TaxTMI 
TaxTMI 
TaxTMI 
2011 (11) TMI 619
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 Amin Gadawala 50,00,000/- Fifty Lakh only. 3. Shri Gajendrakumar Mit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2-2005 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 direct evidence against M/s. Baheti that it has resorted to undervaluation of the goods. The evidences relied upon by the Department are against others and not against M/s. Baheti. This apart, none of the Indenters or High Seas Sellers has given an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n. (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 out under Rule 4(2). In the present Case the transactions do not fall under any of the exceptions enumerated under Rule 4(2) of the said Rules and, therefore, the transaction value is required to be accepted. (i) Eicher Tractors Lim....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 statements recorded under Section 108 of the Customs Act, 1962. The fact that the LME prices are a fair indication of the prevailing market price has been recognized by various courts including the Hon'ble Apex Court. In the case of C.C., Mumbai v. Indian Leads Ltd. - 2000 (117) E.L.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e 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 6146284, the description of the goods as "Loose Pure Aluminium Cuttings", weight 24.719 MT, Rate 1420.00 US Dollar/MT and total value US Dollar 35100. The invoice is addressed to M/s. Ghanshyam Metal Udyog. The sales advice note (waste transfer note) dated 29-1-2004 shows advance of US Dollar....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 maintained by the Customs Houses. Hence the impugned order is not consistent with the provisions of the Section 14(1) of the Customs Act, 1962. No doubt the NIDB data reflects the instances of contemporaneous imports. But then the authenticity of this data cannot be accepted without proper verificatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ubsequent 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 payment of the said differential has been denied by Mr. Babuprasad Shah of M/s. Ghanshyam Metal as well as by Shri Jamnalal Maliwal of M/s. Baheti Metals & Ferro Alloys Ltd. and Shri Shankarlal Shah. We find that these documents are not acceptable due to the following reasons. (a) T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llegations 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 purchased total 206.667 MTs of local aluminium scrap from GSRTC and others in the 2005-2006 out of that 5146 kgs. was sold to SSM as aforesaid. The local sale of bus scrap by the Appellants to SSM cannot be compared to the imports made by the Appellants and no allegation of undervaluation can be sustained on that count. The n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that such transaction value in the case of imported goods shall include, in addit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cepted 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 procedures should be of general application without distinction between source of supply and should not be used to combat dumping. The charge from deemed value to actual value (transaction value) necessitated the corresponding change in valuation rules. Whereby the discretionary power under Rule 8 of the revenue was eliminated and a corresponding obligation was cast on the importe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 be accepted except in the situation covered by the proviso to Rule 4(2). Rule 5 provides that transaction value of identical goods must be ascertained and that should be taken for the purpose of assessment. Rule 5(3) says that in applying that rule, if more than one transaction has taken place, the lowest of such value shall be used to determine the value of the imported goods. If such determ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/65/2007/Gr.IV 4 139545 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/64/2007/Gr.IV 5 136592 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/69/2007/Gr.IV 6 134392 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/62/2007/Gr.IV 7 134391 S/40-132/2005/GR ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on 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 transaction in other goods by other importer or another transaction of same importer. 11. I also refer that the enhancement of value as per LME price on the basis of the DOV Valuation Alert No. 14/2005, dated 16-12-2005 has been set aside by the Hon'ble Supreme Court in the case of Commissioner of Customs, New Delhi v. Prabhu Dayal Prem Chand as reported in 2010 (253) E.L.T. 353 (S.C.). In another case the Hon'ble Supreme Court has dismissed the Civil Appeal No. D36231 of 2008 filed by the Commissioner of Customs, Pune against the CESTAT Final Order No. A/389/2008-....