TaxTMI 
TaxTMI 
TaxTMI 
2020 (3) TMI 925
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....dhering to supply schedule, quality control etc. and placed orders. Officers of DRI, Ahmedabad visited and searched the office premises of the Appellants on 09.01.2012and seized certain files and copied certain data in two DVDs. DRI issued 3 separate Show Cause Notices, in respect of imports at different ports. It was alleged that the appellants misdeclared country of origin; GSEC (appellant) & Gulf Petrochem were related parties; appellants misdeclared value, to evade payment of Customs Duty and that Shri Anand Mathur, Shri Nikharv Hashmukh Shah, Shri S K Gowri Shankar and Shri Sachin Saxena abetted with GSEC Ltd. to undervalue the said goods. The Commissioner, vide Order No.26/2014dated 30.07.2014/22.08.2014, confirmed the demand of customs duty of Rs. 2, 17, 95,982 along with interest; imposed a penalty of Rs. 44, 28,101+Rs. 25, 00,000on the appellants; imposed a penalty of Rs. 12 Lakhs on Shri Anand Mathur and Rs. 14 Lakhs on Shri Nikharav Shah. Hence these Appeals No C/23589, 23591 and 23620/2014. 2. Ms. Nisha Bineesh, Advocate, appearing on behalf of the appellants, submits that the appellants, vide letter dated 21.06.2013, requested DRI to provide copies of DVDs mentioned ....
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....he following rulings as to requisites to be followed in drawing panchnama. (i). Kuber Tobacco Products Ltd Vs Commissioner of C. Ex. Delhi, (2013 (290) ELT 545 (Tri-Del) (ii). M.P. Jain vs. CC, 1988 (37) ELT 577 (Tribunal) (iii). Laxmi Prasad Vs CE, 2009 (248) ELT 489 (Tri - Kolkata) (iv). Plastic DuniyaVs CCE, 2005 (190) ELT 381 (Tri- Del) (v). GunwantraiHarivallabha Jani, Ranvir Bidi Works Vs CCE, 1987 (29) ELT 151 (Tri) 4. Learned counsel further submits that authenticity of emails copied into DVD is in doubt due to non-presence of Panch witnesses, denial of opportunity to cross-examine the witnesses (Panch), and the fact that statement of Shri Rakesh Shah was not recoded; it is a settled law that an electronic record shall not be admitted in evidence unless the requirements under Section 65B of Indian Evidence Act, 1872(also contained in Section 138C of the Customs Act, 1962) are satisfied; without accompaniment of certificate in terms of Section 65B/138C, the same cannot be admitted in evidence; thus, the entire case based on the purported e-mails fails; this view was expressed by Hon'ble Supreme Court in the case of Anvar P.V.Vs P.K Basheer, 2017 (352) ELT 41....
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.... on the following cases. (i). Surya Roshni Ltd Vs CC 2002 (147) ELT 84 (ii). Shri Ganesh International Vs CCE 2004 (174) ELT 171 (iii). Porcelain Crafts & components Exim (P) Ltd Vs CC, 2001 (138) ELT 471 (iv). CC Vs Essar Projects Ltd 2004 (165) EST 537 (v). Ganapati International vs. CC, 2001 (130) ELT 370 (vi). Makali Metals Pvt. Ltd. vs. CC, 2001 (138) ELT 607 Where there is no change in duty payable, the wrong mentioning of country of origin would not amount to misdeclaration as affirmed in the following cases. (i). BEL India Trade Pvt Ltd Vs CC New Delhi 2007 (216) ELT 441 (Tri-Del). (ii). Saboo George Vs CC Kandla 2008 (230) ELT 535 (Tri. - Del.) (iii). CC (EP) Mumbai-I Vs Paras Industries 2010 (257) ELT 481 (Bom) 6. Learned counsel submits that appellant GSEC do not fall under any of the clauses as defined under Rule 2(2) to satisfy the definition of "Related person" in respect of transactions with Gulf Petrochem and Prime Tankers; Commissioner, on the one hand (Paras 67.2, 67.4, 67.5, 67.6 and 67.7), held that in the absence of any documents to show that either capital or profit and loss was shared, it is not possible to rely upon on the stat....
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....ls), Ahmedabad 8. Counsel submits that simple replacement of transaction value with the highest price of comparable goods is not permitted by Section 14 of the Customs Act 1962 or the said Rules; in the instant case, there is no specific evidence on record which brings out that transaction value between GSEC and foreign suppliers has been influenced by non-commercial consideration, and that invoice price does not reflect or reveal the real transaction value; Tribunal, in the case of Oswal Fats & Oil Vs CC 2007 (220) ELT 795 (T), held that fixed price for goods would not remain same for the imported goods when the price fluctuates in reality, and the price in a particular transaction can be rejected only when there is information or evidence that transaction was not a commercial transaction; value in the present case must be determined under Rule 3(1) because the conditions of Rule 3(1) are satisfied and none of the conditions/circumstances mentioned in Rule 3(3) are applicable; prices declared, for contemporaneous imports including the latest clearances occurred after the present investigation, are comparable to the prices declared by appellants; value declared by appellants is c....
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....ow the payment was made to Gulf Petrochem. 10. Learned counsel also submits that in respect of Bill of Entry No. 100 dated 24.10.2011 and emails pertaining to Bill of Entry No.100, appellants, in their reply submitted that emails copied into DVDs cannot be relied upon as evidence; finding was made, based on e-mail dated 26.10.2011 exchanged between Shri Gowri Shanker and Shri Sachin Saxena; the said e-mail cannot be relied upon; appellants provided official email ID to all employees and strictly instructed not to deal with any of the suppliers or buyers with their personal e-mail Id; respective persons were only shown the emails but were not asked to comment upon; in the present case, Shri Gowri Shanker marked the purported e-mail to Sachin Saxena on his personal e-mail Id; appellants have no liability on Email exchanged in personal capacity; E-mail dated 26.10.2011 exchanged between Shri Gowri Shanker and Shri Sachin Saxena is not related to GSEC Ltd; Sachin Saxena was handling domestic market and never given charge of financial transactions; appellants came to know about this e-mail for the first time when it was shown to Shri Rutul Shah during recording his statement on 13.02.....
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....goods is not needed; in case of C.C. vs. Initiating Explosives (I) Ltd., 2008 (224) ELT 343, the Supreme Court held that the burden to prove undervaluation lies squarely on the Revenue and the same was not discharged; therefore, there is no case made out for redetermination of declared value; Tribunal in case of Truwoods Pvt Ltd Vs Commissioner of Cus, Vishakhapatnam, 2006 (204) ELT 288 held that where there is evidence of contemporaneous imports, the transaction value cannot be determined on any other basis; as there is complete absence of evidence of contemporaneous imports at higher prices and, therefore, the transaction value needs to be accepted. 13. Shri Gopa Kumar, Joint Commissioner, Authorised Representative, appearing for the department, reiterates the findings of OIO and submits that the Order-in-Original discussed threadbare all the aspects and arrived at logical conclusions. With specific reference to the points raised by counsel for the appellants, he submitted written submission. 14. On the legality of the Panchnama, he submits that due procedures have been followed; the investigating officers along with the panchas visited the premises and Shri Rakesh Shah, the ....
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....lectronic evidence under the provisions of Sec 65B of the evidence Act and same is acceptable under Sec 138C of the Customs Act, 1962; Hon'ble Delhi High Court upheld the same in (i). M/s. ICICI Bank Ltd Vs Vinod (ii) Kundan Singh Vs the State (2015) and (iii) M. P. Goenka Vs Commissioner of Customs. 16. Replying to the allegation of non-adherence to the principles of Natural Justice, learned AR submits that the SCN was issued in time and ample opportunities were given to the appellants to explain their position; appellants persons appended signatures to the evidences relied upon; requests for cross examination of Shri Nikharv Shah, Shri Sachin Saxena, Shri Gowri Shankar, Shri Nimesh Shah and Shri Hasmukh N. Hangu (Panch witnesses) were sought; the same was denied on logical and legal grounds as discussed in para 53.1 of the O-i-O; during personal hearing the cross examination of Sri Nikharv Shah was allowed; advocate Shri Jithendra Motwani stated that they did not want to cross examine Sri Gowri Shankar and Shri Sachin Saxena who have given very evidentiary statements. 17. Dealing with the allegation of misdeclaration of country of origin, learned AR submits that there is evid....
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....ed Customs about the discount (Para 4.2 of the O-i-O). Shri Rutul K. Shah, Deputy Manager (Accounts), of the appellant, on seeing e-mail dated 10.06.2011, admitted that an amount of Rs. 2 Crore was shown as payable to M/s. Gulf Petrochem indicated that extra money was being repatriated to the supplier M/s Gulf Petrochem (Para 4.3 of the Oi- O). Sri Anand Mathur, admitted in his statement dated 30.04.2012, that the e-mails shown as evidence were exchanged among him/other officials of his company, Shri Nikahrv Shah of M/s AEP and Shri Gowri Shankar of M/s. Gosma Trading with various officials of M/s. Gulf Petrochem / M/s. Prime Tankers. AR submits that there are strong evidences in the undervaluation adopted by the appellants; appellant's contentions that e-mails are not evidentiary, as there is no evidence of flow back of money, are in vain; appellants and the related parties have taken extra care not to leave any tangible evidence - viz. physical copies of parallel invoices etc; cases of solid misdeclaration cannot be proved with mathematical accuracy; preponderance of probability weighs heavily in favour of unearthing such cases as held in Shah Bloorr Mal versus State of Andhra Pr....
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....av Shah) and recovered certain documents there from and placed them in made up file; they also find a desktop computer installed in the chamber and switch on the same and verify data stored therein and find certain e-mails useful for their investigation and they copied these emails useful for investigation and they copied the mails in a DVD and marked the same as DVD1". Similar wordings are there to indicate the copying of emails from DVD2. In this connection, we find that Delhi Bench of the Tribunal has gone into the issue of drawl of Panchnama and seizure of documents in the case of Kuber Tobacco Products Ltd. Vs. CCE, New Delhi [2013(290) ELT 545 (Tri. Del.)]. The Tribunal has pointed out various lacunae in the Panchnama referred therein observing that the Panchnama does not describe the premises or the location in the premises with reference to the neighboring surroundings; does not describe interior of the premises; does not disclose as to who had found the documents in question and where exactly those documents were located in the said premises. Bench relying on the Apex Court's decision in Kanu Amba Vishnu Vs. State of Maharashtra 1971(1) SCC 533 states that it is well settl....
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....sed in the case referred above. Coming to the precise issue of taking out the emails from respective computers, the Panchnama does not record the vital questions relating to the start of computers and copying of the emails. We find that learned counsel has raised certain vital questions as to where was the computer; what type of a computer it was; what was the password for opening of the computer; how did the officers get the password; if they got from others, who was the other person; what was the email id; what was the password of the email id etc. We find that Panchnama does not answer these questions. We also find that statement of the responsible person i.e. Shri Rakesh Shah, Chairman and MD, was not recorded, who was available in the premises during the course of Panchnama. Under the circumstances, the contents therein of the Panchnama certainly become suspect if not liable to be thrown out at the first instance. It can be argued that the current proceedings are in respect of a case of tax evasion and not in respect of a criminal prosecution and therefore non-adherence to the established principles do not vitiate the evidentiary nature of the documents. We are afraid that suc....
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....ourt in the case of Anwar P.V. Vs. P.K. Basheer (supra). We find that apex court observes as follows: - 14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied : (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device. 15. It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to whi....
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....dervaluation and misdeclaration of the imported goods is in the form of the computer printouts taken out from the laptops and other electronic devices seized from the residential premises of Shri Nikhil Asrani, Director in respect of which the requirement of Section 138C (2) has not been satisfied. On this ground, the impugned order suffers from uncurable error and hence, is liable to be set aside. In view of the above, we find that the electronic evidence discussed relied upon in the show-cause notice were not obtained as per the procedure laid down under Section 65B of Indian Evidence Act, 1872 or Section 138C of Customs Act, 1962, as rightly submitted by the counsel for the appellants. However, this being a case of tax evasion, it would be beneficial to examine the evidence contained in the emails and to see if the Department has established the case of undervaluation by reliable evidence. 25. Coming to the allegation that the appellants and their overseas suppliers are related and therefore the transaction value declared requires to be rejected, we find that the learned Commissioner has dealt the issue at length and came to the conclusion that the appellants and the oversea....
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....eports or intimating difference in the quantity will also not make them related, as these are normal business practices. Customs Act or the CVR, 2007 do not consider such acts as amounting to related persons. (iv) (Para 67.6) Shri Anand Mathur has requested to revise the proforma invoice as the cargo was shifted to Karwar. There is no request for reduction in the CIF value; No other invoice is forthcoming indicating that the final price was again reduced to USD 482.As there is increase in the price for which bill of entry is also filed and duty is paid on such higher value, it cannot be said that GSEC have influenced the price. (v) (Para 67.7) on examining the e-mail dated 08.05.2011, it was observed that Proforma invoice No. 153 dated 08.05.2011 is issued by Gulf Petrochem. However, no bill of entry is found for a quantity of 1500 MTs in respect of the imports from Gulf Petrochem. Similarly, no commercial invoice contains the reference of the above said Proforma invoice. In fact imports from Gulf Petrochem have stopped after 14.5.2011. Thus, the same cannot be co-related to any of the imports. In respect of e-mail dated 24.10.2011 of Shri Yunus Khan of Gulf Petrochem, there ....
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....t as per prevailing practice 15-20% discount was given and they got 20% discount. Though Shri Rutul Shah in his statement dated 13.2.2012 stated that 625 USD was Proforma price and value declared to customs was USD 505; however he did not accept that there is undervaluation; Shri Nikharv Shah in his statement dated 16.2.2012 said he was unaware of difference of USD 120 in the transaction. 28. We find that learned Commissioner has proceeded on the figures found in emails without ascertaining if the same were finalised. We find that learned Commissioner accepted the declared price in respect of Bills of Entry and revised the same in some Bills of Entry. We find that the same is redetermined arguably on the basis of the price quoted in the emails. We find that the impugned order bases the value as found in the email dt.15.09.2011 between Shri Gowri Shankar, MD, M/s. Gosma Trading Co and Shri Anand Mathur; e-mail dated 10.06.2011 between Shri Nikhrav Shah of M/s AEP and ShriAnand Mathur of M/s. GSEC regarding the general account as on date and other emails. Interesting points that emerge is that learned Commissioner also finds certain incongruities in the mails and observes as follow....
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....ion value". "Transaction value"' has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4(1) in turn states : "The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules." 8. Reading Rule 3(i) and Rule 4(1) together, it is clear that a mandate has been cast on the authorities to accept the price actually paid or payable for the goods in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exceptions specified in Rule 4(2) namely : (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of ....
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....ssable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India." If the phrase 'the transaction value' used in Rule 4 were not limited to the particular transaction then the other Rules which refer to other transactions and data would become redundant. 14. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rul....
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....mpex 2014(302) ELT 406 (Tri- Mum).The chairman/MD, of the appellant, was not questioned either about the discrepancies or on the averments of other persons. It is surprising that the investigations were concluded without questioning the Top man or without giving the reasons as to why such person is only a dummy and someone else was managing the affairs. We find that the department has missed out on an opportunity to fortify its own case. 32. We find that the appellants have submitted the prevailing international prices on the basis of certain commercial documents. The same were not considered in the impugned order. Moreover, no reasons, if any, for rejecting the same have also been recorded. Moreover, the appellants submit that the insurance policy obtained by them for the cargo was on the price declared by the appellants and not on the price alleged by the Department. We find that Revenue has relied upon the insurance policies obtained by the appellants to establish that the country of origin was Iran and not UAE as claimed by the appellants in the Bills of Entry. In such circumstances, we find that the Department cannot take a different stand vis-à-vis the insurance clai....