TaxTMI 
TaxTMI 
2022 (3) TMI 640
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....estigation was also initiated by the Directorate of Revenue Intelligence (DRI) almost after 10 years after the arrival of the cargo i.e. in the year 2005 and cargo was detained since 2005 till date. The following are the important facts in brief highlighting the litigation happened between the parties and investigation conducted by the DRI. (a) Multiple litigation started in the year 1996 itself, firstly, at Mumbai by one M/s. 21st Century and secondly, at Civil Court Gandhidham by one M/s. Eisenberg and Company, USA who claimed to be financer of the exporter M/s. Special Trading Company. In the Civil Suit at Gandhidham, one injunction order was operative and goods could not be cleared due to the restraining order of the court. Ultimately, the civil suit was dismissed in the year 2005. (b) In 2005, again, Bill of Entries were filed and even permission for warehousing was given on 28.09.2005. But before goods could be delivered to the warehouse, DRI Unit Gandhidham seized the cargo and handed over the same to traffic inspector Kandla Port Trust on the proper supradnama. The panchnama and supradnama clearly show that goods were never delivered to the warehouse and remained with....
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....tract which described the item as "Used Rail HMS". That there was an examination order to check the cargo and it classified the goods as rusted, re- rollable rails/rail of iron and steel of varying length starting from 1 m length to 12.5 m. He further submits that classification in the present case should be under CTH 7204 and not under chapter 73 as has been done in the impugned order. The appellant also relies on following documents to establish that the cargo is Used Rail as heavy melting scrap: a) Advice of status by City National Bank USA dated 12.10.1996; and b) SGS survey report/ certificate dated 22.04.1996. It is further submitted that no evidence has been led by the department in the present case. Moreover, the evidence led by the appellant has not been discarded by the revenue. Therefore, the classification claimed by the appellant be accepted. 2.1.2 He submits that the issue is no longer res-integra and covered by the judgment of this Hon'ble Tribunal in favour of the appellant in the case of Hinduja Foundry Limited vs. Commissioner of Customs, Chennai [2013 (288) E.L.T. 571 (Tri. Chennai)]. The learned Counsel heavily relied upon the aforesaid j....
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....merous occasions, the appellant has explained that the aforesaid invoice has nothing to do with the cargo in question and as such it cannot be relied upon. It is therefore submitted that no reliance can be placed on the said investigation report of the DRI which is half baked and inconclusive. 2.2.3 He further submits that no evidence has been produced by the department for enhancing the goods of the cargo. It is further submitted that it is well settled law that value of the goods cannot be enhanced merely on the basis of willingness by the appellant in the proceedings before High Court of Gujarat to deposit security at the rate of USD 200 PMT in order to get goods released. 2.2.4 He submits that the value of goods has been rejected by applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. It is well settled law that department has to first reject the transaction value under Section 14 of the Customs Act, 1962 with cogent evidence and thereafter the department has to apply the valuation sequentially. In the present....
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....r warehoused and no order for clearance for home consumption in terms of Section 47 was issued. He submitted that the term 'warehoused goods' is defined under Section 2 (44) of the Customs Act, 1962 as 'goods deposited in a warehouse'. He further says that Section 61 further indicates that the warehoused goods have to remain in the warehouse beyond a period of ninety days, for the interest to be chargeable. The Sub-section 2 (ii) of Section 61 and the definition of the term 'warehoused goods' indicates that when the goods deposited in a warehouse remain warehoused beyond a period of ninety days, then the interest starts accruing. Therefore, demand of interest either Under Section 61, 15 or 47 of the Customs Act is not at all sustainable. In fact, goods were never warehoused is an admitted fact and the same can be ascertained from the DRI letter dated 31.08.2012 in which the appellant was informed that seizure of the goods was made on 10.10.2005 and the cargo was handed over to Kandla Port Trust under supradnama of the same date. 2.3.2 He further relied upon the judgement passed by the Hon'ble Supreme Court of India in the case of PRATIBHA PROCESSORS & ORS. Vs. UNION OF INDIA & O....
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....o the goods which are kept in warehouse beyond the period specified in section 61(1). In the present appeal the original assessment order was passed on 28-03-2014 for the assessment of the goods and in the assessment, the department has levied interest @ 15% for 3221 days from 27.12.2005 to 17.07.2013 which is not permissible. The department cannot and may not charge interest before the duration of return of bill of entry. He also relied upon the affidavit of the custom before the High Court of Gujarat at Ahmedabad in SCA No. 21324/2005. Even the DRI report which has been much relied upon in the assessment order has clearly stipulated that goods were not physically removed/deposited in the warehouse and were still in the custody of Kandla Part Trust. He submits that the rate of interest has been asked by invoking Section 61 and 47 of the Customs act, without considering the fact that the goods were never warehoused and even no order was passed for clearing the same for home consumption, therefore, the demand of interest is not sustainable. He therefore prays that impugned order be set aside and the appeal filed by the appellant be allowed. 3. Sh. Ghanshyam Soni, the learned Join....
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....acts and circumstances of the case and relying on the aforesaid decision of this Court, we hold that the Assessing Authorities as well as the Appellate and the Revisional Authorities are creatures of the Act and they perform the functions of the Quasi judicial Authorities and the orders passed by them are also Quasi judicial Orders. Therefore, such orders are required to be passed by exercising independent mind and without impartiality and while doing so, such Authorities are required to consider various evidences made available to them. The Circulars issued by the Department which are in the nature of guidance to such Authorities and, therefore the contents of such circulars could also be considered as evidence available before them. On the basis of all the materials available on record including the evidence, the Assessing Authority has come to an independent finding on its own and therefore, in our considered opinion, the matter can now be allowed to be determined by the Assessing Authority in the light of the aforesaid observations." As per the facts of the present case, it is undisputed that the report certifies that the goods is question are rusted, re- rollable rails/rail....
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....ll in particular tariff item is on the Revenue." Therefore, relying on the above mentioned judgment we hold that the impugned goods are rightly classifiable under Chapter Heading 7204 as "USED RAIL HEAVY MELTING SCRAP." 4.3 As regards to valuation of goods, we find that the value of goods has been rejected by the department by straight away applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. We note that it is well settled law that department has to first reject the transaction value under Section 14 of the Customs Act, 1962 with cogent evidence and thereafter the department has to apply the valuation rules sequentially. The Hon'ble Supreme Court in the case of Commissioner of Customs, Calcutta Vs. South India Television (P) Ltd., 2007 (214) ELT 3 (SC) has held as under: "6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), "value" is defined to mean va....
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....cause the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how ....
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.... per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value." 4.4 In the present case, the department has enhanced the value on the basis of one invoice no. 4433 dated 26.04.1996 by one ALL-RAD VERTRIESS in which the goods are sold at the rate of USD 176.58 . We find that transaction value cannot be rejected merely on the basis of one invoice, which even the department has failed to link with the present impugned consignments. We also find that the investigation conducted by the DRI is inconclusive and hence cannot be held against the appellant inasmuch there is no tangible evidence that has been adduced by the DR....
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....able in ordinary circumstances by the Indian agent itself. There was the additional factor that the stock in question was old and it was a one time sale of 5 year old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1)." 4.6 Further as discussed in the case of Commissioner of Customs, Calcutta Vs. South India Television (P) Ltd. (supra) we find that onus is on the department to prove undervaluation of goods, which has not been discharged by the department. We, therefore hold that value of goods cannot be enhanced and value declared by the appellant at USD 110 PMT is to be accepted. 4.6.1 As regards to demand of interest, the appellant's contention is that the goods were never warehoused, therefore, interest cannot be levied. We find from the letter dated 31.08.2012 issued by the DRI informing the appellant that seizure of the goods was made on 10.10.2005 and the cargo was handed over to Kandla Port Trust under supradnama of the same date. Even the DRI report which has b....