AI Drafter 
TaxTMI 
TaxTMI 
2020 (2) TMI 480
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....nd Mumbai. In context with import of Zinc and Aluminium scrap, the Customs department received specific information that various metal scrap importers including M/s Sunland Alloys have manipulated the actual value of the consignments in collusion with overseas suppliers and indenters inasmuch as they managed to obtain the invoices at lower value for the purpose of duty assessment and paid the differential amount to the overseas suppliers through Hawala transaction. On the basis of the intelligence received, officers of DRI visited the premises of the factory, office and residence of the partners of M/s. Sunland on 11/05/2006. Aluminium, zinc scrap and ingots totally weighing 956.236 MT were also seized. In subsequent investigation, premises of other partners Sanjay Agarwal, Sushil Agarwal and Shri Tarun Jhingon, the indenter were also searched. Statements of Shri Praveen Ashok Ranka, Sanjay Agarwal, Sushil Agarwal, partners of M/s. Sunland Alloys; Shri Tarun Jhingon, Director of Trendene India Pvt. Ltd; Shri Ehesan Hazi, Ameen Gadawala, Chairman of Bibi Group of Companies, Surat; Shri Anil Parolia of Nihon Ispat, indenters were recorded under Section 108 of the Customs Act,1962. ....
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....ase under Section 112(a) of the Customs Act, 1962. In addition to the evidence mentioned above, learned Commissioner has relied upon parameters prescribed by the Directorate General of Valuation in its Alert Circular dated 16.12.2005, holding that the actual price of the aluminium and zinc scrap is dependent upon the metal content and the prevailing LME prices minus discount band. Being aggrieved by the impugned order dated 24/01/2013, the appellants have preferred the following appeals before the Tribunal. Sl. No. Appeal No. Name of the party(s)/Shri Duty/Penalty 1 C/86782/2013 Sushil Kumar Agarwal Penalty u/s 112 (a) 2,47,00,000/- 2 C/86783/2013 Pravin A. Ranka -do- 3 C/86784/2013 Sanjiv Kumar Agarwal -do- 4 C/86785/2013 Sunland Alloys Duty Rs. 8,67,03,864/- Penalty Rs. 8,67,03,864/- and Fine Rs. 10,93,50,000/- 5 C/86846/2013 Mihir Bhatt Penalty u/s 112 (a) 1,23,50,000/- 6 C/86889/2013 Tarun Jhingon -do- 7 C/87311/2013 Ehsan A.Gadawala -do- 5. Ms. Nisha Bineesh, the learned Advocate appearing for the appellants M/s Sunland Alloy....
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....n the absence of cogent evidence or contemporary import of higher value of similar goods, is bad in law; it has been held by various courts including the Hon'ble Apex court that rejection of the declared/transaction value can only be for cogent reasons arrived at by undertaking exercise as to on what basis it could be held that paid price was not the sole consideration of transaction value; respondent have not put forth any cogent or tangible evidence against the Appellant to prove the allegation of under-valuation. In respect of submissions as above, at 5.1 to 5.4, she relies upon the following decisions of Hon'ble Supreme Court and various other Benches of the Tribunal: (i). Final Order No. A/11871-11874/2019 dated 01.10.2019 passed by CESTAT, Ahmedabad. (ii). C.C.E. & S.T., Noida Vs Sanjivani Non-Ferrous Trading Pvt Ltd., 2019 (365) E.L.T. 3 (S.C.) (iii).Vardhaman Sales Agency/Akshay Aluminium Alloys (LLP) Vs Commissioner of Customs ICD, Patpargunj, New Delhi vide Order dated 08.04.2019, by CESTAT New Delhi ( relying upon CC(Import) , Nhava Sheva Vs Bharath Rubber Lining & Allied Services Pvt Ltd. 2013(287)ELT.124 (Tri-Mumbai), CCE & ST Noida Vs....
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....x & Customs Vs Ambica Organics, 2016 (333)ELT A-67(Guj). iii) HarsingharGutka Pvt Ltd Vs Commissioner of C. Ex. Lucknow, 2008 (334) ELT 77 (Tri. Delhi). iv) Premier Instruments & Controls ltd. vs. Commissioner of C.Ex., Coimbatore, 2005 (183) ELT 65 ( Tri. Chennai). 5.7. Learned Counsel further submits that Annexure A and B of the Show Cause Notice are inadmissible; the undated email claimed by the department and referred in the impugned Order cannot be considered as an e-mail, hence cannot be admitted as evidence; further, no details of invoice, contract, quantity, port of loading etc are figuring; this piece of paper can neither be accepted nor be admitted; Annexure B, proves the case of the Appellant and disproves the allegation of Undervaluation; E-Mail dated 17.04.2006, refers to an invoice against which a Show Cause Notice was issued to M/s Sunland Alloys and the order of Lower authority was set aside by Commissioner (Appeals) vide Order-in-Appeal No.217 to 256 (GR-IV)/2010 (JNCH)/IMP-205 to 244 dated 09.09.2010 by accepting the value declared by the Appellant; no Appeal has been preferred against the same by the department and hence the Order-in-Appeal s....
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....s of the Appellant; Moreover, the very same statement of Sushil Agarwal, the Appellant in Appeal No. C/86782/2013, was relied upon in Appeal No. C/11160/2019, which was allowed by CESTAT vide Final Order No. A/11871-11874/2019 dated 01.10.2019; statements dated 29.05.2019 and 23.04.2019 of Shri Sushil Kumar Agarwal cannot be relied upon for the reason there is contradiction in statements; during the course recording his statement dated 29.05.2006, he was shown an alleged abstract of LME price of Aluminium scrap as per which the Aluminium scrap was 80% of the LME price; another statement was recorded on 23.04.2007 that the import price of Aluminium Scrap was negotiated by applying different discount bands ranging from 5% to 35% to the LME price for various grades such as Trump, Tense, Throb etc. which corresponded to the discount bands provided in the Alert Circular No.14/2005 dated 16.12.2005; discrepancy clearly shows that initially the officers were attempting to apply 80% of the LME but later realizing that DGOV was not recommending 80% of LME, they conveniently abstracted the statement of Shri Sushil Kumar Agarwal to match the discount band, as per the DGOV circular. 5.10. L....
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....the case of the department. Appearing for the Revenue, he reiterated the findings recorded in the impugned order. He specifically stated that since the department had thoroughly investigated into the matter of undervaluation, resulting in evasion of Customs duty, the impugned order passed by the adjudicating authority is sustainable and the findings recorded therein cannot be brushed aside, in absence of any convincing evidence being produced/submitted by the appellants in their defence. He submitted that the respective persons concerned have accepted the modus operandi adopted in the statements recorded under Section 108 of Customs Act, 1962. Department has corroborated the statements with cogent and irrefutable evidence. Therefore, the confiscation of seized goods, confirmation of differential duty, imposition of fine and penalty on M/s Sunland Alloys and imposition of penalties on others are justified. 8. Heard both sides and perused the records, including the written note of arguments submitted by the appellants during the course of hearing of appeals. On going through the records of the case, we find that the evidence appears to have been relied upon by the Revenue is as fo....
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....orted scrap items and that the differential price was paid to the overseas supplier through Hawala route. 8.2. Valuation of imported goods for the purpose of assessment is contained in Section 14 ibid, which mandates that the value of goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale for delivery at the time and place of importation, in the course of international trade. The said statutory provision also provides for consideration of the deemed value in the ordinary course of trade, where the seller and the buyer should not have any interest in the business of each other and the price should be the sole consideration for the sale or offer for sale. In the case in hand, the appellant M/s Sunland Alloys had entered into contract with the overseas suppliers for importation of the scrap items in question. Pursuant to the contractual norms, the goods were supplied by the overseas entities under the cover of commercial invoices, bearing the reference of description of goods, quantity, price etc. On the basis of the import documents, the appellant had filed the Bills of Entry before the jurisdictional Customs Authorities for duty....
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....Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value." Therefore, we find that the department has not made any valid case for rejection of the declared transaction value. 9. Moreover, we find that the learned counsel for the appellants has challenged the validity of the printouts taken from the Laptop of Shri Jhingon on the point that mandatory provisions and conditions of Section 138C of Customs Act, 1....
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....nder-valued and payments of differential amount were made through Hawala route. The said e-mails relied upon by the department are inadmissible for consideration as evidence inasmuch as the same were seized by the officers of DRI from the laptop belonging to Shri Tarun Zingon and the mandatory requirements provided under Section 138C ibid have not been complied with. In this perspective, the law is well settled in the case of Harsinghar Gutka Pvt. Ltd (supra) that computer print- outs based on reconstructed or retrieved data is not admissible as evidence. The relevant paragraph in the said decision of Tribunal is quoted below: "10. The short point is that a computer printout would be admissible in evidence, only if the said print out was produced by the computer during the period over which it was used regularly to store or process information. In other words, the important point is that the print out should have been produced when the computer was in regular operation. In the present case, it is not in dispute that the print out or the R-documents is a reconstructed data and obviously it was not produced during the period over which the computer was used regularlyto store....
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....ers and that M/s. Sunland Alloys have also shown procurement of aluminium scrap from the same supplier. Second report dated 17/04/2007, mentions the prices declared in Greece for a quantity of 19.22 MT, 22.71 MT and 22.56 MT, by M/s. Ala International Trading, Dubai and European Metal Re-cycling Ltd., Warrington and the consignments were subsequently imported by M/s. Sunland Alloys. We find that in both the cases, there is no direct reference in the reports to the appellants. Moreover, both the reports suffer from the infirmity that the reports are not signed by the respective Customs authorities either at U.K or Greece. Thus, the reports may at best throw some light on the value of the aluminium scrap traded but cannot be held to be a conclusive proof to show that the appellants have undervalued their imports. Moreover, the above cited evidences pertain to 7 to 8 consignments (as against 630 consignments of aluminium scrap and 6 consignments of zinc scrap alleged to have been imported by M/s. Sunland Alloys). As mentioned above, the documents would certainly throw some light on the commodity prices traded internationally but cannot be treated as conclusive proof as against the app....
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.... declaration have no relevance as the same were no authenticated by the new Zealand and Spanish Customs. She further submits that the allegations, based on High Commission report dated 17.4.2007, made in paragraph 32 of SCN is not tenable; it is alleged that 3 consignments were imported by firm B.E. no.446022 dated 24.08.2005; as per the report this consignment was purchased by Ala international from SID Metal, Greece at USD 1240 PMT as per invoice dated 10.06.2005; this price is not relevant as the goods were purchased by SA from Ala vide invoice dated 5.7.2005 @USD1090 PMT which was the price for export to India. The value has been re-determined @USD1240 on the basis of SID Invoice; as per B/E scrap was of grade TALK; as per the LME minus discount the price should be LME price minus 6% discount; on this basis price should have been more or less USD 1557.9 PMT as determined at sr.no.11 of Annexure E in respect of Talk; it proves that the prices in the international market are not based on LME minus discount as alleged in SCN; further two consignments are alleged to have been cleared under B/E 814268 dated 231.06.2006; the B/Es were assessed on the value on the basis of LME minus d....
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....rcular only requires the department staff to check possible under valuation, after ensuring all relevant specifications. However, the said circular cannot have over riding effect on the valuation provisions contained in the customs statute and as such, the transaction/declared value cannot be rejected merely on the basis of specifications provided in the DGOV Circular dated 16.12.2005. By placing reliance on the judgment of Hon'ble Apex Court in the case of South India Television and CBEC letter F. No. 387/W/9/2013- JC dated 25.06.2013, this Tribunal in the case of C.C. (Import), Nhava Sheva Vs. Bharathi Rubber Lining & Allied Services P. Ltd. - 2013 (287) E.L.T. 124 (Tri.- Mumbai) has held as under:- "5.6 In view of the above, we do not find any infirmity in the observation of the Commissioner (Appeals) that the DGOV Circular cannot override the provisions of Valuation Rules. The Hon'ble Apex Court in the case of Commissioner of Customs, Calcutta v. South India Television - 2007 (214) E.L.T. 3 (S.C.) had held that casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value. The invoice price is not sacrosanct but before ....
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.... 4 Tense 70% 5 Throb 70% 6 Taldon 65% 7 Telic 65% 8 Talk 90% 9 Talon 85% 10 Tread 75% 11 Twang 65% 12 Tassel 75 to 80% 13 Testy 65% 14 Taste 60% 11.4. We find that the learned counsel for the appellants has produced a copy of the letter dated 17/10/2008 addressed to Shri Raghav Daga of All India Non-ferrous Metal Industries Association wherein it was categorically replied that Further, many industry players themselves use different systems for pricing scrap around the world. These include bilateral spot price discussions, term (contract pricing), survey based pricing and long term fixed prices. The LME price is well established in the industries it serves for pricing physical contracts and for price risk management purposes around the world. It should also be noted that the physical market itself will then establish the discount or premium to LME price for grade and location. Any such discount or premium pricing to the LME Benchmark reference price used by industry is therefore not published on or by the LME at all. Furthermore, in some cases, transaction do take pla....
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....p. Therefore, we find that the price declared by the appellants cannot be rejected on the basis of or with reference to LME prices. We find that Tribunal in the case of Vardhaman Sales Agency vide Order dated 08/04/2019 relying upon the decision in the case of Bharati Rubber Lining and Allied Services Pvt. Ltd. (supra) and CBEC Circular F.No. 387/W/9/2013-JC dated 25/06/2015 held that the LME price cannot be the basis to enhance the declared value. Further, we find that the investigation has made a sweeping generalization on the basis of stray third party evidences and have reworked the prices declared by the appellants with reference to LME prices. In view of the above discussion, we find that such a generalization cannot be held to be a piece of evidence. Moreover, other than vague statements to the effect that the differential amounts were sent to the foreign suppliers, no piece of evidence has been brought in that the appellants have paid money to the foreign suppliers over and above the invoiced price. 12. Coming to the statements of persons we find that none of the statements of the so-called indenters have directly implicated the appellants. We find that only inference ha....
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.... contradictions in the statements recorded. She submits that the statements cannot be relied upon for the contradictions; during the course recording his statement dated 29.05.2006, he was shown an alleged abstract of LME price of Aluminium scrap as per which the Aluminium scrap was 80% of the LME price; another statement was recorded on 23.04.2007 that the import price of Aluminium Scrap was negotiated by applying different discount bands ranging from 5% to 35% to the LME price for various grades such as Trump, Tense, Throb etc. which corresponded to the discount bands provided in the Alert Circular No.14/2005 dated 16.12.2005; discrepancy clearly shows that initially the officers were attempting to apply 80% of the LME but later realizing that DGOV was not recommending 80% of LME, they conveniently abstracted the statement of Shri Sushil Kumar Agarwal to match the discount band, as per the DGPV circular. In view of the above, we find that the statements of various persons as discussed and relied upon in the SCN and the impugned order do not help the case of the department as they are not supported by evidences. On the other hand, department attempts to corroborate, the suspicion ....