2024 (5) TMI 1407 - AT - Customs

Two importers used same supplier and invoice numbers to evade anti-dumping duty on calculators through separate Bills of Entry

CESTAT New Delhi upheld the Principal Commissioner's decision to club consignments imported by two entities through separate Bills of Entry to evade ... Clubbing of consignments - Levy of anti-dumping duty - Alleged undervaluation of DVB remotes and diodes - Differential duty confirmation - Confiscation of goods and imposition of penalty. Clubbing the consignment of parts of calculators imported by Banke Bihari and Zippo Mobiles through the four Bills of Entry, two dated 20.02.2018 and two dated 24.03.2018 and 19.03.2018 - HELD THAT:- It is evident that the two consignments imported by Banke Bihari and Zippo Mobiles through two Bills of Entry, each dated 20.02.2018, have the same invoice number and have a common supplier. The purchase orders for both the importers were placed by Dinesh Udhwani to the same supplier M/s. Pandas Technology Ltd., Hong Kong. The calculator parts that were imported by Zippo Mobiles under the Bills of Entry dated 20.02.2018 were found to have been stored in the warehouse of Banke Bihari. The Principal Commissioner has also considered the statement made by Dinesh Udhwani that the goods imported through the Bill of Entry dated 24.03.2018 had been sold out was not correct. It also transpires that the nature of the goods that were imported had matching quantities. Banke Bihari had along with other parts also imported polybags, colour boxes and two pressing machines for calculators. Zippo Mobiles also imported cartons for calculator with front and back covers. The Principal Commissioner was, therefore, justified in recording a finding that the intention was to assemble the calculators from the parts that were imported. Infact, it is also clear that Zippo Mobiles had never imported the parts and that the two consignment of plastic part for calculators arranged by Dinech Udhwani were the first import. It is, therefore, more than apparent that Banke Bihari had imported parts of calculator through Bills of Entries so as to assemble the parts to form the calculator only to avoid anti-dumping duty. Anti-dumping duty under Notification dated 29.05.2015 read with rule 2(a) of Interpretative Rules and recoverable from Banke Bihari u/s 28(4) read with section 28(8) of the Customs Act - The PCB assembly (having in-built cell bracket) connected with display along with button cell, therefore, provides the essential character of the complete or finished article. As per of rule 2(a) of the Interpretative Rules to the First Schedule to the Tariff Act, it is not necessary that all the parts/components of article must be present to merit classification as a complete article. It will still be classified as a complete article if the parts, which are presented, have the essential character of a complete or finished article. PCB assembly along with the cell are enough to provide the essential characteristic and, therefore, as per Interpretative rule 2(a), the parts imported by Banke Bihari are in the nature of a finished article i.e. calculator. Undervaluation of DVD remotes in CKD imported under Bill of Entry No. 6460501 dated 21.05.2018 and Diodes under Bill of Entry No. 6675087 dated 05.06.2018 and whether the rejection of declared assessable value and re-assessment thereof by the Principal Commissioner is correct - The items DVB remote and LED diodes figure in these pages. The summary of container numbers is also mentioned. The said pages also have summary of payments made and payments due and, therefore, indicate the transactional nature of the entries. On being shown Dinesh Udhwani agreed that the details like description, date and quantity is similar to the details in their Bill of Entry/Invoice/Packing list but could not explain the price difference. He was not only evasive in his response but also claimed that the documents cannot be understood by him as they were partly in Chinese. Allegation of undervaluation of DVB remote in CKD under Bill of Entry No. 6460501 - In view of the fact that the model of remote in the Bill of Entry No. 6460501 dated 21.05.2018 was not declared and that the documents showing the actual values for DVB remote of same model were obtained during the investigations, it was found that the assessable value declared by the appellant in Bill of Entry No. 6460501 dated 21.05.2018 was liable to be rejected in terms of the provisions of rule 12 of the 2007 Valuation Rules. No values of identical goods could be found during investigation and so the actual transaction value of the same model found from the email of Dinesh Udhwani was taken to be the transaction value under the provisions of rule 5 of the 2007 Valuation Rules. Thus, the total assessable value in respect of the goods covered under the Bill of Entry No. 6460501 dated 21.05.2018 was arrived at Rs. 49,29,000/- (total value of the goods= Rs. 16.43x3,00,000 units i.e. Rs. 49,29,000/-). It needs to be noted that 1.58 RMB is equal to Rs. 16.43 as per exchange rate of RMB in the show cause notice. Undervaluation of High lumin LED Emitting Diode under the Bill of Entry No. 6675087 - higher values of high lumin LED Emitting Diode 5 MM (Red, Green-S, Blue-S, White, White-S, RG-S, Blue, White-0.25w, White-0.75W) were found in the document containing 23 pages retrieved from email account. When asked to explain, Dinesh Udhwani admitted that the quantity, description, date were matching with the invoices/packing list with Bills of Entry, but he feigned ignorance about the document and denied any connection with the imports. These documents recovered from his email, along with other documents like commercial invoices from Zippo Mobiles indicating details of containers related items and value, payments made and due, cannot be discarded as not related to imports. As no values of identical goods were unearthed during investigation, the transaction value of the same goods found from email of Dinesh Udhwani was correctly taken to be the transaction value under the provisions of rule 5 of the 2007 Valuation Rules. Differential Duty Confirmation - As it has been found as a fact that Banke Bihari had undervalued DVD remotes and diodes, the Principal Commissioner was justified in requiring Banke Bihari to pay the differential duty. Confiscation of Goods and Imposition of Penalty - The Principal Commissioner found that BBEPL and Zippo Mobiles actively connived to evade anti-dumping duty by filing separate Bills of Entry and misclassifying goods. The goods were liable to confiscation u/s 111(m) of the Customs Act. Penalties were imposed under sections 112 and 114A of the Customs Act on BBEPL, Zippo Mobiles, and associated individuals for submitting incorrect and fabricated invoices. All appeals (Customs Appeal Nos. 50856 to 50862 of 2020) were dismissed, upholding the Principal Commissioner's findings and actions. Issues Involved:1. Clubbing of consignments.2. Levy of anti-dumping duty.3. Allegation of undervaluation.4. Differential duty.5. Confiscation and penalty.Summary:A. Clubbing of Consignments:The Principal Commissioner was justified in clubbing the consignment of parts of calculators imported by Banke Bihari and Zippo Mobiles through four Bills of Entry. The evidence showed that the parts were imported under the same invoice number from a common supplier, with the intention to assemble calculators and avoid anti-dumping duty. The statements and documents revealed that the imports were managed by Dinesh Udhwani, who was related to the directors of both companies. The goods were imported under the same IGM/Gateway IGM and stored in the same warehouse, indicating a deliberate attempt to split the consignment to evade duty.B. Levy of Anti-Dumping Duty:The parts imported by Banke Bihari had the essential character of a complete calculator. The PCB assembly with display and button cell provided the essential characteristics of a finished calculator. As per rule 2(a) of the Interpretative Rules, the parts presented had the essential character of a complete article, justifying the imposition of anti-dumping duty. Reference was made to the decision in Samay Electronics, which supported the application of rule 2(a) for anti-dumping duty.C. Allegation of Undervaluation:The Principal Commissioner correctly rejected the declared assessable value of DVB remotes and diodes imported by Banke Bihari. The documents retrieved from Dinesh Udhwani's email indicated higher values for the same goods. The declared values were found to be undervalued to evade customs duty. The subsequent Bills of Entry showed substantially higher values, confirming the undervaluation. The transaction value was re-determined based on the actual values found during the investigation.D. Differential Duty:The Principal Commissioner was justified in confirming the differential duty as Banke Bihari had undervalued the imports. The rejection of the declared value and re-assessment based on the actual transaction value was correct.E. Confiscation and Penalty:The goods imported by Banke Bihari and Zippo Mobiles were liable to confiscation u/s 111(m) of the Customs Act. The Principal Commissioner found that both companies had actively connived to evade anti-dumping duty by splitting the consignment and filing separate Bills of Entry. Penalties were imposed u/s 114A and 112(a) of the Customs Act for submitting incorrect and fabricated invoices. The penalties on individuals associated with the companies were also justified.Conclusion:All the appeals were dismissed, and the order of the Principal Commissioner was upheld. The Principal Commissioner was justified in clubbing the consignments, imposing anti-dumping duty, rejecting the declared values, confirming the differential duty, and ordering confiscation and penalties.