is the valuation of unbranded condensers of Japanese origin. At the initial stage before the Collector, the Customs authorities relied upon the fax copy of a quotation issued by a Singapore party to another Singapore party. The Collector noted that "the same had been collected from a source . The source was not revealed by the Department as normally done." The appellants disputed the correctness of the fax copy of the quotation that was relied upon and sought cross-examination of the source. The collector took the surprising view that if the appellants suspected the bona fides of the document, it was for them to prove that it was not genuine. He added that when entire contents of the fax copy of the quotation had been given to the appellants, the cross-examination that was sought was not necessary. The Collector referred to investigations that had been made in regard to earlier imports of similar goods by the appellants and held that, for that reason, the value thereof was not acceptable.
(2) THE matter was carried by the appellants to the Customs, Excise & Gold (Control) Appellate Tribunal. The Tribunal concurred with the argument of the appellants that the burden lay on the Customs authorities not only to bring sufficient evidence of the correct valuation but also to disclose it to the other side for rebuttal. It held that the authorities were not right in relying upon the quotation offered by one party in Singapore to another party in Singapore. Having regard to the investigation that was in progress, the Tribunal remanded the matter to the Collector on the limited issue of valuation, to redetermine it in the light of its observation.
(3) ACCORDINGLY, the matter went back to the Collector. The Collector found that the investigations had revealed nothing. Even so, the material relating to valuation that was produced by the appellants was not accepted. Instead, the Collector once again relied upon the same quotation given by one party in Singapore to another and that without offering to the appellants the opportunity of cross examining the source, and proceeded to value the imported goods upon that basis.
(4) THE appellants again carried the matter to the Tribunal. The Tribunal quoted some part of the order Mat had been made by it at the earlier stage but upheld the valuation that the Collector had made. It did not take note of what had been said about burden, disclosure, cross-examination, the error of relying Upon a quotation made by one party in a foreign city to another also there and the direction to the Collector to decide the matter on remand in the light of its observations.
(5) A fax message setting out a quotation by one party in Singapore to another party in Singapore cannot be made the basis of valuation of goods imported into India, particularly so when the importers request to be allowed to cross examine the alleged offerer is declined. It is always for the Customs authorities to establish by methods known to law and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is. That onus cannot be shifted to the importer. We have no doubt that all this has been said by the courts again and again, but to no avail.
(6) THE appeal is allowed. The order under appeal is set aside. The goods in appeal shall be valued, in the circumstances, upon the basis of the value declared by the appellants.
(7) THE respondent shall pay to the appellants the costs of the appeal.
