K.L. Rekhi, Member (T)

1. The appellants are aggrieved by the higher valuation, fine and penalty adjudged against them on the charge of mis-declaration under Section 111 of the Customs Act, 1962.

2. The facts, in brief, are that the appellants imported 4 types of thin-wall bearings from U.K. on 22.7.1975. The customs authorities found that the value declared by them in the bill of entry filed for clearance of the goods was low as compared to the prices shown in the published catalogue price list for India then in force for the said bearings. The declared price was less than half for two types of bearings while for the other two types it was lower by 12 to 20 percent. The authorities noticed that all other importers had imported the said bearings at the listed prices only. Two earlier importations by the appellants themselves were also at the listed prices. Since under Section 14 of the Customs Act, 1962, assessment had to be made at the price at which the goods were ordinarily sold or offered for sale, and not at the invoice value obtained by any particular importer, the authorities did not find the declared values acceptable. The appellants explained that the value difference in respect of one particular type of bearing (type M, 4109 L) was due to the concession gained by them on account of production of the said type being discontinued and they having purchased the entire left over stock. On investigation, the authorities found that neither the production of type M 4109 L was discontinued nor there was any evidence of the appellants having lifted the entire left over stock. Besides, some excess goods were also found in the consignment which the appellants attributed to packing errors at the supplier's end. On adjudication, the Collector enhanced the value of the goods to the level of the listed prices. Further, on the charge of mis-declaration under Section 111 of the Customs Act, which the Collector held as established, he ordered confiscation of the goods, giving the appellants an option to have them redeemed on payment of the fine of Rs 1,55,000/-. The Collector also imposed the penalty of Rs. 50,000/- on the appellants. In appeal, the Central Board of Excise and Customs upheld the charge under Section 111 but, on the consideration that the customs duty sought to be evaded through mis-declaration of value was only Rs 30,666/-, reduced the redemption fine and penalty to Rs. 16,000/- each. The appellants are now in appeal against this order.

3. During the hearing before us, the appellants pressed for the following arguments only:

(1) In quasi-criminal proceedings involving confiscation and penalty, the onus on the department was much higher than that in a mere assessment dispute. While the authorities could enhance the declared value to the level of the sale price ordinarily available, they could not just for that reason impose fine or penalty. For the latter, positive evidence showing mens rea on the part of the importer, such as bogus invoice or evidence of extra payment, was necessary.

(2) All that the importer was required to declare in the bill of entry was the invoice value contracted by him for purchase of the goods. Upon the bill of entry being presented, it was the function of the Customs Officer to determine the deemed value ordinarily charged for the goods in terms of Section 14. The importer was not required to declare the said deemed value.

(3) "It is not in dispute that in order to interpret a particular provision and to infer the intention of the legislature, the Objects and Reasons stated in the Bill when it is presented to the Legislature, could be used" MANU/SC/0229/1986 Rib Tapes (India) Pvt. Ltd. and Anr. v. Union of India and Ors. 1986 (8) ECR 731 Section 111 was amended in 1973 by Act No. 36 of 1973 and the word "value" specifically inserted therein. The note on the relevant amending clause stated:

Clause (2). This clause seeks to amend Section 111 of the Customs Act, 1962, with a view to providing for t