AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2016 (10) TMI 725
X X X X Extracts X X X X
X X X X Extracts X X X X
....ilver. 3. The firms were issued show cause notice dt- 14.03.2008 proposing differential duty demand of Rs, 1,62,55,238/- and Rs. 36,07,800/- from M/s Surat Metion Pvt. Ltd; Rs. 21,35,906/-and Rs. 2,58,545/- from M/s I.S.Corporation Ltd. under section 28 of the (1) of the Customs Act. The differential duty was proposed by rejecting the declared value of Polyester Metallic Yarn / Polyester Metallised Film imported during the year 2006-07 and 2007- 08 by both the firms and to re-determine the same under section 14 of the Act read with Rule 4, 6 & 8 of the Customs Valuation (Determination of prices of the imported goods) Rules, 1988 as applicable. It was also proposed to confiscate the imported goods and since not available for confiscation to impose fine in lieu of confiscation and to impose penalty under Section 112 and 114A of the Customs Act, 1962. Further to demand interest under section 28AB. The show cause notice also proposed to impose penalty under section 112 (b) of the Act upon Shri Pragnesh Jariwala, Director of M/s Surat Metlon and Shri Ishwarbhai, proprietor of M/s I.S.Corporation. Initially the investigation commenced on belief that the g....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d the issue on merits, The adjudicating authority after following due process of law, did not agree with the contention raised by the Appellants and confirmed demand along with penalty against the Appellant firms. The redemption fine in lieu of confiscation was also imposed as the goods were not available. Personal penalty was imposed upon Shri Pragnesh Jariwala. 6. Learned Advocate appearing on behalf of the appellants would take us through the entire case records. He files a written submission. He submits that the adjudicating authority has erred in coming to such a conclusion in as much no independent findings have been made by the Commissioner in the impugned order. That the 'Discussion and Findings' portion in the adjudication order is merely a verbatim copy of the paras of the show cause notice. He also submits the list of all the paras of the order which are copy of the paras of SCN. He submits that since the whole order is copy of the paras of the show cause notice, it clearly shows that the order has been passed in perfunctory method and therefore ought to be set aside. He relies upon the judgments of the Tribunal in the case of Rungta Projects Ltd. Vs. CCE 2001....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lue shown by M/s Brightex Corporation in some of the insurance policies of imported consignment by invoking Rule 6 cannot be basis of demands as the value shown in insurance policy does not reflect the transaction value of the similar goods. That firstly Rule 6 is applicable to similar goods imported into India, other than the goods being valued. Secondly, the value of the similar goods should be other than the value of the goods in question. The said value mentioned in Insurance policy does not represent the transaction value of the similar goods imported into India and thus demand has no base. He submits that the insurance of the goods is taken to guard the exporter from any financial loss in case the goods are lost. Generally the supplier of the goods insures the goods at a higher value so that in case the goods are lost in transit, he is in a position to replace the goods and restore the lost goods to the customer in India. He submits that since the value shown in the insurance policy does not represent the 'transaction value' of the similar goods imported into India, therefore the value based on the insurance policy cannot be taken in to account for determining the t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... entry clearly describe the goods as B Grade. There is no allegation of mis-declaration of description of the goods by the appellants. Hence, the imported goods cannot be compared with the goods imported by M/s MLON as they are A grade and are not similar goods. Thus invocation of Rule 6 is not sustainable. Further that the quantity of the goods or value of the goods imported by the Appellants is greater than the value and quantity of goods imported by M/s MLON. While the appellants have imported 57740.820 kgs, M/s MLON have imported only 397.574 kgs. from M/s Brightex and thus the imports made by M/s MLON are not contemporaneous imports. Further that M/s Mlon has also imported Silver Metallic Yarn from M/s Keio Corporation which being different grade, quality and country are not contemporaneous import. That even assuming that otherwise the import of M/s Mlon is not at or about the same time at which the impugned imports have happened. That the Tribunal in the case of R.L. Fine Chem Vs CC in 2007 (217) ELT 92 (Tri-- Chennai) has held that import made more than three months prior to subject import cannot be treated as contemporaneous i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al duty demand by invoking Rule 8 of Customs Valuation Rules is based upon email (Fax) Message dated 17.04.07 of M/s Keio Corporataion, Korea, Imports made by M/s I.S. Corporation from M/s Oike Tec Co. Ltd. and sale note issued to one of the imported M/s Navbharat Impex by M/s Brightex. That the value determined on the basis of above documents is nothing but determination of arbitrary value and hence, such value being contrary to Rule 8(2), is liable to be set aside. Interpretative Notes to Rule 8 gives guidelines in determining the value of the goods under Rule 8 which have not been taken note of by the department. The interpretative note clearly provides that the value to be employed under Rule 8 should be to the greatest extent possible should be based on value of identical goods or similar goods whereas in present case the value has been determined on the basis of documents not indicating of transaction value of similar goods. That the fax message dated 17.04.07 from Mr. Kim Moon Ho of M/s Keio Corporation, Korea to Shri Pragnesh Jariwala, Director of the appellants contains an offer price and does not represent the transaction value of similar goo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isputed by the adjudicating authority, hence cannot be relied upon in the present case. Even otherwise, the said statements were recorded under coercion and duress and these statements were not voluntary. That the statement cannot be concluded to be an evidence of undervaluation as there is no contemporaneous imports. For this reason also, these statement cannot be relied upon to demand duty or for rejecting the transaction value. The Ld. Counsel further submits that the show cause notice relied upon the statement dated 28.2.08 of Shri Pragnesh Jariwala that over and above the invoice price, further amount in Indian Rupees, is given to the representative of the suppliers. That firstly, the department has not taken seriously this statement since no further investigation has conducted based on this statement and there is no further information about the aspects as to who were the persons who had collected the money from the appellants, when the amount was collected, how much amount was collected or paid by the appellants, whether amount so paid was for all consignments. No statement was recorded from the exporters. The export declaration filed by the exporter was not obtained by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed the duty liability. Rule 6 of Customs Valuation Rules is applicable for similar goods imported into India and the value of the goods in the Insurance policy indicates the actual price of the goods, therefore value of the goods shown in Insurance policy has been taken for the purpose of arriving at the transaction value by the adjudicating authority. That the value shown in insurance policy tallies with the invoice value and therefore the insurance value has been taken as the transaction value for the other imports also. That the adjudicating authority has taken the import price of M/s MLON Metallic Pvt. Ltd. and has accepted the investigation done by the department. The aspect of grade has not been challenged before the adjudicating authority. That the evidence in the form of email, insurance certificates showing the higher sum insured and the invoices of contemporaneous imports indicate the actual value of similar goods being imported, hence Rule 6 is rightly applicable. That since for the remaining transactions the sale price in India is not available on record and the date related to cost of raw material and the profit etc is not available for taking recourse to rule 7 and 7A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ducted apart from insurance policy which was issued at the behest of the supplier of the goods to show that the value mentioned in insurance documents are actual price of the goods. The goods were sold by foreign supplier of CIF basis and it was his lookout to get the goods insured. The higher amount of value shown in such insurance documents cannot be ground to enhance the value. The coordinate bench of the Tribunal in the case of M/s Anand Mahindra Vs CC (import) Mumbai 2008 (226) ELT 371 (Tri. Mum) as affirmed by Hon'ble Bombay High Court 2009 (244) ELT 340 (Bom), Nina Chaka Pvt. Ltd, Vs CC, New Delhi 2004 (163) ELT 464 (Tri. Del.) has held that the vlue cannot be enhanced on the basis of insurance policies and we being in agreement with such judgments are of the view that the insurance policies in case of some consignments issued at the behest of the supplier cannot be ground to charge the Appellant firms of having undervalued the goods. 9.2 In the show cause notice to show that the higher insurance amount mentioned in some documents is actual price of the goods, it is alleged that Shri Pragnesh Jariwala in his statement stated that th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so placed reliance upon the imports made by M/s MLON Metallic Pvt. Ltd. wherein they had imported Silver Metallic yarn 1/64" from M/s Brightex Corporation to show that the contemporaneous import of goods were made at higher price of USD 35.56 per Kg. We find from the narration in the show cause notice and the import documents that the goods imported by the Appellant firm were of 1/ 64" metallic yarn B grade which was cleared after examination by custom authorities. Since the goods imported by the Appellant firm were of B grade whereas the goods imported by M/s MLON were of A grade, the goods imported by M/s MLON cannot be said to be contemporaneous. Even the quantity imported by M/s Mlon from M/s Brightex was only 397.574 Kgs. Therefore the allegations of the show cause notice does not sustain. Further in case of goods imported by M/s Mlon from M/s KEIO Corporation, Korea we find that the imports made by M/s MLON were of mere 600 Kgs and that too from different country whereas the Appellant firm had imported 57740. 820 kgs and that too from Japan thus the impcrts of M/s Mlon are not contemporaneous. The show cause notice has relied upon the fax message dt. 08.08.2....