TaxTMI 
TaxTMI 
2026 (1) TMI 1297
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....timber made in the name of his firm M/s A. K. International and in the name of other importers had been undervalued. Sometimes, invoices are prepared on the letter head of Sri Amitabh Saboo's company M/s. Vinayak Impex FZE, Dubai. The invoice amount is transferred through the banking channel whereas the balance amount is given through other persons to M/s. Vinayak Impex FZE, Dubai or to Bhavik Rathod in Sudan as per their instructions. The best quality sawn timber from Tanzania is about USD 850 per cubic ft. and least quality timber is of USD 300. For Sudan timber, rate varies between USD 700 (best quality) to USD 500 (least quality). Similarly, rate of Ghana Timber on an average varies from USD 300 to USD 400 per cubic ft. 1.1 The officers also searched the business premises of the Appellant-1 as well as residence of the partner Sri Arjanbhai Karsanbhai Patel (Appellant-2) but nothing incriminating was found. Statements of Sri Arjanbhai Patel was recorded on 05.06.2014 wherein he accepted undervaluation of imported timber and agreed to pay the differential duty on all the imports. He also accepted to have paid the differential amount in cash to the persons sent by the suppliers....
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....tements to the imports made by the appellants without any further corroborative evidence is not admissible for demanding duty and imposing penalty on them. * The mail relied upon by the investigation has been sent to various parties but no such mail has been sent to the appellant. The mail pertains to consignments related to new Ghana timber whereas only a small part of the consignment imported by them pertains to Sudan. It is settled law that third party evidence cannot be considered as a piece of evidence and the allegations have to be substantiated with the help of corroborative evidence. They rely on the following judgments:- 1. Taksus Steel Pvt. Ltd Vs. Commissioner of Central Excise & ST, Chandigarh as reported at 2015 (329) ELT 859 (Tri.-Del.) 2. G.S. Alloy Casting Ltd. Vs. Commissioner of C. Ex. Guntur- 2016 (331) ELT 310 (Tri.-Bang.) * Shri Avinash Jindal has been stated as supplier of goods whereas he is only a mediator who facilitated the deal. It is a common practice that before a contract of sale is made, mails are exchanged to discover prices. Also, the mail is dated 23.04.2009 whereas goods have been imported between June 2009 to J....
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....Groversons Vs. Commissioner of Customs, New Delhi - 2016 (332) ELT 378 (Tri.-Del.) 2. Commissioner Vs. Sushil Kumar Kanodia - 2015 (319) ELT A73 (Mad.) 3. Assistant Commissioner of Customs Vs. Amrik Singh- 2014 (301) ELT 170 (P&H) * The lower authority has confiscated the imported goods under Section 111(m) of the Customs Act, 1962 and imposed redemption fine of Rs. 6,00,000/- (goods imported at Kandla) and Rs. 6,70,000/- (goods imported at Kandla) under Section 125 of the Customs Act, 1962. As the allegation of undervaluation has been made only on the basis of statements of a third person who is not even a supplier of goods and on the basis of emails exchanged between two persons, confiscation of goods is not legally correct and all the allegations are baseless. It is a settled law that option to impose of redemption fine is not available when goods are not physically available for confiscation. They rely on the following cases:- 1. Commissioner V/s Finesse Creation Inc. - 2010 (255) E.L.T. A120 (S.C.) 2. Commissioner of Customs, Bangalore V/s G. M. Exports - 2012(279) E.L.T. 493 (Kar.) 3. Commr. V/s Shiv Kripa Ispat Pvt. Ltd. ....
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....rovision of Section 110 & 124 are independent, distinct and mutually exclusive. 1. Harbans Lal v/s Collector of Central Excise {1993 (67) ELT 20 (SC)} 2. J.K. Bardolia Mills v/s M.L. Khunger, Dy. Collector of Customs ((1975) 16 GLR 119 3. Mohanial Devdanbhai Choksey and Others v/s M.P. Mondkar and others (1988 (37) ELT 528 (Bom.) 5. We have carefully considered the submissions made by both the sides. We find that a common investigation has been conducted by DRI against various Timber importers including M/s Jay Jalaram Saw Mill. All the evidence including statements of Shri Rajendra Agarwal and Shri Avinash Jindal are common in all the cases. Some documents were recovered from the premises of Shri Rajendra Agarwal and Shri Avinash Jindal which have been relied upon in all the cases. In the case of present appellants, the officers searched the office premises as well as residential premises of the partner which did not result in recovery of any incriminating documents. The partner, after seeing the statements and emails of Sri Avinash Jindal accepted undervaluation of goods and also paid the differential duty, interest and the reduced penalty amount on ....
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....e of the officers. Shri Avinash Jindal, in his cross examination, stated that he was only a commission agent as well as he is in business of imports, but never prepared import invoices in India on behalf of the suppliers nor negotiated the price with India parties. He also deposed that he seldom sold the goods on high sea sale basis to the Appellant but never maintained the alleged documents stated in the show cause notice. That his statement was kept ready by the investigating authority and he was told to sign the prepared statements. He had signed more than 4,000 pages without looking its contents in a single day. The cross examination of Shri VineetJha could not be done as he did not offer for the cross examination. We find that the demand is based upon the documents alleged to have been seized from above persons which are third parties and their statements. However, once these persons have retracted from their statements in the cross examination and also refused the veracity of the documents, in such case, their statements and the e-mails cannot be relied upon as cogent and tangible evidence to substantiate the allegation that the Appellant had declared the lower value of the i....
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....ofit margin, the price of the goods would be around $ 330 per CBM whereas, the Appellant imported the same material at $ 350 to $ 400, which is quite normal. Thus, the value enhancement by the adjudicating authority to $ 650 to $ 800 is not practical. 7.3. In case of Bill of Entries of Goods imported from Tanzania, the revenue has not been able to conclusively show that the goods were undervalued by Appellant with help of any independent evidence. The Appellant has brought out various instances to show that even the third party records seized from Rajendra Agarwal and Shri Avinash Jindal are not reliable enough. For instance in case of demand under Annexure D - 1, the Revenue has relied upon the documents of Hard disk of Shri Rajendra Aagarwal i.e. file found in file path "live data /01/Agarwal-Teak 19.01.2010" said to be related to Bill of entry Nos. 137753 dated 25.06.2009 and 141411 dated 16.09.2009. It is alleged that the details in said file path is matching with the accounts statement found in file path "live data/01/Accounts/Ambrish" and that it pertains to transaction of material purchased by Shri Rajendra Agarwal from one Ambrish Bhai at the rate and quantity list....
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....said records are in respect of 12 containers but the prices in each document varies. In case of "Repla" quality of Timber the documents mentioned contained different prices of the goods, which leads to suspicion about the authenticity of these documents. In case of Bill of Entry No. 145909 dt 30.12.2009, 14760 dt 2.2.10 and 148338 dt 16.2.2010 reliance has been placed upon account statement named "A/c Export Trading", which was found from Shri Rajendra Agarwal. On the basis of same, under-valuation has been alleged. We find that the document is of Shri Rajendra Agarwal and it mentions the number of container and quantity and rate of material. The value mentioned in "A/c Export Trading" is not comparable with the corresponding bill of entry. The Customs authority at the time of importation, after examination of the goods, has enhanced the value from US$ 350 to US$ 422 per CBM. In such case, the enhancement made in the impugned order is not sustainable. 7.6. In case of other demands for other imports we find that in case of Bill of Entry Nos. 151367 dated 29.4.2010, 155707 dated 02.7.2010, 2321538 dated 11.11.2010, 2354906 dated 23.11.2010, 2422349 dated 11.12.2010, 3245435 ....
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....which is not possible. Further, the quantity mentioned in the e-mail does not match with the quantity mentioned in the bill of entry. At the time of importation, the goods were reassessed and the value were enhanced. In case of Bill of Entry No.156846 dated 22.07.2010, the Revenue has compared the same with the accounts statement found in hard disk retrieved from Shri Rajendra Agarwal and in file path "livedata / 01/account (Avinash) 26.7.2010." It is alleged that the statement indicates that the Appellant purchased said material from the Ivory Coast for US$ 55400. The packing list sent by Shri Avinash Jindal through e-mail to one Shri Sunil Gupta has also been relied upon. On the basis of container number on the packing list matching with the bill of entry filed by the Appellant, it is alleged that the Appellant under-valued the imports. 7.8. The account statement has been relied upon to show that the value of material of US$ 55400 is actual. We find that the document relied upon by the Revenue was of Shri Avinash Jindal and only on the ground that name of Shri Deepak Maloo is appearing, it cannot be concluded that the payment of said amount was made by the Appellant for ....
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....hat the material mentioned in e-mail was not imported by the Appellant. None of the container numbers or any particulars identified in the email corresponds to any of the containers imported by the Appellant under subject bill of entry. The Appellant has denied the statement of Shri Deepak Maloo as having been undertaken under pressure and duress. As per the Appellant, Shri Deepak Maloo was never shown the said documents but was forced to state that he has seen and signed the documents. The relied upon email was never shown to the Appellant. In such view of facts it cannot be concluded that the materials were imported by the Appellant or they were imported at the rates mentioned, hence the demand is incorrect. 7.10. In case of Bill of Entry No. 3420395 dated 5.5.2011 on the basis of invoice located in file path "live data/01/DC215/Summary" found from the hard disk of Shri Rajendra Agrawal, it is alleged that two containers of Sudan timber shown in the invoice were purchased at higher rates and quantity than declared in the bill of entry. The statement of Shri Deepak Maloo has been relied upon to substantiate the claim. We find that only for the reason that the container nu....
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....Shri Sunil Gupta on account of Timber allegedly purchased by the Appellant. However we find that the Appellant was not a party to such e-mails. The Appellants were never shown these e-mails during the questioning. The e-mails were private exchange between Shri Avinash Jindal and Shri Sunil Gupta and cannot be used to demand the differential duty. In case of some of the email relied upon even the quantity and the number of pieces do not match. There is no evidence that the said materials were actually imported at any other value than the one declared by the Appellant. Only for the reason that the container and numbers mentioned in the email match with those listed on the Bill of Entry of the Appellant, it is not sufficient to prove that the material was under-valued. Even, assuming that the material indicated against the container number mentioned in the bill of entry matches the container imported by the Appellant, but there is no clear evidence to determine as to which figures in the e-mail correspond to the actual rate at which the materials were purchased. 9. In respect of hard disk recovered from the premises of the Appellant, the Revenue has alleged that it contained ....
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..... Shri Deepak Maloo, proprietor of the appellant in his statement was not questioned about such statements. 11. The SCN has also relied upon packing list of 2 containers of Timber from file path "livedata/01/2x20containers packing list - OT (Bina Sales Corpn)/Sheet 1". However, it is seen that there is no bill of entry of the Appellant corresponding to the container number indicated in the packing list. It does not show as to how the Appellant is identified with such packing lists. Even if assumed so, there is no evidence that the containers were under-valued. We also find that Shri Deepak Maloo in his statement dated 17.10.2013 has stated that the rate of material imported from Sudan were re-negotiated with Shri Rajendra Agarwal after it was imported due to inferior quality and in case of material imported from Ecuador, which was purchased on high sea sales, the payment of the same was made to the seller after unloading of the material. He also stated that the actual rate for both the transactions were declared. Thus, on the statement of Shri Rajendra Agarwal and in the light of the fact that Shri Deepak Maloo in his statement was not questioned in respect of such contain....
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....ce as declared by the Appellant. In terms of Rule 3 the transaction value has to be accepted unless it falls under the exceptions carved out in Rule 3 (iii) of Custom Valuation Rules. Since this is not the case the transactional value has to be accepted as held by the Hon'ble Apex Court in case of BUREAU VERITAS 2005 (181) E.L.T. 3 (S.C.). In case of M/s Eicher Tractors Limited - 2000 (122) E.L.T. 321 (S.C.), the Hon'ble Apex Court has held as under : "13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other Rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not poss....
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....hese circumstances, we do not find any valid reason for enhancement of the Transaction Value. Further, the documents received from M/s. MSAS Blue Skies in respect of M/s. Maxworth Plywood Pvt. Ltd. has not been supplied to the appellants and the lower authority has not allowed the appellant to cross-examine the representatives of M/S. MSAS Blue Skies. This amounts to the denial of Principles of Natural Justice. Moreover, in M/s. Maxworth Plywood case, the corrigendum, revising the demand of duty, was issued on 31-12-2003. In those circumstances, the period of limitation should be reckoned from 31-12-2003. In that case, the demand also would be time-barred. As the demand of duty is not sustainable in view of our above findings, penalty under Section 114A and the demand of interest are not maintainable. The Orders-in-Original cannot be sustained. Hence, we, allow these appeals with consequential relief, if any. The aforesaid order was upheld by the Hon'ble Apex Court as reported in Commissioner of Customs vs. Truwoods Pvt. Limited -2016 (331) E.L.T. 15 (S.C.). We are of the view that the ratio of aforesaid case is squarely applicable to the given facts of the case as only on....
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.... be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoic....
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....importation. This is where the conceptual difference between value and price comes into discussion. 7. Applying the above tests to the facts of the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One such letter is dated 19-9-1996. In the present case, the importer has alleged that the original declarations were with the Department. That certain portions of the originals were not....
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....stead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules." 14. In the present case the Appellant has imported goods on correct transactional value and the allegation of undervaluation are not supported by any cogent evidence. Further the goods by other importers are also on same price. Hence in view of above judgments we find that the declared value cannot be doubted. We also find from the data submitted by the Appellant that the contemporaneous imports of such....
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.... difference between the declared value and the price at which the goods were sold in the domestic market, there appears to be a normal profit margin. The Revenue has not investigated even a single buyer, who has purchased such imported goods from the Appellant, to ascertain the correct position. The Appellant has taken insurance policy for the goods for the transit for foreign loading port to India and the price shown in such insurance document is the declared price. It is coupled with the fact that the Forestry & Beekeeping Division of Ministry of Natural Resources & Tourism of Tanzania has shown the sale price of Timber as $ 130 PMT as against the enhanced value of $ 600 to $ 800. It is not disputed that the Appellant had imported the rejected grade / short length / off size/ off cut size timber, which is more than 33% of the quantity of the imported timber. In such case, there was no reason to enhance the value of rejected timber as per good quality timber. 16. The goods at the time of importation were physically examined by Customs authorities and were found as per the declared description. Thus, in absence of any contrary evidence, the value of rejected grade timber c....
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..... We have seen these Analysis Certificates on record and we find that the difference between the two is very wide and certainly not marginal. We find that the major value element of such Vitamin Mixes is derived from the active ingredients in such ingredients namely the major Vitamins and not the fillers and other impurities. Therefore, we find that when there is such a wide difference in the concentration of such active ingredients in the products imported vis-a-vis the contemporaneous imports relied upon by the department, therefore we cannot subscribe to the view that the two sets of products are even comparable products. 13. With respect to the contemporaneous import relied upon by the importer namely that by M/s. Victoria Marines, the department has brushed it aside saying that it. was a clever set-up by associates of the importers to pave the way for the bigger quantity of imports subsequently at much higher prices. Even if the department harbours such suspicions, there is nothing on record to show that detailed investigations were resorted to by the department to uncover these suspicions through sufficient evidences. It is one thing to say that M/s. Victoria Marines....