TaxTMI 
TaxTMI 
2020 (12) TMI 711
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.... section 14 of the Customs Act, 1962 [Customs Act]. The Principal Commissioner has also ordered for recovery of anti-dumping duty from the Appellant by invoking the extended period of limitation under section 28(4) of the Customs Act with interest. A penalty has also been imposed upon the Appellant. 2. Customs Appeal No. 52251 of 2019, Customs Appeal No. 52252 of 2019, Customs Appeal No. 52253 of 2019 and Customs Appeal No. 52277 of 2019 have been filed by Ajay Kapur, M/s Aishwarya Overseas, Manish Singhal and Ajay Kapur, respectively for also setting aside the aforesaid order dated May 30, 2019 passed by the Principal Commissioner. 3. The amount of anti-dumping duty and penalty imposed upon the five Appellants are as follows : S.No. Appeal No. Appellant Anti Dumping Duty (D)/Penalty (P) 1. 52254/2019 Shubham Chemicals & Solvents Ltd. D-1,49,40,438/- P-1,49,40,438/- 2. 52252/2019 Aishwarya Overseas D-24,12,024/- P-24,12,024/- 3. 52253/2019 Manish Singhal, Proprietor - Aishwarya Overseas P-7,50,000/- 4. 52277/2019 Ajay Kapur, Director - Shubham Chemicals & Solvents Ltd. P-40,20,000/- 5. 52251/2019 Ajay Kapur, Proprietor - Chemical Conne....
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....n under Section 111(m) of the Customs Act, 1962 as proposed in the show cause notice or not? (iv) Whether the Noticees are liable to penal action, as proposed in the show cause notice? 7. It needs to be noted that before dealing with the aforesaid issues, the Principal Commissioner also dealt with the submissions made on behalf of M/s Shubham Chemicals and Ajay Kapur that denial of cross-examination of the co-noticees, Manish Singhal, SharadVerma and Kishori Saran Goel had vitiated the order. The Principal Commissioner found that no prejudice had been caused by not allowing the cross-examinations and, therefore, held that the voluntary statements that had been made had evidentiary value. 8. In regard to the first issue as to whether the demand of anti-dumping duty raised in the show cause notice was justified and recoverable, the Principal Commissioner found that the values of melamine imported and cleared by the firms declared in the 13 Bills of Entry at the time of import to India were not the correct transaction values and, therefore, were liable to be rejected under rule 12 of the Valuation Rules read with section 14 of the Customs Act and the correct transaction was redete....
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....upport of this contention reliance has been placed upon the Circular No. 32/2004-Cus dated May 11, 2004 [Circular dated May 11, 2004] issued on the basis of the decision of the Supreme Court in Hyderabad Industries Ltd. vs. Union of India [2000 (115) ELT 593 (SC)]; (iv) The goods could not have been directly imported by M/s Shubham Chemicals & Solvents Ltd. because it was an authorized dealer for M/s Gujarat Fertilizers & Chemicals Ltd; (v) The transaction value of goods on High Sea Sale basis is not governed by loss of profit in business, but by the provisions of section 14 of the Customs Act; and (vi) The show cause notice was issued on October 27, 2017 in relation to the transactions that had taken place between September 2013 and July 2014. In the absence of any charge of collusion or wilful mis-statement or suppression of facts, the show cause notice could not have been served beyond one year. 13. Shri Sunil Kumar, learned Authorized Representative of the Department, has, however, made the following submissions: (i) The Principal Commissioner was justified in holding that denial of cross-examination did not cause any prejudice to the Appellants since the statements of....
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....exercise of the powers conferred by sub-sections (1) and (5) of section 9A of the said Customs Tariff Act read with rules 18 and 23 of the said rules, the Central Government, after considering the aforesaid final findings of the designated authority, hereby imposes on the subject goods, , the description of which is specified in column (3) of the Table below, falling under sub-heading or tariff item of the First Schedule to the said Customs Tariff Act as specified in the corresponding entry in column (2), the specification of which is specified in column (4) of the said Table, originating in the country as specified in the corresponding entry in column (5), and produced by the producer as specified in the corresponding entry in column (7), when exported from the country as specified in the corresponding entry in column (6), by the exporter as specified in the corresponding entry in column (8), and imported into India, an anti-dumping duty at a rate which is equivalent to difference between the amount mentioned in the corresponding entry in column (9), in the currency as specified in the corresponding entry in column (11) and as per unit of measurement as specified in the correspond....
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....2 1711.79 8296329 0 2144807 3. 4184440 dt. 26.12.2013 63 1550.00 1721.43 6327679 0 1635862 4. 4537990 dt. 03.02.2014 44 1649.90 1832.38 4651823 0 1202611 5. 4537995 dt. 03.02.2014 88 1649.90 1832.38 9303645 0 2405223 6. 4691492 dt. 20.02.2014 88 1675.00 1860.25 9559028 0 2471246 7. 5082362 dt. 02.04.2014 88 1552.00 1723.64 8688262 0 2246131 8. 5536738 dt. 19.05.2014 110 1498.00 1663.68 10202380 148773 2637568 9. 6029549 dt. 05.07.2014 20 1498.00 1663.68 1818602 66154 536308 10. 5117002 dt. 05.04.2014 M/s Chemical Connection 66 1555.00 1726.98 6391361 0 1652325 11. 4442617 dt. 24.01.2014 M/s Aishwarya Overseas 22 1800.00 1972.79 2537506 0 656008 12. 4442622 dt. 24.01.2014 44 1800.00 1972.79 5075012 0 1312017 13. 4442625 dt. 24.01.2014 44 1800.00 1972.79 5075012 0 1312017 17. It is seen from the aforesaid Table that anti-dumping duty was actually paid for consignment at....
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....hen sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf:" 20. The Supreme Court in Wipro Ltd. vs Assistant Collector of Customs [2015 (319)ELT 177 (SC)] examined the provisions of section 14 of the Customs Act as it stood prior to 2007 and also as it stood after the amendment in 2007. It noticed that under the unamended provision, the principle was to find out the valuation of goods "by reference to the value" and it introduced a determin....
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....ed in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of importation. Sub-section (1) of section 14 of the Customs Act also makes it clear that the price actually paid or payable for the goods will not be treated as "transaction value‟ where the buyer and the seller are related to each other. As per the first proviso to the amended section 14 (1), certain charges are to be added to the transaction value of the imported goods. It is, therefore, clear that while there was scope for addition of notional charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. 22. The Principal Commissioner, however, held that the values of melamine imported and cleared by the ....
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....ltimately sold to the Noticee No. 1. ******* Therefore, I hold that no prejudice has been caused to the Noticees Nos. 1 to 3 by not allowing the cross-examination of the above Co-Noticees and hence I hold that the voluntary statements, as relied upon in the show cause notice, have evidentiary value in view of the above settled dictums of law." (emphasis supplied) 25. It is, therefore, necessary to examine whether denial of cross- examination has vitiated the impugned order because it is these statements that were relied upon by the Principal Commissioner to hold that the price of the imported goods had been artificially increased to avoid anti-dumping duty. 26. The Allahabad High Court in Commissioner of Central Excise v/s Kurele Pan Products Pvt. Ltd. [2014 (307) E.L.T. 42 (All.)], while dealing with an excise matter, held that if the authority wants to rely upon the statement of any witness, it is necessary to provide an opportunity to cross-examine the witness and failure to provide such an opportunity results in denial of the principles of natural justice. Cross-examination was held to be a valuable right of the noticee. The relevant portion of the judgment is reproduc....
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.... (emphasis supplied) 29. The Principal Commissioner simply stated that no prejudice has been caused by not allowing cross examination. It is not understood as to how "prejudice‟ would not be caused to the Appellant if cross-examination is denied, for it is on the basis of the statements made by the co-noticees that the Principal Commissioner concluded that the value of the imported goods had been inflated so as to avoid anti-dumping duty. 30. It is also seen from the order that much emphasis has been placed by the Principal Commissioner on the statements made by the three co-noticees. The Commissioner has not accepted the request made by the Appellant for cross examination of the three noticees for the reason that they had voluntarily made the statements which were not retracted. This approach of the Principal Commissioner regarding the issue as to whether cross-examination was to be permitted or not cannot be said to be a correct approach, for an opportunity should have been given to the appellant to ascertain by cross-examination whether the statements were voluntary or not. It is also necessary to note that the sale transactions were made through banking channels on th....
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....directly imported. The transaction value, in view of the provision of section 14(1) of the Customs Act and aforesaid discussion could not have been rejected. 35. It needs to be noted that though Ajay Kapur is a Director of M/s Shubham Chemical and proprietor of M/s Chemical Connection, but both of them are two separate legal entities and transactions were done through a contract and through banking channels. It also needs to be noticed that the statement of Ajay Kapur was taken on March 21, 2017 after two years of his last statement. 36. The price of melamine which was imported is driven by market forces and when transactions between the two separate legal entities in the course of business was done on the basis of valid documents and through proper banking channel and appropriate customs duty was paid, it was not open to the Principal Commissioner to redetermine the transaction value on a lower value so as to impose anti-dumping duty on the Appellant. 37. The contention of the learned Authorized Representative of the Department that Ajay Kapur had paid customs duty towards the import by M/s Aishwarya Overseas in advance, though in the normal course of business customs duty is d....
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....son of collusion or any wilful mis-statement or suppression of facts by the importer or exporter, the proper officer shall, within five years from the relevant date, serve notice on the person chargeable with duty which has not been levied, requiring him to show cause why he should not pay the amount specified in the notice. 42. The show cause notice dated October 27,2017 is in respect of the goods imported in 2014 and only a general statement has been made that there was suppression of actual value of the goods.No reason has been indicated as to why the provisions of sub-section (4) of section 28 of the Customs Act, which permits notice to be issued within five years from the relevant date, was being invoked since the normal period contemplated under sub-section (1) of section 28 of the Customs Act for issuance of the notice is only one year. 43. The reply submitted by the Appellant in regard to the said limitation for issuing the show cause notice is as follows:- "(xx) That in the instant case, the noticees had been served the Show Cause Notice in the year 2017 for the Bill of Entries relating to year 2014 which itself is time barred. Section 28 of the Customs Act,1962, prov....
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.... In this connection the Principal Commissioner had observed that the transaction based on fraud continues to be tainted and the person committing fraud is precluded from deriving any benefit. The Principal Commissioner also observed that fraud and collusion vitiate even the most solemn proceedings. The relevant findings are reproduced below: "I find that in the present case the Noticees Nos. 1, 2 and 4 in collusion with each other by adopting the modus-operandi of High Seas Sales, had fraudulently succeeded to evade total Anti-Dumping duty amounting to Rs. 1,89,79,882/- on the melamine imported by them during the material period of demand, which is required to be recovered from them under the provisions of section 28(4) of the Customs Act, 1962 alongwith the interest as applicable under section 28AA of the Act ibid and section 9A of the Customs Tariff Act, 1975." 45. Section 28(1) of the Customs Act requires that if any duty has not been levied for any reason other than the reasons of collusion or any wilful mis-statement or suppression of facts, the proper officer shall, within one year from the relevant date, serve notice on the person chargeable with duty. It was, therefore, ....
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....tes otherwise. A perusal of the proviso indicates that it has been used in company of such strong words as fraud, collusion or wilful default. In fact it is the mildest expression used in the proviso. Yet the surroundings in which it has been used it has to be construed strictly. It does not mean any omission. The act must be deliberate. In taxation, it can have only one meaning that the correct information was not disclosed deliberately to escape from payment of duty. Where facts are known to both the parties the omission by one to do what he might have done and not that he must have done, does not render it suppression." (emphasis supplied) 48. This decision was referred to by the Supreme Court in Anand Nishikawa Company Ltd. vs. Commissioner of Central Excise [2005 (188) ELT 149 (SC)] and the observations are as follows: "26........... This Court in the case of Pushpam Pharmaceutical Company v. Collector of Central Excise, Bombay, while dealing with the meaning of the expression "suppression of facts" in proviso to Section 11A of the Act held that the term must be construed strictly. It does not mean any omission and the act must be deliberate and willful to evade payment of ....