TaxTMI 
TaxTMI 
2020 (2) TMI 644
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....herein, is engaged in the manufacture of Aluminium Alloy Ingots, which is their Final Product. The Aluminium scrap required in the manufacture of the Final products was imported by M/s AMA from various suppliers thereof based in Europe, Middle East and U.S.A. Mr Vipul Agarwal and Mr Samir Agarwal were the partners of M/s AMA and are co-appellants in the present case on whom penalty has been imposed. 4. During the course of their business M/s AMA imported various kinds of Aluminium scrap such as Tense, Trump, Twist, Twitch, Taint, Tense, Tread, Throb, Tassel, Testy etc at the Ports of Nhava Sheva, Kandla and ICD Tughlaqabad. 5. Investigation was initiated by the officers of Directorate of Revenue Intelligence ("DRI") against various firms including M/s AMA based on information that they are indulging in undervaluation of Aluminium scrap. The said investigation led to search being conducted by the officers of DRI at the premises of M/s AMA and other importers of Aluminium scrap. Statements of partners of M/s AMA, their high seas sellers, their Customs house agent and other importers of Aluminium scrap were recorded. The investigation culminated into issuance of Show cause notic....
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....s Act, 1962; - Interest should not be recovered on the said differential Customs duty under section 28AB of the Customs Act, 1962; - Penalty should not be imposed separately under Section 112 and 114A of the Customs Act, 1962; ICD Tughlakabad - The differential Customs duty amounting to Rs. 16,59,309/- (Rupees Sixteen Lacs Fifty Nine Thousand Three Hundred and Nine only) as detailed in the Annexure-A-3 to the notice, short paid on the said goods, should not be demanded and recovered under proviso to Section 28(1) of the Customs Act, 1962; - Interest should not be recovered on the said differential Customs duty under section 28AB of the Customs Act, 1962; - Penalty should not be imposed separately under Section 112 and 114A of the Customs Act, 1962; 7. The basis adopted for revaluation of scrap was LME price for virgin material to which discount band was applied in terms of DGOV circular supra. The SCN also proposed the confiscation of seized goods and in respect of goods which could not be seized, it proposed to impose redemption fine. Penalty under Section 114A/112 of the Customs Act, 1962 was proposed upon M/s AMA and under Secti....
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....of LME prices. He submitted that the decision in the case of Pushpak Metal Corporation has been accepted by the Central Board of Excise and Customs. In view thereof, he submitted that considering the ratio of aforesaid cases the present demand is not sustainable, as the import price in the present case was comparable to the price of goods in the aforesaid case and the evidence for enhancing the value was also same i.e. DGOV circular. • It was submitted that the import price of goods in the present case is comparable to the import price in the case of M/s Sunland Metal Recycling Industries and M/s Baheti Metals & Alloys, wherein the Department had raised demand based on the same DGOV circular. During the course of hearing the counsel submitted a comparison sheet showing the price of goods in the present case and the price of goods in the case of M/s Sunland Metal Recycling Industries and M/s Baheti Metals & Alloys along with the annexure to SCN issued to M/s Sunland Metal Recycling Industries and M/s Baheti Metals & Alloys. Based on the said comparison chart it was demonstrated that the goods in the present case were valued at a higher price or at par with the goods imp....
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....ntext with the retraction. However, no such effort was made by the Department. • He further submitted that no parallel invoices were recovered in any search operations and enquiry was not conducted on alleged remittance. It is settled law that when a statement is retracted by the witness the adjudicating authority ought to examine such witness before reliance is placed on such statement in terms of Section 138 B of the Customs Act, 1962. In the aforesaid circumstances the adjudicating authority ought to have examined the co-appellants before considering their statements as relevant as required under Section 138 B of the Customs Act, 1962 in the course of adjudication, however the same was not done by the adjudicating authority. In such a situation, statements of co-appellants which were retracted cannot be accepted as evidence. Reliance was placed on the following decisions to support the aforesaid contention: - Agarwal Round Rolling Mills Ltd v/s Commissioner 2015 (317) ELT 145 - Tele Brands (India) Pvt Ltd v/s Commissioner of Customs 2016 (336) ELT 97 • In any event, the statements of co-appellants were contradictory to documentary evid....
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....C 2008 (227) ELT 75 • As far as reliance placed on Brussels Report for roping the charge of undervaluation it was submitted that a) the department through the First Secretary (Trade), Embassy of India, Brussels has obtained a report of the Belgium Customs Authorities along with its enclosures. The enclosure contains a proforma invoice dated 15.04.2003 issued by M/s. Huron Valley Europe NV on M/s. Ni-Met, New York and the document is in Dutch. It is a document of a sales transaction of a European Company selling goods to an American Company in which M/s Agarwal Metals & Alloys is not involved. The same goods have been consigned to M/s Agarwal Metals & Alloys as a separate independent business transaction. In any case the supplier M/s. Ni-met has issued a specific letter stating that the goods have been sold at a much lower price than the price that it was purchased. The adjudicating authority failed to appreciate that the proforma invoice dated 15.04.2003 is unsigned and un-stamped by the supplier. As is clear from the said proforma invoice, the same does not bear any signature of the maker nor a stamp of M/s. Huron Valley. The said report says that M/s. Huron Valley ha....
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....n respect of AY 2007-08 and even Commissioner of Income Tax (Appeals) in respect of AY 2004-05 and AY 2005-06 have not found any wrong-doing during the relevant years in the case of the Appellant. The said orders were placed before us during the hearing and it was submitted that the order was 2007-08 has attained finality. • He submitted that it is settled law that when the statement of partner is not conclusive and there is no evidence of payment of money which is over and above the invoice value, then the transaction value cannot be rejected on the basis of the statement of such partner. Reliance is placed on the decision of Hon'ble Tribunal in the case of Surat Melton Pvt Ltd v/s Commissioner of Customs (Import), Nhava Sheva to support the aforesaid contention. • The subject SCN was issued demanding duty in respect of a total of 385 Bills of Entry. Out of the said 385 Bills of Entry, in respect of 68 Bills of Entry, the assessment is provisional. He submitted a chart depicting the 68 Provisional Bills of Entry, out of 385 Bills of Entry. Out of the said 68 Bills of Entry, in case of 50 Bills of Entry (out of which 48 are common with the impugned SCN), a....
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....04 to 2006-2007 (upto May, 2006), hence, the same is not valid. • Penalty cannot be imposed upon the Partners i.e. Mr Vipul Agarwal and Mr Samir Agarwal as the duty demand itself is not sustainable. 10. Shri T.G. Rathod, Learned Joint Commissioner, authorised representative appearing for the revenue reiterates the findings of the Impugned order and submits that the valuation of imported goods resorted by taking LME price less discount band is correct. 11. Heard both sides and perused the case records. We note from the SCN and the impugned order that the demand in the present case has been confirmed under Rule 4 of the Customs Valuation Rules, 1988 by applying price band to LME prices as per Alert circular No. 14/2005 dated 16.12.2005 issued by the Director General of Valuation. Apart from the above, the demand has been confirmed by relying upon the statements of co-appellants viz, the partners of AMA, indenting agents, etc., 3 insurance policies and Brussel Report in relation to one import consignment. After going through the findings arrived at in the impugned order and considering the comparison chart showing comparison of prices of goods imported by the Appell....
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....' and ‗F' of the show cause notice, the demands have been made under Rule 8 of the Customs Valuation Rules, 1988 by applying price bands to LME prices as per Alert Circular No. 14/2005 dt. 16.12.2005 issued by the Director General of Valuation. The show cause notice has relied upon the statements of the Partners of M/s SMRI and indentors to allege undervaluation. The show cause notice has proposed demand by rejecting declared value. Even though the show cause notice states that wherever the contemporaneous values were found the same has been applied by re-determining the value under Rule 6 and in rest of the cases Rule 8 has been applied, but we find that all demands have been made by applying LME prices and nowhere such contemporaneous values has been cited in show cause notice. The demands have thus been made by adopting the LME prices of Virgin metal and applying discounts inspite of the fact that the Apepllant had produced details of contemporaneous imports. The adjudicating authority if was to redetermine the value, he should have sequentially applied Rule 5 and 6 of the Customs Valuation Rules i.e Transaction value of similar goods or determination under rule 6 by deter....
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....respect of imports made through Kandla and Mudra Port included in Annexure - ‗E' to SCN the assessments were provisional but were finalized vide Orders-in - Original dt. 21.02.2011 and 03.07.2012 accepting the transaction value. It was also held that value cannot be re-determined under Rule 8 on the basis of LME minus discount band. Such orders stands accepted by the revenue. In such case we do not find any reason to reject the declared value. We also find that the issue of determining the value by adopting the price of virgin metal and applying discount bands has been rejected in catena of judgments. In case of Bharathi Rubber Lining & Allied Services P. Ltd. 2013 (287) ELT 124, the tribunal held as under: 5.4 The lower appellate authority has rejected the reliance place on the DGOV Circular on the ground that in terms of the Hon'ble Apex Court judgment in the case of Varsha Plastics (cited supra), the assessment under the provisions of Customs Valuation Rules cannot be given a go-by and the Valuation Rules will prevail over the departmental instructions on the subject matter. The Hon'ble Apex Court in the said case held as follows : "The valuation of the i....
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.... as under : "2. The respondent assesee filed two Bills of Entry dated 16th September, 1988 and 17th December, 1998 for clearance of Brass Scrap and Copper Scrap as per ISRI grade "Honey" and Birth/Cliff" respectively. The Bills of Entry were assessed at the declared invoice value, viz., CIF US $ 1100 and US $ 1300 PMT respectively. After inspection, the goods were cleared on payment of customs duty assessed. 3. Subsequently, on the basis of the information received from the London Metal Exchange, (for short, "the LME") to the effect that the price of the said metals in the LME as on the date of import was more than the price declared by the respondent, an additional duty amounting to Rs. 90,248/- and 1,94,035/- respectively was demanded from the assessee on the said two Bills of Entry. The additional demand having been confirmed by the Deputy Commissioner of Customs, the assessee preferred appeal to the Commissioner (Appeals) but without any success. 4. Aggrieved, the assessee carried the matter in further appeal to the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi, (for short "the Tribunal") as it then existed. By the impugned order, t....
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.... for prime metal are only indicative and cannot be the sole basis for enhancing the value of copper scrap, particularly when the goods imported are copper scrap and not copper. Further there is no basis for holding that refining charges for refining scrap and conversion of the same to copper bar/rod will be US$ 150 per MT. As per Rule 4(2)(b) of the Valuation Rules transaction value of the imported goods shall be accepted provided that (a)- - - - (b) the sale does not involve any abnormal discount or reduction from the ordinary competitive price. It is clause (b) which is highlighted by the Commissioner (Appeals). However, there is no material on record to establish that the suppliers offered any abnormal discount or reduction from the ordinary competitive price for copper scraps which were imported by the appellants. Further, it is brought to our notice that the price declared is only marginally lower than the price as loaded. 3. In the light of the Tribunal's decision in the case of Drunkey Exports (P) Ltd. v. Commissioner of Customs (Port), Kolkata-I- 2004 (165) E.L.T. 417 (Tri.- Kolkata) and Commissioner of Customs, Kandla v. Meera Impex - 2004 (167) E.L.T. 446 (Tri.-M....
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.... mentioned in the Metal Bulletin. From the above communication it is absolutely clear that even the revenue authorities did not consider the valuation of Aluminium scrap to be made as per Alert Circular or based upon LME Prices. Even the CBEC Board while accepting the decision of the Pushpak Aluminium casevide letter F. No. 387/w/9/2013- JC dt. 25th June 2013 F No. 387/W/9/2013-JC dated 25 June, 2013 has clarified as under:- "Recourse to LME prices can't be taken to substantiate the charge of undervaluation when contemporaneous import of almost same prices was available during the material time. It is a settled law that transaction value can't be rejected unless there is contemporaneous evidence to reject the invoice value as being held by the Apex Court in case laws like Commissioner of Customs, New Delhi vs. M/s. Prabhu Dayal Prem Chand reported in 2010 (253) ELT 353 (S.C.), Commissioner of Customs, Kolkata vs. M/s. South India Television (P) Ltd. reported in 2007 (214) ELT 3 (S.C.), Commissioner of Customs, Mumbai vs. H.D. Orgochem Ltd. reported in 2008 (226) ELT 9 (S.C.). The case laws relied upon by the Department will not help our cause bec....
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....Appellant came into possession of cash alleged to be differential amount towards scrap import neither there is any evidence of any cash being handed over to any person representing suppliers. In absence of same the allegation of undervaluation cannot be supported. 10. The Adjudicating authority in order to justify the LME based valuation has relied upon the statement of Shri Sushil Agarwal, Partner of M/s SMRI and indentors. The Appellant has objected to reliance on such statements that the statement dt. 29.05.2006 and 23.04.2007 of Shri Sushil Agarwal are contradictory as different pricing method was stated by him which are not applicable in the facts of the case. That the cross examination of Shri Sushil Agarwal was also not allowed. Further that even though the cross examination of indentors were allowed but they did not appear for the cross examination. The Appellant has pleaded that in such circumstances, the statement of Shri Sushil Agarwal and indentors cannot be relied upon. We find that the adjudicating authority ought to have allowed cross examination of Shri Sushil Agarwal as the same was necessarily required in view of his statements dated 29.5.2006 and 23.04.2....
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....signments imported from PWT Australia. The Appellant had sought cross examination of Indentors. The Appellant has also sought cross-examination of the officials and panchas, who were present during drawal of Panchnama on 26.04.2006 for examination of seized laptop of Shri TarunJhingon on the ground that it was not possible to complete the proceedings in 2 hours, as stated in the show cause notice. The cross examination of the officials, who had recorded the statement of Shri Sushil Agarwal on 9.4.2007 was also sought since it was recorded in his statement that he had submitted in tabular form running into 120 pages the particulars of all imports made in 5 years by the Appellant, which are involved in the impugned appeal. The Appellant in their reply had contended that the cross examination of officials was sought as all the import related documents of the Appellant were lying seized with the investigating officers and there was no occasion for Shri Sushil Agarwal to compile such information in absence of any import documents. However except indentors no cross examination of any of the above persons was allowed. The cross examination of Shri Sushil Agarwal was denied by the adjudica....
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.... price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3-2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 8.In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice. 9. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal." 11. Similarly, in case of Vasudev Garg - 2013 (294) ELT 353 (Dl), it was held that it was mandatory to give cross examination. It was held that the statement against the....
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.... sought cross examination of the officers for the source and authenticity of such document and 80% formula derived by officers. They had also sought cross examination of panch witness who had witnessed such proceedings. However the same was not allowed. In absence of authenticity of such document and refusal of cross examination we find that the charges of undervaluation are not sustainable. 12. Coming to the issue raised by the Appellants that no additional duty of Customs is payable in respect of Zinc Ash, skimmings and scrap as these are not manufactured product, we observe that adjudicating authority has denied relief to Appellant on ground that they have not produced evidence to show that goods are not manufactured products. We find from the definition of various scrap imported as per ISRI and the photographs annexed to appeal papers that it clearly shows that the scrap was not arising as a result of process of manufacture. The ratio of law on such scarp being non excisable is absolutely settled by the judgments and Circulars viz. Hindalco Industries Ltd. 2015 (315) ELT 10 (Bom), Circular No. 904/24/2009 - CX dated 28.10.2009, Circular No. 1027/15/2016-CX dated 25.04.....
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....e not relevant in the instant case. 11.2 We note that in the above case, prices declared by Baheti Metal (supra) reported as Pushpak Metal (supra) has been accepted by the department and the same was relied upon to reject the redetermination of Value in the case of Sunland Metal (supra). The order of Pushpak Metal has been accepted by the department and the CBEC and the same goes on to show that the price declared by them has been found to be correct. Once the said price has been accepted to be true and having found that prices of the AMA, the appellant herein, are identical to the prices declared by both Sunland Metal and Baheti Metal (reported as Pushpak Metal (supra)), we have no hesitation in holding that the impugned order redetermining the value of imported scrap on the basis of DGOV circular and by overlooking the contemporaneous data is required to be set aside. In any event as held the case of Sunland Metal (supra), the value of imported Aluminium scrap could not be redetermined on the basis of the DGOV Circular as the said circular takes the price of LME as the basis which deal with prime metal and the imported goods in dispute are admittedly Aluminium scrap and not pr....
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....cannot be the sole basis to confirm the charge of undervaluation as the same is contrary to documentary evidence which is in the form of contemporaneous import price. Our views that documentary evidence will prevail over oral evidence is case of contradiction between them are based upon the judgment of Tribunal in the cases of Philip Fernandes v/s Commissioner 2002 (146) E.L.T 180, R.P Industries v/s Collector 1996 (82) E.L.T 129 and Commissioner v/s Latex Chemicals 2005 (181) E.L.T. 138 (Tri. - Del.). We also note that the allegation that the excess amount over and above the invoice price was paid through hawala transaction is equally baseless and there is no evidence of any hawala transaction to prove the said allegation. There is no evidence as to how the Appellant came into possession of cash alleged to be differential amount towards scrap import neither there is any evidence of any cash being handed over to any person representing suppliers. We respectfully follow the finding given in para 9 of the order of Sunland Metal (supra) in this regard. Even in own case of Appellant, the same issue has been examined by the Income Tax Department and no wrongdoing is noticed by the ITAT ....
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....at the beneficiaries in each case, is the supplier himself. We are of the view that supplier could have obtained a higher insurance cover for his own benefit or it could also be a clerical error on the part of the supplier's staff while applying for insurance cover. Our view is based on the fact that Appellant in all had imported scrap under 385 Bills of Entry from 2003-2006 as per the SCN and in each of the insurance certificate accompanying the other 382 different consignments imported by them, goods are covered for the values as mentioned in the invoices accompanying the same. In any event we are in agreement with the plea of the Appellant that value shown in the insurance policies, cannot be a ground to enhance value, as such value might have been shown to get a higher amount of compensation in the event of goods getting lost or destroyed. We find that apart from the insurance policy, no other independent evidence is on record to establish the fact that the goods covered under the said policies were under-valued. Hence, we are of the view that adoption of insurance value for alleging under-valuation is not proper. Our views are based upon the judgment of Tribunal in the cases o....