TaxTMI 
TaxTMI 
2015 (4) TMI 1072
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....llant. 2. Revenue entertained a view that the goods appeared to be over-invoiced. Accordingly, samples were drawn and marketing inquiries were conducted with local dealers at Jaipur. The prices of the pliers were ascertained in the range on the lower side for each size of the pliers as compared to the declared price accordingly. Further, investigations were conducted at M/s. Jindal Tools, Nagaur who had supplied the goods to the present appellant. He was also asked to inform the source of procurement of pliers supplied by them to the present appellant along with costing data. Statements of various persons were also recorded during the course of investigations. 3. Shri Dinesh Goyal, proprietor of the appellant in his statement dated 28-8-2003 recorded under Section 108 of the Customs Act, 1962 stated that the FOB value was declared as per contract order received from M/s. Efficient Trading Est., Dubai; that the goods were procured from M/s. Jindal Tools, Nagaur, whose proprietor Shri Anand Prakash Pitti is his brother-in-law. On being shown the invoices of other exporters, in which the prices of pliers exported were very less compared to their prices, he stated that ....
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....ssain, Faiyaz Ahmed, Mujaffar Ali and Kayum could be traced and on being inquired, 2 persons namely Shri Salam and Shri Sheru both refused having sold any goods to M/s. Jindal Tools and 4 persons namely S/Shri Abid Hussain, Faiyaz Ahmed, Mujaffar Ali and Kayum stated that they had sold the goods to M/s. Jindal Tools @ Rs. 20/- to 25/- per piece, in their statements recorded under Section 108 of the Customs Act, 1962 on 21-2-2004. 5. The appellant also produced invoice dated 27-3-2003 of M/s. Jindal Tools, Nagaur showing purchase price of export goods as Rs. 77,90,424/-. As M/s. Jindal Tools had procured the goods manufactured from dealers/blacksmiths at Nagaur; they were asked to give the details of the said persons. However, M/s. Jindal Tools produced a "Daily Purchase Statement" giving details of the purchase of said goods from individual persons showing price of the goods ranging from Rs. 85/- and Rs. 91/- per piece. Ultimately, they disclosed the names of 8 persons from whom the goods were got manufactured out of which only 6 persons could be traced out of which two denied having sold any goods to M/s. Jindal Tools and 4 persons stated such goods were sold for Rs. 20/- ....
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....e also exported by him in the year 2001 at a less value. However, the adjudicating authority has failed to take into consideration the discloser made by Shir Pitti that the Pliers exported by him in the year 2001 at lower rate were not of the same quality as the Pliers involved in the present case. The goods supplied by him to the appellant were of superior quality and chrome plated with good quality PVC sleeves. Apart from the above we note that the export may by Shri Pitti in the year 2001 whereas the present exports are in the year 2003. Further the pliers cost exported by Shri Pitti in the year 2001 itself verified. In one case it was Rs. 23.87 per piece and in the other it was Rs. 12.73. This reflects upon the fact that pliers can be of different value depending upon many factors. Further, no evidence stands produced by the revenue to reflect upon the fact that the exports made by Shri Pitti and the present export goods were identical in quality. Shri Pitti has very clearly deposed that the goods exported by him in 2001 were of low quality. For adopting, the value of the other goods, they have to be contemporaneous in nature, i.e., they should match in respect of quality, quan....
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....und that the discloser of the price by the gold smiths and non-production of any purchase invoice by M/s. Jindal Tools is sufficient to disregard the evidence produced by M/s. Jindal Tools. We do not agree with the above reasoning of the adjudicating authority. He has picked up the basic price, as revealed by the Iron-Smiths, who are illiterate people and do not maintain any records. In the said price, he has added the cost of the various processes, which stands revealed by the artisans. There is no basis for the Commissioner to pick up the price of polishing, buffing, chrome plating, etc., has Rs. 6.50, Rs. 10/- and Rs. 1.50 respectively. In the business, the sale price of the goods cannot be decided based upon the cost of various process as and at set margin of profit. The Commissioner's efforts arriving at the cost of the plier cannot be appreciated. Further, there is also no basis for adding the dealers margin as Rs. 20/-. It is the business of the manufacture, who has to decide as to at which profit margin he wants to work. No question stands put to Shri Pitti so as to assess the cost of the various processes of polishing/buffing, chrome plating, etc. As such, we find no me....
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....urse of investigation. The same is also supported by documentary evidences, in the shape of invoice, having been raised by him against the appellant, as also by the fact of receipt of the total consideration of the goods. The efforts on the part of the revenue to go to the iron-smiths and to arrive at the value of the goods, based upon the cost of various processes in the hands of M/s. Jindal Tools and on the basis of the margin of profit of the vendors, without their being any evidence to that effect, cannot be upheld. 13. The appellant have further, contended that the goods were being sent to the foreign buyer through the Commission agents efficient trading under a contract order and they have received the entire consideration from their foreign buyer through the Banks. The said fact is not disputed by the revenue but stands rejected by the Commissioner on the ground that realization of foreign exchange equal to the FOB value cannot be accepted in the light of the judgment in the case of Olympia Overseas wherein it was held that the receipt of foreign receipt is no defence where overvaluation of the exported goods is conclusively proved. We find that the fact of receipt o....
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....ries undertaken at Jaipur revealed that values were very less as compared to value claimed for DEPB benefit. (c) Enquiry conducted at the level of suppliers of M/s. Jindal Tools based in Nagaur revealed price of pliers to be very low. On enquiry relating to 8 suppliers, it was found that two were non-existent. Other two admitted that no supply of pliers made by them. Four suppliers stated that the impugned goods were sold for Rs. 20/- to Rs. 25/-. (d) Enquiry was also conducted from ICD, Jalandhar and ICD, Ludhiana indicating that price of similar goods being exported from both ICDs ranging from Rs. 10.46/- to Rs. 3.86/- per piece. 17.1 S/B No. 2249, dated 28-3-2003 issued under DEPB scheme disclosed export of 78024 no. of Drop Forged Combination Pliers Chrome Plated with Heavy Red Transparent Sleeve to M/s. Markish Building Material trading Dubai. Declared price of pliers by the appellant were - (i) USD 2.00 (Rs. 95.10) - 8" pliers (ii) USD 1.95 (Rs. 92.72) - 7" pliers (iii) USD 1.90 (Rs. 90.35) - 6....
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....in he stated that :- (i) He was shown the statements dated 21-2-2004 of Shri Salam s/o Gayasuddin and Shri Sheru s/o Jamaluddin both of Nagaur tendered under Section 108 of the Customs Act, 1962 whose names were informed by Shri Anand Prakash Pitti as suppliers of pliers. In the said statements, these two persons have denied having supplied any such tools to M/s. Jindal Tools, Nagaur meaning thereby that the names of suppliers and details of purchases mentioned in the daily purchase statement are false and fabricated. (ii) He was shown the statements dated 21-2-2004 of Shri Faiyyaj Ali, Shri Abid Hussain, Shri Qayum Khan and Shri Muhjaffar Ali, all of Nagaur tendered under Section 108 of the Customs Act, 1962 whose names were also informed by Shri Anand Prakash Pitti as suppliers of pliers. In the said statements, these four persons have stated that they supplied pliers to M/s. Jindal Tools, Nagaur for prices ranging from Rs. 20-25 per piece. (iii) He was then asked if he could prove from any other document besides the daily purchase statement that he had purchased the 78024 pli....
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.... respectively from one M/s. Jindal Tools, Nagaur owned by his close relative (brother-in-law) under Invoice No. 201, dated 27-3-2003 for Rs. 77,90,424/- which were not considered genuine; and therefore, the market enquiry was resorted by the department to ascertain the price of similar goods. (i) Market price ascertained from the Dealers of such goods at Jaipur on 29-4-2003, was ranging from Rs. 61-64/- for 6" Plier, Rs. 63-65.50 for 7" Plier and Rs. 67-69.75 for 8" Plier. (ii) Since the exported plier were reported to be manufactured at Nagpur; therefore, the price ascertained from the manufacturers of Nagpur was Rs. 165-240/- per dozen for 6" plier, Rs. 174-252/- per dozen for 7" plier and Rs. 186-264/- per dozen for 8" plier. (iii) Contemporary export price of similar goods as reported by AC, ICD, Jalandhar and Ludhiana were ranging from USD 0.22 to 0.67 per piece, which is equivalent to Rs. 10.46 to 31.86 per piece. (iv) Shri Anand Prakash Pitti, Proprietor of M/s. Jindal Tools, Nagpur, who supplied the export goods in his statement dated 28-8-2003 depos....
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....No. 201, dated 27-3-2007 of M/s. Jindal Tools, Nagaur are not reliable and I find the PMV ascertained by the department fair & justified. Para 3.4 As per the provisions under erstwhile Section 14(1) of the Customs Act, 1962, in case of assessing the value for purpose of export, value is to be determined at the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of exportation in the course of international trade, where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for sale. As such, the correctness of value declared under Section 14(1) of the Act is required to be ascertained for the purpose of allowing benefit under any of the Export Incentive schemes. As per the Govt. of India's order dated 26-3-1999, in the case of M/s. Texcomash Exports reported in [1999 (111) E.L.T. 657 (GOI)], once FOB value declared by the exporter in the shipping bill is rejected, no option is left but to fall back upon the ascertained market price. Since the rate specified under DEPB is in relation to FOB, at best, an attempt was made to ascertain the FOB in respect of th....
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....4,093/- instead of Rs. 11,77,323/-." 21. Evidence on record proved that the exporter in convenience with Shri Anand Prakash Pitti - (brother-in-law of Shri Deepak Goyal - exporter) inflated the export price with intent to avail higher DEPB benefit to the tune of Rs. 6,23,230/-. Shri Deepak Goyal and Anand Prakash Pitti did not co-operate during investigation but avoided summons and notices. Complaint was filed in Economics Offences Court for ensuring their presence. It was only after this, statement could be recorded for completing investigations. Only contention of the exporter was that no action can be initiated once foreign exchange equal to FOB value has been realized. In this regard judgment in the case of Olympia Overseas v. C.C., Cochin - 2008 (223) E.L.T. 114 (Tri.) (citation) is relevant where it has been held that the receipt of foreign remittance is no defence where overvaluation is conclusively proved. In the case of Om Prakash Bhatia's case [2003 (155) E.L.T. 423 (S.C.)] is also very relevant wherein it was held that when the goods are easily available in the market, then any foreign buyer, a prudent business man would not pay a much higher price as compared to....
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....eme. For the purpose of DEPB benefit, the Prevailing Market Value (PMV) of the goods was declared as Rs. 80,94,094/-. The pliers being exported were of 6", 7" and 8" in length. The shipping bill for export of this consignment had been filed at ICD, Jodhpur on 28-3-2003. The goods were examined, the samples of the goods were drawn and sent to CRCL for a test and the CRCL's report confirms the description of the goods that the goods are made of chrome plated steel and plastic part is made of PVC. Since there was some doubt about the eligibility of the goods for DEPB, a reference was made to DGFT, pending which the export was allowed on provisional basis under DEPB. There is no dispute that subsequently the DGFT vide letter dated 14-7-2003 clarified that goods are eligible for the DEPB benefit. 26. After clearance of the goods it appeared that the FOB as well as PMV of the goods has been inflated and accordingly, enquiries were initiated. The appellant had purchased the goods being exported from M/s. Jindal Tools, Ajmer. The proprietor of M/s. Jindal Tools, was one Shri Anand Prakash who had supplied the goods in question to the appellant at the rate of Rs. 85 to 91 per piece ....
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....the Customs Act. Against this order of the Commissioner, this appeal has been filed. 28. This matter was heard by the Bench on 8-9-2008. While Member (Judicial) vide order dated 12-9-2013 set aside the impugned order and allowed the appeal with consequential relief, holding that there is no evidence to justify the rejection of the declared FOB value and the declared PMV, the Member (Technical) by separate order dated 25-10-2013 rejected the appeal except for reducing the penalty on the appellant to Rs. 25 lakh. On account of difference between Member (Judicial) and Member (Technical), the point of difference as mentioned above has been referred to the undersigned for decision. 29. Heard both the sides in respect of the point of difference. 30. Ms. Shikha Sapra, Advocate, the ld. Counsel for the appellant, pleaded that the goods on examination found to be as per the declaration and even the chemical examiner's report confirms the declared description of the goods and as such there is no misdeclaration about the description of the goods; that full export proceeds have been received by the appellant and this fact is also not disputed; that there is no evidence ....
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.... that there is no justification for huge difference between the price at which the artisans supplied the pliers and the price at which M/s. Jindal Tools had supplied the pliers, in question, to the appellant, which is much higher than the price at which M/s. Jindal Tools themselves had exported a consignment of pliers in 2001; that the export price in the present case is also much higher than the price of similar goods being exported from Jalandhar and Ludhiana and that from these facts, it is clear that the FOB value has been inflated with intention to fraudulently claim higher DEPB benefit. He, therefore, pleaded that it is the order recorded by Hon'ble Member (Technical) which is correct. 31. I have considered the submissions from both the sides and perused the records. 32. The declared FOB value of the export consignment is Rs. 73,58,267/- and the declared PMV is Rs. 80,94,094/-. There is no dispute that on examination by the Customs, the goods were found to be as per the declaration and even the chemical examiner's report also supports the declared description of the goods. There is also no dispute that the export proceeds have been realized in full and as such....