TaxTMI 
TaxTMI 
2025 (1) TMI 1687
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....PER SHRI ASHOK JINDAL: Both sides are in appeal against the impugned order. 2. The assessees, namely, Shri Vijay Biyani, Shri Dinesh Maheshwari, Shri Bhagchand Baser and Shri Rakesh Biyani are in appeal against the penalties imposed, jointly and severally, under Section 114AA of the Customs Act, 1962. The assessee, namely, Shri Rakesh Biyani is also in appeal against the penalty of Rs.8,00,000/- imposed on him under Section 112(a)(ii) of the Customs Act, 1962. 2.1. Whereas, the Revenue has filed the appeals against Shri Vijay Biyani, Shri Rakesh Biyani, Shri Dinesh Maheshwari and Shri Bhagchand Baser for imposing penalties jointly and severally under Section 114AA of the Customs Act, 1962 and for non-imposition of penalty on Shri Pramod Nahata, Director of M/s. ERT Shipping & Warehousing Private Limited, against whom it has been observed by the ld. adjudicating authority that proceedings can be initiated under Section 28(4), Section 114A, Section 114AA, Section 111(o) and Section 112(a) of the Customs Act, 1962, but no penalty has been imposed on him. 3. Therefore, these appeals. 4. The facts of the case are that during the impugned period, the Company viz. M/s. Futu....
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....knowledged and allowed and is not at all a subject matter of the present proceedings. 5. Insofar as the remaining 57 Bills of Entry are concerned, after considering the submissions made by the assessees, the ld. adjudicating Authority, vide the Adjudication Order No.03/CUS/CC(P)/WB/2020-21 dated 03.09.2020 (hereinafter referred to as the "impugned order"), confirmed the demand of Rs. 81,20,953/- under Section 28(8) of the Customs Act, 1962 in respect of 6 Bills of Entry (details stated hereunder). Vide the impugned order, a penalty of Rs. 81,20,953/- under Section 114AA of the Act was also jointly and severally imposed upon the Company and the assessees and a further penalty of Rs. 8,00,000/- was imposed upon Mr. Rakesh Biyani under Section 112(a)(ii) of the Customs Act. No. of BoEs BoE details COO details Differential Customs Duty (INR) Reason for confirming the demand 6 3466444 dt. 03.10.17 EPB(C)13980 2,53,915/- Non-originating content exceed maximum limit of 70% 3486920 dt. 04.10.17 EPB/DHK/ 11137 26,882/- 3535664 dt. 07.10.17 EPB(C)14006 67,26,411/- 3596856 dt. 12.10.17 EPB/DHK /11368 2,98,883/- 3597949 dt. 12.10.1....
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.... (iv) The value declared in the Bills of Entry in India was the value at which the trading house had supplied the goods to the Company. There is no justification in terms of the Rules of Origin on the basis of which the Revenue has added to the value of the non-originating material declared in the COO, the difference between the FOB value at which goods had been supplied by the Bangladeshi supplier to the trading houses and the FOB value at which goods had been supplied by such trading houses to the Company, to arrive at the value of the non-originating material. (v)It is submitted that the method for valuation of non-originating material, as provided under Rule 11 of the Rules of Origin [as inserted vide Notification No. 75/2006-Cus.(N.T.) dated 30.06.2006] provides as under: Rule 11 : Method for Valuation of non-originating materials (a) The value of the non-originating materials, parts or produce shall be: (i) The CIF value at the time of importation of the materials, parts or produce where this can be proven or (ii) The earliest ascertainable price paid for the materials, parts or produce of undetermined origin in the territory o....
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....ARC economic cooperation to maximise the realisation of the region's potential for trade and development for the benefit of their people. Therefore, the endeavour of the Revenue to somehow deny the benefit of the Exemption Notification, rightly availed by the Company, is contrary to the terms of the SAFTA Agreement, the Exemption Notification and the Rules of Origin. Consequently, the imposition of penalties on the Assessee is unwarranted. (x)In view of the above, it is submitted that the ld. adjudicating authority has erred in denying the benefit of the exemption Notification in respect of goods imported under the said 6 Bills of Entry and consequently, erred in imposing penalties upon the assessees. B. SAFTA exemption correctly extended to the 51 Bills of Entry (i) It is submitted that the ld. adjudicating authority has rightly extended the benefit of the Exemption Notification to the consignments imported under 51 Bills of Entry, despite having calculated the value of non-originating material incorrectly. (ii) It is submitted that when the value of nonoriginating material was found to be much less than 70%, even as per the Revenue's calculatio....
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....ation Procedures under Annexure B to the Rules of Origin. 7.1. In view of the above submissions, the Ld. Counsel for the assessees prayed that the appeals filed by the assessees be allowed and the appeals filed by the Revenue be dismissed. 7.2. The Ld. Counsel appearing on behalf of the assessees has also made further submissions, which are as under: - A. Reg: No contravention of Section 11 4AA and/or Section 11 2(a) (The individual roles of each person, as arrived by the Adjudicating Authority and the infirmity therein, are more particularly stated hereinafter.) (i) It is submitted that the present proceedings by which penalty has been imposed under Section 114AA of the Customs Act, 1962 ('Customs Act') on all the individual assessees named above, jointly and severally along with Future Enterprise Limited ('FEL'), is bad in law. The primary basis for imposition of penalty on the above named individual assessees is that FEL was not eligible to claim exemption from payment of Basic Customs Duty on the import of garments manufactured in Bangladesh, in terms of Notification No. 99/2011-Cus. dated 09.11.2011 ('Exemption Notification') ....
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....ms Act, knowing fully well that the same is false or incorrect. This Section does not contemplate on account of any vicarious liability as is the basis in the Adjudication order. (vi) It is submitted that assuming that Mr. Rakesh Biyani played a vital role in getting the COOs revised/ re-issued from Bangladesh, that by itself is no ground for imposing penalty as there is nothing to establish that Mr. Rakesh Biyani knowingly or intentionally made a false or incorrect declaration/ statement or otherwise in the transaction of business under the Customs Act. It is nobody's case that Mr. Rakesh Biyani had any knowledge that the revised/re-issued COO were not issued by the competent authority. (vii) It is submitted that it is a matter of record that none of the COOs had been revised at his insistence and such revision has been done by GBX Trading, Dubai ('supplier' or 'GBX Trading') at their own instance when they had been called upon by FEL to explain the reason for the difference in the FOB values declared in some of the SAFTA COOs vis-a-vis the FOB value in the corresponding Bills of Entry. It is nobody's case that the revised COOs were issued....
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.... that Mr. Baser and/ or Mr. Maheshwari were aware that the COO being submitted at the time of customs clearance was obtained by the supplier through mis-declaration or suppression, if any. (xi) It is submitted that in any case, the COOs issued by EPB, Bangladesh have not been cancelled or revoked. In view of this matter, there is no basis for holding that Mr. Baser and/ or Mr. Maheshwari were responsible for submitting defective documents, which were obtained through mis-declaration or suppression. (xii) Further, it is submitted that as per the report of the 27th Standing Committee of Finance (2005-2006) under which the Taxation Laws (Amendment) Bill, 2005 was tabled before both the Upper and Lower Houses of the Parliament of India, Section 114AA of the Customs Act had been introduced to penalise serious frauds in respect of export of goods, where documents were being fabricated for availing benefits under various export promotion schemes while no underlying goods were actually being exported. It was further discussed that the said provision would only cover offences committed with criminal intent and such offences could not be treated at par with other instances ....
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....adesh to FEL, has been factored in as part of the value of the non-originating material, which is clearly at odds with Rule 11 of the Rules of Origin as per which the value of the non-originating material is the CIF value at the time of importation of the materials, part or produced which go in the manufacture of the export product, and if such value is not available, the earliest ascertainable value in the country of export (Bangladesh in the present case) of the materials, part or produced used for manufacture of the export product. It is submitted that if the value of the non-originating material, as declared in the COO, could be revised, the same could be recalculated only in the manner prescribed in Rule 11 and not in any ad hoc manner, as has been done by the Adjudicating Authority. (v)If the arbitrary basis for computing the value of the non-originating material, as applied by the Customs Authorities in India in the present case had been discarded, then with respect to all 57 Bills of Entry, there could not have been any allegation that the value of non-originating material was more than 70% of the FOB value of export. Therefore, the proceedings in respect of 6 Bill....
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....dropped with regard to 51 Bills of Entry and only against 6 Bills of Entry proceedings were concluded and also challenged the non-imposition of penalty on Shri Pramod Nahata and also on the ground that joint and several penalties cannot be imposed. 9. Heard both sides. 10. We find that the subject matter of these appeals pertains to 57 Bills-of-Entry, whose details are as under: - Table-1 N 0. Bill of Entry No, & date FOB value mentioned in the Bills of Entry SAFTA Certificate No. Origin Criterion as per Origin al SAFTA FOB value as per original SAFTA Value of third country origin content as per original SAFTA (5x6) Diff Amount paid to third country supplier (3-6 Total recalculated third country content (7+8) % of third count content in product as per the calculation (9/3 x 100) 1 2 3 4 5 6 7 8 9 10 5 3042585 DT. 30/08/2017 $ 59,270.80 EPB/DH K/10335 "D" 45% $ 53,948.95 $ 24,277.03 $ 5,321.85 $ 29,598.88 49.94% 6 3042559 DT. 30/08/2017 $ 1,53,090. 90 EPB/DH K/10336 "D" 45% $ 1,39,246. 81 $ 62,661.07 $ 13,844.09 $ 76,505.16 49.97% 7 3042659 DT. 30/08....
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....00 $ 6,559.66 59.09% 33 3597808 DT. 12/10/2017 $ 82,692.00 EPB/DH K/11655 "B" 51% $ 71,082.00 $ 36,251.82 $ 11,610.00 $ 47,861.82 57.88% 34 3594621 DT. 12/10/2017 $ 42,981.12 EPB/DH K/11648 "B" 51% $ 34,917.12 $ 17,807.73 $ 8,064.00 $ 25,871.73 60.19% 35 3636136 DT. 16/10/2017 $ 52,144.56 EPB/DH K/11734 "B" 51% $ 41,002.56 $ 20,911.31 $ 11,142.00 $ 32,053.31 61.47% 36 3636159 DT. 16/10/2017 $1,61,066. 88 EPB/DH K/11735 "B" 51% $ 1,26,650. 88 $ 64,591.95 $ 34,416.00 $ 99,007.95 61.47% 39 367345$ DT. 19/10/2017 $1,07,939. 52 EPB/DH K/11822 "B" 51% $ 84,875.52 $ 43,286.52 $ 23,064.00 $ 66,350.52 61.47% 40 3673456 DT. 19/10/2017 $ 35,231.04 EPB/DH K/11823 "B" 51% $ 27,703.04 $ 14,128.55 $ 7,528.00 21,656.55 61.47% 42 3738197 DT. 24/10/2017 $ 1,24,845. 00 EPB/DH K/11716 "B" 45% $ 1,08,199. 00 $ 48,689.55 $ 16,646.00 $ 65,335.55 52.33% 46 4277880 DT. 05/12/2017 $ 2,799.00 EPB/DH K/14111 "B" 48% $ 2,413.36 $ 1,158.41 $ 385.64 $ 1,544.05 55.16% ....
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....51% $ 20,766.24 $ 10,590.78 $ 4,104.00 $ 14,694.78 59.09% 68 3849004 DT. 02/11/2017 $1,03,334. 40 EPB/DH K/12026 "B" 51% $ 81,254.40 $ 41,439.74 $ 22,080.00 $ 63,519.74 61.47% 69 389867$ DT. 07/11/2017 $ 9,455.42 EPB/DH K/12256 "B" 51% $ 7,681.42 $ 3.917.52 $ 1,774.00 $ 5,691.52 60.19% 70 3898700 DT. 07/11/2017 $ 84,325.32 EPB/DH K/12259 "B" 51% $ 72.239.32 $ 36,842.05 $ 12,086.00 $ 48,928.05 58.02% 71 3849003 DT. 02/11/2017 $ 5,526.72 EPB/DH K/12257 "B" 51% $ 4,614.72 $ 2,353.51 $ 912.00 $ 3,265.51 59.09% 72 3849047 DT. 02/11/2017 $ 35,212.32 EPB/DH K/12025 "B" 51% $ 27,688.32 $ 14,121.04 $ 7,524.00 $ 21,645.04 61.47% 73 4479047 DT. 20/12/2017 $ 17,753.44 EPB/DH K/14819 51% $ 15,207.44 $ 7,755.79 $ 2,546.00 $ 10,301.79 58.03% 74 4479406 DT. 20/12/2017 $ 75,616.92 EPB/DH K/14821 "B" 51% $ 64,754.92 $ 33,025.01 $ 10,862.00 $ 43,887.01 58.04% 75 4479032 DT. 20/12/2017 $ 52,479.60 EPB/DH K/14822 "B" 51% $ 43,819.60 $ 22,347.99 $ 8,660.00 ....
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....the Bills of Entry in India was the value at which the trading house had supplied the goods to the Company. We find that there is no justification in terms of the Rules of Origin on the basis of which the Revenue has added to the value of the non-originating material declared in the COO, the difference between the FOB value at which goods had been supplied by the Bangladeshi supplier to the trading houses and the FOB value at which goods had been supplied by such trading houses to the Company, to arrive at the value of the non-originating material. 11.1. We find that the method for valuation of non-originating material, as provided under Rule 11 of the Rules of Origin, inserted vide Notification No. 75/2006-Cus.(N.T.) dated 30.06.2006, is as under: "Rule 11 : Method for Valuation of non-originating materials (a) The value of the non-originating materials, parts or produce shall be: (i) The CIF value at the time of importation of the materials, parts or produce where this can be proven or (ii) The earliest ascertainable price paid for the materials, parts or produce of undetermined origin in the territory of the Contracting States where the wor....
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....ssees in this case. Consequently, no penalty is imposable on the assessees. 13. We further find that the Revenue has disputed the extending of the benefit of SAFTA exemption by the ld. adjudicating authority in respect of 51 Bills-ofEntry. We find that in respect of these Bills-of-Entry, the value of non-originating material was found to be much less than 70%. Even as per the Revenue's calculation, had the said value been calculated as per Rule 11 of the Rules of Origin, it would have been evident that the actual value of the non-originating material was much lower as was declared in the COO. The contention in the Revenue's appeals that the ld. adjudicating authority erred in dropping the proceedings with respect to the 51 Bills of Entry after having confirmed the demand for 6 Bills of Entry on the same count, is unwarranted. We find that the ld. adjudicating authority, in the impugned order, has clearly observed that even at the time of assessment, the mismatch of FOB values between the COO and the Bills of Entry had been noticed by the Customs authorities and a query had also been raised to that effect. However, the response of the Company that such mismatch was on account....
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....us., dated 10-81999 when read with SAPTA Rules. As per the first proviso to this Notification, the Assistant Commissioner/Deputy Commissioner/Joint Commissioner has to be satisfied that imported goods are in accordance with the Customs Tariff (Determination of Origin of Goods under the Agreement on SAARC Preferential Trading Arrangement) Rules, 1955 (SAPTA Rules). As per Rule 4 of the SAPTA Rules read with its Schedule even products processed in the member countries are eligible for concessions under SAPTA Rules when the base goods are not produced/manufactured in the contracting countries. The only requirement under these Rules is that a certification of origin has to be produced for availing concessions as issued by the designated authority of Govt. of exporting contracting State and notified to the other contracting States in accordance with the certification procedures mentioned in the form annexed to SAPTA Rules. Required certificates of origin with respect to imported goods were furnished by the appellant where percentage of value addition as per SAPTA Rules was also indicated. Adjudicating authority has not accepted the value addition indicated in the certificate of origin b....