TaxTMI 
TaxTMI 
2023 (12) TMI 13
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....angli Impex and then decide. 2. On Revenue's appeal, Delhi High Court, by its Order dated 27.8.2019, set aside the Final Order of the Tribunal dated 21.6.2017, and remanded this appeal to this Tribunal with direction to decide the matter on merits uninfluenced by the judgment in Mangli Impex. The question before Hon'ble High Court in Mangli Impex was if, by virtue of Section 28(11), the officers of DRI and others were retrospectively empowered to issue notices for demand of duty under section 28. Subsequently, there was another judgment by the Supreme Court in Canon India deciding the question of competence of officers of DRI to issue an SCN under section 28 and the Review Petition filed by the Revenue against the judgment is pending before the Supreme Court. Further, in the Finance Act, 2022, some retrospective amendments were also made to empower officers of DRI and others to issue notices under section 28 of the Customs Act. The vires of these amendments are also said to be challenged before the Supreme Court. 3. However, in this case, both sides wanted to argue the matter only on merits and hence the question of jurisdiction of the officer two issued the Show Cause Notice....
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.... (d) Since the goods covered under Bill of Entry No.766759 dated 09.02.09 have already been provisionally released to the importer on payment of duty of Rs.11,55,761/- (Rs. Eleven lacs fifty five thousand seven hundred sixty one only) on enhanced value, I appropriate the said amount towards payment of duty on the re-determined value. (e) The goods valued at Rs.1,45,02,410/- (One crore forty five lacs two thousand four hundred ten only) covered under Bills of Entry Nos. 760587 dated 14.01.09, 746857 dated 17.11.08, 725687 dated 30.08.08, 708103 dated 04.07.08 and 698659 dated 28.05.08 are also liable for confiscation under Section 111(m) of Customs Act, 1962. However, as these are not available, I impose redemption fine of Rs.30,00,000/- (Rs. Thirty lacs only) in lieu of confiscation under Section 125 of Customs Act, 1962. (f) The differential duty amounting to Rs.51,73,595/- pertaining to seven Bill of Entry 7668815 dated 17.02.09, 766759 dated 09.02.09, 760587 dated 14.01.09, 746857 dated 17.11.08, 725687 dated 30.08.08, 708103 dated 04.07.08 and 698659 dated 28.05.08, is hereby confirmed. The importer is directed to discharge duty liability alongwith statuto....
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....n respect of motor Model Y2 802-4 (0.75KW), the unit value declared in the Bill of Entry dated 09.02.2009 was Rs. 590/- while the value of the similar goods as per NIDB was Rs. 2,470/- and the value determined by the Chartered Engineer is Rs. 2,225/-. Similarly, for Motor Model No. Y 2 225FS-4 (37KW) imported through Bill of Entry dated 17.02.2009 the declared value was Rs. 5,668/- while the value of similar goods in NIDB was Rs. 32,827/- and the value determined by the Chartered Engineer was Rs. 30,000/-. Similar large variations were found in the values of all the other motors. 7. Therefore, the goods imported under the two Bills of Entry were suspected to be undervalued and hence liable to confiscation under the Act and were seized under section 110 of the Act but they were later released provisionally on execution of bonds and bank guarantees. 8. The officers of SIIB also scrutinized five of the past Bills of Entry of similar goods imported by the appellant between 28.5.2008 and 14.1.2009 which had already been cleared and they came to the conclusion that they were also similarly undervalued and accordingly, the values of the goods imported under the five Bills of Entry a....
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..... On behalf of the appellants, the following submissions were made: 13.1 The impugned order is illegal, void and not sustainable either on facts or in law. 13.2 After the SCN was issued, the appellant obtained, under the Right to Information Act [RTI], copies of some Bills of Entry dated 13.5.2009, 29.7.2009, 14.6.2010 and 30.8.2009 under which the goods were cleared at by the department after loading 25% on the declared value. The values at which the goods were assessed by the department in these Bills of Entry were lower than what was proposed in the SCN in this case. 13.3 The Commissioner of Customs wrongly rejected the declared value under Rule 12 and no proof of contemporaneous import of similar goods at higher values was relied upon. The expert opinion is vague and is not based on any proof of similar import at higher values. 13.4 There was no admission of higher values by the appellant in the two statements made. No hawala payment or direct or indirect payment other than the declared value was noticed to substantiate the charge of mis-declaration of value by the department. Therefore, the allegation of mis-declaration is arbitrary and whimsical. 13.5 The adjud....
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....sequential relief to the appellant. 14. On behalf of the Revenue, the following submissions were made: 14.1 The issue pertains to undervaluation of the imported goods. The values declared in the two current Bills of Entry were compared with the NIDB data and with the reports of an expert report and were found to be quite low. Investigation was initiated and statements of Shri Qasim were recorded on 24.2.2009, 25.2.209 and 24.3.2009 under section 108 of the Customs Act. In these statements, which have not been retracted till date, the appellant accepted the re-determination of values. 14.2 The values of contemporaneous imports of goods were comparable to the values determined by the Chartered Engineer. The differential duty was calculated accordingly. 14.3 The values of the goods imported under the five past Bills of Entry were also determined accordingly. 14.4 Once the appellant accepted the enhanced value in writing, it was binding on both sides as per section 147. In fact, there was not even a need to issue any speaking order as per section 17(5) of the Act. 14.5 There was no forced acceptance of the valuation based on the NIDB data. If the appellant did not agr....
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....and confirmation of demand in respect of the five past Bills of Entry sustainable? c) Is the confiscation of the goods imported in the two Bills of Entry and their release on payment of redemption fine, sustainable? d) Is the order holding the goods imported under the five past Bills of Entry liable to confiscation and imposition of redemption fine since they were not available, sustainable? e) Is the imposition of penalty on the importer under section 114A sustainable? f) Is the imposition of penalty on Shri Qasim under section 112(a) sustainable? Rejection of transaction value and re-determination of value in respect of the two current Bills of Entry 17. The case of the appellant is that the goods should be valued as per transaction value as per Rule 3 as there is no evidence of any payment through Hawala or any other direct or indirect payment by the importer to the overseas seller and no evidence to this effect was put forth by the Revenue. It is also its case that the appellant accepted the values proposed by the Revenue to avoid demurrages and ensure quick clearance. It is further its assertion that it has not been provided with copie....
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....d 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, 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 specified in the rules made in this behalf: Provided further that the rules made in this behalf may provide for,- (i) the circumstances in which the buyer and the seller shall be deemed to be related; (ii) the manner of determination of value in respect of goods when there is no sale, or the buyer and the seller are related, or price is not the sole consideration for the sale or in any other case; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section: Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under sec....
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....provide for: a) the circumstances in which the buyer and the seller shall be deemed to be related; b) the manner of determination of value in respect of goods when there is no sale, c) the manner of determination of value in respect of goods if the buyer and the seller are related, d) the manner of determination of value in respect of goods where price is not the sole consideration for the sale; e) the manner of determination of value in respect of goods in any other case; and f) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section. 22. The Rules were framed as per the second proviso to sub-section 1 of section 14. These are 13 Rules in all of which Rules 1 and 2 are Preliminary rules. Rule 3 states that subject to Rule 12, the value shall be the transaction value adjusted according to Rule 10. Rule 10 provides for certain costs to be included in the transaction value. Rule 12 provides for the proper officer to reject the transaction v....
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....be as per the value of similar goods (Rule 5); e) If transaction value is rejected and there is no value of identical goods or similar goods, value must be determined through Deductive method (Rule 7) f) If transaction value is rejected and there is no value of identical goods or similar goods and it is not possible to determine value following deductive method, then value must be determined through computation (Rule 8) g) If the importer so chooses, computational method may be adopted without examining the deductive method first (Rule 6). h) If the transaction value is rejected and there is no value of identical goods or similar goods and if it is also not possible to determine the value through deductive method or computational method, then value may be determined through the residual method by the officer following the above principles (Rule 9). 24. The next question which arises is when can the proper officer reject the transaction value. Rule 12 reads as follows: 12. Rejection of declared value. - (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods....
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....lue, he can call for information including documents and evidence. If the information and evidence is presented and after examining it or if no information or evidence as called for is presented, if the proper office has reasonable belief then it shall be deemed that the value cannot be determined as per Rule 3 (i.e., based on transaction value with additions, if necessary). While the officer can, in the first place call for information and evidence if he has reason to doubt, at the second stage, he should have not just some reason to doubt but a reasonable doubt. If he has such reasonable doubt, then the transaction value can be rejected. The grounds on which the proper officer may raise doubts about the truth and accuracy of the transaction value have been illustrated in explanation 1 (iii) to Rule 12. The list is inclusive and not exhaustive. 26. In this case, the officers received intelligence that the motors imported by the appellant were under-valued. Acting on this intelligence, the goods were examined in detail and they were found as declared in the two Bills of Entry but their values appeared to be too low. The importer was asked for evidence to support their values but....
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....om some expert in this regard as there is a great difference in the prices declared by me and the value compiled on the basis of the NIDB data. I further state that I am ready to pay duty whatever fair assessable value is worked out. I further submit that due to heavy demurrages and other charges my case may be decided at the earliest and a lenient view may be taken and I also submit that I do not want any show cause notice or personal hearing in this matter. (emphasis supplied) 29. The appellant while agreeing to the valuation and waiving the SCN and personal hearing also sought that the goods may also be got examined by an expert. The goods had already been examined by a Chartered Engineer who submitted his report dated 23.2.2009. Another statement of Shri Qasim was recorded on 25.2.2009 in which he was shown the Chartered Engineer's certificate as well as the charts showing the values as per the NIDB data. In his statement, he, inter alia, stated as follows: .. I have been shown the chart prepared by the Customs officials on the basis of the Chartered Engineer report according to which the value of the imported goods is Rs. 44,01,050 and the Customs duty on this v....
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....r, the assessable value of the 408 pieces of electric motors works out toRs.61,21,950/- I have also signed the same in respect of B/E No. 768815 dated 17.02.09. (emphasis supplied) 31. Having rejected the declared assessable value under Rule 12, the department sought to re-determine it under Rule 5 based on the contemporaneous value of similar goods imported into the country. It needs to be noted that since the imported goods were miscellaneous motors of various specifications there cannot be identical goods to determine duty as per Rule 4 and hence determining duty on the basis of values of similar goods under Rule 5 is fair and proper. To determine the value of the contemporaneous imports, the relevant data was extracted from the NIDB. The department also referred the matter to a Chartered Engineer to determine the value of the imported goods. In his first statement dated 24.2.2009, Shri Qasim was shown the NIDB data and he requested that the matter may also be referred to an expert to arrive at a fair value. On 25.2.2009, Shri Qasim was shown both the NIDB values and the report of the Chartered Engineer and he made a categorical statement accepting the chart prepared by th....
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....epted, in writing, by the appellant, these facts were not in dispute and neither side needed to produce any evidence. Therefore, there is no force the submissions of the learned counsel for the appellants that the department failed to provide evidence in support. Revenue need not produce any evidence. In fact, it did not have to even issue the SCN or hold a personal hearing insofar as the re-assessment of these two Bills of Entry is concerned because the appellant had waived them in writing. 35. The appellant's contention that it had accepted the value to avoid demurrages also does not hold any water. There is nothing on record to show that its acceptance was not voluntary. On the contrary all three statements explicitly state that the statements were voluntary and none of them have been retracted. If the appellant wanted to avoid demurrages and was not willing to accept the valuation, the appellant could have transferred the goods to a Customs bonded warehouse under section 49 and it would not have had to pay any demurrages but only the rent to the warehouse keeper. The appellant could have, as an alternative, disagreed with the re-assessment but paid duty under protest and ask....
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....principle that when goods are assessed based on values of contemporaneous imports, they refer to only imports which have already taken place, i.e., past Bills of Entry and not based on Bills of Entry which may be filed in future. The reason for this is that the assessment can be done based on what is available at the time of filing of the Bill of Entry and not anticipating what may happen in future. Therefore, there is no force in this argument either. 38. The correctness of the values determined by the determined and accepted by the appellant cannot, therefore, be questioned as they were undisputed. In a similar situation, where the importer accepted the re-assessment by the officers and after clearing the goods, filed an appeal questioning the same values which the appellant had accepted, this Tribunal had in Hanuman Prasad & Sons held as follows: 35. The following position emerges from the aforesaid decisions of the Tribunal: (i) When an importer consents to the enhancement of value, it becomes unnecessary for the revenue to establish the valueaion as the consented value, in effect, becomes the declared transaction value requiring no further investigation; ....
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....f Entry No. 768815 dated 17.02.09, 766759 dated 09.02.2009, 760587 dated 14.01.09, 746857 dated 17.11.08, 725687 dated 30.08.08, 708103 dated 04.0.08 and 698659 dated 28.05.08. No further information/ documents or any other evidence was provided by the importer to substantiate their declared invoice value." 43. Evidently, the SCN alleges mis-declaration and does not even allege that it was willful, let alone producing any evidence to the effect. 44. Learned authorised representative submitted that the appellant had agreed to pay the differential duty in respect of the past cases also. We have seen the Statement of the appellant given on 25.2.2009 and the relevant portion of it is as follows: I further state that in the past I have imported the same goods by 2-3 Bills of Entry from China. At present I am not having the details, I am ready to pay Customs duty for the same if any. 45. A plain reading of the above shows that at the time of recording the statement, the appellant could not remember the exact number of Bills of Entry filed before and also did not have the details. All that is stated is that he is ready to pay Customs Duty for the same, if any. Neither we....
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....ovided further that, without prejudice to the provisions of the proviso to sub-section (2) of section 115, such fine shall not exceed the market price of the goods confiscated, less in the case of imported goods the duty chargeable thereon. 48. Section 111(m) provides for confiscation of imported goods which do not correspond in value or in any other particular to the entry made. The case of the appellant is that since the re-assessment itself is not sustainable, neither is the confiscation. The case of the Revenue is that the confiscation was done correctly. As we have already found that the goods were correctly re-assessed, section 111(m) squarely applies to the goods in question and therefore, their confiscation needs to be upheld. 49. Once the goods are confiscated, section 125 requires that, unless the goods are prohibited goods, the owner should be given an option to redeem the goods on payment of fine. If they are prohibited goods, the adjudicating authority has the discretion of allowing redemption or not. This section further restricts the quantum of penalty to the market value of the goods. It is not the case of either side that the motors imported by the appellant ....
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....the interest has not been charged or paid or has been part paid or the duty or interest has been erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts, the person who is liable to pay the duty or interest, as the case may be, as determined under sub-section (8) of section 28 shall, also be liable to pay a penalty equal to the duty or interest so determined: Provided that where such duty or interest, as the case may be, as determined under sub-section (8) of section 28, and the interest payable thereon under section 28AA, is paid within thirty days from the date of the communication of the order of the proper officer determining such duty, the amount of penalty liable to be paid by such person under this section shall be twenty-five per cent. of the duty or interest, as the case may be, so determined: ****** 53. As we have found that the demand of differential duty under section 28 in respect of the past Bills of Entry cannot be sustained, we set aside the penalty under section114A as well. As far as the duty on the two current Bills of Entry are concerned, they are a matter of re-assessment under section 17 and not a case of dut....
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.... the value thereof or five thousand rupees, whichever is the highest; (v) in the case of goods falling both under clauses (ii) and (iii), to a penalty not exceeding the duty sought to be evaded on such goods or the difference between the declared value and the value thereof or five thousand rupees, whichever is the highest. 55. We have already found that the confiscation of the goods imported under the two current Bills of Entry and their release on payment of redemption fine need to be upheld and we have set aside the confiscation and imposition of redemption fine in respect of the five past Bills of Entry. We have also upheld the re-assessment of duty in the two current Bills of Entry and set aside the demand of duty under section 28 in respect of the five past Bills of Entry. Shri Qasim is the person most directly connected with the filing of the two Bills of Entry and the values of the goods in these did not match the imported goods which rendered the goods liable to confiscation under section 111(m). Therefore, Shri Qasim squarely falls under Section 112(a) and is liable to penalty under it. 56. However, in the impugned order, penalty under section 112(a) has be....