D.C. Mandal, Member (T)

1. The appellants imported 2 consignments of 232 cartons containing 60,000 gross sets declared as "Metal fittings rivets (rivets for leather goods)" and filed 2 bills of entry No. 5770 and 5771, both dated 27-12-1988 for their clearance. Declared CIF value was Rs. 1,59,1987/- in each consignment, total coming to Rs. 3,18,396/-. The Department alleged that the appellants had actually imported snap fasteners consisting of 4 pieces, i.e. top, socket, stud and post, of 3 different sizes VT2, VT3 and VT5, of "swallow-RK" brand and had split up the importation into two consignments as detailed below:-

It was alleged that the snap fasteners were imported in two consignments by misdeclaring the goods as rivets with a view to evading customs duty and clearing the goods against REP licence for rivets. The appellants had REP licence for rivets, but did not have licence for snap fasteners. Under Notification No. 224/85 dated 9-7-1985 as amended by Notification No. 290/87 decorative rivets were exempted from duty in excess of 40% plus 5% ad valorem with Nil additional duty of customs, whereas the duty on snap fasteners was 100% + 45% ad valorem plus 15% additional duty of customs. It was also alleged that the prices of Japanese brand "Kane-M" snap fasteners imported during the relevant time at Kandla Port were found to be as follows:-

The declared price of the imported goods was 45 Yen for 2 pieces, i.e. 90 Yen for 4 pieces. It was alleged that on the above basis the correct value of the two imported consignments was Rs. 2,69,015.00 each. Show Cause Notice was issued to the appellants alleging misdeclaration of description and value, contravention of Section 11 of the Customs Act read with Section 3(2) of the Imports Exports (Control) Act, 1947 read with Clauses 3(1) (2) of Import (Control) Order, 1955 and that the goods were liable to confiscation under Section 111(d) (m) of the Customs Act and the appellants were liable to penalty under Section 112(a) of the Customs Act. After considering the appellants' reply to Show Cause Notice and after hearing them personally, the Collector of Customs Central Excise, Rajkot held the allegations as proved. He confiscated the two consignments, with redemption fine of Rs. 1,20,000/- and imposed penalty of Rs. 1 lakh on the the appellants. Hence, this appeal before this Tribunal.

2. Shri Balani for the appellants made the following contentions during the hearing before us:

(i) The imported goods were rivets as declared in the bills of entry.

(ii) There was no misdeclaration of description and value of the goods, as alleged.

(iii) Comparison of the price with the price list of "Kane-M" brand snap fasteners of Japanese make, which expired in July, 1988, whereas the present import was in December, 1988, was not correct.

(iv) No market inquiry was made by the Custom House to find out whether in the trade parlance these goods were known as "rivets" or "snap fasteners".

(v) The method of valuation adopted by the Department was not correct,

(vi) Redemption fine and penalty were very heavy.

Shri Balani relied on MANU/SC/0220/1971 : A.I.R. 1971 S.C. 1558 (Union of India v. Tarachand Gupta Bros.), 1989 (39) E.L.T. 585 (Susha Electronics Industries v. Collector of Customs Central Excise), MANU/WB/0168/1984 : 1987 (30) E.L.T. 345 (Calcutta) in the case of Collector of Customs, Calcutta v. Mitsuny Electronic Works, and MANU/CE/0345/1986 : 1988 (34) E.L.T. 65 (Tribunal) in the case of Janta Traders, Bombay v. Collector of Customs, Bombay.

3. The learned Departmental Representative challenged the contention of Shri Balani regarding the method of valuation. He re-iterated what was stated in the impugned order.

4. The points to be decided in this appeal are:-

(i) Whether the appellants misdeclared the description and value of the goods;

(ii) Whether the goods were liable to confiscation; and

(iii) Whether imposition of penalty was justified.

The goods were described by the appellants as "Metal fi