TaxTMI 
TaxTMI 
2020 (12) TMI 711
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....) Rules, 2007 [Valuation Rules] read with 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....
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.... Connection (Noticee No. 2) and M/s Aishwarya Overseas (Noticee No. 4) are liable to confiscation 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 ru....
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....ts could not have been discarded; (iii) The transaction value cannot be redetermined by loading 2% notional commission and in support 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: ....
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....ms Act and would include all duties of customs except duties levied under sections 3, 8B, 9 and 9A of the Tariff Act. The relevant portion of the said Notification dated February 19, 2010 is reproduced below : "Now, therefore, in 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 rat....
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....ls of Entry (inRs.) AntiDumping Duty Paid (inRs.) Customs Duty Paid (inRs.) 1. 3323655 dt. 20.09.2013 M/s Shubham Chemicals & Solvents Ltd. 84 1534.22 1703.9 8470482 0 2189830 2. 3596650 dt. 21.10.2013 84 1541.32 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 ....
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....port goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. 19. Section 14 of the Customs Act, as amended on 10 October 2007 is as follows: "Section 14.Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when 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, royalti....
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....erage, 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 which can be prescribed in the rules. Sub-section (2) of Section 14, which remains the same, is an over-riding provision which empowers the Board to fix tariff values for any class of imported goods or export goods under certain circumstances. We are not concerned with this aspect in the instant case." (emphasis supplied) 21. Thus, what has to be seen under section 14(1) of the Customs Act, as amended 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 th....
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.... "Find that the above Co-Noticees had tendered their statements voluntarily and they had not retracted their said statements. I further find that the present case show cause notice is based on facts and the documentary evidences are also available, therefore, in such a scenario, cross-examination of the above Co-Noticees, is not acceptable, especially when the above Co-Noticees had categorically admitted that the High Seas sales transactions were made on the instructions of Shri Ajay Kapur, Director of Noticee No. 1, at inflated/manipulated value to avoid the Anti-Dumping duty and that the imported goods were ultimately 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 Commission....
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....t is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent No. 2 to allow the said request, as it is trite and well-settled position in law that statements recorded behind the back of an assessee cannot be relied upon, in adjudication proceedings, without allowing the assessee an opportunity to test the said evidence by cross-examining the makers of the said statements. If at all authority is required for this proposition, reference may be made to the decision of the Hon‟ble Supreme Court in Arya Abhushan Bhandar v. U.O.I. 2002(143) ELT 25(SC) and Swadeshi Polytex v. Collector, 2000(122)ELT 641 (SC)." (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 ....
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....h were executed and payments were made through proper banking channels. "High Sea Sales‟ is a common trade practice whereby the original importer sells the goods to a third person before the goods are entered for customs clearance. It is after the "High Sea Sales‟ of the goods that the Bill of Entry is filed by the person who buys the goods from the original importer during the said sale. The Principal Commissioner has not doubted the agreements or the payments made and it is only the basis of the statements made by the three co-noticees, that the transaction value has been rejected. The Appellant has also stated that the goods could not have been 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 ....
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....ment or suppression of facts with intent to evade payment of anti-dumping duty. 41. To examine this issue it would be necessary to examine the relevant provision. Sub-section (1) of section 28 provides that where 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 the duty which has not been so levied, requiring him to show cause why he should not pay the amount specified in the notice. Sub-section (4) of the section 28, however, provides that where any duty has not been levied by reason 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 goo....
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....) of the Central Excise and Salt Act had been committed; that the proviso to section 11-A(1) of the CESA being pari material with the proviso of section 28 of the Customs Act, the ruling of the Apex Court is squarely applicable to the instant case." 44. There is no consideration of the reply submitted by the Appellant regarding limitation in the order passed by the Principal Commissioner, since all that has been stated is that noticees No. 1,2 and 4 in collusion with each other had fraudulently succeeded in evading the anti-dumping duty on the melamine imported by them, which required to be recovered from them under the provisions of sub-section (4) of section 28 of the Customs Act. 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 fraudul....
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....pression of facts must be deliberate and with an intent to escape payment of duty. The observations are as follows; "4. Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well known. In normal understanding it is not different that what is explained in various dictionaries unless of court the context in which it has been used indicates 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 ....