TaxTMI 
TaxTMI 
TaxTMI 
2025 (6) TMI 690
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....nery 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.S. Sarma under sections 112(a) and 114AA of ....
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....e 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 selling price in India of the goods produced in India; (ii) a system which provides for....
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....y 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 locally empaneled Chartered Engineers. e) In cases where the report is to be prepared by the agencies in India notified by DGFT or the Chartered Engineers empaneled by Cus....
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....xisting 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 and supplement the rules and issue instructions not inconsistent with the rules already framed." (emphasis added) 4.3 Further ascertaining the value of second-hand machines after allo....
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....d 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. Jhaver & ors. etc. [1968] 1 SCR 148 at p. 154/155 to substantiate his thesis that the doctrine of implied powers clothes the Commissioner with vast incidental powers. He illustrated his point by quoting fro....
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....tion 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. That absence of the personal knowledge of place of inspection on his part or mentioning the wrong place of inspection in the report cannot trivialize the inspection or the report. Further Mr. Vijaykumar has during the cross-examination sta....
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.... 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 observed by this Court in Avadh Kishore Das v. Ram Gopal and Ors., AIR (1979) SC 861 in the backdrop of Section 31 of Indian Evidence Act, 1872 (in short the 'Evidence Act') it is true that evidentiary admissions are not conclusiv....
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....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 decommissioning, dismantling, packing, insurance and inspection of the equipment. Payments made to Aerostaff Australia towards assistance in dismantling and packing of impugned goods. Similarly, payments made to Niche Solutions towards consultancy for relocatio....
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.... 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 contracts are special contracts. The principle of uberrimae fidei, meaning "utmost good faith," operates in insurance contracts. This is a fundamental legal doctrine, requiring both parties to act with complete honesty and transparency. They are based on the general principles of full disclosure. Thus, a propose....
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....port 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 services. - (1) In determining the transaction value, there shall be added to the price actually paid or payable for the imported goods, - . . . . . e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such pa....
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....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 transferred by BAA to Mahindra Aerospace (MAPL) for purpose of export to India. This is summarised in letter dated 27.04.2010 by Boeing Defense, Space & Security addressed to Mahindra & Mahindra, which also outlines the actions required by both organizations in order to complete transfer. It includes, both the parties jointly approaching Indian Authorities and make efforts to obtain offset credit for the transfer for Boeing towards its existing offset obligations for a project being ex....
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....ng, 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 India Pvt. Ltd. by MASPL before arrival of the cargo at Chennai Port. When confronted with the purchase order no. 3400058975 dated 02.04.2012 issued by MASPL on M/s BOXCO Logistics India Pvt. Ltd. and bill of lading no. S00020462 dated 7th May 2012 issued by M/s ASEAN Cargo Pty. Limited on instructions M/s BOXCO Logistics India Pvt. Ltd. and his admission that there was no amendment to the purchase order, he was unable to answer as to why and how name of the consignee was changed to MAPL and the shipment effected in the name of MAPL. He was also unable to clarify as to how and why the freight amount was paid by MA....
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....t 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 Raghu Shetty, President of M/s BOXCO inter-alia, stated that the Purchase Order No. 3400058975 dated 02.04.2012 was raised by MASPL on BOXCO Logistics India Pvt. Ltd. towards transportation of equipment from Australia to India, that he was not aware of any amendment made to the said purchase order nor was any amended purchase order forwarded to them by MASPL that the shipment was necessarily required to be done in the name of the firm/entity that was raising the purchase order, viz. MASPL. On being pointed out that in the absence of any amendment to the purchase order the bill of lading no, S00020462 dated 7th May 2012 for the said....
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....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 faulted. The amount is also not shocking to the conscience so as to interfere with the quantum imposed. As stated by the Hon'ble Supreme Court in S.P. Changalvaraya Naidu Vs Jagannath [1994 (1) SCC 1], a "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. In this case the parties involved attempted to cheat the exchequer of its rightful tax revenues and for the company to illegally gain from it. 7. The question then arises as to whether benefit of EPCG license can be d....
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....ooking 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 fraudulent but whether the goods are covered under a valid authorization issued under the EPCG Scheme. If so the benefit of the notification cannot be denied, so long as the authorisation is valid, on the score that the value of the goods declared to Customs authorities at the time of import was fraudulent. That would be beyond the scope of the notification. 7.6 The EPCG scheme does not adopt the valuation of goods done as per section 14 of the Customs Act 1962, for issue of authorisation under the EPCG scheme. The option available to the Customs authorities was to take up the issue of the fraudulent value noticed by them with the DGFT for cancellation of authorisation issued und....
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....mported 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 (Import), Mumbai Vs M/s. Finesse Creation Inc. (2010 (255) E.L.T. A120 (SC)) while examining the said legal issue, had dismissed the Revenue Appeal and upheld the decision of the Hon'ble Bombay High Court Order with the same title, reported in 2009 (248) E.L.T. 122 (Bom.) which inter-alia held that; "5. In our opinion, the concept of redemption fine arises in the event the goods are available and are to be redeemed. If the goods are not available, there is no question of redemption of the goods. Under Section 125 a power is conferred on the Customs Authorities in case import of goods becoming prohibited on account of breach of the provisions of the Act, rules or notification, to ....