TaxTMI 
TaxTMI 
2016 (3) TMI 509
X X X X Extracts X X X X
X X X X Extracts X X X X
....recorded statements from Shri M.A. Rahim, partner of the appellant-firm and Shri Ameerul Hussian s/o M.A. Rahim, another partner. After detailed investigations conducted and also carried overseas verification to ascertain the correct value declared by the overseas supplier from the Consulate General of India, U.S.A. On completion of the investigation, and also recording further statement from appellant Ameerul Hussian on 11.10.2004, SCN No.VII/26/64/2003-DRI dt. 20.11.2004 was issued to the appellants rejecting transaction value and proposing to refix the transaction value at Rs. 12,49,85,609/- as against declared value of Rs. 8,95,11,067/- as per Annexure and also demanding differential duty of Rs. 2,48,59,575/- under proviso to Section 28 (1) of the Customs Act and also proposed to appropriate an amount of Rs. 3,00,000/- already paid by the appellants. The notice also proposed for confiscation of goods under Section 111 (m) and imposition of penalty on M/s. National Fruits Agency, first appellant under Section 114A and penalty on its partner Shri Ameerul Hussian under Section 112 (a) of the Act. The period of dispute in this case is Feb 2001 to April 2003. The adjudicating author....
X X X X Extracts X X X X
X X X X Extracts X X X X
....suppliers for the entire season at uniform price and the payment terms was in 15 days from the delivery and the payments were made through banks. He submits that the investigation was started only in March 2003 and the same date search of appellant's premises conducted and recorded statement from the partner Shri Ameerul Hussian and on that date, the department never produced any documents or any second set of invoices. The statement was retracted immediately on the very next date, that department carried out verification and enquiries from the overseas suppliers end and obtained copies of two sets of invoices. One set of invoice is for the customs and the second set of invoice is a computer generated invoice which is not signed by the authorized persons. He submits that after one year on 11.10.2004, again a statement was recorded and the appellants were shown documents and asked to append signature on the statements as if he has computed the duty amount. He submits that no documents were ever recovered from the appellants premises in India. 7. He drew our attention to para-57 of the OIO and submits that the adjudicating authority held that since no contemporaneous imports ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ined whether it is on the basis of the sale price to the Appellant or not. No evidence from the supplier was found of having undervalued and there is no shipping bill declaration filed with US customs declaring higher price. The letter dt.31.5.2004 referred to by the Consul (Trade) was not made available to them and even the payment of fine is only hearsay evidence. He further submits that in the case of 8 Bills of Entry, invoice price has been accepted and in few Bills of Entries in the absence of second parallel invoices, the value has been loaded. 10. He further submits that no statements were recorded from the overseas supplier by Indian Consulate officials at USA to prove receipt of excess amount than the declared price. He relied on Hon'ble Madras High Court order in the case of Thangaiah Vs State of Tamil Nadu - 2010 (251) ELT 187 (Mad.) on an identical issue of import of apples though it related to COFEPOSA case where the High Court has laid down the guideline as to how value should be taken in the case of import where the High Court has relied on the Supreme Court's order. He relied on case law of Swati Industries Vs CC Amristar - 2009 (248) ELT 191 (Tri.-Del.) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... (SC) 3) Radhey Syham Ratanlal Vs CC (Adjn.) Mumbai-2009 (238) ELT 14 (SC) She drew attention to para-53 of the Order-In-Original wherein he has clearly given the reasoning and findings for rejecting the declared price.Relied the e-mail evidence of the importer at page 739 read with pages 747, 748 where the appellants have informed the supplier that the price should be quoted at US$ 10.25 and no advance should be mentioned. 12. In rejoinder, learned advocate countered the arguments of A.R and submits that appellants were not made aware of any developments that took place after recording of statement, nor given any document to them. It was only during recording the second statement on 11.10.2014, the documents were only shown and the appellants were forced to sign of having seen the documents. He submits that statement was recorded from the appellant tailor made as if the appellants calculated the value. He submits that, it was prepared by the department. He referred to SCN at page 201 Vol-II, and the worksheet annexed to SCN at pages 218 to 222, where it was stated that second set of invoices were relied as to how duty was calculated and also submits that there was n....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rice is available, the Department should have taken under Rule 5 and 6 of CVR. He pleads that both on merits as well as on facts, the impugned order may be set aside and also the personal penalty imposed on the main appellants and on the second appellant be set aside. 14. We have carefully considered the submissions of both sides and perused the records. The issue before us for consideration in the present appeals relates to whether undervaluation and rejection of transaction value on the apples imported by the appellants from U.S.A. and loading of value under Rule 8 of CVR is in conformity with law or otherwise. The adjudicating authority in his impugned orders rejected the declared price of US$ 10 to US$ 12 per carton and enhanced the value under Rule (8) as per the parallel set of invoices recovered by the officers of the Consulate General of India (CGI), U.S.A. and forwarded to the D.R.I. The appellants contested the rejection of transaction value and the veracity and authentication of the said documents is not proved. Revenue relied retracted confessional statement and also contended the violation of natural justice that out of the 12 documents/letters obtained from CGI, U.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....parallel invoice No.21522 dt. 17.5.2001 (at Pages828 , 829) issued by the supplier M/s. Raymond "Mickey" Cohen & Son Inc. Biglerville, PA. USA, wherein in the first invoice, the price is indicated as US$ 10.50 per carton and in the second invoice, the price is shown as US$ 14.25 per carton. Both the documents do not bear any signature of the supplier or his authorized person. We find that the said invoices bear the endorsement which is stamped indicating compared with original and certified to be a true copy thereof signed by a special agent on 31.1.2004 and also bears another signature dt.11.10.04 of person of CGI. The invoices were not signed by authorized persons of the supplier, but only authenticated by USA agent, and Indian Consulate at USA. Whereas the customs import invoice of same number and date annexed at page 596 at Vol-2 is a bank-attested invoice. We find that the said Customs invoice is clearly attested by U.T.I Bank Ltd., Dr.Radhakrishnan Salai, Chennai. Further the said invoice is duly signed by the authorized person of the supplier with his company seal and with name of the foreign Bank, with account number etc. The foreign exchange remittances were made to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isource International and even in the said export declaration the supplier declared less price to US customs. Therefore, we are of the considered view that in the absence of any authentic evidence from suppliers end i.e. either in the form of letter or a statement from them explaining the reason for maintenance of two sets of invoices in their system and also confirming receipt of flow back of excess amount, the department's reliance on unsigned computer generated invoices cannot be relied on, as sole evidence of undervaluation. Mere authentication of a document by U.S. Agent or officers of OCGI, USA does not automatically become a valid evidence to reject the declared price in the customs invoice and to redetermine value under Rule 8. 20. As regards the Lower Authority relying on the statement dt. 28.3.2003 of Ameerul Hussain as a proof of undervaluation and flow back, it is seen that the said statement was retracted by the person on the very next date on the grounds of coercion and threat that he was forced to sign. As a result, he was to be admitted in the hospital as OPD on the very next date. The appellants produced copies of medical certificates, bills etc. annexed at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ry Port of Import Name of the Importer Country from where imported Quantity imported (cartons) CIF/Carton of 20 Kgs. USD(Rs.) 1. 24.4.2001 Mumbai Manav Enterprises USA 250 10.14 478.51 2. 24.4.2001 Mumbai Fara Agro Products Co. USA 750 10.14 478.51 3. 24.4.2001 Mumbai C. Kishinchand USA 650 10.03 473.18 4. 30.4.2001 Mumbai C. Kishinchand USA 650 10.03 473.18 5. 30.4.2001 Chennai Sach Investments USA 1050 + 952 12.53 591.48 6. 30.6.2001 Chennai Sach Investments USA 5250 12.63 595.90 7. 20.6.2001 Kolkata Prabath Kumar & Bros USA 2058 10.21 482.08 8. 7.6.2001 Mumbai A.C. Trading Co. USA 705 10.10 476.72 9. 31.7.2001 Chennai SIMS International USA 1029 9.18 433.42 10. 30.4.2001 Chennai Sach Investments USA 1050 12.62 591.48 11. 28.2.2002 Chennai Empee Bee Internatinoal USA 32917 12.12 589.03 12. 28.2.2002 Chennai Empee Bee Internatinoal USA 8228 11.11 539.95 13. 28.2.2002 Chen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ismissed the Revenue appeal. The relevant paragraphs of above decision are reproduced as under :- "2. The facts giving rise to this civil appeal are as follows. The respondent had imported six consignments of ceramic capacitors and one consignment of diodes from Hong Kong during the above period. The goods were shipped from Hong Kong by M/s. Compo Export of Hong Kong and M/s. Pearl Industrial Company of Hong Kong. The price of ceramic capacitors was declared by the respondent in its Bill of Entry @ HK $ 6.00 per 1000 pcs. whereas the price of diodes was declared @ HK $ 29406 CIF as reflected in the invoices. On 27-4-1998 a show cause notice was issued by the Assistant Commissioner of Customs, Calcutta alleging inter alia that as per the overseas investigation report of the Hong Kong Customs and Excise Department the declared price did not represent the transaction value under Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 ('Customs Valuation Rules') as the price actually paid appeared to be different than the declared price and that the importer had under-invoiced the value of the goods to evade huge amount of the Government's revenu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the goods could have been determined in terms of Rule 5 and, therefore, there was no question of invoking Rule 8. In this connection reliance was placed on the judgment of this Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai reported in 2000 (122) E.L.T. 321. ... ... ... 6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), "value" is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....asting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Department received from the Hong Kong supplier a Fax message dated 22-7-1996. That was produced before the Commissioner. In that message, he had explained that the manufacturer of the impugned goods was getting export rebates and, therefore, it is possible that the manufacturer had over-invoiced the price in order to claim more rebate. The goods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal. 8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsider the import price of similar or identical goods available i.e. US$ 10.14 to US$ 12.63/carton which is more or less the same what the appellants declared in the present case. In view of the above decision of the Hon'ble Apex Court, we hold that when the price of similar or identical goods are same price and it was accepted by the Customs in all major Custom Houses, there is no justification for taking recourse to Rule (8) of CVR and to adopt the price of Country of Exportation. 25. Our above findings is further supported by the decision of Hon'ble High Court of Madras in Thangaiah Vs State of Tamil Nadu (supra) on identical issue of undervaluation of import of apples where the proceedings initiated under COFEPOSA Act, the Hon'ble High Court has set aside the detention order. The Hon'ble High Court while setting aside, had discussed the legal aspect of valuation of imported goods under Section 14 and CVR and held that the Revenue is duty bound to follow the Valuation Rules sequentially. The relevant paragraphs of the Hon'ble High Court order are reproduced as under:- "12. Thus, a thorough procedure has been contemplated under Rule 3 as to how the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the duty within the time limit prescribed therein. Section 128 of the Customs Act provides for appeal to Commissioner against any decision or order passed under the Customs Act by an officer of customs within sixty days from the date of the communication to him of such decision or order. 15. When such safeguards and procedures have been contemplated under the Customs Act and the Rules framed therein, we are unable to find anything from the bulky material submitted before us by the respondents, that they have followed the procedure contemplated under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for assessing the value of the imported goods, so as to say that the detenu has undervalued the same and is thus liable to be punished. No reasons, much less appreciable ones, have been offered by the Department as to how they have arrived at the conclusion that the detenu had undervalued the goods imported. Even if there is any such under-valuation, the respondents are duty bound to follow the above explained procedure contemplated under the Act and the Rules, whereupon the aggrieved party, the detenu in the case on hand, will have the appeal remedy ....