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2022 (1) TMI 812
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....Act] with an option to the importer to redeem it under section 125 of the Customs Act on payment of redemption fine of Rs. 3.5 crores. The order also seeks to confirm the demand of customs duty of Rs. 5.11 crores leviable on the Barge with equipments, spare parts and accessories. The order further appropriates customs duty of Rs. 5.15 crores and imposes a penalty under section 114A of the Customs Act. 2. Customs Appeal 87424 of 2014 has been filed by Hari Bhambhani, Managing Director of M/s. Bhambhani Shipping Ltd. to assail the aforesaid order dated February 24, 2014 to the extent it imposes a penalty of Rs. 1.75 crores upon him under section 112(a) of the Customs Act. 3. The appellant is engaged in offshore activities, like providing tugs, accommodation barges and supply vessels. It purchased the second-hand non-propelled accommodation Barge with all standard equipments and accessories from M/s. Halani International Ltd., Dubai [Halani] for a transaction value of US Dollars 60 lakhs 'Free on Board' [FOB], to be paid directly to the bank account of the seller, as detailed in the Memorandum of Understanding and the Agreement signed in Mumbai on August 12, 2010 [MOU]. The Bill....
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.... was examined by the Dock staff in the presence of SIIB Officers, who observed that considering the number of people that could be accommodated on the Barge and the accessories, equipments on board the vessel, the vessel appeared to be grossly under invoiced. 10. On the basis of this observation, further inquiry proceedings were launched and in the said process, statement of the Managing Director was recorded under section 108 of the Customs Act on September 30, 2011. 11. In the light of the aforesaid observations of the Officers of SIIB (Import) and the statement of Hari Bhambhani, a re-inspection of the Barge was carried out by the same Chartered Engineer along with SIIB Officers on October 06, 2011. Thereafter, a revised Chartered Engineer Certificate was issued on October 12, 2011, which amended the FOB value from US Dollars 6,000,000.00 to US Dollars 7,385,000.00, with a remark that during the re-inspection, they gathered complete vessel particulars which had not been made available during their initial inspection regarding capacities, Year of Manufacture & other technical specifications of equipments, such as cranes, generators, compressors WMP and STP. 12. The Barge....
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....scation of the impugned barge on account of misdeclaration of value, if any and the consequent penal provisions to be invoked on the notices are the remaining issues which need consideration. xxxx xxxx xxxx 24. From the above, it is evident that the value of the equipments, which were not accessories of the barge, had not been included in the value of the impugned barge. Further, the freight component had also been mis-declared by M/s Bhambani Shipping Ltd., as admitted by Shri Hari Bhambani, Managing Director of M/s Bhambani Shipping Ltd, in his statement recorded under section 108 of the Customs Act, 1962 and detailed in para 22 above. Therefore, I hold that the declared CIF value of Rs. 26,97,49,1677- of the Impugned Barge "Halani Star" imported and sought to be cleared vide Bill of Entry No. 4460906 dated 25/08/201 is liable for rejection under Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules 2007 (hereinafter referred to as 'Customs Valuation Rules, 2007'). 25. Having rejected the declared, the same is required to be re-determined as per the provisions of the Customs Valuation Rules, 2007. Once transaction value i....
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....entire case of the Department is based on the revised Valuation Report issued by the Chartered Engineer. On comparing the two Reports dated 22.07.2011 and 12.10.11, it can be seen that the vessel particulars, which had purportedly not been made available during the first inspection, formed part of the First Report and have been verbatim reproduced in the Second Report. The appellant had always provided the true and correct facts and details about the Barge to the Chartered Engineer, which is evident from the fact that the description of the Barge and its equipment is identical in both the Valuation Reports. The Chartered Engineer had also inspected the Barge before issue of the First Report; iii. The question of wilful suppression with intent to evade payment of duty or mis-declaration of value on part of the appellant does not arise. Even the impugned order records a finding that it was the valuer who failed to consider the value of equipment; iv. The Chartered Engineer had altered the valuation without any sound reason. Hence, it was necessary to record his statement and grant a cross examination to the appellant. Infact, the appellant had made a specific reques....
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....iscation and the consequent redemption deserve to be set aside; x. In any event, even if it is held that the Barge was liable to confiscation on technical grounds, the redemption fine should be nominal, considering the facts and circumstances of the matter; xi. Penalty under section 114 A should be set aside when the duty purported to be demanded under section 28 itself does not survive; xii. The jurisdiction to impose penalty under section 114A can be assumed only if duty is confirmed under section 28 of the Customs Act and not under any other section. In this connection reliance has been placed upon Commissioner of Customs (Import and General) vs. M/s. Care Foundation [2014-TIOL-537-HC-DEL-CUS] and Surendra R. Choudhary vs. Commissioner of Customs (Import), Nhava Sheva; xiii. Penalty of Rs. 1,75,00,000/- under section 112(a) on the Managing Director of the Appellant should be set aside as the Impugned Order is silent and does not disclose existence of any of the ingredients for imposing penalty under section 112(a). There is no finding that the Managing Director personally indulged in any commission or omission rendering the Barge liable to confiscation....
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....he Customs Act; vi. Penalty was correctly imposed the Managing Director. In support of this submission reliance has been placed upon the decision of the Madras High Court in Commr. of Cus. (AIR), Chennai vs. A.P. Pinherio [2014 (306) E.L.T. 349 (Mad.)]; and vii. Where it is intended to recover or demand duty from any person and also confiscate any offending goods related to such proposed demand of duty along with imposition of penalties provided in Chapter XIV, a combined notice has necessarily to be issued invoking provisions of both sections 28 and 124 of the Customs Act. In support of this contention reliance has been placed upon the decision of the Tribunal in Prince Fortified Steels Pvt. Ltd. vs. Commissioner of Cus., Tuticorin [2019 (369) E.L.T. 1228 (Tri.- Chennai)]. 18. The submissions advanced by the learned counsel for the appellant and the learned authorized representative appearing for the Department have been considered. 19. The issue that arises for consideration in these appeals is regarding the valuation of the Barge. The value declared by the appellant in the Bill of Entry filed on August 25, 2011 under section 46 of the Customs Act seeking ....
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.... of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1) or subsection (1A), if the Board is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export 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. *******" 23. 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 expo....
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....re can be a presumption that the actual price which is paid or payable for such goods is not the true reflection of the value of the goods. This Section also provides that normal price would be the sole consideration for the sale. However, this may be subject to such other conditions which can be specified in the form of Rules made in this behalf. 23. As per the first proviso of the amended Section 14(1), in the transaction value of the imported goods, certain charges are to be added which are in the form of 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 which can be prescribed in the rules. Sub-section (2) of Section 14, which remains the same, is an overriding 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) 25. Thus, what has to be seen under section 14(1) of the Customs Act, as am....
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....evised certificate and amended the FOB value from the Barge from US Dollars 6,000,000.00 (FOB) to US Dollars 7,385,500. 28. In paragraph 23 of the order, the Commissioner has noted why there was a change in the CIF value of the Barge and the said paragraph is reproduced below: "23. It is evident from the Para 9.6 of the Chartered Engineer's [M/s. Intertek Services] certificate dated 22.07.2011 submitted by the importer for the clearance of the impugned barge, that the list of items for which the CIF valuation had been considered were "Old and Used Non Propelled Accommodation Barge "Halani Star", spares, consumables, and Provisions on board". Further, it appeared that the valuer had not considered the value of the equipments such as the Crane of "American" brand AMHOIST with a capacity of 225 Tones, three Power Generators of Caterpillar Make with capacity of 1030 Kilowatt, 4 Winches with 8 drums (one set was non functional and under repair), Water Maker with capacity under Reverse Osmosis process for making 25 tons per day. The value of the these equipments installed on the barge was required to be included to arrive at the assessable value of the barge under import. On ....
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.... Barge "HALANI STAR" while she lay afloat at "V-3, Anchorage, Mumbai Port" on 21.07.2011. In regards we now report as under: 1. Purpose and Object of Inspection : : : : Whether the items/components are new or used ones and re-conditioned or not, Whether the items/components put together will form a complete unit, To ascertain Year of Built/Make/Model/Price in Year of Built, To appraise the value of items/components in the 'as is where is basis' 6. Details of Items Inspected 6.1 Technical Specifications : One Old, Used & Secondhand Non- Propelled Accommodation Barge "HALANI STAR" with related spares, accessories, consumables & provisions on-board. 6.2 Vessel Particulars Name of Vessel Type IMO no. Official No. Port of Registry Builder Place of built Owner &nb....
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.... : 1982, Singapore d. Price of New Vessel in (YOM) : USD 20,000,000.00 Approx. Detailed Specifications, Certificate of Ownership attached herewith for "HALANI STAR". 7. Nature of inspection 7.1 Whether Inspected in Working Condition (Yes/No) : Yes 7.2 Technical Details of Tests Carried Out : All equipments were found to be working in good condition and as per their respective stated capacity. 7.3 National/International Standards Followed for Inspection : There is no specific National/International Standard for the inspection of these equipments. This type of machinery is well known and proven internationally for various applications. 8.5 Comments on Valuation Taking into consideration the condition of the equipment, expected residual life and the enquiry in market, the fair and reasonable price in our opinion is USD 6,000,000.00[FOB....
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.... 1710 - C524, 515 HP 2. In column 6.2 of Certificate: Main Generator; 3 x 1,030 kw - Make Caterpillar Model CAT - D - 399 Emergency Generator: 1 x 320 kw - Make Caterpillar Model CAT-D-34112 3. In column 6.2 of Certificate: Compressors: 1 x Sullair 680 cfm & 1 x Ingersoll 350 cfm 4. In column 6.2 of Certificate: Water Maker: Reverse Osmosis S-64B-436 [1 x 25 tons / per day- 1 x 20 tons! per day) 5. In column 9.6 of Certificate: CIF Valuation One Old, Used & Secondhand Non-propelled Accommodation Barge "HALANI STAR' with related spares, accessories, consumables & provisions on board Value as per Invoice US D 6,000,000.00 Freight USD 5,000.00 Insurance US D 29,657.00 CIF value US D 6.034657.00 6. In column 8.5 of Certificate: Comments on Valuation Taking into consideration the condition of the equipment expected residual life and the enquiry in market, the fair and reasonable price in our opinion is USD 6,000,000.00 [FOB] [US Dollars Six Million Only). 7. In column 9.4 of Certificate: Deck Machinery, ....
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....lant had purchased the Barge at US Dollars 6,000,000.00 (FOB) and earlier the same Barge was imported by M/s. Afcons Gunanusa Joint Venture under a Bill of Entry dated October 22, 2010 for Rs. 23.41 crores, which value was accepted by the Department. The value of the Barge was mentioned as Rs. 26.82 crores in the Bill of Entry dated August 25, 2011 submitted by the appellant. 36. Learned counsel for the appellant also submitted that since the Chartered Engineer had changed the valuation, the appellant had made a request for cross examination of the Chartered Engineer but this request was rejected by the Commissioner for the sole reason that it was the Managing Director of the appellant who had stated that the same Chartered Engineer should re-inspect the Barge. The relevant portion of the order of the Commissioner is reproduced below: "26.7 They have contended that the department has erred in rejecting the Chartered Engineer Certificate without recording his statement or cross examining him. Therefore, to pick holes in the certificate of Chartered Engineer without cross-examining him is not just and proper in law. They have cited the case law of the Big Apple Manufactur....