TaxTMI 
TaxTMI 
2003 (9) TMI 384
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....wo import licences, dated 23-1-1991 and 12-3-1991. valid for import of items permissible as per the provisions of paragraph 192 of the Import and Export Policy 1990-93, Bills of entry were assessed and clearance of the goods was allowed on declared value. Customs duty of Rs. 30,81,414/- and Rs. 30,26,148/- was paid. After the release of the consignments, a review application was filed before the Collector (Appeals) on the ground that the licences were not valid to cover the consignments; the Collector (Appeals) allowed the review application vide an Order-in-Appeal dated 2-3-1993; the importers filed an appeal before the Tribunal which remanded the case to the Collector (Appeals). The Collector (Appeals) allowed the Department's review application in de novo proceedings and thereafter a show cause notice was issued on 31-5-1994 alleging that the goods imported were covered by Entry No. 31 of Appendix 2B of 1990-93 Policy which read as "Concentrate of Alcoholic Beverages" and since the importer produced REP import licences which were valid only for items in Appendix 3A of the Policy, the import was unauthorised and the goods liable to confiscation under Section 111 (d) of the Custom....
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....e value of the goods imported was alleged to be as under :- Finacord Chemicals (P) Ltd. S.R. Nagpal & Sons (India) Quantity of the goods imported (in bulk litres) 24,423 36,902 Amount paid under L/Cs @ GBP 1.40 per bulk litre (converted at the exchange rate of GBP 2.2900 = Rs. 100/- prevailing on the date of filing of the Bills of Entry). GBP 34,192.20 = Rs. 14,93,109/- GBP 51,662.80 = Rs. 22,56,017/- + Amount paid by direct bank transfer @ GBP 2.38 per bulk litre, equivalent to US $ 2,66,500, being the actual amount transferred (converted at the exchange rate of US $ 3.8475 = Rs. 100/- prevailing on the date of filing of Bills of Entry) divided proportionately, between the two firms. US $ 1,06,135/- =Rs. 27,58,545/- US $ 1,60,365/- Rs. 41,68,031/- + Amount of Rs. 31,25,000/- (@ Rs. 50/- per bulk litre for 62,500 bulk litres) paid locally, as per Rs. 12,44,547/- Rs. 18,80,453/- the instructions of Mr. Ravi Khosla of M/s. Ravco International Ltd., divided proportionately between the two firms. Total CIF value Rs. 54,96,201/- Rs. 83,04,501/- Assessable value Rs. 55,51,163/- Rs. 83,87,546/- Customs duty leviable @ 355% + 50% Rs. 2,24,8....
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....P 1.40 per bulk litre CIF is not acceptable and the actual transaction value of the goods is determined as Rs. 54,96,201/- CIF. The Customs Duty on the said correct value was not levied/short-levied because of deliberate misdeclaration of value and suppression of the correct value by the importer. I, therefore, order recovery of short-levied Customs Duty of Rs 1,63,74,648/- from M/s. Finacord Chemicals (P) Ltd. under Section 28 of the Customs Act, 1962 read with proviso to sub-section (1) thereof. However, any part of this duty, if finally recovered in relation to the seized goods on deposit in lieu thereof in pursuance of other parts of this order shall stand abated from the said amount of Rs. 1,63,74,648/- held recoverable from M/s. Finacord Chemicals (P) Ltd. (b) I hold that the goods valued at Rs. 54,96,201/- CIF imported by M/s. Finacord Chemicals (P) Ltd. and finally in possession of M/s. MDL are liable to confiscation under Section 111(d) and (m) of Customs Act, 1962. An Order in this behalf is being made in relation to M/s. MDL. (c) I also impose a penalty of Rs. 1,64,00,000/- on M/s. Finacord Chemicals (P) Ltd. ....
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....iate an amount of Rs. 51,62,413/- towards the value of the goods (which would have been leviable as redemption fine if the goods had been available for confiscation)." Hence these appeals. 5. We have heard both sides and carefully considered the rival submissions. Our findings are recorded as under :- (i) Validity of Import : The admitted alcoholic strength of the goods is 59.3% vol., and therefore overproof whisky as per ISI Standards, according to which "degrees overproof and under proof are considered, depending on whether the liquid is more concentrated or more diluted than proof spirit. For example, 20 overproof (20 OP) refers to 120% proof spirit and 20 underproof (20 UP) refers to 80% proof spirit. 100% proof spirit is equivalent to 57.1% alcohol by vol." The question that remains to be answered is whether over-proof whisky is a concentrate of alcoholic beverages. We find that in the case of Bussa Overseas Properties Ltd. v. CC(I), Mumbai - 2002 (148) E.L.T. 328, the Tribunal has held that whisky of overproof alcoholic strength is to be treated as concentrate of whisky. In that case the goods were underproof whisky 55% by vol. alcoholic strength and this is wha....
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....g Director of M/s. Ravco International Ltd. agreed to work with M/s. Finacord Chemicals (P) Ltd. and S.R. Nagpal and Sons (India) at the request of a family friend Mr. Nandi Nagpal. (c) At the request of Mr. Umesh Nagpal, the invoice for GBP 3.78 per litre was split by M/s. Ravco into two sets of invoices; one to show a price of GBP 1.40 per litre and the other to show the price of GBP 2.38 per litre. The invoices showing the price of GBP 1.40 per litre were paid by letter of credit and the other set showing GBP 2.38 per litre was paid by direct bank transfer to M/s. Ravco from Habib Bank, New York or Hong Kong, who in turn would pay it to M/s. Morrison Bowmore. 2. Details of the transactions with M/s. Finacord Chemicals (P) Ltd. and M/s. S.R. Nagpal and Sons (India) are as under :- (a) M/s. Finacord Chemicals (P) Ltd. Invoice No. RI/922/91931 @ GBP 1.40 per litre GBP 17250.80 Invoice No. RI/922/91931A @ GBP 1.40 per litre GBP 16941.40   Total paid by letter of credit GBP 34192.20 Invoice No. RI/922/91931 @ GBP 2.38 per litre GBP 29326.36 Invoice No.RI/922/91931A @ GBP 2.38 per litre. GBP 28800.38   Total paid by direct bank transfer....
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....; 3rd April, 1992 Subject : Suspected misdeclaration of value of undenatured ethyl alcohol imported by M/s. Finacord Chemicals (P) Ltd., and S.R. Nagpal & Sons (India) both of Bombay - Regarding. Please refer to your fax message No. 365/XVII/l/91-Pt., dated 21-2-1992 followed by a letter No. SG/INF-28/AJ/91 SIIB, dated 19-2-1992 from Shri D.S. Solanki, Collector of Customs, Bombay. In this connection, further investigations conducted by H.M. Customs and Excise reveal that Mr. Khosla, the Managing Director of Ravco International Ltd. confirmed that the total payment received by Ravco International for spirit purchased by Finacord Chemicals (P) Ltd., was GBP 92,318.94. Copies of relevant invoices are as per Annexure 'A' which Mr. Khosla confirmed were true copies of company records. Further, Mr. Khosla confirmed that the total payment received by Ravco International Ltd. for spirit purchased by S.R. Nagpal and Sons (India) was GBP 139,489.56. Copies of all relevant invoices, which Mr. Khosla confirmed were true copies of....
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....sp; Sd/-3-4-92 Shri B. Sankaran, Director General, Directorate of Revenue Intelligence, New Delhi. Encls :- 22 pages documents as per list attached. Copy to : Shri D.S. Solanki, Collector of Customs, Bombay, along with authenticated documents as discussed above." "No. CT/VI/15/91 24th April, 1992 Subject : Suspected misdeclaration of value of undenatured ethyl alcohol imported by M/s. Finacord Chemicals (P) Ltd. and S.R. Nagpal & Sons (India) Please refer to your fax message No. 365/XVII/1/91-Pt., dated 16-4-1992 received by this Unit on 21-4-1992. As desired an attested copy of letter No. ILPO 928, dated 31-3-1992 from H.M. Customs and Excise with remarks "attested from the original" is being sent to the Collector of Customs, Bombay directly and a copy of the same is enclosed herewith. Further, on our request H.M. Cu....
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.... 3.78. Although Umesh Nagpal has, in one of the statements dated 9-10-1991 (page 343/Vol. II), inter alia, stated that he had made payment of Rs. 31,25,000/- in India to some person on behalf of RIL @ Rs. 50/- per litre, this statement has been retracted. Besides, this statement is in conflict with and contradictory to the case of the Department, which is that the entire differential amount was paid to RIL through Habib Bank and hence the question of making payment in person in India on behalf of RIL, does not arise at all. So also, this alleged payment of Rs. 31,25,000/- does not represent the differential value, as alleged by the department, which is alleged to be Rs. 60,25,923/- (Rs. 83,04,501/- - Rs. 22,78,578/-) in the case of SRN and Rs. 39,88,161/- (Rs. 54,96,201/- - Rs. 15,08,040/-) in the case of FCPL. Therefore, this statement is uncorroborated and unsubstantiated and the retraction thereof is valid and proper in law, rendering the statement unreliable. On the other hand, the manufacturer's invoice (Bowmore's invoice) issued in favour of SRN and FCPL containing full details and particulars are available on record and are signed. These are at pages 119 and 133 of Vol. II.....
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.... GBP 0.05 and net GBP 1.35. Copy of letter received by FCPL is part of the seized records. We therefore set aside the duty demands. 7. Redemption fine : In view of our finding on issue (i) that the goods are liable to confiscation as they have been imported without cover of a valid licence, we hold that levy of fine is warranted. However, we note that for the first time in the case of Bussa Overseas Properties Ltd. v. CC(I), Mumbai - 2002 (148) E.L.T. 328, the Tribunal held that overproof whisky having more than 55% alcohol content by vol. is a concentrate of alcoholic beverages and until this decision, a practice to allow clearances of similar goods under REP licence was prevalent. We also note that a long period has lapsed since the import and that the goods are raw materials for manufacture of alcoholic beverages that this is not a case of duty evasion as the finding on undervaluation has been set aside by us, thereby reducing the gravamen of the charge. The assessable value of the goods imported by FCPL is Rs. 15,08,040/- while the assessable value of the goods imported by SRN is Rs. 22,78,578/-. The fine levied by the Commissioner on FCPL is Rs. 51,62,413/- and that of ....