TaxTMI 
TaxTMI 
2016 (1) TMI 1102
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....gin and the unit price of US$ 190 in respect of mixed acid oils and of US$ 210 and 205 in respect of mixed fatty acid. The samples were drawn from the said consignment and the goods were found to be palm stearin, palm fatty acid, palm stearin composed of triglysides of fatty acids (easters), RPO etc. The price declared by the appellant was enhanced by the assessing officer to US$ 336.25 in respect of mixed acid oils and to US$ 415.5 in respect of mixed fatty acid. The appellant accepted the said enhanced value and cleared the same on payment of duty. 4. However, subsequently based upon certain investigation, proceedings were initiated for enhancement of assessable value resulting in passing of impugned order vide which the assessable value of the mixed acid oils as well as mixed fatty acid was enhanced to US $ 420. 5. After hearing both sides, we find that identical proceedings, based upon the identical investigation conducted by the Revenue were initiated against another importer and orders were passed enhancing the declared assessable value of US$ 185 per MT to US$ 420 per MT. The evidence collected by the Revenue for enhancement of value was the statement of two indenting ....
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....f two indenting agents namely Shri Rakesh Kumar and Shri Anil Kumar Arora has confirmed the demand, but appellate authority set aside the same by observing that there is no evidence of rejection of transaction value. The said order of the Commissioner (Appeals) also stand accepted by the Revenue inasmuch as there is no appeal before the Tribunal. 8. In view of the above, the impugned order is set aside and all three appeals are allowed with consequential relief to the appellant. (order pronounced in the open court on) (Archana Wadhwa), J. (Manmohan Singh), J. PER : Manmohan Singh 9. I have gone through the draft order passed by learned Member (judicial) in respect of M/s JMD Oil Pvt. Ltd wherein order passed by the Commissioner of Customs vide his Order-in-Original no. 23/2009 dated 17.3.2009 confirming demand of duty and imposition of penalties has been set aside. I do not agree with these decision and findings recorded by the Id. Judicial Member for the reasons stated below. 10. Basis of the order recorded by Member (Judicial) was relying on Tribunal's earlier order in the case of M/s HLK. International Vs. CC New Delhi 2011 (274) E.L.T. 449 (Tri.-Del) wh....
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....5 of his order respect of Bill of entry no. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007 where the goods imported were declared as Mixed Fatty Acid @ USD 190 to 210 PMT CIF Nhava Sheva as depicted in the said para. Containers covered by the B/Es were physically examined and samples drawn. When samples were sent to CRCL, result thereof went against appellant and such result has been vividly described by Id. Adjudicating authority in Para -6 of his order,. Last column of the table appearing under that Para proved conduct of the appellant misdeclaring goods. For better appreciation of the fact of misdeclaration in different B/Es covering the respective containers approved by CRCL report as appearing in Para 6 of the impugned order is extracted below: S. No B/E NO. Date Description goods declared Total Net Weight Container No. Assessable Value USD PMT) Invoice Value (USD PMT) 1 540653 09.10.06 MIXED ACID OIL 90.65MT IALU 2270080 IALU 2273407 IALU 2266692 IALU 2271425 IALU 2271195 336.25 190 2 541277 10.10.06 Mixed Acid Oil....
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....ion for the manufacture of Fatty Acids or registration with Direcorate of Vanaspati, Vegetables Oils and Fats. (v) Sh. Gulsahan Kumar, authorized representative of the company and his two brothers Sh, Kishan kumar and Sh. Naresh Kumar, both the Directors of M/s JMD Oils Pvt. Ltd. controlled and managed all the business activities related to the fraudulent import of Palm Stearin as well as Palm Fatty Acid Distillate / Palm Fatty Acid and sold them in the local market. They intentionally mis-declared the value and description of the imported goods as PFAD, PFA or MFA in order to import them bypassing the restrictions and also to justify the value declared on lower side. (vi) As per the monthly Export Price Bulletin of Palm Fatty Acid Distillate (FOB USD/TONNE) issued by the Malaysia Palm Oil Board, the average price of Palm Fatty Acid Distillate during the year 2006 was USD 345 PMT (FOB). If valuation of the same is conducted as per the valuation Rules, 1988 then 20% of the FOB is to be added as Freight which comes to USD 69 and the total comes to USD 414 and insurance @ 1,125% comes to USD 3.88 and this the CIF value comes to USD 417.88 PMT, Therefore....
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....d., Delhi had finalized the contract of purchase, approved the quality and prices of the said goods so imported by his company M/s JMD Oils Pvt. Ltd. which confirmed that he was aware of the true character and description of the goods. He had admitted that his company M/s JMD Oils Pvt. Ltd. Delhi imported and traded Palm Fatty Acid Distillate, Palm Stearin and Palm Fatty Acid by Mis-declaring them as Mixed Fatty Acid. It. is evident that it was he who negotiated and contracted the description and value of the imported goods, i.e. Palm Fatty Acid Distillate, Palm Fatty Acid and Palm Stearin in the range of USD 400 PMT to US$ 450 PMT (CIF) and that on his direction his foreign supplier issued the invoices for value which was about 40% to 50% less than the actual value of the so imported goods. He also submitted the invoices of less value to customs for clearance of goods imported by him with willful intent to evade customs duty. Facts above confirmed that he had full knowledge of the actual prices and description of the goods hut he illegally imported the said goods by way of mis-declaration of their correct description and actual value, (xi) import of the said goods ....
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....toms by mis-declaration of actual description and actual value." [Emphasis supplied] 15. I have examined the records and the matter under appeal in detail Result of test report given by CRCL as depicted in para 12 of Order-in-Original compared with the declaration of description in Bill of Entries show that there was deliberate mis-declaration of description of the goods and the Goods in question were not PFAD or MFA as declared but were Palm stearin. Test reports unquestionably proved mis-declaration and the appellant failed to lead any evidence to the contrary. Results of the lest reports received from CRCL are as under: LL OF ENTRY NO. 540853 DT. 03.10.2006. 1. Container No. IALU 2270080 Sample No. Report C No. & Date FFA fas oleic.Acid /Palmitic Acid) Melting Point Gist of Report 14 A 35CRCU2006-CL-5749 SIIB dt. 08.02.07 1.49% by weight as P.A. 53/C The sample appears to be Palm Stearin. 14 B 35CRCL/2006-CL-5743 SIIB dt. 08.02.07 0.06% by wt as P.A. 54/C The sample appears to be Palm Stearin. 14 C 35CRCL/2006/CL-5744 SIIB dt. 08.02.07 0.12% by wt as P.A. 54/C The sample appears to be Palm Stearin. ....
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....ppears to be Palm Stearin. BILL OF ENTRY NO. 541277 dt 10.10.2006 1. Container No. IALU 2267132 Sample No. Report C. No. & Date FFA (as oleic Acid/ Palmitic Acid) Melting Point Gist of Report 15 A 35CRCL/2006/CL-5745 SIIB dt. 08.02.2007 0.06% by weight as P.A 55/C The sample .appears to be Palm Stearin. 15 B 35CRCL/2006/CL-5746 SIIB dt. 08.02.2007 0.08% as P.A. 53/C The Sample appears to be Palm Stearin. 15 C 35CRCL/2006/CL-5747 SIIB. dt. 08.02.2007 0.05% as P.A. 54/C The Sample appears to be Palm Stearin. BILL OF ENTRY NO. 5540762 dt 09.10.2006 1. Container No. IALU 2269990 Sample. No. Report C. No. & Date FFA (as oleic Acid / Palmitic Acid) Melting Point Gist of Report 10 A 35CRCU2006/CL-5730 SIIB dt. 12.01.2007 The sample appears to be Palm Stearin. 10 B 35CRCU20G6/CL-5731 SIIB dt. 12.01.2007 0.07% as P.A. 53/C The sample appears to be Palm Stearin. 10 C 35CRCU2006/CL-5732 SIIB dt 12.01.2007 0.06% as P.A 53/C The sample appears to be Palm Stearin. 2. Container No. IALU 2268822 Sample No. Report C. No. & Date FFA (as oleic A....
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....miticAcid) Melting Point Gist of Report 50 A 35CRCL/2006/CL-6230 SIIB dt. 05.07.2007 0.09% by weight as P.A. 53/C The sample appears to be Palm Stearin 50 B 35CRCL/2006/CL-6231 SIIB dt. 27.07.2007 86.99% as P.A. Not mentioned The sample is having characteristics of Fatty Acid, whether it is edible or not is not clear as it is having such a high FFA. 50 C 35CRCL/2006/CL-6232 SIIB dt. 27.07.2007 85.97% as P.A. Not mentioned The sample is having characteristics of Fatty Acid, whether it is edible or not is not clear as it is having such a high FFA. 2. Container No. UESU 2206241 Sample No. Report C. No. & Date FFA (as oleic Acid / Pa(miticAcid) Melting Point Gist of Report 51 A 35CRCL/2006/CL-6233 SIIB dt. 05.07.2007 0.07% by weight as P.A. 52/C The sample appears to be Palm Stearin 51 B 35CRCL/2006/CL-6234 SIIB dt. 27.07.2007 85.35% as P.A. Not mentioned The sample is having characteristics of Fatty Acid, whether it is edible or not is not clear as it is having such a high FFA. 51 C 35CRCL/2006/CL-6235 SIIB dt. 27.07.2007 85.827% as P.A. Not mentioned The sample is h....
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....f Triglycerides of Fatty Acid (Esters) 47 B 35CRCL/2007/CL-6216 SIIB dt. 26.01.2007 0.68% as P.A. Not Mentioned The sample appears to be Palm Stearin compsed of Triglycerides of Fatty Acid (Esters) 47 C 35CRCL/2007/CL-6217 SIIB dt. 26.11.2007 98.1% as P.A. 108.1% as O.A. Not Mentioned The sample is having characteristics of Fatty Acid, whether it is edible or not is not clear as it is having such a high FFA. 5. Container No. MOGU 2522841 Sample No. Report C. No. & Date FFA (as oleic Acid / Pa(miticAcid) Melting Point Gist of Report 48 A 35 CUS./06/CL 6221 SIIB dt. 04.07.2007 1.0% by weight as P.A. 54/C The sample appears to be Palm Stearin 48 B 35 CUS./06/CL 6222 SIIB dt. 04.07.2007 0.63% as P.A. 0.59% as O.A. 53/C The sample appears to be Palm Stearin 48 C 35 CUS./06/CL 6223 SIIB dt. 11.06.2007 53.732% as P.A. Not Mentioned The sample is having characteristics of Fatty Acid, whether it is edible or not is not clear as it is having such a high FFA. 16. An important fact in the present case to be noted is that Palm stearin imported by the appellant was not freely importa....
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....cription and actual value. 18. From the above facts, it is manifest that without probe and investigation by the DRI and testing by CRCL, mis-declaration would have escaped scrutiny of customs causing huge loss and injury to exchequer. In each container, different types of products in various drums have been found which were entirely different from declared goods. It further comes out that mis-declarations was consciously made which was within the knowledge of Shri Gulshan Kumar. When CRCL results were shown to him during recording of his statements he did not result the same. Para 25(x) of Order-in-Original clearly establishes fraudulent conduct of the appellant by mis-declaration and under valuation. Ld. Adjudicating Authority recorded as under to demonstrate mischief of the importer as under:- Sh. Gulshan Kumar, authorized representative of M/s JMD Oils Pvt. Ltd., Delhi had finalized the contract of purchase, approved the quality and prices of the said goods so imported by his company M/s JMD Oils Pvt. Ltd. which confirmed that he was aware of the true character and description of the goods. He had admitted that his company M/s JMD Oils Pvt. Ltd., Delhi importe....
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....d . But on appeal, adjudication proceeding was dropped against M/s H.K. International based on contention that evidences produced by Revenue were generic in nature and prices based on bulletin were not acceptable without examining the mis-declaration of the product, gravity of misdeclaration, conduct of importer causing evasion. 20. It is relevant to briefly describe the facts in the present case for proper decision. There was specific intelligence received that certain importers were engaged in the fraudulent import of banned items of Palm Stearin & Crude Plam Oil mis-declaring their description as Mixed Acid Oils and Mixed Fatty Acids and also their value mis-declared. One such importer was M/s JMD Oils (P) Ltd., 5/1-B, Ramesh Nagar, New Delhi- 110015 (hereinafter referred as the "Importer") who was indulged in such activities and evasion of customs duty detected by investigation. Learned Adjudicating Authority recorded material facts which demonstrated deliberate and well designed mis-declaration of the imports. 21. Examination made by commissioner in the present case shows his application of mind and testing of evidence minutely vis-a-vis intelligence, evidence on record,....
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....1. Whether there was deliberate mis-declaration of description and value of imports proved from investigation result, report of CRCL and various evidence gathered by investigation as well uncontroverted adjudication finings as recorded by Technical Member and adjudication should be upheld ? OR 2. Whether merely relying on the decision of Tribunal in the case of H K International (supra) irrespective of peculiar facts of each case tested on the basis of law, adjudication is to be set aside as recorded by Judicial Member. 27. The learned Counsel for the appellants submits that para 29.3 of the impugned order have alleged against the appellant. The grounds were mis-declaration and under valuation of imported goods, therefore, the, value was enhanced. 28. In the case of H K International (supra) the grounds are identical. Therefore, the decision of this Tribunal in the case of H K International is to be followed. He further submits that Hon'ble Member (Technical) has fell in error as there is no allegation or any evidence that the appellant has paid any amount over and above the declared invoice value to the overseas supplier and even in the statement of app....
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.... goods have been imported and the market price of the imported goods is much higher than the declared value. He further submits that all the test report have been admitted by the appellants which shows that it is a palm styrene, therefore, the appellant has violated the condition of Import Policy. Therefore, the enhancement is proper. 30. I have perused the record and find that in the impugned order para 29.3 has made the allegations against the appellant of mis-declaration of description and value of the imported goods. For the sake of brevity, the evidence relied have been incorporated herein as under:- "29.3 I have carefully gone through the case records including the show cause notice and the relied upon documents. Allegations in the show cause notice are that the noticees M/s. JMD Oils Pvt. Ltd. and its Directors Sh. Kishan Kumar and Sh. Naresh Kumar and authorized representative Shri Gulshan Kumar have mis-declared the description and value of the imported goods. In support of these allegations, following evidences have been relied upon: (a) There was general intelligence that the importers of 'PFAD' and Palm Acid Oil' were mius-declaring the ....
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....e comes to USS 420 PMT (CIF). (e) Representative samples were drawn from the containers imported under bill of entries No. 540653 dt. 09.10.2006, 541277 dt. 10.10.2006, 540762 dt. 09.10.2006, 563848 dt.12.01.2007 and 563904 dt. 12.01.2007 and were sent to Central Revenue Control Laboratory (CRCL), New Delhi for chemical test and analysis, CRCL in their test reports reported that the goods covered by the above bills of entry were having the characteristics of Palm Stearin / Fatty Acid / Refined Palm Oil / Palm Stearin composed of Triglycerides of Fatty Acid (Esters). (f) Sh. Sh. Gulshan Kumar, authorized representative of M/s. JMD Oils Pvt. Ltd. in his voluntary statements dated 13.12.2006, 29.1.2007, 06.03.2007, 05.4.2007, 25.5.2007 and 30.11.2007 recorded under section 108 of the Customs Act, 1962 has inter alia, stated that he had been authorized by the Board of Directors of M/s. JMD Oils Pvt. Ltd, to tender the statement and represent the case; that he had the full knowledge of purchase/ sale of the goods in the company; that besides him, his two younger brothers namely Sh. Kishan Kumar and Shri Naresh Kumar are also Directors in the company; that their company....
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....d not know any process by which the subject goods could be used in the manufacture of Vanaspati Ghee because the melting point recommended for Vanaspati Ghee is 41.5/C whereas the Melting Point of the subject goods was 50-60/C and it could not be the soap value, acid value and iodine value are also different of the subject goods as compared to that of Vanaspati Ghee; that they have not used the subject goods for edible purpose in any manner; that after seeing all 54 test reports received from CRCL in respect of the samples drawn from the goods imported under aforementioned five bills of entry, he was satisfied with the results shown in the reports and accepted all such results given in the test reports; stated that his company is agreed with the test reports and is ready to pay duty on the value derived at USD 420 PMT." 31. I have also perused the order of this Tribunal in the case of H K International (supra) wherein para 5 of the said order is relevant which records the evidence to allege under-valuation. Same is reproduced herein as under: "5. After going through the order of the Commissioner we find that he has basically relied upon the following evidences. "(a) The....
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....IF value comes to USS 417.88 PMT. Therefore, the average actual price in USS of Palm Fatty Acid Distillate comes to USS 420 PMT (CIF). (e) Representative samples were drawn from the containers imported under bill of entry No. 540998 dated 10-10-2006 and were sent to Central Revenue Control Laboratory (CRCL), New Delhi for chemical test and analysis. CRCL in their test reports reported that the goods covered by the above bill of entry were having the characteristics of Fatty Acid. (f) Shri Raghuvar Dayal, Proprietor of M/s. HK International in his voluntarily statement dated 26-12-2006 recorded under Section 108 of the Customs Act, 1962 has inter alia stated that his firm M/s. HK International is engaged in import and trading of Mixed Acid Oil and Mixed Fatty Acid; that first import in his firm was started in the last period of 2004; that they imported 2 containers of Mixed Fatty Acid against bill of entry No. 540998 dt. 10-10-06; that the landing cost of Mixed Fatty Acid was on much higher side and that it would be about US$ 420 PMT; that market value of their product i.e. Mixed Fatty Acid was enhanced and he accepted voluntarily to pay the duty at enhanced assess....
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.... the evidence has observed as under: "8. After going through the evidences relied upon by the Commissioner, we fully agree with the learned advocate for the appellant that the said evidences are in the nature of general evidences and not relatable to the import made by the appellant. The statements of the two indenting agents are general in nature indicating that the landed price of the fatty acids is around US$ 440. In neither of the statements the said indenting agents have admitted that the goods imported by the appellant were invoiced on the lower side. On the other hand the appellants have strongly contended that they entered into negotiation with the supplier of the goods, who agreed to supply the same at US$ 185 PMT. There is no evidence recording any extra payment to the supplier. We also do not find any investigations made by the Revenue at the suppliers' end. In these circumstances, it is difficult to uphold the contention of the Revenue. 9. The Tribunal in the case of Jindal Strips Ltd. v. CC, New Delhi reported in 2001 (133) E.L.T. 570 (Tri.-Del.) has held that the transaction value has to be accepted as the correct assessable value unless there is....