TaxTMI 
TaxTMI 
2011 (11) TMI 619
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....o impose personal penalties on various persons. The aluminium scrap of 332.86 MTs valued at Rs. 2,17,50,755/- was also proposed to be confiscated. 3. On adjudication the original adjudicating authority rejected the values declared by M/s. Baheti Metals & Ferro Alloys Ltd. and held that the value should be re-determined under Section 14 of the Customs Act, 1962. He held that the value should be Rs. 67,88,52,051/-. He also held that the goods valued as above will be liable for confiscation and imposed redemption fine of Rs. 4 lakhs on the goods covered by Bill of Entry No. 68, dated 13-10-2004. Further, he confirmed the demand of customs duty to the tune of Rs. 5,82,19,641/- under Section 114A of the Act. He imposed a penalty of Rs. 1 crore on Shri Shankarlal Shah, Managing Direct of M/s. Baheti Metals & Ferro Alloys Ltd. and also imposed a penalty of Rs. 1 crore on Shri Jamnalal Maliwal, authorized signatory of M/s. Baheti Metals & Ferro Alloys Ltd. Further, personal penalties were imposed as under : Sl. Noticee Penalty (Rs. in figures) Penalty (Rupees, in words) 1 Shri Purshottam Parolia 25,00,000/- Twenty-Five Lakh only. 2. Shri Ehsan Haji Ami....
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....med from the premises of the indenters, one invoice issued by the Overseas Supplier, M/s. F.J. Church & Sons, London received from the High Commission of India, Trade Department, London and also the Valuation Alert Circular No. 14/2005, dated 16-12-2005 issued by the Director General of Valuation. (b) Ld. Counsel for M/s. Baheti made voluminous submissions and raised various contentions against the impugned order. He contended that the basis for raising demand is the DGOV Alert Circular No. 14/2005 and the solitary invoice of M/s. F.J. Church & Sons, London which is unsigned, unstamped and unattested. He said that the Commissioner's reliance on LME is not correct in view of the Hon'ble Apex Court's judgment in the case of C.C., New Delhi v. Prabhu Dayal Prem Chand - 2010 (253) E.L.T. 353 (S.C.). Similarly, his reliance on the unsigned, unstamped and unattested invoice of M/s. F.J. Church & Sons, London is also incorrect in view of the Apex Court's judgment in the case of C.C. v. East Punjab Traders - 1997 (89) E.L.T. 11 (S.C.) and Tribunal's decision in Truewoods Private Ltd. v. C.C., Visakhapatnam - 2006 (204) E.L.T. 288 (T). He also submitted that there is no....
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....clearly demonstrate that the values mentioned in the Bills of Entry reflect the correct value. The DRI had in its possession the names and other details of all buyers/consignment agents yet no investigation at that end has been done to ascertain the correct position. (e) The value of goods imported by the Appellants need to be determined in terms of Section 14 of the said Act read with the provisions of the said Rules once transaction value is rejected as held in the case of Varsha Plastics Pvt. Ltd. v. UOI reported in 2009 (235) E.L.T. 193 (S.C.). Thus, without the transaction value being rejected in the first place it was not open to the Respondent to have proceeded to re-value the said goods This is more so in light of the various contemporaneous import records made available by the Appellants. Rule 3 of the said Rules provides that the value of the imported goods shall be transaction value. Rule 4(1) defines transaction value to be the price actually paid or payable for the goods when sold for export to India. The transaction value for the imported goods is required to be accepted unless the transaction in question falls under the exceptions carved ou....
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....a from NIDB revealed that 15 types of scraps account for more than 90% of total volume of imported Aluminium Scraps. The quantity imported, average price and minimum price as per the study of DGOV for all these 15 grades is shown in Annexure-1 to the circular. The prominent grades are tread, twitch, trump, taint/tabor etc. Prices of all the 15 grades have been linked to the price of prime metal as traded on LME in the form of discount from the price of prime metal. It is highlighted that these prices are indicative prices and are on lower side. The circular also states that prices of scrap depend upon the extent of metal recovery from the scrap and type of the scrap. The Alert Circular is, therefore, a valuable guide to the assessing officers for the purpose of assessment of aluminium scraps. Having regard to this, no fault can be found with the impugned order for taking assistance of this circular. This apart, it is well known the world over that the prices of aluminium scraps in the international market depend on the LME prices. This has also been admitted during the investigation by various persons including Shri Jamnalal Maliwal, authorized signatory of M/s. Baheti in their sta....
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....l did not accept the LME price. However, in the present case, apart from the statements of the indenters stating payment of differential value to the overseas suppliers, the Department has also cited numerous instances in the form of e-mails showing payment of differential value to the foreign suppliers by the importers, though these are not directly pertaining to M/s. Baheti. But these are certainly circumstantial evidences against Baheti. Therefore, the afore-cited judgment is not an authority to say that LME price cannot be relied upon even where there are circumstantial and indirect evidences indicating payment of differential value over & above the invoice value. Therefore, this judgment of the Hon'ble Apex Court is not helpful to M/s. Baheti. Invoice No. 12558/1, dated 1-2-2004 issued by M/s. F.J. Church & Sons Ltd. (d) This invoice has been obtained by the Department from HM Revenue & Customs Authorities, UK through the High Commission of India, Trade Department, London under cover of its letter No. CT/VI/10/2007 FS, dated 6-9-2007 along with a copy of Sales Advice Note (Waste Transfer Note). This invoice shows, inter alia, the container No. TRLU 6146....
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....customs officers. However, in the present case, the invoice for advance issued by M/s. F.J. Church & Sons, London, though unsigned, was obtained from H.M. Revenue & Customs Authorities, UK through the Diplomatic Channel. Hence the authenticity of this document cannot be doubted. Therefore, the afore-cited judgments do not advance the case of M/s. Baheti. (f) In most of the cases of imports, orders were placed by the importers with the overseas suppliers verbally through the indenters who actually acted as their conduit. None of the importers opened any letter of credit. Documents were retired from the banks against cash payment. These are certain significant factors clearly indicating that the transactions between the importers and the overseas suppliers and the transactions between high sea sellers and M/s. Baheti were not straight, thereby paving the way for preponderance of probabilities which have been taken into consideration by the Commissioner in the impugned order. (g) Ld. Counsel for M/s. Baheti contended that the Commissioner has not taken into account the contemporaneous imports as reflected in NIDB data maintai....
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....e same have become final. According to him, the Department's action amounts to reopening of the closed cases. It is submitted that just because in some cases the Department has not preferred any appeal, that does not necessarily mean that the Department is debarred from filing appeals or agitating in subsequent cases. Reliance is placed in this regard on the judgment of the Apex Court in the case of C.K. Gangadharan v. Commissioner of Income Tax, Cochin - 2008 (228) E.L.T. 497 (S.C.) and Commissioner of Income Tax, Central Kanpur v. J.K. Charitable Trust - 2008 (232) E.L.T. 769 (S.C.). 6. We have sailed through the various facts and circumstances of the case and had gone through the various case laws in this regard. The department primarily relied upon the report, dated 6-9-2007 of the UK Customs received through the Indian High Commission, London (IHC) which in turn refers to invoice, dated 1-2-2004 and a purported sales advice note, dated 29-1-2004 of M/s. F.J. Church. According to the department the purported invoice dated 1-2-2004 received through the IHC is allegedly the real/actual invoice issued to M/s. Ghanshyam Metal which shows a difference of USD 988.760. The pay....
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....d. No details of bills of entry are available to support the said price and hence the allegation is based on surmises and not actual imports. 8. In any case there is no evidence of actual imports of bottle skelton under any contract at the purported actual price of the USD 1525 during the period. Further the allegations are based on e-mail dated 5-5-2004, for supply of Bottle Skelton to Ghanshyam Metal by S.A. Metal, recovered from the computers of Primetal, which discloses the actual price of the goods as being USD 1525 as against the draft contract for USD 800 dollars. However, there is no evidence of actual import of Bottle Skelton by M/s. Ghanshyam Metal from S.A. Metal. The details in the Bill of Entry do not support any such allegation. We are to look into the practice of transaction that the aluminium scrap sold by the Appellants to SSM was purchased from M/s. Karnavati Metals Prodcuts Pvt. Ltd. (originally generated as bus scrap at Gujarat State Road Transport Corp (GSRTC) @ Rs. 80 per kg. and therefore, the Appellants' sale price of Rs. 81.25 per kg. (difference of Rs. 0.69 per kg = 0.85%) is fair and true as per the prevailing market rates. The Appellants purchase....
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....r Metal Ltd. v. C.C. - 2008 (232) ELT 692 (T) (c) C.C. v. Meera Impex - 2004 (167) E.L.T. 446 (T) (d) Shiva Alloys Pvt. Ltd. v. C.C. - 2006 (196) E.L.T. 212 (T) (e) Palco Metals Ltd. v. C.C. - 2009 (234) E.L.T. 472 (T) (f) Adani Exports Ltd. - 2000 (116) E.L.T. 715 (T) (g) C.C. v. Dimple Overseas Ltd. - 2007 (220) E.L.T. (103) (h) Shiv Cables and Wire Industries (India) v. C.C. - 2004 (178) E.L.T. 762 (T). 11. On the basis of the above judgments we are of opinion that the LME prices do not pertain to metal scrap which are merely indicative of the prime quality metals. Section 14 reads as follows : SECTION 14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export f....
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....eign currency or foreign currency into Indian currency; (b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in clause (m) and clause (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999). 12. The valuation to be done so, it has to be done under the following, general and accepted practice. 4. Valuation under Sec. 14 of Customs Act, 1962. - The "Agreement on implementation of Article VII of the G.A.T.T." was brought into force in India on 14-8-1988". The preamble of the Agreement clarifies the object and reason of such uniform code of valuation as : (a) The need for a fair, uniform and neutral system for the valuation of goods which precludes the use of arbitrary or fictitious customs value. (b) That the basis for valuation of the goods for Customs purposes, should to the greatest extent possible, be the transaction value of the goods. (c) That the customs value should be based on simple and equitable criteria consistent with commercial practices. (d) That the valuation pro....
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....narily" in Sec. 14(1) is of great importance. In Section 14(1) the Supreme Court does not see the actual value of the goods, but the value at which such goods or like goods are ordinarily sold or offered for sale for delivery at the time of great importance. The Supreme Court has to see the value of the goods not for each specific transaction, but the ordinary value which it would have in the course or international trade at the time of its import. (Ref : Ispat Industries Ltd. v. Commissioner of Customs, Mumbai - 2006 (202) E.L.T. 561 at P. 568 (S.C.) According to the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and Sec. 14(1)(A) of the Customs Act, the value of the imported goods shall be the transaction value. It is only if the transaction value cannot be determined, then the value can be determined by proceeding sequentially through Rules 5 to 8. Rule 4 provides that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule (9). Rule 4(2) specifically says that the transaction value of imported goods under sub-rule (1) shall ....
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....ble event continues till the goods are cleared at customs barrier for home consumption under Sec. 15 of the Customs Act. The ad valorem rates of duties are subjected to the value of a product. This value apart from other things is constituted by the elements of cost, insurance and freight. Apart from these elements, there are many other elements which may go into the costing part of the value. 13. There is another significant point in this case. The appellants brought to our notice two orders passed by the Commissioner of Customs (Appeals) pursuant to which the lower authorities have finalized the assessment rejecting LME as the basis and determining the assessable value either on the basis of contemporaneous import or accepting the transaction value. The details are as follows : Details of 15 Bill of Entry Sr.No. Bill of Entry No. OIO No./Order in Assessment OIA No. Order in Original No. 1 140205 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/ 34/2007/Gr.IV 2 141638 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/70/2007/Gr.IV 3 140026 S/40-132/200....
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.... In this context, I rely upon the case of M/s. Adani Exports Ltd. v. Commissioner of Customs, Vishakhapatnam - 2000 (116) E.L.T. 715 (Tribunal) wherein it has been ordered that enhancing the value of HDPE (IG) and HDPE (FG) on PLATTS price are not legally sustainable unless there are any convincing evidence of any fraud in the declared value with respect to. Also in the above said case it was observed that mere two informal quotation of local office of foreign manufacturer in India can not be treated as contemporaneous import and unless there are fraudulent declaration of transaction value in the invoices and also the Rule 10A of Customs Valuation Rules, 1988 is not applicable. The above decision was upheld by the Honorable Supreme Court by way of dismissing appeal filed by the Department vide Commissioner v. Adani Exports Ltd. - 2002 (146) E.L.T. A213. 10. I also rely upon the cases of Gujarat Ambuja Cements v. C.C.E. - 2003 (157) E.L.T. 188 (CESTAT) and Gujarat Ambuja Cements v. C.C.E. - 2003 (157) E.L.T. 292 (CESTAT), where the Hon'ble Tribunal has observed that the transaction value contemplated in Rule 4 is the transaction value of goods under assessment and not the tr....