TaxTMI 
TaxTMI 
2025 (6) TMI 690
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng Aerostructures Australia (BAA). The machinery and equipment were part of a sheet metal component manufacturing plant which was to be discontinued by BAA. They apparently agreed to transfer it to MAPL at no charge (free), no warranty basis. Based on intelligence, DRI, Mumbai, investigated the matter. From the investigation, it appeared that the nature, actual charges and value of the goods under import had been suppressed resulting in the misdeclaration of value in the Bill of Entry filed on first check basis by MASPL. Hence Show Cause Notice was issued and after due process of law, the Ld. Adjudicating Authority rejected the declared assessable value of Rs.18,75,82,857.34 under the provisions of Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR 2007), and redetermined the value as Rs.40,79,94,786/-. He also denied the benefit of concessional rate of duty under Notification No. 103/2009-Cus dated 11.9.2009 under the EPCG scheme. Differential duties were demanded along with interest and penalties were imposed on the appellant under sec. 114A/114AA of the Customs Act, 1962 (CA 1962). Penalty of Rs.2,00,000/- each was imposed on the DGM Shri T.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....statements recorded under Section 108 of CA 1962. Hence the findings in the impugned order merits being upheld and he prayed that the appeal be rejected. 4. We have perused the appeal and have heard the parties to the dispute. Recourse to valuation of the goods as per rule 9 of CVR 2007 has not been questioned by either of the parties. The rule reads as under; 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 principles and general provisions of these rules and on the basis of data available in India; Provided that the value so determined shall not exceed the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade, when the seller or buyer has no interest in the business of other and price is the sole consideration for the sale or offer for sale. (2) No value shall be determined under the provisions of this rule on the basis of - (i) the selli....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have an inspection / appraisement report of secondhand machinery from a particular Chartered Engineer. The importer shall be free to select any chartered engineer, empaneled by the Custom House for the respective class of goods, if so required. 12. To sum up, the following guidelines shall be followed: a) All imports of second-hand machinery/used capital goods shall be ordinarily accompanied by an inspection / appraisement report issued by an overseas chartered engineer or equivalent, prepared upon examination of the goods at the place of sale. b) The report of the chartered engineer or equivalent should be as per the Form A annexed to this circular. c) In the event of the importer falling to procure an overseas report of Inspection / appraisement of the goods, he may have the goods inspected by any one of the agencies in India, as are notified by the DGFT under Appendix 2G of the HBoP 2015- 20 and Aayat Niryat Forms to FTP 2015-20, as amended from time to time (para 2.59 of Handbook of Procedures 2015-20 refers). d) At customs stations where agencies notified by DGFT are not present, importers may continue to avail of the services of lo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot be amended by Executive instructions but "if the rules are silent" on any particular point, Government can fill up the gaps by issuing executive instructions, in conformity with the existing rules. The relevant portion is extracted below; "We proceed to consider the next contention of Mr. N.C. Chatterjee that in the absence of any statutory rules governing promotions to selection grade posts the Government cannot issue administrative instructions and such administrative instructions cannot impose any restrictions not found in the Rules already framed. We are unable to accept this argument as correct. It is true that there is no specific provision in the Rules laying down the principle of promotion of junior or senior grade officers to selection grade posts. But that does not mean that till statutory rules are framed in this behalf the Government cannot issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. It is true that Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point Government can fill up the gaps....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ent and the correct duty has to be redetermined by issue of notice to the importer under section 28 of CA 1962. Hence there is no merit in the appellants stand that rejection of the value assessed under Rule 9 of CVR 2007 is not possible. 4.5 Even otherwise, we note that in Mohinder Singh Gill and another Vs. Chief Election Commissioner, New Delhi and Others [(1978) 1 SCC 405 / 1978 AIR 851] a 5 Judge Bench of the Supreme Court has examined a situation where there was no express statutory grant of power for an authority to perform its duties and held as under; "Black's Law Dictionary explains the proposition thus "Implied powers" are such as are necessary to make available and carry into effect those powers which are expressly granted or conferred, and which must therefore be presumed to have been within the intention of the constitutional or legislative grant. (p. 1334 Black's Legal Dictionary 4th Edn.) This understanding accords with justice and reason and has the support of Sutherland. The learned Additional Solicitor General also cited the case in Metajog Dobey v. H. C. Bhari [1955] 2 SCR 925 at p. 937 and Commissioner of Commercial taxes,& Ors v. R. S. Jhav....
X X X X Extracts X X X X
X X X X Extracts X X X X
....countants of India Vs Mukesh Gang [2016 SCC OnLine Hyd 327]; "Certification is a formal procedure by which an accredited or authorized person or agency assesses and verifies the attributes characteristics, quality, qualification or status of individuals or organisations, goods or services, procedures or processes, or events or situations, in accordance with established requirements or standards. Certification refers to the confirmation of certain characteristics of an object, person, or organisation. This confirmation is often, but not always, provided by some form of external review, education, assessment, or audit. Certification means authenticity of a particular fact on verification, and is not a mere statement." (emphasis added) 4.8 The appellant has stated that the rejection of the appraisement report is unsubstantiated, and records of cross-examination have been mis-quoted. They have stated that the secondhand machines were inspected by BVIPL through their Australian office. That Mr. Pani of BVIPL had during the cross-examination stated that he had conducted inspection in Australia of the said machines before and after the dismantling of the machine. Tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....repared and signed by Mr Tony Boskovic under his signature and seal. In fact the C. E. Shri K. P. Vijaykumar concluded in his statement that the certificate given by him was fabricated and baseless. It was hence a false certificate. Shri Ashish Kumar Upendra Pani of BVIPL in his statements dated on 18.2.2013 and 19 2.2013, admitted that he had issued a certificate for and on behalf of BVIPL in respect of secondhand equipment and accessories supplied by BAA, Australia to MAPL. He had not verified the machines and their condition but had given an imaginary value in respect of the value of refurbishment. He has however resiled from this position during the cross examination. 4.10 Section 58 of the Indian Evidence Act, as it then stood, lays down that facts admitted need not be proved. The principle on which this section is based is that a court sits to decide only disputed facts. However as per section 58 of the said Act, even where a fact is admitted, the court has a discretion to require proof of that fact. The Hon'ble Supreme Court in United India Insurance Co. Ltd. and Anr. Vs Samir Chandra Chaudhary, [(2005) 5 SCC 784] has held to the following effect: As was....
X X X X Extracts X X X X
X X X X Extracts X X X X
....his assessment methods, all of which builds trust and assurance in his findings. But where the CE's opinion suffers from shortcomings, ambiguities, human frailties etc due to which the above requirements are not met or the quality of his certification is suspect, due to his negligence or is fraudulent, it would be unsafe to rely on his certification. When this happens as in the present case the facility of a simple method of determining the value by appraisement extended to the importer by Boards Circular, for his secondhand goods is no longer feasible. Hence the decision in the impugned order discarding the certificate cannot be said to be arbitrary, vague or fanciful. We hence find that the rejection of value declared as appraised by C.E. Vijaykumar's cannot be faulted. 5. Hence the appellant has forfeited his chance to have the goods valued as per the Boards Circulars discussed above. We shall next examine the allegation of the appellant having suppressed information. 5.1 As per revenue the appellant has suppressed the correct considerations in respect of freight (including inland freight and local clearing charges in Australia). Expenses incurred in Australia towards deco....
X X X X Extracts X X X X
X X X X Extracts X X X X
....- Amount payable by MAPL to BAA towards ownership transfer of scrap and provision for storage space Nil AUS$ 1,57,300 converted to INR @ 55.32 - Rs.87,01,836/- Insurance Rs.1,54,420/- High Sea Sales Commission Rs.30,00,000/- Total CIF value Rs.40,39,55,234/) rounded off) Add 1% landing charges Rs.40,39,552/- Total Assessable Value Rs.40,79,94,786/- 5.2 The appellant has stated that the insured value as shown in the table above is neither assessed or supported by any surveyor nor accepted by the insurance company as being the true or fair value of the equipment. It is also not based on any invoice as there was no transaction value. Hence the Commissioner grossly erred in holding the insured value as the intrinsic value of the impugned goods. We find that there is no allegation that the insurance document is a manipulated one. In fact the documents were submitted by the appellants themselves during the course of inquiry to the Custom authorities. 5.3 Section 2(h) of the Indian Contract Act, 1872, as it then stood, states that 'An agreement enforceable by law is a contract.' Insurance contra....
X X X X Extracts X X X X
X X X X Extracts X X X X
....toms 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 export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: Provided that such transaction value in the case of imported 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: . . . . . . . . Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 Rule 10.Cost and serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntainer Freight Station shall not be included in the cost of transport referred to in clause (a). Explanation.- The cost of transport of the imported goods referred to in clause (a) includes the ship demurrage charges on charted vessels, lighterage or barge charges. (3) Additions to the price actually paid or payable shall be made under this rule on the basis of objective and quantifiable data. (4) No addition shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule. (emphasis added) From a plain reading of the legal provisions, it is clear that any value that is ascertained as per the Customs Act and Rules framed there under must include in addition to the price, all costs incurred towards the transport of the imported goods to the place of importation. Loading, unloading and handling charges associated with the delivery of the imported goods at the place of importation and the cost of insurance. 5.6 In the current scenario the 'Memorandum of Understanding' dated 22.06.2010, sets out the general understanding of the conditions under which the equipment is being tr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Clearing charges at Melbourne Port, Australia 9,87,250 Ocean Freight from Melbourne Port to Chennai Port 98,17,500 High Sea Sale Commission 30,00,000 Total 1,59,96,500 5.8 We find that as per the documents provided by the appellant the actual payments to third parties were as reflected in the chart given at para 39 of the OIO and reproduced at para 6.1 above. Shri Tangirala Subrahmanya Sarma (T. S. Sarma) DGM (Finance) MAPL, admitted in his statement dated 04.03.2013 that the High Sea Sale Agreement did not include an amount of approximately Rs 6.70 crores towards dismantling, warehousing, insurance etc. incurred abroad and it did not represent the actual cost incurred by the high seas seller. The relevant portion of the impugned order recording the gist of the statement as given by Shri T. S. Sarma is reproduced below; "31. Regarding the role of M/s BOXCO Logistics Pvt. Ltd., Mumbai, he clarified that the said company was entrusted with the responsibility of moving of equipment and machinery from Larthur's warehouse in Australia to factory in India. He confirmed that there was no amendment in the purchase order raised on M/s BOXCO Logistics In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rma Invoice' to be submitted to DGFT authorities white applying for EPCG license to project an indicative value for all items of machinery, though received free of cost, along with freight and insurance. The value of machinery as considered as per BVIPL's inspection and valuation report, whereas the freight were taken on approximate basis. An amount of Rs.1,59,96,500/- was paid by MASPL to MAPL and there was no transaction for Rs.21,00,00,004. He further clarified that expenses amounting to Rs.6,72,72,100/- were incurred in relation to acquisition of the goods but the same were not included in the HSS agreement. This amount was charged by MAPL to MASPL vide a separate debit note No. MASPL/002/12-13 dated 25.9.2012 and paid by MASPL by cheque. This amount was also not included in the value of goods while applying for the EPCG license. As regards value of the goods for the purposes of insurance, he clarified that the goods were inspected by the representative of the insurance company and the value for insurance was worked out after consultation with him and the value of the goods was estimated to be Australian $ 52,00,000. 33. In his statement dated 07.03.2013 Shri Sunil Rag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....formation. 6.2 Apart from the false C. E. Certificate produced for valuing the goods, Shri T. S. Sarma in his statement, a summary of which is extracted in the para above, was not able to explain, when there was no change in the purchase order dated 02.04.2012 raised on M/s Boxco logistics India private limited by M/s MASPL how the consignee was changed to MAPL and the shipment effected in the name of MAPL when the shipment was necessarily to be done in the name of the entity raising the purchase order, or why the freight amount was paid by MAPL. Why he himself had prepared the high sea sales invoice dated 14.05.2012 in his capacity as authorised signatory of MAPL though being an employee of MASPL and had also signed the high sea sales agreement on behalf of MAPL and that the agreement was countersigned by Mr Thyagarajan Director of MASPL. Having not discharged the onus of proof of not having committed a blame worthy conduct, revenue has succeeded in over all establishing fraud and thus have rightly invoked section 28(4) of the Customs Act 1962 for demanding duty. In the circumstances the penalty imposed on Shri T. S. Sarma under section 112(a) of CA 1962 also cannot be fau....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Regulation) Act, 1992 (FTDR Act) operate in their own spheres. Customs Duty is payable, on imported goods, as per the relevant notification issued under the Customs Act, 1962. Whereas the FTDR Act and the Rules etc framed there under, regulate the import or export of goods. 7.4 The EPCG scheme is administered by DGFT with regard to issuance of authorizations to its redemption and issue of EODC to 'authorisation holder's', while the registration of authorisation at Customs ports for allowing exemption from levy of Customs duty on imported capital goods as well as accounting of exports against the authorizations are administered by the Customs Department. 7.5 When looking at conditional notifications, especially related to EXIM schemes having concurrent jurisdiction, one has to examine the activity owner of the conditions set out there under. Hence when the benefit of Notification No. 103/2009-CUSTOMS is sought to be denied on the grounds of fraudulent valuation made by the importer to Custom authorities, it should be examined for specific condition violations of the notification. In this case the condition is not whether the value declared for Customs purposes was fraud....
X X X X Extracts X X X X
X X X X Extracts X X X X
....th liability and availability of the goods are necessary. 8.1 As a principle, goods which are liable for confiscation but not available cannot be redeemed, unless the importer has undertaken to produce the goods as per the condition of the bond executed by him. Hence with regard to the confiscation and redemption of the goods on payment of a fine, we find that although the goods were cleared on execution of a bond, it was executed in terms of notification No. 103/2009-Cus dated 11.9.2009, for binding the importer to comply with all the conditions of the notification as well as to fulfill export obligation on FOB basis equivalent to eight times the duty saved on the goods imported as may be specified on the authorization, or for such higher sum as may be fixed or endorsed by the Licensing. Not for any blameworthy conduct under the Customs Act. None of these reasons are mentioned in the SCN and are not relevant in the present case. We have earlier found the impugned goods eligible for exemption under notification No. 103/2009-Cus, and hence the goods are not liable for confiscation in terms of the bond. 8.2 The Hon'ble Supreme court in the case of Commissioner of Customs (....