TaxTMI 
TaxTMI 
2013 (11) TMI 1299
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....he same are liable for confiscation under Section 111 (d) and (m) of the Act. Hence these appeals. 2. We have heard S/Shri V.S.Nankani, Subba Reddy, P.M. Dave, Paritosh Gupta, for the Appellants and Dr.J. Nagori, Additional Commissioner (A.R.) DR for the Respondent-Commissioner. 3. The main argument of the Appellants is that there is no evidence to show import of complete air-conditioner or to show that complete air-conditioner was shipped from Thailand to Singapore where it was dismantled or disassembled into parts before shipment to India and hence the Commissioner could not have taken the prices of complete air-conditioner and apportioned the same in the ratio 60:40 for indoor and outdoor units of split air-conditioners. It was also submitted that the findings of the Commissioner are based solely on statements of KCM and other co-noticees, although not only KCM but also co-noticee Savaram Patel had retracted their statements. On behalf of KCM, Shri Nankani pointed out that veracity and authenticity of some documents was challenged, as confirmed by handwriting experts, and there are no findings on the discrepancies noticed in several key documents on the basis of which the ....
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....The main issue relates to re-determination of value on account of alleged under invoicing. Before dealing with this issue, we may conveniently dispose of the issue relating to clubbing first, because the entire investigation has been premised on the fact that what was ordered was a complete air-conditioner which disassembled before import into India, and hence the price of a complete air-conditioner as given in the price quotation sent by email dated 12.8.2005 from Mr K.Hayashi to Mr Ashok of Uptron Electronics faxed to KCM and found during the search from his office should be adopted as the basis of determining the correct value. There is no doubt that in terms of the law laid down by the Apex Court in Collector of Customs vs. Sony International 2008 (231) ELT 385 unless the goods 'as presented' having the essential character of a complete or finished article, the same cannot be assessed or classified as a complete article. As a consequence of ratio of this judgment, it follows that different consignments of parts of an article when imported at different points of time cannot be assessed together as a complete article. In the present case, this ratio is sought to be applied on t....
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....ue. There is no explanation from the Department how thousands of consignments of parts of air-conditioners of O General brand are allowed imports, if the enquiry with ETA General is correct. The Commissioner no doubt refers to 3 cases where consignments of the same quantity of indoor and outdoor units were imported by Subh Electromech and Vinayak Enterprises in paragraphs 47.9 and 47.10 but except for one instance, where the same model was imported at different ports, in other two it is not known whether same model was imported. These consignments were also not presented as such or together for assessment. The Tribunal in Susha Electronics vs Collector (1989 (39) ELT 585) set aside the order clubbing consignments of parts of television imported at Bombay and Kandla to confiscate the same as complete television which required a licence then to import and value them as complete television. Amongst the seized goods, examination as detailed in sub-paragrapghs of main para 9.1 of the show cause notice also shows that these are parts of different quantities of different models not constituting a set of complete air-conditioners. Applying the ratio of Sony International (supra) we the....
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....lectromech, M/s. Vinayak Enterprises, M/s. BGM Enterprises, M/s. Japonica International as suppliers of parts, but stated that he does not know M/s. Kheteshwar Electronics and M/s. Satguru Electronics, who have factories at Silvassa. KCM has however identified the proprietors of M/s. Kheteshwar Electronics and M/s. Satguru Electronics. KCM has further stated that compressors are filled with gas and that the suppliers have given a certificate that the compressor gas does not contain any ODS substance; (b) In his statement dated 22nd August 2007, the first seven pages contain formal recording of facts. In Q. 5 on page 7, KCM was shown pages 61, 60, 59, 58, 57, 62 and 72 of File No. 27 seized under Panchnama dated 23.5.2007. He explained that pages 61 and 59 are Debit Notes Nos. ID 00083 and 84 dated 23.4.2007 and 20.4.2007 respectively issued by Uptron. After setting out the contents of these two documents read with pages 60 and 58 of the same seized file, on page 9, KCM has stated as under: I further state that the amt. minus the invoice amt. i.e. US $ 302580.75 being the differential amt. was remitted separately to M/s. Uptron Pte. L....
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.... undervalued rate with a clear understanding that the amount over and above the undervalued amount will be sent separately to the suppliers abroad. He further stated that the imported consignments were sold under 60% billing and the rest in cash, and the cash so generated was sent to Uptron through Uptrons persons or when Shri Pradeep Tewani, owner of Uptron visited India. KCM was however, unable to give details of the person who used to come and collect the cash from him. He also confirms that the similar modus was followed for other suppliers like Ninja, Jackys and Anisuma. He once again explains pages 1, 2 and 7 of the computer print-out which inter alia contains the payment schedule given date-wise. He once again confirms that page no. 3 of File No. 26 shows the prices of various models of O-General brand air-conditioners imported by him during the period April 2004, August, 2005 and as on 12.8.2005. He also explains other pages of the seized record shown to him; (e) In his last statement dated 12.11.2007, he accepts the contents of his earlier statements. He gives details of 36 models of window and split air-conditioners. In the same way, when shown page 3 of File No. 26,....
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....ause of the threat to him on account of his daughter's interrogation and her impending marriage in the following month, but in view of his three statements recorded thereafter, which admittedly have not been retracted, we hold the statement dated 22nd August, 2007 to be voluntary, but following the ratio of the judgments of the Hon'ble Supreme Court referred to hereinabove, deal with it to see whether it is independently corroborated. 12. The next task is to evaluate and weigh the statements and the evidentiary value of the documents referred therein. While the oral statements may not be sacrosanct, its probative value must be considered having regard to the overall evidence and material on record. This is more so when there are various inconsistencies between the statements and some of the uncontroverted facts to which we shall advert to now. 13. The first difficulty in accepting the statements as such is that the same proceed on the basis as if KCM had imported complete air-conditioners. Although KCM stated that purchase orders are destroyed after the transaction, in respect of live consignments and seized goods, no such purchase orders were found in the search carried out ....
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....the entire investigation has been premised. 14. We also find strong force in the contention that there is a serious contradiction amongst the seized documents viz. pages 58 to 61 of File No. 27 (debit notes) and page 3 of File No. 26 (price quotation fax), when read with the statements of KCM. According to KCM, the differential amounts as per the invoices and the amounts shown in the two debit notes were paid to Uptron separately. If the quantity covered by the invoices referred to in debit notes is multiplied by the rate in US Dollars indicated in the price quotation fax, the actual price does not tally with the amount shown in the debit notes. The Department has adopted the prices given in the price quotation fax (page 3 File No. 26) for the purposes of calculating the differential duty. If the same rates are adopted for the purposes of the two debit notes to the quantities covered by the invoices, they should tally with the 'actual price' purportedly mentioned under two debit notes, but as demonstrated by the Appellant, it does not do so. The Department has not been able to show how the amounts mentioned in the debit notes is the actual price if the rates shown on page 3 of F....
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.... Mr Pradeep and no evidence of reply from Mr.Pradeep. It is undated and unsigned document containing rates for the period April 2004 and KCM does not in his statements say when this proposed prices at which we would like to place orders was actually sent. No quantity is mentioned. Though it refers to purchase schedule there is no reference to period of delivery or terms of payment , contrary to which KCM says 60% was remitted through banks and 40% in cash which again tally with the debit notes. The net result in this case is documents by themselves are not incriminatory and do not corroborate or support the statements of KCM. We find that statements have been discarded when the same are uncorroborated and not truth thereof cannot be established by the record in Commissioner vs. R.M.jewellers (2008 (228) ELT 577), Swati Industries (2009 (248) ELT 191) and Radha Madhav Corporation vs. Commissioner (2012 (284) ELT 369). 16. We may at this stage deal with one of the submissions made by the Appellants in relation to the debit notes. It is argued that the debit notes are not genuine and were not seized from the premises of the Appellant. According to the Appellants, the debit notes....
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....how that the other suppliers like Jackys, Ninja and Anisuma also supplied complete air-conditioners at the same prices mentioned in the price quotation fax or Page 7 of computer printout; (v) A report from the Singapore High Commission showed that M/s.My Way Electronics is in the business of forwarding, packing and crating services which does not lead to the conclusion that it was engaged or competent in dismantling a complete air-conditioner into parts; (vi) There is no allegation of relationship between the suppliers and the importers. 18. In support of their case, the Appellant has produced evidence of a large number of contemporaneous imports of parts of air-conditioners imported at prices comparable to those declared by them. The Commissioner, however does not accept this evidence, because according to the Commissioner, except for producing the NIBD data, the Appellant has not produced any further material to show that the goods covered by the contemporaneous imports are like or similar to the goods imported by it. The law, however, puts the burden of proof of undervaluation on the Department as held by the Hon'ble Supreme Court in Mirah Exports vs. Collector (1998 (....
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....nt in support of its allegation of undervaluation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on him is valid. Therefore, the charge of under invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. 19. The Department has not produced evidence of contemporaneous imports at higher prices. The Commissioner has also not made any enquiry at all major ports regarding the prices at which parts of air-conditioners are being imported. When these aspects are considered, it is obvious that the Department has not discharged the burden to prove undervaluation by complying with the tests laid down by the Hon'ble Supreme Court. It finally boils down to statements of KCM versus the evidence of contemporaneous imports. In our view, in the light of the judgement of the Supreme Court in South India Television, the transaction value cannot be discarded in the present case as it is duly corroborated by evidence of contemporaneous. It was open to the Commissioner to make all India enquiry as held by th....
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....ral which in any event, is a distributor to the supplier. 23. So far as appellants argument that Commissioner could not have demanded duty and imposed Section 114A penalty upon KCM in his individual and personal capacity, we agree with the legal principle on this aspect, as laid down by the Tribunal in Gujarat Adani Ports Ltd. Vs. Commissioner 2013 (287) ELT 330, Gurmeet Singh vs. Commissioner, 2006 (199) ELT 822 and in Bimal Kumar Mehra vs. Commissioner (2011 (270) ELT 152), and accordingly hold that KCM cannot be fastened with the liability under Section 28 and Section 114A of Customs Act, 1962, as he is not the importer. 24. The Commissioner has also held that goods (outdoor units) are liable for confiscation under Section 111(d) on the ground that import of compressors containing R22 Gas requires a license. It is no doubt true that at the time when the goods landed into India, the importers did not have a license. It is only subsequently that the importers applied for and obtained licenses which were issued post facto, to cover goods which had already been shipped/landed/cleared. We therefore, set aside the confiscation under Section 111(d) subject to verification of the....