TaxTMI 
TaxTMI 
2019 (7) TMI 970
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....1.1 I reject the declared assessable values aggregating to US$ 2,59,140 equivalent to Rs. 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Thousand Three Hundred Seventy Five only) under rule 12 of the CVR, 2007 r/w section 14(1) of the Customs Act, 1962. 5.1.2 I re-determine the assessable value of the impugned goods in accordance with rule 4 of the CVR, 2007 r/w section 14(1) of the Customs Act, 1962 to US$ 4 per Kg aggregating to Rs. 2,55,08,750/- (Rupees Two Crore Fifty Five Lakhs Eight Thousand Seven Hundred Fifty Only). 5.1.3 I confirm the demand of differential duty amounting to Rs. 27,45,081.90/- (Rupees Twenty Seven Lakhs Forty Five Thousand Eighty One and Paise Ninety Only) under proviso to section 28(1) of the Customs Act, 1962 along with interest at appropriate rates under section 28AB of the Act ibid and order recovery forthwith. I order appropriation of Rs. 21,00,000/- (Rupees Twenty One Lakhs only) deposited voluntarily by SCPL towards duty. 5.1.4 I confiscate the impugned goods having declared value of US$ 2591.40 equivalent to Rs. 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Thousand Three Hundred Seventy Five only) and ascertained....
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....4506 dtd 3.10.2009 & 702642 dtd 1.10.2009) whereas they had exported the same goods earlier to MSDL @ US$ 12 to 27 per kgs. 2.3 After completion of the investigations a Show Cause Notice dated 24.12.2010 was issued to the Appellants asking them to show cause as to why- a) "The invoice value of US$ 2,59,140/- equivalent to Rs. 1,27,54,375/- (Rupees One Crore Twenty Seven Lakh Fifty Four Thousand Three Hundred Seventy Five only)as mentioned in Annexure A (covered under B/Es mentioned in Ann A to this SCN) should not be rejected under Rule 12 of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 read with the provisions of Section 14(1) of the Customs Act, 1962. b) The assessable value should not be revised/ reassessed in respect of Bill of Entries Nos mentioned in Ann A under Rule 12, Rule 8 and Rule 10 of the Customs Valuation Rules, 2007 in terms of the value of same goods ascertained as mentioned in Annx B to this Show Cause Notice, to Rs. 12,75,02,717/- c) Differential duty amounting to Rs. 2,46,96,887/- (Rupees Two Crore Forty Six Lakhs Ninety Six Thousand Eight Hundred and Eighty Seven) should not be demanded and recovered under Section 28(1) o....
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....stating that- a) They had exported 139.2 MT of impugned goods during 20.11.2008 to 20.01.2009 out of which 114.97 MT were locally procured and 49.8 MT were re-exported under Bond, no export incentive was claimed by them as the export were made of free shipping bills. Out of the above exported goods, MSDL sought to sell 129.57 MT of impugned goods but were not able to do so due to sharp slump in the European Market in view of wide spread recession. b) The entire quantity for which these proceedings have been initiated are in respect of these goods only on re-import. Since this is case of re-import of the goods they are eligible to benefit under Notification No 94/96-Cus (NT). This benefit should have been extended to them, even if the same was not claimed by them at the time of filing of Bill of Entry.[HGI Industries Ltd [2007 (209) ELT 18 (T-Ahd)]. This benefit was not allowed by the Commissioner, for the reason that the re-imports were not made in the same packing contrary to the decision in case of Pansari Gems International [2005 (179) ELT 253 (T- Del)] c) If the benefit of Notification No 94/96-Cus is extended to them then would be entitled to Refund of Rs. 17,99,548.60/-....
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....towards demurrage charge was made to MSDL against impugned goods. Thus inclusion of these charges on the basis of the statements that MSDL had demanded these charges cannot be sustained. j) They had sold the impugned goods in domestic market at rates varying from Rs. 85 to Rs. 158 per Kg (average Rs. 121 per kg). Taking average conversion factor of US$ to Rupee as Rs. 48.6. Thus the costing would come as follow: Import Price = US$ 2 per kg = Rs. 97.2 per kg Custom Duties @ 7.5% = Rs. 7.29 per kg Total = Rs. 104.49 per kg. (without adding any post clearance expenses like transportation, commission, storage, profit etc.) Thus if total returns against entire quantity of import is taken it can be safely be said that the market price of imported goods was in the vicinity of the price which they paid to MSDL. k) Explanation (iii) to Rule 12 of CVR clearly lays down the situations in which the declared transaction value could be doubted or rejected. The order of Commissioner travels beyond the said explanation and hence is bad in law. l) Since the charge of suppression could not be sustained, extended period cannot be invoked, and hence the demand notice issued on 24.12.2010....
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....me at time of filing the B/E {2007 (209) ELT 321 and 2007 (22) ELT 166} c) Since the demand of duty is not tenable in law question of penalties, question of imposing penalty what so ever, under any provision of Custom Act, 1962 also is frivolous and bad in law. 4.3 Arguing for Appellant 4, his counsel submitted that CHA has no knowledge about misdeclaration or any irregularity being committed by the importer hence penalty imposed by the Commissioner on him is not justified. {Buhariwala Logistics [2015 (236) ELT 170 (T-Del)] & Deepak Kumar [2017 (358) ELT 854 (T-Del)]}. 4.4 Arguing for the revenue learned authorized representative submitted that- a) During the course of search some email messages were traced out relevant to the transaction of imported Acetonitrile. In one of the message, overseas supplier stated that- "please raise Purchase Order for ICC material @2 USD/Ltr plus reimbursement of following charges Demurrage for ICC Material - GBP 4905 Bulk Operation Expenses - GBP 120/PMT X 120 MT SRM Storage, Testing, handling - GBP 1230" b) In another message Shri Sanjay Parmar, Director informed Shri Raju Verma of MSDL, UK that- "we can finalize the price ....
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....Cus should be admissible to him as he had earlier exported the goods from India. However no details of such exports in respect of the goods procured locally from India has been produced. Further Commissioner has observed in the order that since the goods are not in the same packing the benefit of exemption could not have been extended. i) Issue involved is not for extending the benefit of exemption under Notification No 94/96-Cus but the issue is in respect of misdeclaration of value. During the course of search certain documents have been recovered from the premises of the appellant 1. Appellants have in their statements admitted the fact about the said documents and also to the undervaluation which has been alleged on the basis of these documents. It the case of the revenue that the value of the goods needs to be determined in accordance with the Custom Valuation Rules, which provide for the addition of cost and services while determining the assessable value. The value as per the 4.4 of the impugned order has been determined on the basis of contemporaneous imports. j) Since the appellants were fully aware of value of cost and services that needs to be added for determining t....
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....n of the case by the competent officer, the Commissioner of Customs (Preventive), R & I Wing, Mumbai has agreed to release the said seized goods to the obligator's exceeding the bond in the manner aforesaid. 5. The Commissioner of Customs (Preventive), R & I Wing, Mumbai has agreed to allow provisional release of the goods described in the schedule below. The proper officer, pending further enquiries clarification or investigation, has agreed to allow provisional release of the goods, subject to the obligator's providing to the satisfaction of the proper officer Bank Guarantee for the sum of Rs. 10,00,000/- (Rs Ten Lacs) to cover the entire goods as mentioned in the Schedule below." Thus the case in hand is of provisional release of seized goods and not the case of provisional assessment as claimed by the appellants. Since the case is not the case of provisional assessment the decisions {1989 (43) ELT 225, 1991 (56) ELT 31, 2000 (123) ELT 909, 2001 (133) ELT 698 and 2006 (203) ELT 532} relied upon by the appellant in this respect are distinguishable and are not applicable in the facts of present case. 5.3 Appellants have contended that in the present case in respect of the two ....
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....he person from whose possession they were seized: Provided that the aforesaid period of six months may, on sufficient cause being shown, be extended by the Commissioner of Customs for a period not exceeding six months.: Provided further that where any order for provisional release of the seized goods has been passed under section 110A, the specified period of six months shall not apply. (3) The proper officer may seize any documents or things which, in his opinion, will be useful for, or relevant to, any proceeding under this Act. (4) The person from whose custody any documents are seized under sub-section (3) shall be entitled to make copies thereof or take extracts therefrom in the presence of an officer of customs. SECTION 110A. Provisional release of goods, documents and things seized pending adjudication. - Any goods, documents or things seized under section 110, may, pending the order of the adjudicating officer, be released to the owner on taking a bond from him in the proper form with such security and conditions as the adjudicating authority may require." Admittedly and undisputedly in the present case, the order for provisional release of the seized goods have ....
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....ovisional release of goods it was not the case where the goods were never available for seizure and confiscation. In case of Raja Impex relied upon by the Appellants, Hon'ble Punjab and Haryana High Court has after taking note of Weston Components held as follows: "11. The respondent in the present case took clearance of imported machinery under Bill of Entry No. 1546 dated 4-12-2004. The show cause notice was issued subsequently on 31-3-2005 and the Adjudicating Authority ordered confiscation of machinery under Section 111 of the Act and imposed redemption fine and penalty. Since the goods had been released unconditionally and were not available, those could not be confiscated. The Commissioner of Customs found that proceedings for the confiscation of goods were invalid as they had been initiated by issuing show cause notice after clearance of the goods and there is no averment in the show cause notice, which may show that the appellants were the owners of the goods at the time of issuing of the show cause notice. The Commissioner of Customs also found that the goods were not available and no undertaking had been obtained by the department at the time of release of goods and the....
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.... of learned counsel for the revenue upon the provisions of Section 125 of the Act is also misconceived. Section 125 of the Act is applicable only in those cases which have been cleared by the concerned authorities subject to furnishing undertaking/bond etc. However, in the present case, admittedly, the goods were cleared by the respondent-authorities without execution of any bond/undertaking by the assessee. Thus, in view of the fact and circumstances of the case, we find no error in the impugned orders. No substantial question of law arises for our determination in the present appeal and the same is hereby dismissed." Hence we do not find any merits in the submissions of the AR to the effect that goods which were released by the Custom Authorities after assessment and were not available for confiscation, could still have been confiscated as has been done by the impugned order. Accordingly we hold that only those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. Since the total value of the goods covered by two Bill of entries as above which were seized is only Rs. 27, 55,688/- (B/E No 702642 (Rs. 23,....
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....xported acetonitrile to M/s. Merck Sharp & Dohme, U.K. in year 2008-09 which we had procured these materials from foreign supplier viz. Saler Door Enterprises Ltd. (Taiwan), Hainan Zhongxin Chemical, (China), Imperial Chemical Corporation (Taiwan) and the remaining quality have been procured from local traders. From these local traders viz. M/s. Jaskon International, M/s. Ketul Chem P. Ltd., etc. and these local traders supplied acetonitrile of foreign origin to us which we had exported to M/s. Merck Sharp & Dohme, U.K. I say that we had exported these goods under various Shipping Bills to M/s. Merck Sharp & Dohme, U.K. and no export incentive including rebate has been claimed against these Shipping Bills. On your question, in view of the fact that the exported goods had come back from M/s. Merck Sharp & Dohme, U.K. and therefore the said exported value has to be taken as a transaction value at the time of import, I do say that the goods imported under above said B/Es are same goods exported by us and it is a fact that the transaction value of the export was much more higher than the present declared import value but since it was an import taken place after 7 months and that the ....
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.... of the goods from the from the foreign supplier at the prevailing market rate. If it had been the case for re-import of the same goods as exported by the appellant then the value of the goods as declared by the importers on the Bill of Entry could not have been the value as declared by them but would have been the value as per the shipping bills filed by them for export of the said goods and accordingly the benefit of exemption under Notification 94/96-Cus would have been determined. Since the goods have been supplied by the foreign supplier against his own invoices we are not in position to agree with the contention of the appellants that the benefit of exemption under Notification No 94/96-Cus could be extended to the appellants. Tribunal has in case of Sundaram Finance Ltd [2012 (279) ELT 220 (T-Chennai)] held as follows: "7. Section 20 of the Customs Act, 1962 is the appropriate provision to deal with such goods. It reads as follows :- Re-importation of goods. - If goods are imported into India after exportation therefrom, such goods shall be liable to duty and be subject to all the conditions and restrictions, if any, to which goods of the like kind and value are liable o....
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....oods were repacked in ISO tanks as per the directions of SCPL and demurrage charges, bulk operation expenses, storage of goods at UK testing and handling charges etc amounting to Rs. 15,60,000/- (approx) were borne by MSDL on behalf of SCPL which were also required to be included in the assessable value. However the fact was not declared as required under rule 10(e) of the CVR, 2007. As such, I find that SCPL obliviously violated the provisions under Section 14 r/w section 46 of the Customs Act, 1962, in as much as they have misdeclared the value of the impugned goods with clear knowledge and intention to evade customs duty leviable on the impugned goods thus rendering them liable to confiscation under section and 111(m) of the Customs Act, 1962 and rendering themselves to penalty under section 112 of the Act, ibid. Further I also find that misdeclaration of value and other particulars of the goods in the import documents are in gross violation to the provisions of rule 11 and 14 the Foreign Trade (Regulation) Rules, 1993 r/w section 11 of the Foreign Trade (Development and Regulation) Act,1 992 thereby making the goods "Prohibited Goods" as defined under section 2(33) of The Custo....
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.... also provided in the said Rule that in applying the said rule the transaction value of identical goods and sale at the same commercial level and substantially of the same quantity, would be used to determine the value of the imported goods." 5.7 Appellants have in their appeal disputed the admitted facts in their statement and have questioned the impugned order stating that demands could not have been made on the basis of the facts admitted by them during the statement. The issue in respect of admissibility of the statement recorded under Section 108 of the Customs Act, 1962 is no longer res integra. In case of K I Pavunny [1997 (90) ELT 241 (SC)] Hon'ble Apex Court has laid down the law stating as follows: "26. In Naresh J. Sukhawani v. Union of India - 1996 (83) E.L.T. 258 (S.C.) = 1995 Supp. 4 SCC 663 a twoJudge Bench [to which one of us, K. Ramaswamy, J., was a member] had held in para 4 that the statement recorded under Section 108 of the Act forms a substantive evidence inculpating the petitioner therein with the contravention of the provisions of the Customs Act as he had attempted to export foreign exchange out of India. The statement made by another person inculpating ....
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....f the offences committed under the Act has consistently been adopting the consideration in the light of the object which the Act seeks to achieve." In case of System & Component Pvt Ltd [2004 (165) ELT 136 (SC)] Hon'ble Apex Court stated- "5.......... We are unable to understand this reasoning. Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use there is no need for the Department to prove the same. It is a basic and settled law that what is admitted need not be proved." Thus in our view in light of the law laid down by the Apex Court, the fact about undervaluation of the goods need not be again established as the same has been admitted by the Appellant themselves in their statements recorded under Section 108. However the fact of undervaluation is further corroborated by the value of contemporaneous imports made by the other importers at or about the same time. Hence we hold that appellants have misdeclared the value of the imported goods with intention to evade payment of duty. In view of this extended period of limitation as provided by proviso to sub sec....
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....ave clarified the distinction between Sections 11AB and 11AC by virtue of sub-section (2B) and Explanations below the same. Second explanation below sub-section (2B) reads thus : "Explanation (2) : For the removal of doubts, it is hereby declared that the interest u/s. 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short payment of duty if any as may be determined by the Central Excise Officer, but for this sub-section." It is evident that explanation has taken care to charge the interest on the difference amount if the amount of duty payable as ascertained by the assessee and the amount of duty payable as ascertained by the Central Excise Officer, is different. Thus, even if the assessee pays the short duty by virtue of liberty granted by sub-section (2B) of Section 11A, he is liable to pay interest, on the same even if the amount is paid, and he is liable to further interest also on the amount of short duty as ascertained by the department if that exceeds the self-assessment and to that extent. By this explanation, we are convinced that even if no notice is issued by the department because it agrees with the amount of sh....
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....able below on the Appellants. Appellant Penalty Under Section 112 (a) 112(b) 114A 114AA Total 1 - - 2745081.90+Interest - 2 500000 - - 2750000 3250000 3 500000 - - 2750000 3250000 4 - 200000 - - 200000 A. Appellant 1 From the table above it is quite evident that on Appellant 1, Commissioner has imposed penalty under Section 114A, as equivalent to the aggregate duty demanded and interest on the duty demanded. The order of Commissioner imposing penalty equivalent to the aggregate of duty and interest on the duty demanded cannot be sustained in view of decision of Tribunal in case of Sundaram Finance Ltd [2012 (279) ELT 220 (T-Chennai)], wherein following has been held: "17. The above issue as to whether penalty under Section 114A should be imposed equivalent to the "duty demanded plus the corresponding interest accrued under Section 28AB of the said Act" instead of penalty equivalent to the "duty demanded" stands decided by this Bench in the case of Bharti Airtel & Others. The relevant findings are reproduced below : "21.2 At this stage, the appeals by the department on the quantum of penalties imposed on the appellant-assessees can be....
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....(8) of Section 28". The Commissioner was not in a position to determine the interest amount at the time of passing the impugned order. Therefore, his imposing penalties equal to the duty determined is in order." Hence we are not in position to uphold the order of the Commissioner imposing penalty equivalent to aggregate of duty and interest, hence the order of Commissioner, is modified to hold that penalty imposed under Section 114A, to be equivalent to the duty demanded. It is settled law that in case where duty demand has been determined by invoking the proviso to Section 28(1) of Customs Act, 1962 penalty under Section 114A will get attracted. Hon'ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] stated the position in law as follows: "23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-se....
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....njay Parmar, the Director of SCPL were handling the day to day affairs of the company and have actively participated in the import of the subject goods, made correspondence with MSDL, the overseas supplier for re-importation of the subject goods. They had sent fax messages for the storage charges, price to be declared for import purpose, etc., with the foreign supplier. They have also personally dealt with the clearance of formalities of the subject goods from the port including mis declaration and undervaluation. By their acts of omission and commission these two directors have rendered the goods liable for confiscation while rendering themselves liable to penalty under the provisions of section 112(a) of the Customs Act, 1962. Further S/ Shri Dilip Parmar and Sanjay Parmar, for having knowingly and intentionally made, signed and used declarations, statements and documents which were false and incorrect in material particulars, in the clearance of the goods, are also liable to a penalty under Section 114AA of the Customs Act, 1962. Since the directors of the company have committed the offence mentioned hereinabove, SCPL also is liable to penalty under Section 112(a) of Customs Act....
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....aside the same." Since we uphold the penalties imposed on the Appellant Company (Appellant 1) under Section 114A, we are not inclined to uphold the penalties imposed on the Directors (Appellant 2 and 3) under Section 112 (a) b. Section 114AA of the Customs Act, 1962 read as follows: "SECTION 114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods." From the wording of the section itself it is evident that the said section can be invoked only on establishment of the fact that the declaration, statement or document made/ submitted in transaction of any business for the purpose of the Act, is false or incorrect. Without establishing that the document, statement or declaration made is false or incorrect in any material particular this section cannot have been invoked. In our view it is not even the case of department that the transaction value as declar....
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....voking the said provision is that it must be established that a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document, which is false or incorrect in any material particular, in the transaction of any business for the purposes of the Act. As noted herein before, when the Act itself has envisaged provisional assessment, it cannot be said that incorrect value of the imported goods per se amounts to any of the acts referred to in the said provision." Thus following the above decisions penalties imposed upon the Appellant 2 and 3 under Section 114AA are set aside. C. Appellant 4 For imposing penalty on Appellant 4, who is CHA handling the clearance of goods for the Appellant 1, Commissioner has observed: "4.12 M/s Far-N-Far (I) Pvt Ltd., (CHA No 11/1197) were the clearing agents who had filed the import documents on behalf of the importer before the customs. They have also attended and facilitated the assessment and examination formalities. They have failed to inform the customs that the goods were re-exported goods and the value was liable to be enhanced. They also failed to advice the party that the g....
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....tly, we set aside the penalty imposed on the appellant." Similarly in case of Deepak Kumar [2017 (358) ELT 854 (T-Del)] following was held "5. Similarly, Tribunal in the case of Prime Forwarders v. Commr. of Customs, Kandla [2008 (222) E.L.T. 137 (TriAhmd.)] has observed that when the CHA acted on the basis of documents given to them and there is nothing to show that he was aware of containers being stuffed with uncalled for material, the penal action cannot be taken against them under Section 112 of the Act. Further, the Tribunal in the case of Safe C & F Agency P Ltd. v. CCE [2007 (210) E.L.T. 225 (Tri.-Mum.)] has held that where CHA issued NOC for two containers for customs examination, he cannot be held guilty of any failure to perform his duties as per the regulation. 6.Similarly, Tribunal in the case of Parekh & Sons v. Commissioner of Customs (P), Mumbai [2002 (150) E.L.T. 1274 (Tri.-Mum.)] has observed to the same effect that merely acting as CHA, in the absence of any reasons to record that he was having knowledge about the illegal activities of the importer, is not sufficient ground for imposition of penalty under Section 112(d) of the Customs Act. 7.We note that t....