TaxTMI 
TaxTMI 
2019 (3) TMI 982
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....g. The goods were imported through Kandla and Mundra Port. The goods imported from Tanazania were in sawn form and from other countries, it was in log / round square form. The goods were measured in cubic meter (cbm). The goods imported from Tanzania has various qualities with 'Silli' as regular quality timber, 'Repla' and 'Rejection grade' / cut off size short length being timber of lowest quality. The Appellant's 60% of the total import during the period was of rejection grade / cut off size short length. 3. The Appellant were issued show cause notice dated 12.11.2013 alleging that the Appellant has mis-declared the imported goods and has thus undervalued the same. It was alleged that the premises of the Appellant and other persons namely Shri Rajendra Agarwal of Delhi and Shri Avinash Jindal of Gandhidham were searched. The search at premises of Shri Rajendra Agarwal and Shri Avinash Jindal resulted into discovery of incriminating documents along with hard disc and laptop recorded under different panchnamas. The documents in hard discs retrieved from Shri Rajendra Agarwal and Shri Avinash Jindal had container-wise details of packing list of timbers in the name of various part....
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....made by the Appellant to Shri Avinash Jindal and Shri Rajendra Agarwal based on made up file recovered from the resident premises of Shri Avinash Jindal. iii) In number of cases, there was suppression of quantities and in some cases there was suppression of cubic meter range from 2 to 3 CBM per container. iv) The prices declared by the Appellant for import of the timber were much less than the market value of timber of various qualities. v) An excel file with 2 tables with the file path "Live Data/Agarwal/Teal 19.01.2010 provide details of imported goods that contained details of official and unofficial amount and quantities of purchases made by the Appellant. Based on the above recoveries, it was alleged that the Timber imported by the Appellant was not on correct transactional value and the appellant has under-valued the imports by more than 50% of actual value. The show cause notice proposed to reject the declared value in the Bills of entry under Rule 12 of Customs Valuation (Determination of Value of the Imported Goods), Rules, 2007 read with Section 14 of the Customs Act, 1962. It was proposed to fix the assessable value on the basis of various documents / records....
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....Shri Rajendra Agrawal in his cross examination deposed that he was only an agent and received certain charges for container from the supplier of imported goods. He never supplied Timber to the Appellant nor maintained any accounts or Ledger of the appellant on behalf of the supplier or the importer. In respect of data / e-mail retrieved from the hard disc, he stated that he did not know how to operate the computer and never made any hand-written entries in the document. That the documents were signed by him on the insistence of the officers without seeing the contents of the same. Shri Avinash Jindal in his cross examination stated that he was a commission agent as well as in business of import. He never prepared import invoices in India on behalf of the suppliers nor negotiated the prices for the Indian parties. He occasionally sold goods on high sea sales basis to the appellant but never maintained the so called alleged documents, as relied upon in the show cause notice. That his statements were kept ready by the investigating officer and was told to sign the same, which he did. He has signed more than 4,000 pages without looking in to the contents in a single day as he was force....
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....emand made under Annexure C-2 and Annexure D-3 in terms of Rule 9 of Custom Valuation Rules, the Ld. Counsel submits that the demand has been made by relying upon the alleged contemporaneous imports said to be found by the Investigating authority from the premises of Shri Rajendra Agarwal and Shri Avinash Jindal at the time of search in respect of other importers. 5.4. Ld. Counsel submits that the investigating authorities did not find any document to substantiate the case of under-valuation against the Appellant except the statements. The Appellant has made payments through letter of credit or payment against documents. They never made any payment for the imported goods to Shri Rajendra Agarwal or Shri Avinash Jindal in cash or other mode on behalf of the suppliers. The valuation declared by them are correct value and in compliance with the terms of Section 14 of the Customs Act. He relies upon the domestic sale price of disputed imported goods to match the same with the value declared for the imported goods in dispute. He relies upon the insurance coverage of the disputed goods which shows the value as declared by them. He relies upon the judgment in cases of Truwood Private L....
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....hich resulted into wastage of around 35 to 45% of the total logs / timber cut by the owner from the forest, which are sold / exported as rejection grade. The owner normally gets yield approx. 55 to 60% of the total cut timber, which is in saleable position in different sizes as "silli". The average cost of yield material would come to approx. $ 160 to $ 200 per CBM. If all these expenses are considered, including taxes while ascertaining the sale value of the Timber per CBM including freight & ocean freight charges comes, the cost would come $ 300 per CBM. Even if 10% profit on the total cost of production is considered, the landed cost of good quality imported goods in India would not go beyond $ 330 per CBM. They have imported same material at $ 350 to $ 400, which comes within the parameter of sale value of the suppliers. The enhancement made by the Revenue on the imported at $ 650 to $ 800 is not possible. Thus, the value declared by the Appellant is within the parameter of imported goods declared by them. 5.8. Ld. Counsel has also drawn our attention to the statement supported by copies of bill of entry filed by other importers for importation of identical goods from the sa....
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....any other importers across the country in each of the years and the valuation of the same was not challenged by the Revenue. The Revenue has not considered the data submitted by the Appellant received from M/s Info Drive, which provides information about each quality of Timber, which was being regularly imported into the country at or about the same prices at which the Appellant imported the same. 5.10. He submits that in such circumstances, re-determination of the value is unlawful as the data fully supports the value declared by the Appellant, and, therefore, the question of rejecting the transaction value ought not to have been arisen at all. He has drawn our attention to all the contemporaneous imports of identical goods by other importers more or less at the same price downloaded from such CDs received from M/s Info Drive. That if declared value of the goods is not accepted, then the same ought to have been under terms of Section 14 of the Customs Act read with provisions of Custom Valuation Rules in respect of value having been enhanced based on the price agreed by Shri Avinash Jindal and Shri Rajendra Agarwal, related to emails retrieved from their e-mail IDs. Rule-3 of t....
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.... Annexure D-2, the valuation has been made under Rule 5 on the basis of similar goods said to be of same quantity and country of origin other than Tanzanian timber. In case of demand made under Annexure C-2 and D-3, the valuation under Rule 9 has been resorted to on the basis of contemporaneous imports by others. The contemporaneous imports referred to in such annexure were said to have been found by the investigating authority from the premises of Shri Rajendra Agrawal and Shri Avinash Jindal at the time of search in respect of other importers. Also statement of Shri Deepak Maloo of Appellant concern has also been relied upon. 7.1. As far as documents seized from Shri Rajendra Agarwal and Shri Avinash Jindal are concerned, preliminary we find that the said persons has refused the veracity of such documents. Also both of these persons in their cross examination has retracted from their statements. They refused that they maintained any accounts or ledger of the appellant on behalf of the suppliers or the importers. Shri Rajendra Agarwal, in his cross examination in respect of data / e-mails retrieved from the hard disc stated that he did not know how to operate the computer and h....
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....said packing lists remain un-corroborated with an evidence. In case where the declared value is in doubt, the same has to be determined in terms of Section 14 read with provisions of Customs Valuation Rules. If the declared valued is to be discarded, the same has to be proved by tangible evidence. The statements of Shri Avinash Jindal and Shri Rajendra Agarwal and Shri Vineet Jha , Accounts Asst. of Shri Rajendra Agarwal are not corroborated by any evidence and thus cannot form the basis for alleging under-valuation as held in case of Akshay Exports Vs Commissioner 2003 (156) ELT 268 and Galaxy Funworld 2006 (206) ELT 800. Further the statement of Shri Vineet Jha cannot be relied upon as he was not cross examined. In case of KARAN TRADERS 2016 (339) E.L.T. 249 (Mad.), the Hon'ble High Court of Madras has held that if a person is not made available for cross examination his statement cannot be relied upon. 7.3. We find from the tender documents of M/s Prime Timbers and M/s Janki Exports, who were awarded the tender by the Tanzanian Govt, that the tenders were awarded @ $ 95 to $ 120 per CBM. After cutting and processing, the average cost of yielded material comes to $ 160 to $ 20....
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....her the documents does not disclose the rate at which the materials were purchased. Even the Appellants were not shown these documents or questioned about the same during investigation. In case of Bill of Entry No. 144831 dt 12.07.2009, reliance has been placed by the Revenue on account statement named "A/c Export Trading" located in file path "live data/01/Account 26.01.10" report located in file path "live data/01/Accounts/Ambrish Bhai" and import bill located in the file path "live data/02/Agarwal-Teak 19.01.2010" found in hard disk recovered from Shri Rajendra Agarwal. It is alleged that the actual value of imported timber was found to be higher than the declared valued and relied upon the statement of Shri Rajendra Agarwal and Shri Deepak Maloo. 7.5. We find that the statement of Shri Rajendra Agarwal has been denied by him. In respect of "A/c Export Trading", the document does not show the rates at which the goods were purchased nor the Appellant was questioned about the same during investigation. The billed quantity and amount in the document located in file path "live data/01/Agarwal-Teak 19.01.2010 and "livedata/01/Accounts/Ambrish Bhai" does not match. The quality ment....
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.....05.2011 the emails of Shri Avinash Jindal has been relied upon to allege that the values and quantities mentioned therein are actual. Reliance has also been placed upon statement of Shri Rajendra Agarwal and Shri Deepak Maloo. However we are of the view that the statements cannot be basis of alleging undervaluation. Further, statement of Shri Rajendra Agarwal stands retracted. The statement of proprietor of the Appellant concern Shri Deepak Maloo, who accepted under-valuation cannot be the basis to conclude that the goods were under-valued as it is not corroborated with any independent evidence. 7.7. It is also a fact that at the time of importation the goods were reassessed by the Customs Authorities after examination and the value was enhanced. In case of Bill of Entry No. 155709 dated 02.07.2010, reliance was placed upon emails of Shri Avinash Jindal to allege that the values and quantities declared in the said e-mails were correct and that the values declared by the Appellant were much lower. We find that the enhancement of value is not proper as the said document is not corroborated by any independent evidence. No evidence is forthcoming that the value and quantity of good....
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....r they were questioned at the time of investigation. The e-mails were between Shri Avinash Jindal and Shri Sunil Gupta with no involvement of the Appellant. There is no clear evidence to determine which figures in the e-mail corresponding to the actual rate at which the materials were purchased. The e-mails contained table having heading of Sl. No., container no., PIC, CBM, invoice, rate US$ and size. The remaining two columns do not have heading. For enhancing the value, figures mentioned in one of the un-named columns has been used without ascertaining as to what this figure actual meant. Shri Avinash Jindal was never questioned or was asked to clarify as to what the unnamed figures represent. It is also found that the goods at the time of importation was re-assessed and the value was enhanced from US$ 350 to US$ 375. In view of such circumstances, there is no reason to enhance the value. 7.9. In case of Bill of Entry No. 4794 dated 30.09.2010, the Revenue has relied upon the e-mails from Shri Avinash Jindal to Leo Timbers. The e-mail contains information regarding container number, number of pieces, CBM, average rate and amount that has been alleged to be corresponding to the....
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....ncern was not shown such papers nor was he questioned about the same in spite of the fact that these documents are the sole evidence for making the allegation that the appellant had made un-official payments in cash. Only by showing the name of the Appellant in the account statement and that too of a third party, it cannot be concluded that the payment was actually made to Shri Avinash Jindal or even if the payment was made, it was on what account . In absence of any confirmation from Shri Avinash jindal or from Shri Deepak Maloo about the authenticity of such papers, no allegation can be made against the Appellant. A hand-written page from the made-up file of Shri Avinash Jindal has been made as basis for alleging that the Appellant imported Tanzanian timber from Shri Avinash Jindal through one container of 1" material of 14.556 CBM at US$ 391 per CBM, one container of "silli" material of 22.329 CBM at US$ 785 per CBM. We find that there is no evidence that the material mentioned was imported by the Appellant as there is no corresponding bill of entry. The only evidence is the statement of Shri Avinash Jindal, however, the same has been retracted in cross examination and, thus, ca....
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....ad already submitted the packing lists received from the overseas suppliers to the Customs at the time of filing of bill of entry, which dealt with the contents mentioned in the import documents. The Appellant has also stated that the packing lists relied upon by the Revenue are not related to the import by the Appellant. In spite of search of the premises of the Appellant, no incriminating document was found. 10. Similarly in case of packing lists of containers of Tanzanian timber found in the hard disk of Shri Rajendra Agarwal, on the basis of which the demand was made against the Appellant, we find that the Appellants were never shown the above records nor their statement was recorded. It has been alleged that the accounts statement found from the hard disk of Shri Rajendra Agarwal indicates the rates at which he purchased the material from one Shri Ambrish Bhai. However, we find that these transactions are of private documents of Shri Rajendra Agarwal with no corroboration from the Appellant. Further the transactions in respect of Appellants were listed under the sub-heading "Through Bank", which even the investigating authority stated as official payment. The name of the Ap....
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....ppliers. Even during the cross examination, Shri Rajendra Agarwal and Shri Avinash Jindal have accepted that the Appellant is not concerned with the contents of the made-up files. It is emanating from the records that the Appellant imported Timber from various suppliers, who were well- recognized and there is no direct evidence that the Appellant had connivance with them so as to undervalue or mis-declare the imported goods. 12. Further, the Appellant have imported Timber even after the disputed period more or less at the same price at which the Appellant imported the goods in disputed period, as we find from the data submitted by the Appellant, there is no specific evidence that the prices were influenced by non-commercial consideration. In case of M/s Oswal Fats & Oils - 2007 (220) ELT 795, the Tribunal has held that the price of the goods would not remain same for the imported goods when the prices fluctuate and the prices in a particular situation can be rejected only when there is information or evidence that the transaction was not a commercial transaction. We find that the Appellant has given the import data of Timbers from the same country and same size and similar perio....
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....ation held:- "6. We have gone through the records of the case carefully. A similar issue of alleged undervaluation was examined in the case of M/s. Truwoods Pvt. Ltd. by CESTAT, Delhi and the appeal was allowed. The ratio of the above decision is squarely applicable to the facts of the present case. We also do not find any reason for rejection of the transaction value in terms of Rule 4(2) of the Customs Valuation Rules, 1988. The case-laws cited by the appellants are relevant. It is not the case of the Revenue that the appellants had paid more than what has been reflected in the invoices. Investigations have not brought out any evidence against the appellants in this manner. It is further seen that the insurance covers the value of the goods enhanced by 10% as per the international practice. Further, we find that reliance has been placed on photocopies without proper signature or official seal of the foreign Customs officers. It has already been held in M/s. Truwoods Pvt. Ltd. case, cited supra, that such documents cannot be relied on to enhance the declared value. Further, we have seen that the appellants have given enormous evidence to show that the value of contemporaneous i....
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....lue. 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 context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word "value" is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the Bill of Entry is the value referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 14(1A), it env....
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....tion 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 the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of "deemed value". Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determinin....
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....ccepted 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 Valuation Rules refers to the transaction value. Utilization of the word 'the' as definite article indicated that what should be accepted as the transaction value for the purpose of assessment under the Customs Act is the price actually paid by the importer for the particular transaction, unless it is unacceptable for the reasons set out in Rule 4(2). In the said judgment, it has been further held that, the word 'payable' in Rule 4(1) also refers to the "transaction value" and payability in respect of the transaction envisaged a situation where payment of price stood deferred. Therefore, this decision of the Supreme Court directs t....
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....s, we find that there is no case of demand against the Appellant. 15. From the quantity of imports, we find that more than 60% of the imports were of rejected quality Timber. Also, we find that out of 161 bills of entry involved in this case, the value of 83 bills of entry declared by the Appellant was initially rejected by the Revenue and were enhanced in comparison with the contemporaneous imports after physical inspection and examination of the goods. In such case, there is no reason to doubt the declared value as the goods were permitted to be cleared after physical examination. The Appellant has made payments through letters of credit and there is no evidence of having made payments to Shri Rajendra Agarwal or Shri Avinash Jindal on behalf of the suppliers. In such case, the value cannot be discarded. The Appellant has also annexed the prices of imported goods in the domestic market and we do not find any major difference between the declared price and the sales price in local market. There is no evidence acquired from the Appellant such as private records or records of any payment made in cash or recovery of any unaccounted cash which can be supported the cases that the Ap....
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.... normally at U.S. Dollars 8,200/- per M.T. It is not in dispute that by its very nature Vitamin Mixes imported at different times from different sources are having different composition. Therefore, prices at which identical goods have been imported may not be available. It is also not disputed that in view of this what the department seeks to do is to apply the price of comparable or similar goods as per the Customs Valuation Rules. However, the dispute arises on the sole ground that the chemical composition of such comparable goods relied upon by the department as contemporaneous imports was so widely different from the chemical composition of the goods imported in these cases by the appellants that it would not be correct to hold the two sets of goods as comparable. We find that ld. Advocate has in detail submitted the chemical composition as per the Analysis Certificate on record which have not been disputed. Comparison of these show that whereas any cost of imports relied upon by the department the concentration of major Vitamins was many times lower in the goods imported from both Pingtai as well as Zuelling when compared to the concentration of similar Vitamins in the product....