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2026 (5) TMI 26
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....r') passed by the Commissioner of Customs (Import-I), New Custom House (NCH), Mumbai Customs Zone-I, Mumbai. 1.2 Revenue has also filed appeals being No. C/87763; C/87764 and C/87765 of 2024 against the appellants M/s Govindji Gopalji & Sons; Shri Dharmesh Govind ji Vadar and Shri Dinesh Sharma, assailing the impugned order to the extent it has adjusted voluntary payments claimed by the department to have been made against the duty demands in respect of part of the consignments beyond the extended period of limitation of time, against the duty demands confirmed for the normal period of time in the impugned order. Revenue also contends that this has not been proposed in the show cause proceedings and such adjustment of voluntary payment made offers the appellants a set off against the duty liabilities payable by them without any legal basis. 2.1 The brief facts of the case are that the appellants during the period January, 2006 to September, 2010 had imported 117 consignments consisting of 113 numbers of 'second hand/used cranes'; 4 consignments of its accessories and one another consignment of second hand crane by Shri Dinesh Sharma, by filing Bill of Entry with the jurisdict....
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...., 1962 along with interest, arising on account of re-determination of the assessable value in respect of 81 second hand cranes and 4 consignments of its accessories by invoking extended period of limitation; confiscation of such imported goods under Section 111(m) ibid; imposition of redemption fine of Rs. 5 crore under Section 125(1) ibid; imposition of mandatory penalty equal to duty under Section 114A ibid; penalty of Rs.80 lakhs each on M/s Govindji Gopalji & Sons and Shri Dharmesh Govind ji Vadar under Section 114AA ibid; and another Rs.80 lakhs penalty on Shri Dharmesh Govind ji Vadar under Section 112(a) ibid. Further, he had confiscated 32 second cranes for which the assessable value was redetermined at Rs.13,70,33,060/- by allowing it upon payment of Redemption fine of Rs.1.50 crore and by imposition penalties on the appellants under Sections 112(a), 114A, 114AA ibid and similarly confirmed the adjudged demands in respect of one used crane imported by Shri Dinesh Sharma. Feeling aggrieved with the impugned order both the appellants and Revenue have filed these appeals before the Tribunal. 3.1 Learned Counsel for the appellants at the outset submitted that the issue of d....
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.... that extended period of limitation is not invokable in their case for demand of duty along with interest, since they were of bonafide belief that the value adopted by them is the correct value and they had also accepted the valuation done by the independent chartered engineers recognised by the department before clearing the goods from customs control. Further, as the appellants have declared in the Bills of Entry all the particulars as per invoice, and the goods were subjected to physical examination on first check basis, there is no ground to claim that any incorrect particulars were declared with an intention to evade duty for invoking the extended period of limitation and for confiscation of impugned goods and for imposition of penalty on the appellants. 4.1 Learned Authorized Representative appearing for Revenue reiterated the findings in the impugned order and submitted that the imported goods though were duly examined by the chartered engineers at the port of import, it is only during the investigation conducted by DRI that the entire modus operandi of evasion of customs duty was brought to the fore. These included suppression of freight, commercial terms of supply of go....
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....hout seizure of the said goods is sustainable under the Customs statute (vi) differential duty in respect of 32 consignments of appellant M/s Govindji Gopalji & Sons and 1 consignments of Shri Dinersh Sharma, relating to imports beyond the 5 years period from the date of issue of SCN, which was adjusted from the amount deposited voluntarily towards duty on imported goods, which has not been confirmed in the impugned order by the adjudicating authority is proper and justified in terms of the Customs statute. 7. The dispute between the appellants-importer and the department lies in determination of appropriate duties of customs payable on the imported goods, duly determining its assessable value for the purpose of calculation of duty under Section 14 of the Act of 1962 read with CVR, 2007. Further, it is also required to be determined whether the imported goods are liable for penal consequences of confiscation, redemption fine and the appellants concerned with such goods are liable for penalty under the various provisions of Customs Act, 1962. 8.1 Before we consider the issues under dispute along with the submissions made by both sides, it is important to note that the....
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....uld mean determination of the duty liability of imported goods including inter alia in arriving at the appropriate valuation of such imported goods as determined in accordance with the provisions of Section 14 ibid and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 [herein after, for short, referred to as "the CVR, 2007"]; framed thereunder. Further, the provisions relating to search of premises, detention/seizure of goods involving customs offence, provisional release, confiscation, imposing redemption fine in lieu of goods, penalty on the persons etc. are also provided under the respective legal provisions of the Act of 1962. These are extracted for convenience of reference and given below: "Section 2. Definitions. - (2) "assessment" includes provisional assessment, self-assessment, reassessment and any assessment in which the duty assessed is nil;' Post amendment w.e.f.29.03.2018 [Substituted by the Finance Act, 2018, w.e.f. 29-3-2018] (2) "assessment" means determination of the dutiability of any goods and the amount of duty, tax, cess or any other sum so payable, if any, under this Act or under the Customs Tarif....
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....mises. (1) If the Assistant Commissioner of Customs or Deputy Commissioner of Customs, or in any area adjoining the land frontier or the coast of India an officer of customs specially empowered by name in this behalf by the Board, has reason to believe that any goods liable to confiscation, or any documents or things which in his opinion will be useful for or relevant to any proceeding under this Act, are secreted in any place, he may authorise any officer of customs to search or may himself search for such goods, documents or things. (2) The provisions of the Code of Criminal Procedure, 1898 (5 of 1898), relating to searches shall, so far as may be, apply to searches under this section subject to the modification that sub-section (5) of section 165 of the said Code shall have effect as if for the word "Magistrate", wherever it occurs, the words "7[Principal Commissioner of Customs or] Commissioner of Customs" were substituted. Section 110. Seizure of goods, documents and things (1) If the proper officer has reason to believe that any goods are liable to confiscation under this Act, he may seize such goods : "Provided that where it is no....
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....t to the provisions of section 114A, to a penalty not exceeding ten per cent of the duty sought to be evaded or five thousand rupees, whichever is higher; xxx xxx xxx (iii) in the case of goods in respect of which the value stated in the entry made under this Act or in the case of baggage, in the declaration made under section 77 (in either case hereafter in this section referred to as the declared value) is higher than the value thereof, to a penalty not exceeding the difference between the declared value and the value thereof or five thousand rupees, whichever is the greater; (iv) in the case of goods falling both under clauses (i) and (iii), to a penalty not exceeding the value of the goods or the difference between the declared value and 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. Section 114AA. Penalty for use of false and incorrect material. If a ....
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....ported goods free of charge or at a reduced cost for use in connection with the production and sale for export of these imported goods; (g) "transaction value" means the value referred to in sub-section (1) of section 14 of the Customs Act, 1962; Determination of the method of valuation Rule 3. (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted : Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which- (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly o....
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....is found, the transaction value of identical goods sold at a different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both, shall be used, provided that such adjustments shall be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value. (2) Where the costs and charges referred to in sub-rule (2) of rule 10 of these rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods. Transaction value of similar goods Rule 5. (1) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of similar g....
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....her than India; (vi) minimum customs values; or (vii) arbitrary or fictitious values. xxx xxx xxx xxx Rejection of declared value Rule 12 (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule (1) of rule 3. (2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1)...." 9.1 From plain reading of the above legal provisions, it transpires that in order to determine the appropriate duti....
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....y demand in respect of these imports, which are beyond the statutory time limit of 5 years for issue of SCN in recovering the short levy and also did not appropriate the voluntary payments against such duty. Therefore, in our considered opinion re-determination/enhancement of the assessable value for 32 consignments of used cranes under Rule 8 ibid; and one crane sold on High Sea Sales (HSS) basis under Rule 4 ibid, for demanding duty is not proper and cannot sustain legal scrutiny in terms of Sections 14 and 28 of the Customs Act, 1962 read with Rules of 2007. Therefore, the appeal filed by Revenue for setting aside the voluntary deposit made by the appellants which was appropriated by the learned adjudicating authority towards the confirmation of adjudged demands within 5 years period, in order to enable such payment of duty for its appropriation or recovery of duty on such aforesaid consignments beyond 5 years period, is liable to be dismissed. Thus, the appeals filed by Revenue are liable to be rejected. 9.3 On careful perusal of the impugned order passed by the learned Commissioner, it transpires that out of the total 118 consignments of second hand cranes, in respect of on....
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....tly or sale between related persons etc., which have not been captured in the transaction value, in which case, the value for imposition of duty must be determined under one of the subsequent methods of valuation applied in sequential order from Rule 4 to Rule 9 ibid. Further, while determining the assessable value in terms of Section 14 ibid read with Rules 3, 4, 5 of the Rules of 2007, the value of the goods shall be the transaction value, unless the same is rejected in terms of Rule 12 ibid and thereafter to proceed with Rules 4 to 9 sequentially. In the present case, the transaction value of second hand cranes were already rejected under Rule 12 ibid and was re-determined by the proper officers of customs at the port of import, on the basis of independent chartered engineer's assessment, which is in compliance with the instructions issued by the CBEC vide Circular No.4/2008-Customs dated 12.02.2008 and the earlier Circular No. F. No. 493/124/86-Cus.VI dated 19.11.1987 for assessment of second hand goods. Therefore, in order to again re-determine the assessable value, there should be specific evidence on the basis of which the duty that escaped assessment or duty short levied co....
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....mported immediately after sale without any further usage abroad. (ii) However if transaction value of Rule 3 is rejected, valuation of second-hand machinery can be done under Rule 9, on the basis of value of new machine, as certified by the Chartered Engineer, and scaled down by allowing depreciation commensurate with the period of usage. Supreme Court judgment in the case of Gajra Bevel Gears [2000 (115) E.L.T. 612 (S.C.)] refers in this regard. (iii) However, transaction value of Rule 3 cannot be rejected by ab initio application of Rule 9, inasmuch as one cannot, before rejecting transaction value of Rule 3 with sufficient evidences, straightaway arrive at a notional value under Rule 9. 3. It may thus be seen from the judicial decisions that, before redetermination of value of second hand machinery under Rule 9, it is essential to reject the transaction value of Rule 3. There would be no difficulty in rejection of transaction value in those cases where the assessing officer is able to assail the documents like Chartered Engineer's Certificate, invoice, etc., as manipulated or fraudulently obtained. Similarly, there will also be no difficulty in rejecti....
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....s found to be much below the value arrived at by the depreciation method on the basis of the certified price of the new machinery in the year of its manufacture, the assessing officer may have reason to doubt the truth or accuracy of the declared value, and ask the importer to furnish further information and explanation. If he is satisfied, he may accept the declared value. But, if he still has reasonable doubt about the truth or accuracy of the declared value, he can reject the declared value under Rule 12, and proceed to re-determine the value under Rule 9 by following the Board's Circular No. F. No. 493/124/86-Cus. VI, dated 19-11-1987 in respect of the depreciation to be extended to such second hand machinery. 6. In fact, for other imported goods as well, the method for acceptance or rejection of declared value, and then re-determination of value in case the declared value is rejected, would be similar to that in the case of second hand machinery, as explained hereinabove. 7. In cases where the declared value is rejected, and assessable value is redetermined, the assessing officer shall issue a detailed speaking order, giving the reasons for such rejection, by....
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....er Rule 8 of CVR, 2007 is to be determined on the basis of computation of value of materials, processing or fabrication charges, profit margin etc., of the same class or kind as the goods being valued which are made by producers in the country of exportation for export to India. Further, the method of valuation of goods Rule 9 of CVR 2007 should be on reasonable means consistent with the principles and general provisions of the rules of CVR, 2007 and on the basis of data available in India. In adopting such method, the learned Commissioner had relied upon the statement of two persons viz. S/Shri Praveen Chawla and Hardayal Singh, who are stated to be industry experts providing the value of used cranes on the basis of tonnage of lifting capacity. Such determination at the most could be termed as thumb rule value, as no basis for such determination has been provided in the impugned order, while accepting such method as the basis for redetermination of assessable value. Further, we also find that such a practice or procedure does not find place in the CBEC instructions (supra). Furthermore, it is not the case of the department that they had recovered certain parallel invoices indicati....
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....f the said order is quoted below: "12. It is submitted by the Learned Counsel for the appellant that the adjudicating authority had not examined the witnesses, as per the provisions of Section 138B of the Act, 1962. In this context, we find that the Hon'ble Delhi High Court, in the case of J&K Cigaratte v. Collector of Customs - 2009 (242) E.L.T. 189 = 2011 (22) S.T.R. 225 (Del.), while dealing with Section 9D(1) of the Central Excise Act, 1944 (Parimatria to Section 138B of the Customs Act, 1962) have held that the procedure as prescribed in the statute is required to be followed for proving the truth of the statement. The said decision of the Hon'ble Delhi High Court has also been relied upon by the Hon'ble Punjab & Haryana High Court, in the case of G-Tech Industries v. Union of India - 2016 (339) E.L.T. 209 (P & H). We find force in the submissions of the Learned Counsel for the appellant that the adjudicating authority has not followed the procedures prescribed under section 138B of the Act, 1962. We are also in agreement with the Appellant that the statements of witnesses cannot be relied upon as Learned Adjudicating authority not conducted cross-examinat....
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....the Order of the Tribunal. Therefore, we do not find any merits in confirmation of the adjudged demands by the learned Commissioner on the basis of redetermination of assessable value, without effectively contesting the value firstly determined by the proper officers of customs in the port of import on the basis of independent chartered engineer's certificate and on the basis of statements recorded from various persons, whose cross-examination could not be conducted by him. Hence, on this ground also demand of duty cannot be sustained. 9.7 Further, the Co-ordinate Bench of the Tribunal vide Final Order No. A/85324-85327/2022 dated 12.04.2022 passed in the case of Karim Haria and Crown Lifters Private Limited (supra) have held that since there was no ascertainment of the actual purchase price of second hand/used cranes purchased through auction, re-determination of value on the basis of alleged payments made through non-banking channels etc. is not sustainable particularly in the absence of corroboration of evidences and its test of cross-examination and its relevancy. It was also held in this case that there was no allegation of the imported goods being prohibited or correct dut....
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....y, under section 12 of Customs Act, 1962, and value determined in the manner prescribed in section 14 of Customs Act, 1962. The first is not in dispute as far as the impugned goods are concerned and the show cause notice has not proposed recovery of duties of customs on goods imported by M/s Crown Lifters; valuation, under the authority of section 14 of Customs Act, 1962, is limited to assessment. In the glaring absence of proposal in the present proceedings for levy of differential duty, recourse to valuation merely for the purpose of resorting to confiscation is to transform it from penal consequence to cause of action. Hence, it would appear that confiscation is disproportionate detriment and without any justification to cause such detriment. Consequently, confiscation of nine 'used cranes' imported by M/s Crown Lifters fails along with the penalties arising therefrom. 11. It was after going through the re-determination of value, the confiscation and the imposition of penalty that the Tribunal found it fit to reject all the conclusions in the order impugned therein for want of credibility of the statements relied upon in the absence of cross examination. That order of r....
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....962. We also set aside the penalties imposed on the noticees under section 114AA of Customs Act, 1962 as also the recovery of differential duty under section 28 of Customs Act, 1962 from M/s Crown Lifters Pvt Ltd." 9.8 We further find that the appeals filed by the department vide CUAPP/31/ 2023 and CUAPP/37/ 2023 against Crown Lifters P Ltd., and Crown Lifters, respectively, the Hon'ble High Court of Bombay had assigned the filing number to the appeals on 29.09.2023 by registering the same, and had not given any hearing or given any stay against the order of the Tribunal, as on date. Therefore, we do not find any justifiable ground for taking a decision contrary to the above order passed by the Co-ordinate Bench of the Tribunal on the same set of facts. 10.1 In the impugned order, the learned adjudicating authority has held that confiscation of goods have been established due to under valuation of imported goods through confessional statements, manipulated invoices, predetermined valuation of goods based on weight of goods rather than on actual transaction value, remitting differential amounts abroad through illegal hawala transactions etc. For the purpose of confiscation of ....
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....er XIII and 'confiscation of goods and conveyances, imposition of penalties' under Chapter XIV as the Act of 1962, we find that under Section 105 ibid, if the Assistant Commissioner of Customs (AC) or Deputy Commissioner of Customs (DC) has reason to believe that any goods, documents or things that are liable for confiscation are secreted in any place then he may authorise any officer of customs, for conducting search of the premises for search of such goods etc. During the search process of the premises, if the proper officer of customs has reason to believe that any goods are liable for confiscation, then he may affect seizure of such goods under Section 110 ibid. The specific reasons by which any imported goods are liable for confiscation are itemized in detail in clauses (a) to (q) of Section 111 ibid. Once the goods are authorised for confiscation in the above process under Section 111 ibid, then in new of confiscation and option to pay fine can be imposed under Section 125 ibid. For the present case, the relevant clause (m) of Section 111 ibid had been invoked for imposing redemption fine. On reading the relevant clause (m), it transpires that in respect of value or in any ot....