SHARP BUSINESS MACHINES PVT. LTD., BANGALORE versus COLLECTOR OF CUSTOMS, BANGALORE

Citation: [1990] SUPP. 1 S.C.R. 28 · Decided: 24-08-1990 · Supreme Court of India · Bench: N.M. KASLIWAL · Disposal: Dismissed

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Judgment (excerpt)

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SHARP BUSINESS MACHINES PVT. LTD .• BANGALORE 
v. 
COLLECTOR OF CUSTOMS, BANGALORE 
AUGUST 24. 1990 
[N.M. KASLIWAL AND S.C. AGRAWAL, JJ.] 
Customs Act, 1962: Ss. 14(1), lll(d}, 111(m), 112& 130(e)-
lmport of copiers in SKD/CKD form-Confiscation of for misdescrip-
tion and misdeclaration of value-Va/idit_v of-Personal penalties-
] ustification for. 
Section 14(1) of the Customs Act, 1962 provides that where a duty 
of customs is chargeable on any goods by reference to their value, the 
value of such goods shall be deemed to be the price at which such or like 
goods are ordinarily ~old or offered for sale, for delivery at the time and 
place of importation, in the course of international trade. 
The appellant-company, a small scale manufacturer of plain 
paper copiers, had submitted, alongwith their application for approval 
of the phased manufacturing programme, the quotations received by 
them from their foreign collaborators based in Hongkong in respect of 
the various components and obtained a licence in this regard for 
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Rs.4,94.500. Subsequently, they imported three consignments of com-
ponents and consumables in SKD/CKD form from suppliers at Hong-
kong and another consignment from Singapore. The total value 
dedared under the four bills of entry was Rs.99,612. 
The Collector of Customs found that the invoices submitted by the 
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company were undervalued and determined the price of goods at 
Rs.7,15,485 with reference to the quotations, for the purposes of 
s. 14(1) of the Act. He thus held that there was a misdeclaration of value 
to the tune of Rs.6,15,873, that the duty payable thereon would be 
Rs.10,96,228.20 and that the entire goods were liable to confiscation 
under s. ]] l(m) of the Act. He also held that the goods imported were 
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fully finished copiers in SKD/CKD form and as such there was a 
misdeclaration that the imported goods were only parts of the copiers, 
that description of most of the items in the invoices had been deli-
berately manipulated to suit the description in the licence, that folly 
assembled copiers were not permissible to be imported and this was a 
clear violation of the Act and the terms of the licence. In the alternative 
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he held that even if all the parts contained in SKD/CKD packs were 
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S.B. MACHINES v. COLLECTOR OF CUSTOMS 
29 
viewed individually, none of the items was covered by the licence. He 
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further held that the value of the parts imported for the purposes of 
s. 14(1) of the Act would be Rs.5,63,332, whereas the importers were 
permitted to import goods worth Rs.4,94,500, that there was thus an 
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excess of Rs.68,832 and as such the goods were liable to confiscation 
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under s. 11 l(d) of the Act. Consequently, he directed confiscation of the 
entire goods with an option to the company to pay Rs.3 lakhs in lieu 
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thereof and also Rs.2 lakhs in personal penalties. The Customs, Excise 
and Gold (Control) Appellate Tribunal dismissed their appeals. 
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In these appeals under section 130(e) of the Act, it was contended 
for the appellants that the quotations had .indicated prices at Hongkong 
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and .not the place of importation, that at the time of submitting the c 
application for grant of licence the prices were quoted for fixing the 
upper limit of the value of the licence, that when the actual purchase 
transactions were entered into the company negotiated for the price and 
having regard to the quantum of purchase and the prospects of future 
sales the company was given 25 per cent discount by the suppliers, and 
that in the absence of any other material on record the invoice price 
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alone could form the basis of valuation of the imported goods. For the 
respondents, it was contended that the prices quoted by the collabora-
tors were based on the prices given by the manufacturers, and there was 
no question of supplying the components on a lesser price than given by 
the manufacturers themselves, that the goods imported were not com-
ponents of plain paper copiers as declared, that the cartons in fact 
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comprised of all the parts required for full and complete assembly of 14 
copiers, that the company in importing them in the guise of separate 
components and accessories had not only violated the terms and condi-
lions of the licence but also committed a complete fraud, that in the 
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circumstances the adjudicating authority was fully justified in placing 
reliance on the prices mentioned in the quot

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