The burden of proof of under-invoicing lies on the department, and the department must prove under-invoicing by cogent evidence. The adjudicating authority must apply the correct provisions of the Customs Valuation Rules in determining the value of imported goods.

( 1 ) THIS appeal is directed against the judgment and order dated 5th July, 1991, passed by the Court of the first instance. The facts leading to this appeal are staled hereafter :

( 2 ) THE appellant carries on business of importation, amongst others, of diverse kinds of trawler parts and components. In terms of the proforma invoice of Entre Ltd. 891 Finehlcy Road, London, N. W. 118 RR (hereinafter referred to as the foreign supplier), the appellant placed order for one container of spares for Perkins p-6-354 Diesel Engine fitted on Trawler FILTERED ELEMENTS containing 42,500 pieces (hereinafter referred to as the said goods) on or about 12th December, 1990. The said contract was entered into by and between the appellant and the said foreign supplier at the rate of 0. 23 per piece C and F Calcutta by sea amounting to UK 9,775. 00.

( 3 ) PURSUANT to the said contract the foreign supplier shipped the goods on board on 24th February, 1991, and raised an invoice in respect of the said goods bearing No. 12421/ea 41897 dated 9th March, 1991. In the usual course of business the appellant insured the said goods with New India Assurance Cq, Ltd. on 18th April, 1991, for which he paid the premium of Rs, 1,637/ -. The Clearing Agent of the appellant M/s. B. B. Bose and Sons filed the Bill of Entry for home consumption on or about 18th April, 1991, in respect of the said goods with the Customs authorities and the same was noted by a Noting number 922 on 18th April, 1991, pn which date the appellant for the first time came to learn that the said goods had arrived at the Port of Calcutta on or about 21st March, 1991, per vessel TIGERSTREEM', under Rotation 167/91 Line No. 3. The Appraiser of the concerned group i. e. Group 5a took steps for getting the Bill of Entry assessed but for reasons unknown to the appellant the respondent No. 2 had not assessed the Bill of Entry till the last week of May, 1991. In the meantime the respondents were making undue delay in assessing (he said Bill of Entry in spite of copious correspondence made to them. The appellant through the said Clearing Agent addressed a letter on 10th May, 1991, to the respondent No. 2, inter alia, requesting him to allow the said goods to be warehoused under Section 49 of the Customs Act, 1962 without payment of duty as the goods were incurring huge demurrage for no fault of the appellant.

( 4 ) IN spite of requests for warehousing the said goods under Section 49 without payment of duly no steps were taken by the respondent No. 2 for warehousing the said goods. The respondent No. 2, however, informed the appellant's said Clearing Agency that the Bill of Entry filed on behalf of the appellant had been referred to the Assistant Collector of Customs, Special Investigation Branch for reasons best known to him. In the meantime the appellant was suffering huge demurrage which was also brought to the notice of the respondent authorities.

( 5 ) ON the facts and in the circumstances as aforesaid, the appellant moved a writ petition in this Court on 31st May, 1991, Several interim orders were made in the writ proceedings. After the affidavits had been completed, the matter came up for final hearing before a learned Judge of the first court.

( 6 ) THE case made out by the respondents in the affidavit filed in the Court below is that the Customs House had received a letter from the Directorate of Revenue Intelligence bearing File No. 50/1. 1-1 N/v/91 dated 13/14th February, 1991, wherein it was mentioned that certain motor vehicle parts of LUCAS-make were being imported from the UK by various importers and were being heavily under-invoiced in general. It was further stated that the items of Filter in particular were being subject to extraordinary under-invoicing. The Unit FOB price of LUCAS CAV FILTER No. 7111296 according to the Directorate of Revenue Intelligence was indicated to be 3. 73 (30% less for export and bulk orders) against the price of 0. 23 indicated