AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2023 (9) TMI 576
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....daiyur Post, Nagapattinam District on the recommendation of "Tamil Nadu Electricity Board". The project was approved and the Essentiality Certificate was issued by the Sponsoring Authority viz., Energy Department, Government of Tamil Nadu vide letter dt. 16.03.1999. M/s.PPN submitted a proposal to the Energy Department, Government of Tamil Nadu for their power plant and the Energy Department vide their letter dated 16.03.1999 have certified the details of items of import and prescribed certain value limit against the relevant items. Thus concessional benefits of Customs duty for the import of such items were allowed. In this regard, the Energy Department's letter is addressed to Commissioner of Customs, detailing the value limit. As per the said certificate, the Sponsoring Authority has recommended 9 segments of the project totalling to JPY 8,86,24,43,836 and USD 6,41,13,986. Based on the Sponsoring Authority's approval, the project contract of M/s.PPN was registered by Custom house, Chennai on 30.03.1999. As per the norms stipulated in the Project Import Regulations, 1986, M/s.PPN had submitted a Bond for Rs.638 Crores and a Bank Guarantee for Rs.13.77 crores in favour of the Comm....
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....e goods relating to the 1st, 2nd and 9th segments were supplied by M/s. Mitsubishi Heavy Industries, Japan. Similarly, the goods relating to 7th and 8th segments were supplied by M/s.Kier International, U.K. The goods relating to the 3rd, 4th, 5th, 6th were supplied by M/s.Stone and Webstar Engineering Corporation, USA. only. 5. As mentioned above, the goods relating to 3rd, 4th, 5th & 6th segments were supplied by M/s.Stone and Webstar on behalf of M/s.Marubeni who raised invoices on M/s.PPN. Based on these invoices, M/s.PPN filed their import documents before the Customs Department. M/s.PPN have cleared goods covered under 259 bills of entry and 12 bills of entry were supplied by M/s.Stone and Webstar invoiced through M/s. Marubeni. 6. In the 3rd segment, goods relating to "Sea water System/Desalination System", in the 4th segment, goods relating to "Balance of Plant", in the 5th segment, goods relating to "Electrical and Control Equipment" and in the 6th segment, goods relating to "Fuel System" were imported by M/s.PPN availing concessional benefits of Customs duty. 7. After the erection and commissioning of the power plant, M/s.PPN submitted a proposal to the Commissio....
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....1 crore under Section 112(a) of the Act ibid. 9. Learned Counsel Sri Hari Radhakrishnan appeared and argued for the appellant M/s. PPN. Ld. Counsel vehemently argued with regard to the delay in finalization of the assessment. To establish that there has been huge delay in final assessment, Dates & Events have been furnished by the counsel for easy reference as follows :- SN DATE EVENTS 1 16.03.1999 The Appellant received recommendation letter from the Tamil Nadu Government to the Collector of Customs, Chennai for setting up their power plant. 2 30.03.1999 The Respondents registered the project of the Appellant and issued a Project Intimation letter in F. No. S37/11/1999.The Appellant executed bank guarantees and also deposited an amount of Rs. 84 lakhs as security deposit. The goods were imported during the period from 10.2.2000 to 20.12.2001. 3. 26.12.2002 The appellant as per letter dated 26.12.2002 requested the Commissioner of Customs to finalize the provisional assessment. 4. 17.06.2003 The Petition's Counsel sent a letter to the Assistant Commissioner of Customs requesting him to finalise the assessments in respect of the import....
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....4.10.2007. The appellant was kept in dark as to the investigation report made by the DRI. 20 15.02.2017 Letter from the Appellant's Counsel to the Assistant Commissioner of Customs requesting him to finalise the assessment. 21 25.02.2017 Letter from the Appellant's Counsel to the Commissioner of Customs requesting them to finalise the assessment. 22 05.09.2017 Bank Guarantees executed by the Appellant were periodically renewed. 23 05.03.2018 Final Reminder sent by the Appellant's Counsel to the Commissioner of Customs. 24 22.5.2018 The appellant preferred a writ petition bearing no. 6492 and 6493 of 2018 seeking direction from the Hon'ble High Court to the Department to finalize the assessment and return the huge cash security deposit made for an amount of Rs.84 lakhs and also to release the bank guarantee executed for an amount of Rs.13.77 crores. During the pendency of the said writ petition, the subject show cause notice dated 22.5.2018 on an entirely new ground that the value for the imported equipment was lesser than the supplier's purchase price. 25 08.10.2018 The appellant filed writ petition bearing no. 14365 of 2018 cha....
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....here is no evidence of any amount paid to M/s.Marubeni over and above the contract value. Merely because M/s.Marubeni had procured some of the items from other sources at a higher price the transaction value cannot be rejected so as to enhance the value declared by appellant and demand higher duty. The final assessment has been done by department after a huge time gap and without factual or legal basis to demand differential duty. 11. The decision in the case of J. Sheik Parith Vs CC (Seaports-Exports), Chennai - 2020 (374) ELT 15 (Mad.) was relied by the Ld. Counsel to argue that when there was a huge delay of 8 years for adjudication of the show cause notice, it was held to be against the principles of natural justice. The demand was set aside by the Hon'ble Jurisdictional High Court. 12. It is submitted by the counsel that the Hon'ble Supreme Court in the case of State of Punjab Vs Bhatinda District Co-Op. Milk P. Union Ltd. - 2007 (217) ELT 325 (SC) held that when there is no period of limitation prescribed in the statute, the authorities must exercise its jurisdictional with a reasonable period. Though there is no period prescribed in the Customs Act, 1962 as to finaliza....
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....ed for the appellant viz. M/s.Marubeni. He submitted that it is the case of the department that M/s.Marubeni procured goods from other vendors and supplied the same to M/s.PPN at lower prices which resulted in payment of lesser customs duty by M/s.PPN in the following segments : S. No. Item of Work Name of the sub-contractor Amount as per contract registered with Customs Sub-contracted amount 4. Sea Water / Desalination System M/s. Stone & Webster Engineering Corporation, USA 1,18,62,835 1,27,57,000 6. Electrical & Control Equipments M/s. Stone & Webster Engineering Corporation, USA 84,52,403 91,05,000 7. Fuel system M/s. Stone & Webster Engineering Corporation, USA 6,53,429 7,21,000 9. Single point mooring system M/s. Kier International Limited, England 50,12,444 72,23,644 15.1 It is held by the Department to be intentional mis-declaration of value for which the differential duty at merit rates is demanded from the importer viz. M/s.PPN and a penalty of Rs.1 crore has been imposed under Section 112 (a) on PPN as well as on M/s.Marubeni being the foreign supplier. 15.2 There is no dispute that when all....
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..... PPN had paid a higher amount than what has been declared. • Further, in the instant case, none of the circumstances specified under Rule 3(2) of the Valuation Rules exist, and nor is it the contention of the custom department that any of these circumstances exist, warranting rejection of transaction value. 16.2 Ld. Consultant appearing for M/s.Marubeni relied on the following case laws in support of the above proposition: a) Eicher Tractors Ltd. Vs. CC, Mumbai - 2000 (122) ELT 321 (SC) b) Tolin Rubbers Vs. CC, Kochi - 2004 (163) ELT 289 (SC) c) Commissioner Vs. Bureau Veritas - 2005 (181) ELT 3 (SC) d) CC, Mumbai Vs. J.D. Orgochem Ltd. - 2008 (226) ELT 9 (SC) e) CC, Vishakhapatnam Vs. Aggarwal Industries Ltd. - 2011 (272) ELT 641 (SC), f) Basant Industries - 1996 (81) ELT 195 (SC) g) Mirah Exports Pvt. Ltd. - 1998 (98) ELT 3 (SC) 16.3 Further, the impugned order ignores the fact that the payment has been made on account of a signed contract and through Letter of Credit. These documents show that the price paid is a negotiated price and is the true transaction value. The same must be accepted. Withou....
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....ars from the date of import. 18.2 Further, the fact that the goods were provisionally assessed under Section 18 of the Customs Act, 1962, which are not finalised so far is not relevant for the purposes of initiating penal proceedings. Further, the Appellant, being a foreign supplier is not a party to the provisional assessment and they have not executed any bond with the authorities. 18.3 Reliance is placed on the following judgements: a) Parekh Shipping Corporation v. ACC., Bombay, 1995 (80) E.L.T. 781 (Bom.). b) State of Punjab v. Bhatinda District Co-Op. Milk P. Union Ltd., 2007 (217) E.L.T. 325 (S.C.), c) Neeldhara Weav. Factory v. DGFT, New Delhi, 2007 (5) S.T.R. 404 (P & H) d) CCE., Chandigarh-I V. Malwa Iron & Steel Co., 2015 (320) E.L.T. 533 (P & H) e) CCE, Chandigarh v. Hari Concast (P) Ltd., 2009 (242) E.L.T. 12 (P & H) f) Usha Stud & Agricultural Farms (P) Ltd. v. CC., New Delhi, 2011 (274) E.L.T. 365 (Tri. - Del.) 19. Ld. Consultant submitted that, in the present case, the Bills of Entry were filed, duty was paid, and the good were cleared way back during the period 1998 to 2002 itself. Thus, any SCN proposi....
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....t time, the provisions of the Customs Act, 1962 extend only to the whole of India and not beyond India. Further, the authorities in India have no jurisdiction under law to try a person in respect of something which was done beyond India and in a foreign country which will not come within the mischief of the provisions of the Customs Act, 1962. 26. Accordingly, the provisions of the Customs Act, 1962 cannot be invoked and no penalty can be imposed on them under the provisions of the Customs Act. 27. In this regard, the Appellant relies on the decision of the Hon'ble Tribunal in the following cases: a) Shri Kunhahammed v. Collector of Customs, Cochin, 1992 (62) E.L.T. 146 (Tribunal) b) Guru Electronics Singapore Pvt. Ltd. - 2009 (240) E.L.T. 56 (T) c) Vishwajyoti Impex Vs. CC(Adjn.), Mumbai, 2009 (238) E.L.T. 257 (Tri. - Mumbai) d) Patel Engineering Ltd. CC (Exports), Nhava Sheva, 2014 (301) E.L.T. 370 (Tri. - Mumbai) e) Ankit Gopal Agarwal Vs. CC, Cochin, 2009 (234) E.L.T. 646 (T) f) Advance Exports vs. CC, Kandla, 2007 (218) E.L.T. 39 (T) g) Relax Safety Industries Vs. CC, Mumbai, 2002 (144) E.L.T. 652 (T) ....
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....ner of Central Excise, Noida 2004 (163) ELT 47 (Tri.-Del.). The proceedings are ultra vires the powers and jurisdiction of the Asst. Commissioner. 33. Moreover, the impugned proceedings are Ultra Vires being beyond the jurisdiction of the Assistant / Deputy Commissioner of Customs. It is submitted that in terms of Section 122 of the Customs Act, read with Notification issued thereunder, the Ld. Assistant Commissioner is empowered to adjudicate matters in which anything is liable to confiscation or any person is liable to a penalty, where duty amount involved is up to Rs. 5 lakhs. The present SCN is clearly beyond his jurisdiction as the duty amount involved is over Rs. 9 Crores. 34. However, with regard to these submissions, the Ld. Adjudicating Authority has held that under Section 18(2) of the Customs Act, 1962, Assistant Commissioner is the proper officer to finalise the provisional assessment and therefore, the proceedings are within jurisdiction. 35. Though it is true that the Assistant Commissioner of Customs is the proper officer to finalise the provisional assessment, the same will hold good only in case of mere assessments. When the issue of confiscation, impos....
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....h amount may be adjusted pursuant to the provisions of the Project Contract. Owner shall pay: (a) the Contract Amount (b) all Indian Taxes as may be applicable to the Foreign Supply; and (c) such other sums as shall become due and payable to Contractor from time to time. In each case, in accordance with the General Terms and Conditions. In view of the transfer of title to equipment, materials and other Work under this Agreement on an FOB port-of-shipment basis, no sales tax shall be applicable in transactions s contemplated by this Agreement." 40. The total value of the contract is USD 1,48,39,000. As per Table A as above. The amount payable in Japanese Yen is 8,86,2443,836 and USD is 6,41,13,986. The total of both these would be equivalent the contract value. The department has vivisected the contract into goods sourced from different suppliers and held that the value of goods supplied by M/s.Stone & Webstar to M/s.Marubeni is higher than the invoice value issued by M/s.Marubeni to M/s. PPN. The other items does not have such dispute. The value which is stipulated in the contract has been paid to M/s>Marubeni. There is no allegation ....
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....h the Customs Valuation Rules, 1988. The 'special circumstances' have been statutorily particularised in Rule 4(2) and in the absence of these exceptions, it is mandatory for Customs to accept the price actually paid or payable for the goods in the particular transaction. In all the cases, we find that the transaction value has been arrived at purely on commercial considerations based on contracts. The supplier, in order to honour the contracts, supplied the goods at the contracted price. There is also no allegation that the appellants paid to the supplier more than the contracted value. Under these circumstances, there are actually no grounds to reject the transaction value. The reliance on Rajkumar Knitting Mills case - 1998 (98) E.L.T. 292 (S.C.) does not appear to be correct as the same was rendered in the context of the old law. In view of the above observations, we allow all the appeals with consequential relief, if any." The said decision was affirmed by the Hon'ble Apex Court as reported in CC Vs Vishakatpatnam Vs Aggarwal Industries Ltd. - 2011 (272) ELT 641 (SC). The relevant para reads as under : "12. In Eicher Tractors Ltd. (supra), relied upon by the Tribun....
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....are of the opinion that the revenue erred in rejecting the invoice price. As stated above, in the present case the whole controversy arose on account of difference in price of the same commodity, contracted to be supplied under different contracts entered into at different points in time. As aforesaid, in the instant case, admittedly the contract for supply of crude sunflower seed oil @ US $ 435 CIF/PMT was entered into on 26th June 2001. It could not be performed on time because of which extension of time for shipment was agreed to between the contracting parties. It is true that the commodity involved had volatile fluctuations in its price in the international market but having delayed the shipment, the supplier did not increase the price of the commodity even after the increase in its price in the international market. This fact is also proved by the actual amount paid to the supplier. There is no allegation of the supplier and importer being in collusion. It is also not the case of the revenue that the transaction entered into by the respondent was not genuine or undervalued. Nor was there a mis-description of the goods imported. It is also not the case of the revenue that the ....
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.... Bills of Entry, invoices, and the final payment certificate is insisted upon only in cases where the contract provides that the amount of the transaction will be finally settled after completion of the supplies. 5.2 To ensure that the imported goods have actually been used for the projects for which these were imported, plant site verification may be done in cases where value of the project contract exceeds Rs.1 crore. In other cases, plant site verification is normally done selectively. 5.3 In the normal course, after submission of the reconciliation statement and other documents by the importers, the provisional assessments are finalized within a period of three months where plant site verification S tor required and within six months where plant site verification is required. In cases where a demand has been 1ssued and confirmed on such finalization and importer has not paid the duty demanded, steps are taken as per law to realise the amount." 42. The date and event chart noticed above will show that there has been inordinate delay in finalizing the assessment. Though it was a matter under investigation by DRI, the report of DRI was filed in 2006. In spite ....
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....pre-deposit required to be made would be Rs.7.5% of the disputed demand. 8. Thus, taking into consideration the peculiar facts and Circumstances of the case, we are of the view that partial relief can be granted to the appellant so as to enable them to tide over the financial crisis, which they are stated to be undergoing at present. However, we are convinced that the other directions issued by the learned Single Bench directing the appellant to participate in the adjudication process would not require interference. 9. Accordingly, we partly allow this appeal to the extent indicated below: a) The order and direction issued by the learned Single Bench in Paragraph 15 (a) (b) & (c) are confirmed. b) The directions ordered in Paragraph 15 (d), (e) & () stands modified as follows: The appellant is directed to remit a sum of Rs.16 lakhs as cash deposit so that the cash deposit to be retained by the department will be rounded off to Rs.1 Crore as already Rs.84 lakhs has been remitted by the appellant. The appellant need not renew the Bank Guarantee "and the department is directed to intimate the petitioner's bankers about the above directi....