TaxTMI 
TaxTMI 
2009 (8) TMI 496
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....as required to be accompanied by Kimberly Process certificate (hereinafter referred to as KP certificate). There is no dispute that such certificate stand accompanied with the consignment of the imported rough diamonds. 3. As per the recordings made in the impugned order, an intelligence was received by the Directorate of Revenue Intelligence that large scale over-valuation of rough diamonds imported from Dubai/Hongkong is being done by the importers, the consignment of imported rough diamonds were detained by the officers of DRI under Panchnama dated 25-5-03 for further investigation. The said sealed consignments were subsequently brought in the office of the appraising officer for examination of the value of the same. The said seals were broken in presence of Panchas and the panel members of export panel, which consisted of 7 members. The panel members comprised of representatives/owners of firms engaged in the import/export of rough diamonds, Government approved valuers and two officers of Indian Diamond Institute (IDI). The said export panel so constituted by the Department opined that the value of the import consignment of rough diamonds was at par with the declared value of ....
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....y Revenue was futile. In any case, the learned advocate has submitted that first panel constituted by the DRI consisted of the Director of Indian Diamond Institute (IDI), Senior Faculty-cum-Division Head of IDI, President of Surat Diamond Association, two Government approved valuers and two members of diamond trade. The valuation report given by six member expert panel constituted by DRI is supporting the appellant's case that the invoice value was fair. The said valuation report given by the said expert panel on 10-6-03 does hot stand accepted by Revenue and is discarded by them without giving any justifiable reason for the same. It simply stand recorded in the SCN that subsequent to the above examination, further intelligence received from the Directorate indicated that the value given by the above panel was not fair. Shri Patel argued that from the above narration, it can be safely concluded that the decision to carry out revaluation was without any justifiable reason and the same can be on the basis of either the informer or the person, who can be considered rival, in which case, the intelligence could be bogus and fictitious. This clearly reflects to a conspiracy and collusion....
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....was no uniformity or unanimity even amongst the panel members of subsequent panels. 9. It stand contended before us that there is no evidence produced by the department to show that the invoices issued by foreign supplier was either fabricated or fake or that any relationship existed between foreign supplier and the appellant. The Commissioner has only relied upon the report of the third panel and the retracted statements of the Director of the appellant-company. Relying upon the Tribunal's decision in the case of M/s. Mahalaxmi Gems v. CC, Mumbai, 2002 (144) E.L.T. 548 (Tri.-Mum.) as confirmed by Hon'ble Supreme Court in 2008 (231) E.L.T. 198 (S.C.), he submits that the transaction value cannot be rejected merely on the basis of report given by the trade panel constituted by the department in the absence of any evidence to show the violation of provisions of Rule 4(2) of the Customs Valuation Rules, 1988. The Hon'ble Supreme Court while upholding the Tribunal's judgment has observed that where the department failed to show any contemporaneous evidence and has failed to show that the invoices are fabricated/fake or any relationship existed between importer and exporter, the transa....
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....ent, where inconsistencies appeared. Further, they have submitted that even if the diamonds are of same quality, purity and other specifications, their price would still differ depending upon the country of origin as accepted by Shri Bakul Mehta during his cross-examination. Inasmuch as the country of origin has not been taken into consideration, their value cannot be ascertained. 12. As regards reliance by the authorities on statements recorded during the investigation, learned advocate submitted that while dealing with the allegations of valuation (either under-valuation or over-valuation), the same cannot be established on the admissions and acceptance thereof, but was required to be arrived at based on the valuation rule, as observed by Tribunal in case of Galaxy Funworld Pvt. Ltd. v. CC (Prev.), Mumbai, 2006 (206) E.L.T. 890 (Tri.-Mum.). He has also placed reliance on various other decisions of the Tribunal, some of which stand confirmed by Hon'ble Supreme Court. 13. In any case, the learned advocate has submitted that inasmuch as the rough diamonds did not attract any duty on their importation, no penalty should have been imposed upon the appellant as held by the Tribunal i....
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....l in case of M/s. Shree Corporation v. CC, Mumbai, 2004 (166) E.L.T. 471 (Tri.-Mum.), wherein the goods were allowed to be re-exported on a normal fine of Rs.50,000/- and penalty of Rs. 20,000/- was held to be adequate. As held by Hon'ble Supreme Court in case of Hargovind Das K. Joshi v. Collr. of Customs, 1992 (61) E.L.T. 172 (S.C.), it is necessary for the respondent to have given special reason for not giving an option to redeem the said goods. 15. They have further submitted that the Commissioner's reliance upon Hon'ble Supreme Court judgment in case of M/s. Om Prakash Bhatia v. CC, Delhi, 2003 (155) E.L.T. 423 (S.C.), is not appropriate inasmuch as the subject matter of that judgment was as regards the Customs jurisdiction to determine the value under Section 14 of the Customs Act in respect of goods which were exported under scheme of duty drawback, which in turn is based upon the FOB value of the goods. Inasmuch as in the present case, the importer was not drawing any benefit of any sort by alleged over-valuation of the diamonds and the diamonds did not attract any duty liability, it was not open to the Customs authorities to go into the question of valuation. The valuatio....
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....rder passed by Commissioner, we find that whole dispute in the present case, relates to the valuation of the consignments of rough diamonds imported by the various appellants. Without recording any details, we find that the said consignments which were detained by DRI officers on the basis of intelligence received, was got examined by expert panel, the said expert panel was constituted by the DRI itself and comprised of Director of IDI, Sr. Faculty-cum-Division Head of IDI, person from Surat Diamond Association and two Government approved valuers and two persons of the Diamond trade. The value given by the said panel was in consonance with the value of the diamonds declared by the appellant, and was made known to Department vide their report date 10-6-03. It is not at all clear as to why the said report given by the expert panel which was constituted by DRI itself, was not accepted and what was the reason compelled the DRI officers to constitute another panel consisting of the members from the trade and not any experts in the field. No valid reason has been given either in the SCN or in the impugned order in support of DRI decision to go ahead with the second valuation. Not only th....
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....d during the course of adjudication has revealed that they were neither Government approved valuers nor regular importer of diamonds nor have taken any technical or vocational course in diamonds. In this regard, cross-examination of Shri Ramesh Sanghvi, Vishal P. Shah, Mavjibhai Patel, Chhaganbhai Patel, Kanaiyalal L. Narola can be referred to in the impugned order. The report of the panel which neither consisted of qualified person or experienced person, cannot be preferred over the report of the panel consisting of members which were not only technically qualified but more experienced. 19. We also take note of the various discrepancies pointed out by the appellant in the report of the two subsequent panels. As per factual position, there are six consignments (packages) and each consignment consisted of several sub-packages. The report dated 10-6-03 according to which there is no over-valuation of the goods, gives the value of all the sub-packages in each consignment. Subsequent report shows that only 4 samples were drawn from each of the six consignments. The version of all the members as regards there being six packages and number of sub-packages, while doing the valuation of s....
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....said KP certificate. In the case of M/s. Mahalaxmi Gems v. CC, Mumbai, 2002 (144) E.L.T. 548 (Tri.-Mum.), Tribunal, while dealing with the identical dispute, has observed that in the absence of any cogent evidence, enhancement of the value of the rough diamonds based upon the panel consisting of employees of the department and members of the diamond trade, cannot be resorted to. For better appreciation, we reproduce Para 3 of the said judgment. "3. It is debatable whether the members of the diamond trade would be independent witnesses with regard to the valuation of goods imported by another member of the same trade. In such matter one cannot overlook the fact of competition among these members and expect a member of the panel to rise above such consideration taken impartially. It is however, not necessary for us to rest our decision upon the tack of impartiality of this panel. The fact remains that the value of the goods that was declared was the transaction value. The genuineness of the invoice that the appellant produced has not been questioned. It has not been alleged that it was fabricated or fake or that any relationship between the importer and the exporter. Applying the r....
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....22.4 of the impugned order. "22.1 The international certification scheme for rough diamonds entitled: "Kimberly Process Certificate Scheme" was adopted in a Ministerial meeting held at Interlaken, Switzerland, on 05th November, 2002. India is a signatory to the undertaken Declaration. The scheme has been evolved to deal with the issue of conflict diamonds which are basically rough diamonds whose trade is prohibited by the United Nations Security Council, because the proceeds of that trade are used by rebel movements and their allies to finance conflicts aimed at undermining legitimate governments. 22.2 KP certificate is a forgery resistant document with a particular format which identifies a shipment of rough diamonds as being in compliance with the requirements of Certification Scheme (i.e. KPCS). The KP certificate inter alia contains the details of country of origin, the certificate number, date of issuance, date of expiry, issuing authority, the details of importer and exporter, carat weight/mass, value in US $, number of parcels in shipments, relevant HS code and validation of certificate by the exporting authority. It may also have additional details such as quality, charac....
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....ing absolute confiscation of the goods, the Commissioner (Appeals) has relied upon the Para 7 of the said Circular which refers to the importation of the rough diamonds through personal baggage under various export promotion schemes and prescribed that if the rough diamonds becomes liable to confiscation under Section 111 of the Customs Act for any contravention, the goods should be absolutely confiscated by the Customs. On going through the Para 7 of the said Circular, we find that the same does not relate to non-production of K.P. certificate, but is in respect of other contravention. The relevant para, which deals with the production of K.P. certificate in Para 6 of the said Circular which is reproduced below for better appreciation. "6. In case a rough diamond consignment is not accompanied by a KP Certificate) but otherwise in order, the importer in India may be given seven working days to arrange for the original KP Certificate for clearance of the' said import consignment. If the importer is not able to submit the Original KP Certificate within the said period of seven working days, the goods would be sent back to the Exporting Authority (i.e. the certifying authority) of t....