TaxTMI 
TaxTMI 
2019 (7) TMI 970
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...."5.1 On the basis of the foregoing findings, I pass the following order: 5.1.1 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/-....
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...., premises of the Appellant 1 was searched. 2.2 Appellant 1 had imported the said goods against a declared value of US$ 2 per kgs (vide Bill of Entry No 704506 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....
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....by the Commissioner by the impugned order, referred in para 1, supra. Aggrieved by the order of Commissioner, Appellants are in appeal before by the tribunal. 3.1 In their Appeal, Appellants have assailed the order of Commissioner 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 we....
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....ession against them. i) Contemporaneous imports were allowed by Mumbai Customs at rates even less than at which they had paid the import duty. The agreement of price with MSDL was on principal to principal basis and the payments were made through banking channels and no further payments 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....
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....t have been issued under Section 28. {1989 (43) ELT 225, 1991 (56) ELT 31, 2000 (123) ELT 909, 2001 (133) ELT 698 and 2006 (203) ELT 532} b) It is admitted in the impugned order that case is of re-import of goods, and hence the benefit of Notification No 94/96-Cus should be extended to the Appellant. The benefit should have been extended to them even if they did not claimed the same 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....
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.... Origin 300005128 31.1.09 12.0 20000 11376000 765098/29.1.09 12.0 16000 9540863 Taiwan 300005225 5.2.09 12.8 27000 16727040 769554/2.2.09 12.8 16000 10176921 Taiwan 300005226 6.2.09 12.8 27000 16727040 769593/2.2.09 12.8 16000 10176921 Taiwan 300005351 10.2.09 12.0 20000 11616000 776757/9.2.09 12.0 16900 10077537 China 6946178 24.12.08 38.4 Procured from the local market 7017210 21.1.09 38.4 7055103 2.2.09 12.8 h) Importer has claimed that benefit of exemption under notification No 94/96-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 hav....
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....seized by the Superintendent of Customs (P), HQIU, R & I Wing, Mumbai (hereinafter called the said officer) from the premises at All Cargo Logistic J N P T. 3. And Whereas the Commissioner of Customs (P), R & I Wing, Mumbai has required the obligator's to deposit as Guarantee an amount of Rs. 10,00,000/- (Rs ten lacs only) by way of Bank Guarantee No INBG01909000024 dt 19.111.2009 issued by Development Credit Bank Ltd. The Bond Security for a face value of Rs. 55,12,000.00 (Rs Fifty Five Lacs Twelve thousand only) endorsed in the favour of President of India and accepted on this behalf by the Assistant Commissioner of Customs (P), R & I Wing, Mumbai. 4. And whereas pending investigation 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 re....
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....edings under this Act and shall make an application to a Magistrate for the purpose of - (a) certifying the correctness of the inventory so prepared; or (b) taking, in the presence of the Magistrate, photographs of such goods, and certifying such photographs as true; or (c) allowing to draw representative samples of such goods, in the presence of the Magistrate, and certifying the correctness of any list of samples so drawn. (1C) Where an application is made under sub-section (1B), the Magistrate shall, as soon as may be, allow the application. (2) Where any goods are seized under sub-section (1) and no notice in respect thereof is given under clause (a) of section 124 within six months of the seizure of the goods, the goods shall be returned to the 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 n....
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....ld not be imposed because the goods were no longer in the custody of the respondent authority. It is an admitted fact that the goods were released to the appellant on an application made by it and on the appellant executing a bond. Under these circumstances if subsequently it is found that the import was not valid or that there was any other irregularity which would entitle the customs authorities to confiscate the said goods, then the mere fact that the goods were released on the bond being executed, would not take away the power of the customs authorities to levy redemption fine." From the text of the decision itself it is quite evident in the case before the Apex Court, the goods were allowed to be released to the appellant on an application made by it on the appellant executing a bond. Thus the case before Apex Court was case of provisional 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....
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....evy redemption fine. A reading of the judgment/order of the Hon'ble Apex Court in M/s. Weston Components Ltd. v. Commissioner of Customs, New Delhi (supra), would show that the Apex Court has taken the view that redemption fine can be imposed even in the absence of the goods as the goods were released to the appellant on an application made by it and on the appellant executing a bond. Since the goods were released on a bond the position is as if the goods were available. The ratio of the above decision cannot be understood that in all cases the goods were permitted to be cleared initially and later proceedings were taken for under-valuation or other irregularity, even then redemption fine could be imposed. We are, therefore, not inclined to accept the contention raised by the appellant on this issue and set aside the redemption fine. 13. The reliance 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....
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....SA during the period 2008-09 out of which we have received back 129 MT (approx., from M/s. Merck Sharp & Dohme, U.K. against the above said Bills of Entries. I say that M/s. Merck Sharp & Dohme, U.K. had returned the goods after 7 months because of recession and that the said goods supplied by us were no longer required and could not be sold by them in UK. Therefore they offered us to take it back. Since during the June 09 onwards because of recession and world market price of acetonitrile were very low we had offered them a price of USD 2 per kg. packed in ISO tanks and said price is for the purpose of customs and that the final price will be decided after sale of the goods in Indian market. On your question whether the exported goods of acetonitrile has been manufactured by Imperial Chemical Corporation only and how CO certified at time of export I say that we had exported 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....
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....ut we had received the goods back from the buyer in a refilled ISO tanks so it is not sure whether they had mixed the goods with receipts from some other parties to them. However on your question regarding the transaction value for imports to be taken at par with the exports value, I say that no comments to offer on this and I had already detailed our position in afore said statement." 5.6 From the said statement and the findings recorded in the impugned order it is quite evident that: • Appellants themselves are not in position to certify that the goods imported by them were the same goods as exported by them or were mixed of the goods exported and other goods. • The goods imported were not in the same packing in which they had been exported by them. • The case of the appellant is not of the return of the goods by the foreign buyer on account of rejection but is the case of purchase 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....
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....good measure of like value, being the value of the very same goods. .......... • Appellants have themselves admitted to the fact that the normal international price/ contemporary import are in range of US4 3 to US$ 5. • The relied upon document at Sl No 15, annexed with the Show Cause Notice dated 24.12.2010, "Computer printout of imports during the period Jan'09 to Dec'09" gives the value of contemporaneous imports made of the same goods during the period from January 2009 to December 2009. As per this document the value of contemporaneous imports come in the range of US$ 3 to 6 per kg. Commissioner has in para 4.4 of his order dealt with the issue in relation to valuation of goods and has observed as follows: "4.4 S/Shri Dilip Parmar and Sanjay Parmar, Directors of SCPL have categorically admitted that the goods were exported by them earlier that the value declare was not final, that the normal value was in the range of US$ 3 to 6 per kg. The goods 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) w....
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....A) of Section 14 which opens with the expression "subject to the provisions of sub-Section (1) of Section 14." Therefore, the provisions of sub-Section (1) of Section 14 would prevail when the transaction value required to be determined under Rule 4 does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. There cannot be any dispute with regard to said interpretation that it is the provision which will always prevail. In other words the deemed value contemplated under Section 14(1) would prevail when the price declared does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. Under Rule 5, it is inter alia provided that the value of imported goods shall be the transaction value of identical goods sold for export to India and imported on or about the same time, good being valued subject to provisions of Rule 3. It is 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 ....
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....sed manner under absolute secrecy. They are white-collar crimes upsetting the economy of the country. Detection and confiscation of the smuggled goods are aimed to check the escapement and avoidance of customs duty and to prevent perpetration thereof. In an appropriate case when the authority thought it expedient to have the contraveners prosecuted under Section 135 etc., separate procedure of filing a complaint has been provided under the Act. By necessary implication, resort to the investigation under Chapter XII of the Code stands excluded unless during the course of the same transaction, the offences punishable under the IPC, like Section 120B etc., are involved. Generally, the evidence in support of the violation of the provisions of the Act consists in the statement given or recorded under Section 108, the recovery panchnama (mediator's report) and the oral evidence of the witnesses in proof of recovery and in connection therewith. This Court, therefore, in evaluating the evidence for proof of 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 Lt....
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....does not appear any submissions advanced regarding the issue of interest. The stray reference to interest has come in the judgment of the Tribunal unsupported by any reasons except that it has treated the interest chargeable u/s. 11AB at par with the penalty imposable u/s. 11AC. We have sufficiently distinguished the nature of liability of interest u/s. 11AB and penalty u/s. 11AC in the discussion hereinabove. The first one is civil liability whereas second is penal, if not criminal, liability. This is because u/s. 11AC, existence of mens rea is a must, whereas u/s. 11AB, it may be innocent evasion or omission to pay the duty. The judgment of the Supreme Court is brief and it is not possible to judge whether issue regarding interest was also agitated by the department before the Hon'ble Apex Court. Otherwise also, we have already pointed out that this is a judgment, which can safely be presumed to be regarding the duty payable for a period prior to insertion of amendments by Act No. 14/2001 with effect from 11-52001, which have clarified the distinction between Sections 11AB and 11AC by virtue of sub-section (2B) and Explanations below the same. Second explanation below sub-section....
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.... payment under sub-section (2B) shall not serve any notice under sub-section (1) in respect of duty so paid." We are afraid, the proceedings starting with the show cause notice u/s. 11A(1) are prohibited so far as duty paid. It does not make any reference, much less prohibits issuance of show cause notice for the purpose of according an opportunity to the assessee to show cause as to why interest may not be charged or penalty may not be imposed. The department would be justified in issuing show cause notice pertaining to duty as well if the duty as ascertained by the assessee himself and paid is less than duty as prima facie ascertained by the officer of Central Excise. In any case, we are unable to agree with the submission by learned Counsel Shri Kolte that on payment of short duty as under sub-section (2B), before issuance of show cause notice, no interest u/s. 11AB can be charged, by virtue of portion of Section 11AB (2B) reproduced hereinabove." 5.8 Penalties: Commissioner has vide the impugned order imposed penalties as detailed in table below on the Appellants. Appellant Penalty Under Section 112 (a) 112(b) 114A 114AA Total 1 - - ....
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....ded in the show cause notices. Section 114A refers to cases where "the person who is liable to pay the duty or interest, as the case may be, as determined ............" It appears that Section 114A deals with penalty on the person who is liable to pay duty or the person who is liable to pay interest. 21.3 We find that the show cause notices specifically indicated only amounts of duty proposed to be demanded but did not (and could not) indicate the quantum of interest proposed to be demanded. Apparently, the duty demand itself was to be determined subject to the outer limit of amounts mentioned in the show cause notices. The interest payable depends not only on the duty so determined but also the actual date of payment of the duty so determined. Only then, the actual interest payable will be ascertainable. Obviously, in the present cases, the Commissioner at the time of adjudication of the case could not have determined the actual amounts of interest to be included in penalties under Section 114A. Further Section 114A envisages penalty "on the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of Section 28". The Commis....
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....n the said decision reference was made to the decision in Union of India and Others v. Dharamendra Textile Processors and Others (supra) but the facts remain that in the said decision, particularly in paragraph 34, this Court held that the decision in Dharamendra Textile Processors's case must, therefore, be understood to mean that though the application of Section 11-AC would depend upon the existence or otherwise of the conditions expressly stated in the section, but once the section is applicable in a case, the Authority concerned would have no discretion- in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. Here is a case where Rule 96-ZQ is directly applicable and, therefore, the three-Judges Bench squarely covers this case." B. Appellant 2 and Appellant 3 On Appellant 2 and 3 identical penalties have been imposed under Section 114AA and Section 112 (a) of the Customs Act, 1962. Commissioner has while imposing penalties under the said section, observed in his order as follows: "4.11 Next let me take up the penalty provisions invoked against the noticees in the SCN. I find that S/Shri Dilip Parma....
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....een them and the foreign supplier. Not even an iota of evidence has been produced in the entire proceedings that Directors were responsible any act of omission or commission making the goods liable for confiscation. Order of Commissioner only makes general observations and proceeds to invoke the provisions of Section 112(a) against both the Directors. In our view such an approach is not contemplated by the Section 112 (a). Also in case of Rajhoo Barot [2017 (348) ELT 562 (T-Mum)], bench held as follows: "6.5 As regards the penalties imposed under Section 114A equal to the duty sought to be evaded, this is quite harsh considering the fact that the goods were used for construction of roads even though by others and not by the appellant. In the facts and circumstances of the case, therefore, penalty under Section 112 would suffice. Accordingly, we impose a penalty of Rs. 58 lakhs on the appellant M/s. AIL under the provisions of Section 112(a) of the Customs Act, 1962, instead of the mandatory penalty under Section 114A equal to the duty. Inasmuch as the appellant-importer has been imposed with a penalty, we are of the considered view that penalty on the Director is not warra....
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....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 reading of the above Section 114AA, it is observed that if the person knowingly makes the false declaration or signs any such document then only he will be liable to penalty under Section 114AA. In the present case, there is no case that the Directory of company has done any act which specified under Section 114AA. Even the enhancement of value was done on the basis of contemporaneous import, it cannot be said that the Director has done anything to mis-declare the value. Moreover, as discussed above, since there is no case of short payment or non-payment of Customs duty, the show cause notice itself was not warranted. Consequently, neither the penalty on the appellant company nor on the Director was imposable." Hon'ble Andhra Pradesh High Court has in case of Jai Balaji Industries [2018 (361) ELT 429 (AP)] held as follows: "6.In the aforementioned admitted facts of the case and provision of law, we are of the opi....
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....ing Regulation, 2004 in terms of the License granted to him. Without imputing the knowledge or reason to believe that the goods in respect of which he has undertaken the custom clearance process were liable for confiscation, penalties imposed on him under Section 112(b) cannot be justified. Tribunal has in case of Buhariwala Logistics [2015 (336) ELT 170 (T-Del)] held as follows: "Thereafter the penalty on the appellant has been dropped but the penalty on Shri G.S. Prince was imposed. Further we find that in the case of CC v. Vaz Forwarding Ltd. (supra), wherein the penalty was dropped on the CHA in absence of evidence of the knowledge of the CHA. Further, in the case of S.Y Ranade (supra), it was held that there is no evidence to prove the involvement of the CHA and an employee has suo motu acted for his personal greed and beyond the scope of his duty, therefore the employer, i.e., CHA cannot be penalised. In this case also, it is not in the knowledge of the appellant that Shri G.S. Prince is involved in illegal importer and Shri G.S. Prince acted in his personal capacity for monetary gains. We also find that in subsequent proceedings Shri G.S. Prince no penalty has been ....