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CASE NO.: Appeal (civil)  3084 of 2008

PETITIONER: COMMISSIONER OF CUSTOMS, AHMEDABAD

RESPONDENT: GUJARAT SMALL SCALE INDUSTRIES CORPORATION

DATE OF JUDGMENT: 29/04/2008

BENCH: S.H. KAPADIA & B. SUDERSHAN REDDY

JUDGMENT: JUDGMENT

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                            IN THE SUPREME COURT OF INDIA

                             CIVIL APPELLATE JURISDICTION

                               CIVIL APPEAL NO 3084 OF 2008                               (Arising out of SLP(C) No. 20222/2006)

COMMISSIONER OF CUSTOMS, AHMEDABAD                                              ...APPELLANT (S)

                                              VERSUS

GUJARAT SMALL SCALE INDUSTRIES CORPORATION                                      ...RESPONDEN T                                  (S)

                                              ORDER

           Lave granted.

           This Civil Appeal is directed against the judgment dated 11th May, 2006 delivere d

by Customs, Excise and Service Tax Appellate Tribunal in Appeal No. C/607/Mumbai.

           The short question involved in this Civil Appeal is whether there was mis-

declaration of goods imported, namely, Polyethylene (prime/virgin) mis-declared as

Polyethylene-Wide-Spec. with the intention to evade duty?

           Briefly, the facts are as under:

           Respondent - importer imported 1485 MT of goods declaring them as

"Polyethylene Wide Specs" @ US $ 410 PMT against 13 Bill of Entries. The department had

some doubts about the genuineness of the value declared by the importer. They asked the

respondent to produce manufacturer’s invoice for which the importer expressed their inabili

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to produce the same. At this stage, it may be

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noted that we are concerned with the period February, 1996 to April, 1996. At the relevant

time respondent was a State Government owned Corporation. The Custom Officers drew 4

samples from different containers and forwarded the same to CIPET at Ahmedabad for

testing the samples. The query raised by the department with the Institute was whether the

subject samples tallied with the Quality Certificate furnished by the respondent.         Th at

certificate is dated 18th December, 1995 (see page 93 of the paper book). That certificate

indicates importation of Polyethylene Wide Specs material on the basis of two relevant facto rs,

namely, Melt Flow Index and Density. We quote hereinbelow the said Certificate.

                                                              "DECEMBER 18, 1995

                                 QUALITY CERTIFICATE

             THIS IS TO CERTIFY THAT 1485 MT POLYTHYLENE WIDE     SPECS SHIPPED TO M/S GUJARAT SMALL INDUSTRIES CORPORATION     LTD., AHMEDABAD, INDIA, THROUGH M/S G.A. INTERNATIONAL, DUBAI     (U.A.E.) PER VESSEL MV "MED.TIKYO" V.102W VIDE B/L NO. SINCY 610     AND SINCY 611 DATED DECEMBER 18, 1995 IS POLYETHYLENE WIDE     SPECS MATERIAL HAVING FOLLOWING CHARACTERISTICS:

                    GRADE NO. : PEE X 12 - PEE X 34

                    MFI          : 2.4   - 4.12

                    DENSITY : 0.927 - 0.960

          Sd/-

          Iector Moreno

          Technical Department

          Teshas Lineales, RESILIN, C.A.

          Complejo Petroqulmico Fi Tablazo,

          Venezuela."

          It is important to note that the Test Reports submitted by CIPET [at page 35]

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show the comparative test values in terms of Melt Flow Index and Density.           The Test

Certificate indicates that samples drawn from each container separately give a wide range of

test values in terms of two factors, namely, Melt Flow Index and Density. For example, in th e

Test Report No. 686(a) dated 30th July, 1996 the Melt Flow Index has a Test Value of 3.4

whereas in the Test Report No. 686(b) for the same factor the Test Value is 3.3. It is 4.07  in

Test Report No.687(a). Same is the position with regard to Density. In Test Report No.686

(a) Density is given as 0.950, whereas in the subsequent Test Report No.686(b) the Test Valu e

in terms of Density is 0.948 and it is 0.934 in Test Report No.687(a) and so on. These Test

Reports, therefore, support the Quality Certificate dated 18th December, 1995 which indicate s

a wide range of the grades given in terms of two main factors, namely, MFI and Density. The

problem arose on mis-interpretation of the Test Reports. According to the department the

imported material does not have Wide Spec gradation because the Test Values remain

constant, for example, in the Test Report No.686(a) the Test Value in terms of MFI is 3.4 an d

3.4 as mentioned in the last column. However, fallacy is that two samples are drawn from the

same container and therefore the resultant figures in terms of Test Value remains the same.

However, when samples are drawn from different containers the grades differ as discussed

hereinabove.

          For the aforestated reasons, we are of the view that there was no reason for the

department, on the facts and circumstances of this case, to reject the transaction value whi ch

is in consonance with the contract value.

          One more aspect needs to be mentioned. In the present case, as can be seen from

the Contract/Sale Confirmation dated 20th November, 1995, the item is imported from

Venezuela. The quantity is 1500.000 MT imported in 25 KG bags. Therefore, looking to the

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quantity involved and the price at US $ 410 per MT along with Wide Range of test values

there was no need to reject the transaction value.

           Accordingly, we find no merit in the Civil Appeal and the same is dismissed with  no

order as to costs.

                                                           ....................J.                                                             [ S.H. KAPADIA ]

       New Delhi,                                          ....................J         April 29, 2008                                      [ B. SUDERSHAN REDDY ]