TaxTMI 
TaxTMI 
2023 (5) TMI 616
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....ms Valuation (Determination of Price of Import Goods) Rules 1988 and the relationship influenced the value of imported goods. Therefore the matter was referred to Special valuation Branch, Mumbai and the Bills of Entry were assessed provisionally. The matter of import of chips of Sodium Isethionate/ Chips of Sodium Isethionate HEBE was investigated by DRI, Mumbai. As per the investigation reports of DRI and Special Valuation Branch, Mumbai the value of imported items were found to be mis-declared as the imported items found to be „soap noodles‟ and also the unit price was required to be enhanced by 153%. Accordingly show cause notice was issued by Additional Commissioner of Customs, Mundra and it was adjudicated by Order-I-Original dated 16.01.2020 by which the declared value was rejected and re-determined and differential customs duty was confirmed. The subject goods were held liable for confiscation, but no fine was imposed. Penalty was imposed on the Appellant under Section 112(a) of the Customs Act 1962. In addition, penalty of Rs. 5 crore each was imposed under Section 112(a) and 114AA of Customs Act 1962 on Shri P.B. Balaji, Chief Financial Officer of the Appellan....
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....st and margin of profit. The prices were certified by Unilever -Mannheim on quarterly basis and appropriate duties were also paid based thereupon. The description of the product (CSI) mentioned in the Bills of Entry was based on the documents like export invoices, Bill of Lading, Country of Origin Certificate, transfer pricing certificate, etc., received from Unilever group companies which specifically mentioned the description of the products as "Chips of Sodium Isethionate" (CSI) and therefore, there was no mis-declaration by the Appellant. 2.1 He also submits that SLI-exported by Galaxy Surfactants to Unilever -Buxtehude was not used by Unilever-Mannheim nor can it be used in the manufacture of CSI/Dove Noodles. This facts is also evidenced from the Bills of materials and transfer pricing certificate, wherein there is no mention of SLI -80 as raw material. Therefore, the cost of SLI-80 exported by Galaxy to Unilever -Buxtehude for use in manufacture of liquid body wash has no relevance, whatsoever, for the valuation of CSI imported by the Appellant from Unilever -Mannheim. When ingredients like Sodium Isethionate, Dove Coconut Fatty Acid, Zinc Oxide and vegetable Stearic acid a....
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....odles imported by the Appellant from the very same group company, who supplied Dove Soaps, when the quality and specifications of dove soaps remain the same, whether, it is manufactured in Germany or in India. This itself evidence that the term "SCI" and "SLI" is used interchangeably for the in-situ material emerging at intermediate stage while manufacturing CSI at Unilever-Mannheim. In the present matter department has not brought in any plausible evidences to disprove the aforesaid contention of the Appellant, except bare statement on imagination that SLI-80 and/or similar SLI was used as an input for manufacture of CSI, which statements is contrary to the evidences like Bills of materials, transfer pricing certificate, etc listing down the ingredients used in the manufacture of CSI. To supper their contention that SLI-8- imported by Unilever -Buxtehude from Galaxy and SCI/SLI emerged in situ during the manufacture of CSI at Unilever -Mannheim are two distinctly different products and CSI/Dove Noodles cannot be manufactured from SLI-80 of Galaxy, as the carbon chain and fatty acid contents are not at all suitable for use in manufacture of CSI, he submitted Opinions/ Certificates/....
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....has not mis-declared the goods in parameters, such as description, etc., as it is not the case that what was declared in the import documents was found to be different. 2.8 He further submits that Appellant had classified the disputed product under Tariff item 340220 10/ 3402 2020 under a bona fide belief and understating that the disputed goods fall thereunder. Claiming classification of a product under particular heading/ sub-heading /tariff items cannot be termed as misclassification or mis-declaration and extended period and penal provisions not invokable in the present matter. He placed reliance on the following judgments. Denson Pultretaknik - 2003(155) ELT 211 (SC) Lewek Altair Shipping - 2019(366) ELT 318 (T) Mittal International - 2018 (359) ELT 527 (T) Indabrator Ltd. -2000 (118) ELT 649 (T) 2.9 He also submits that imported goods were cleared after provisional assessment without any encumbrances and, therefore, the provisions of Section 111(m) are not attracted and, accordingly, the same are not liable to confiscation. Once the goods are not available for confiscation, the same are not liable to confiscation. 3. On the other hand Shri Ajay Jain, Learned Specia....
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....which is used by them in manufacture of Dove Liquid Wash as a basis for valuation of Chips of Sodium Isethionate (CSI) and is used for manufacture of Dove bathing Bar/ Soap. We find that first of all SLI - 80 is neither used nor is usable in manufacture of Dove Bathing Bar/ Soap. It is all together a different product than Chips of Sodium Isethionate (CSI) which was imported by Appellant. The Appellant has produced the list of ingredients used for manufacture of CSI/ Dove Noodles which are Sodium Isethionate, Zinc oxide, Dove Cocount Fatty Acid, Vegetable Stearic acid, Vegetable Soap base, CAPS - Triglyceride Route, Sodium Chloride, Coated Titanium Dioxide, EHDP 60% Solution, Tetra Sodium EDTA Low Formadehyde and in support of same the appellant had produced the specimen copies of Bills of material of Unilever - Manneheim, Bill of material pertaining to PT. Unilever Indonesia forming part of CA certificates all dt 03.12.2019 for different quarters which clearly substantiate that SLI - 80 is never used in the manufacture of CSI. They also produced buying specification of Unilever - Buxtehude for SLI - 80 from M/s Galaxy Surfactants mentioning quality specifications and it also shows....
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....ely proved that SLI-80 never ever used in the manufacture of CSI 8. Quantity imported from Unilever Mannheim Germany Nil; 100000 MTs *Data source: DRI report dated June 2017 The above chart clearly shows that SLI - 80 is altogether different product having different use. Hence being not at all comparable/similar or identical goods there is no ground to make the export value of SLI- 80 as basis to reject the declared value of CSI. We find that the appellant since very long was declaring the goods on the basis of transfer pricing and such method is accepted valuation method under all financial and taxation laws in case where the goods are bought from related person, only in a particular case where there is any doubt that such transfer pricing can be rejected. However in the present case we find that there is no such reason or place of doubt. 4.2 Even otherwise also we find that the revenue has adopted very strange method of valuation i.e the revenue considered that CSI comprises of 51% of Sodium CocoylIsethionate (also called as SLI) and 49% of other substances. It considered Galaxy‟s SLI - 80 price converted it to 100%....
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....e (b) of sub-rule (1), is found, the transaction value of identical goods sold at a different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both, shall be used, provided that such adjustments shall be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value. (2) Where the costs and charges referred to in sub-rule (2) of rule 10 of these rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3)In applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods. RULE 5. Transaction value of similar goods. - (1 )Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of similar goods ....
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....n, the value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons who are not related to the seller in India, (b) In such determination, due allowance shall be made for the value added by processing and the deductions provided for in items (i) to (iii) of sub-rule (1). RULE 8. Computed value. - Subject to the provisions of rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of :- (a)the cost or value of materials and fabrication or other processing employed in producing the imported goods; (b)an amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India; (c)the cost or value of all other expenses under sub-rule (2) of rule 10. RULE 9. Residual method. - (1) Subject to the provisions of rule 3, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the prin....