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TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 714
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....enalties have been imposed on Shri Kapil Garg, Director amounting to Rs. 3,00,000/- under Section 112(a) and Rs. 2,00,000/- under Section 114 AA of the Customs Act. 3. The brief facts are that M/s Kuber Impex Limited, Indore is an importer. They had imported a consignment of 10,000 pieces of voltage Regulated Lead Acid Batteries (VRLA) 12V 7.2 Ampere Hours, through JNCH, Nhava Sheva, vide Bill of Entry No. 803525 dated 25.08.2010, by declaring the unit value @ US$ 1.17 (Rs. 55.97) per piece. The total declared value of goods was Rs. 5,59,721/- and in US$ 22700 (C&F). The supplier had raised Invoice No. LHI1010290002 dated 10.08.2010 for these VLRA batteries. The above said Bill of Entry was facilitated through 'Risk Management System' under no assessment, no examination procedure. The importer deposited Customs duty amounting to Rs. 1,50,278/- on the above declared value and presented the said Bill of Entry before the Shed officer, for getting out of charge order. The shed officer compared the value of the above imported batteries with the value available in National Import Data Base (NIDB) and found that there was a huge difference between the declared unit value (Rs. 55.97) and ....
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.... vide bill of entry No. 785027 dated 10.08.2010 and had submitted a fake, false, manipulated, fabricated and parallel invoice having the same No. LHI1010290001 dated 27.07.2010 showing unit value @ US$ 1.17 per piece, to customs, and thereby it appeared that the importer had suppressed the true and correct value of the goods. Two other consignments of VLRA batteries imported under bill of entry No. 803525 dated 25.08.2010 and 827979 dated 25.08.2010 were also cleared by declaring unit value as US$ 1.17 per piece. Therefore on reasonable belief that the import of goods had been cleared by misdeclaring the value in contravention of the provisions of the customs Act, 1962 and hence were liable for confiscation. Detention of VRLA batteries was converted into seizure. The seized goods were provisionally released on the request of the importer after obtaining necessary Bond and Bank Guarantee from the importer. 8. Statement of Shri Kapil Garg, Director of the appellant company was recorded on 19.10.2010 and 22.10.2010 wherein, he, interalia, stated that his company has been dealing in import of VRLA batteries and battery accessories since 2002, and ordered for 3,00,000 pieces of 6 Volts....
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....clared total value for the consignment as US$ 11170 (C & F) only against the actual value of US$ 58700. Both the invoices, one which was fake, false, manipulated, fabricated and parallel invoice and the second one which is the original invoice, were compared as below for clarity in matter:- False / fabricated Actual invoice Supplier Shenzhen Leoch battery Technology Co. Ltd., Shenzhen Leoch battery Technology Co. Ltd., Invoice No. LHI1010290001 LHI1010290001 Date July 27, 2010 July 27, 2010 Contract No. LHA10125 LHA10125 Description VRLA Battery DJW12-8.0 VRLA Battery DJW12-8.0 Quantity 10000 pieces 10000 pieces Unit price USD 1.17/CFR USD 5.75/FOB Freight -- US$1200 FOB Value -- US$57500/FOB Total Amount C & F US$11700 US$58700 Assessable value Rs. 5,59,898.52 Rs. 28,38,175.20 Duty (Rs.) 1,50,325/- 7,62,011/- Thus, from above it appeared that the importer in case of goods imported under Bill of Entry No. 785027 dated 10.08.2010 had mis-declared value at just about 20% of the actual value. The importer had declared value at Rs. 5,59,898.52 against the actual value of goods at Rs. 28,38,175.20, ....
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....ted 6.12.2010, the officer visited once again for making attempt to create mirror image of another seized hard disc having no.B2RSTURE was created, and images were copied to another portable hard disc. 13. The statement of Shri Sanjay A. Chothani, employee of the CHA of the importer company was recorded on 24.11.2010, wherein he inter alia, stated that he is satisfied with the market survey done at Lamington road & Ghatkoper and the same has been done in fair manner. He further stated that he has got no idea of the value of the VRLA Batteries. Further, he stated that he was present on 16.11.2010 in the Forensic Laboratory, at the time of data retrieval. 14. Further, statement of Shri Kapil Garg, Director was recorded on 23.11.2010, wherein he, inter alia, stated that he visited China to meet the battery manufacturers including Leoch. At Leoch, he contacted a person named Mr. Alex, with whom he negotiated the deal for 12 Volts batteries. The price was US $4 CIF in the month of Jan.-Feb., 2010. After hard negotiation and to ascertain the quality of the ingredients to be used in the production (recycled lead/plastic), they had finalized the deal at US$ 3.25 per piece, and settled th....
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.... Declared Unit Price CFR Nhava Sheva in False Proforma Invoice Actual Unit Price (FOB) 1. 6V4.2AH USD0.35 $1.65 2. 6V4.5AH USD0.35 $1.79 3. 6V5.0AH USD0.35 $1.90 4. 12V7.2A USD1.17 $5.23 5. 12V7.6A USD0.17 $5.50 6. 12V8.0A USD0.17 $5.75 16. Statement of Shri M. Rajendra Mangal (Aggarwal), Accountant of the appellant company was recorded on 3.12.2010, who, inter alia, stated, that he was looking after the work of the appellant as part time Accountant for the last two years at a salary of Rs. 3,000/- per month. There was another Accountant, Shri Mahesh Aggarwal, who mainly attended the appellant company. In respect to the data contained in the seized pen drive and the printouts taken therefrom, he stated that the data was prepared and fed by him on the computer, and DSR means the Daily Sales Report. The information on the rough sheet was prepared by Shri Kapil Garg and he fed it on the computer. Fusion 1.497 means Rs. 1,49,700 dated 16.04.2010. 17. Tiger 540 means Rs. 54,000/- dated 16.04.2010. Thus, all data/figures of the payment recorded have been mentioned in the code. That he changed the figures on the instructions by Shri Kapil....
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..../piece FOB and in case of BE No.827979, the actual unit value is USD 5.5/FOB/piece. He further admitted that in some instances of earlier import, he might have manipulated the declared value, the bills of which are in the Hard disc/USB drive, seized by the Department. On being confronted with by the Department - ''Import Format" retrieved from the seized Hard disc/Pen drive showing the actual value of the batteries imported or to be imported , he explained that this sheet showed the invoice, supplier's name, modal, U/P, quantity, etc. as well as actual unit rate, along with amount actually remitted to the supplier. Shri Garg further confirmed the modal-wise actual import price from M/s. Shenzhen Leoch Battery Technology Co. Ltd., China as below:- 1. 12V/8AH @ US$ 5.75/pc FOB 2. 12V/7.2 AH @US$5.23/pc FOB 3. 12 V/7.6 AH @US$5.50/pc FOB 4. 6V/4.2 AH @US$1.65/pc FOB 6V/4.5 AH @US$1.79/pc FOB 19. Shri Garg, on being confronted with photocopy of P/I No. LHA10124 dated 16.06.2010 for 3 lakh pieces of 6 V batteries, having unit value US$ 0.35/pieces CNF total value US$ 105000/- and LHA 10125 dated 16.06.2010 for 60,000 pieces of 12V batteries showing uni....
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.... US$20,015 and the actual Proforma Invoice, having same reference showing higher unit value totalling US$ 1,31,080, the details as per Bill of Entry No.700711 and 700713 both dated 01.12.2008, he admitted the correct invoice value in case of these two bills of entry was US$ 1,31,080, but the declared value was mis-declared at US$20,015/-. 25. Investigation revealed that the appellant - importer has imported several consignments during the last 5 years adopting the similar modus of mis-declaration of value to evade customs duty. Out of 68 consignments, 62 were imported and cleared through JNCH, Nava Sheva and rest 6 consignments, which were imported and cleared through ICD, Pithampur, Indore. For the consignments imported through JNCH, Nava Sheva, a separate show cause notice had been issued demanding differential duty of Rs. 3,46,78,022/-. The present show cause notice relates to 6 consignments imported through ICD, Pithampur, from the two Chinese supplier, Power roc Company Ltd. and M/s. Suqian Yongda Imp. & Exp. Trade Co. Ltd. The details of bills of entry are as follows:- Supplier, M/s POWER ROC.CO.LTD. B/E No. Date Invoice No. Date Model Qty. Unit 101167 24.0....
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....er, M/s. Power ROC:- "(a) Wire Transfer dated 27.12.2006 through Mr. Anil Kingrani of US$25000 (b) Wire Transfer dated 15.01.2007 through A1 Fardan Exchange of US$23262. (c) Wire Transfer dated 29.12.2006 through HSBC, Indonesia of US$ 15000. (d) Wire Transfer dated 16.10.2006 through Mr. Anil Kingrani of US$50618. (e) Shri Kapil Garg's E-Mail dated 21.12.2006 to Mr. Anil Kingrani asking him to transfer $ 60747 to Power ROC Co.Ltd. (f) Ms. Kitty (supplier) vide E-Mail dated 4.1.2007 informed Shri Kapil Garg that they had received $ 14980 & $ 25000 by the end of last month. (g) Mr. Kapil Garg's E-Mail dated 22.12.2006 to supplier that today they have planned to remit US$ 75747 to them. This corroborates the balance payment of three containers imported at ICD Pithampur." 29. From Shri Kapil Garg's E-Mail dated 29.01.2007 to supplier, it was found that their supplier had received an E-mail from AC(ICD), Pithampur for confirmation of the valuation of batteries imported by them, and the importer being apprehensive of being caught about the malpractice of valuation, advised their supplier to send the reply as suggested by him, to Customs & insisted to confirm the price of ....
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.... to Shri Koppula Laxman Murthy dated 09.10.2007 mentioned that they charged @ Rs. 280/pc for 12V4.5Ah battery. (vii) Shri Kapil Garg's E-Mail to Shri Koppula Laxman Murthy dated 13.08.2007 to settle their total outstanding of Rs. 6,64,174/- & out of which Rs. 3,46,742/- to pay in cash. (viii) Shri Kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 29.10.2007 vide which informed that for new order of 5000 pieces total outstanding amount is Rs. 638750 & out of which the cheque amount will be Rs. 154500 & Rs. 231750= Rs. 3,86,250/- & the balance amount is Rs. 252500. It was further mentioned in the E-mail that INR 349650 by cash. (ix) Shri kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 07.10.2007 that they have sent 650 pcs. Of 12v4.5 batteries @ Rs. 280/- piece. (x) Shri B. Chhitrapal vide E-mail 25.09.2007 placed an order for 1000 pieces of batteries 12V4.5AH@ Rs. 265/- piece. (xi) E-Mail dated 06.10.2006 vide which Shri Laxman wrote to Shri Kapil Garg that he will make DD for invoice amount & remaining balance would be deposit by cash. (xii) Shri Kapil Garg vide E-Mail dated 22.12.2007 to Shri Chhitrapal B. Seth requested for making payment as below. 1.50....
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....re Batteries @ Rs. 402/- under Tax Invoice No. 1355/09-10 dated 31.12.2009. (b) Purchase of I2V7.2 AH Battery 1100 pieces from M/s Empire Batteries @ Rs. 410/- under Tax Invoice No. 1341/09-10 dated 29.12.2009. (c) Purchase of 6V4.5 AH Battery 5000 pieces from M/s Empire Batteries @ Rs. 110/- under Tax Invoice No. X-799 dated 25.2.2010. (III)(a) During investigation, one document named as 'IMPORT COST SHEET' 350-419 was recovered from the importer's records. It was showing the total expenditure like duty, detention, freight, local taxes etc. incurred by the importer after the importation of the goods. Thus on the basis of their actual local sale price, the value of the goods imported under particular import can be re-determined by allowing the deduction on account of expenses/ profit/duty & taxes under the deduction method as outlined under Rule 7 of the Customs Valuation (Determination of value of imported goods) Rules, 2007. The importer had imported 50,000 pieces of 6V5Ah batteries vide B/E No. 107292 dated 09.02.2010 imported from the supplier M/s Suqian Yongda Imp. & Exp. Trade Co. Ltd. and as per the details of the said import cost sheet the total expenses incurred in....
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....d., China." 32. The Revenue, on scrutiny of NIDB data of 12 V 7.2 AH batteries, it was revealed that some other importers, who were importing the identical goods of 'Suquian brand' China, in a much higher volume than this importer, the declared prices were 4 to 5 times in the range of 250.47 to Rs. 257.65. It further appeared to Revenue that there is no significant difference between the contemporaneous import price of identical goods found as per NIDB data and the price arrived at after applying the deductive method or the actual price retrieved from the seized USB drive. 33. The Revenue also considered that the price of VRLA batteries depends on the cost of lead content and the price of lead in the International Market. The international price of lead during June, 2009 to December, 2009 was at US$ 2047.96 per MT and during January, 2010 to July, 2010 was at US$ 2050.37 per MT. Thus, it appeared to Revenue that even on the basis of the lead content, which as per the manufacturer is 59.6 % of the total weight of the battery, the declared value appeared to be suppressed and mis-declared, and hence, the cost of lead content for 6 V battery was coming to US$ 1.62 to 1.80 and for 12 ....
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....gave vague replies. Mr. Kapil Garg also contended that the higher values revealed in the parallel invoices, etc. was not the actual value, as the same were meant for the supplier, who were claiming higher duty draw back in China. Whereas the actual values being lower were declared. 37. The said contention was found to be not believable in view of the other evidences brought on record. 38. The appellant contested the show cause notice particularly mentioning that neither relied upon documents have been served upon them, nor the non-relied upon, in spite of there being a list of documents relied upon as per the show cause notice. The appellants submitted an interim reply requesting for return of non-relied upon documents and also for service of relied upon documents in order to make an effective and detailed reply to the show cause notice. The appellants were informed, with reference to the letter dated 4.11.2016 issued by the Dy. Director, SIIB (JNCH) that the original file F.No.SS/MISC/107/2010-11/SIIB (I) is not traceable in the Section, as well as pursuant to the tracer's circular. Further, the documents, hard disc and pen drive also cannot be found. However, the adjudicating a....
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....2 (Delhi), wherein it has been held that the demand under Section 28 of the Customs Act would follow only when provisional assessment is finalised. Ld. Counsel further urges that the Revenue placed reliance on the email and wire transfers found from the seized hard disc and pen drive and alleged that the declared transaction value pertaining to these three bills of entries are liable to be rejected. He submitted that reliance on email and wire transfer is not sustainable as the same are merely assumptions / presumptions. There is no correlation made out by the Revenue with the said emails with respect to the particular bills of entries or the bills of entries under consideration. Further, there is time gap between the imports, which are in Jan. 2007, whereas the emails are of March, 2006. He further urges that the data found on the hard disc/pen drive cannot be relied upon as neither these were opened in the presence of the Director of the appellant or their authorised Signatory. These were opened in presence of the Representative of CHA, who is not anyway concerned with such data. The CHA is authorised only for limited purposes for clearance of the goods at Port. The appellant was....
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.... the NIDB data is in respect to 12 V 7.2 AH. 45. Further, it is urged that the show cause notice refers to cost of lead in the International Market to allege that the declared value cannot be less than the cost of main raw material - Lead. The cost of lead in the International Market cannot be made the basis for rejection of transaction value and its re-determination. The international price of any product /metal is only indicative and does not reflect true and correct market price on the date of purchase of any product. 46. It is further urged that sofar as the market survey is concerned, the same has not been conducted in proper manner. Firstly, the importer was not a party to such market inquiry and secondly, the importers have disputed the market inquiry. It is further urged that comparing the consignment value of the appellant with any other import, makes little sense in view of the vast difference in their deal with the supplier like volume, rejections, quality and price discount, payment terms offered, etc. Further, neither the manufacturer nor the appellants were giving any warranty and guarantee, which was also an important factor for the lower acquisition price by the a....
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.... battery @ of US 5.75 FOB per battery. Whereas the appellant had declared the value of USD 1.17 per piece, in their bill of entry no.785027. Thus, the appellant declared the about 20% of the actual value as per invoice of the manufacturer/supplier by mis-declaring the transaction value. It is further urged that the Representative of the CHA is good enough for the purpose at the time of market survey. It is further urged that Director of the appellant, Shri Kapil Garg in his statement dated 29.11.2010 had admitted that in order to sustain in the market, he had adopted modus operandi of mis-declaration of transaction value. Further, it is stated that Shri Rajendra Mangal (Aggarwal), Accountant of the appellant confirmed in his statement that the appellant used to prepare two bills for resale of batteries, one of lower value, the payment of which was received by them through cheque and the balance payment was taken in cash. The appellant with respect to import of 6 V batteries for Shenzhen Leoch Battery had declared the transaction value of USD 0.25 per piece approximately, whereas as per email communication with the supplier during the period March, 2006 to April, 2006, they had sett....
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....ies were assessed provisionally and were pending finalisation. Accordingly, we hold that the impugned order is bad under Section 28 of the Customs Act, as the provisional assessment is still not finalised. Accordingly, the demand in respect of three bills of entry nos. 101168, 101169 and 101167 is set aside. 55. We further find that in the present case, the appellant has imported VRLA batteries 6-V/4.5 GLA/4.2 AH/4.5 A.H. We also find that the show cause notice was issued by relying upon the data from seized hard disc and pen drive. However, the appellant was informed later on that the said pen drive and hard disc are not traceable for the purpose of adjudication. The Dy. Commissioner of Customs, SIIB (I), JNCH, in his communication dated 4.11.2016 has categorically stated that the original file of seized documents, hard disc and pen drive seized under Panchnama are not traceable. We further find that the appellant was not noticed before opening of the hard disc/pen drive by the Department. One hard disc and pen drive was opened in the presence of Shri Sanjay A. Chothani, employee of the CHA firm and at the time of opening of another hard disc on the other date, nobody was present....