TaxTMI 
TaxTMI 
2026 (6) TMI 1309
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....ents) imported by M/s. Rochees Time Private Limited [The importer] through two ports, re-determined the values, confirmed demand of differential duty amounting to Rs. 20,67,047 under the proviso to section 28(1) of the Customs Act, 1962 [Act] along with interest under section 28AB of the Act, confiscated the imported watches under section 111 of the Act and imposed redemption fine in lieu of confiscation under section 125 of the Act and imposed penalties on the importer under sections 112 and 114A of the Act. He also imposed personal penalties on some persons including the appellants in Customs Appeals No. 213/2011 and 214/2011 as follows: Appeal Appellant Dut/Fine/ Penalty (Rs.) Sections C/210/2011 Rochees Time Private Ltd. (the importer) Duty Rs. 20,67,047/- Redemption fine Rs. 10,00,000/ Penalty Rs. 21,78,862/ Proviso section 28(1) Confiscated under section 111(d) & (m) and fine imposed under section 125 Sections 112 (a) & (b) and 114A C/213/2011 Om Prakash Pareek Penalty 2,00,000/- 112 (a) &(b) C/214/2011 Naresh Moolrajani Penalty 1,50,000/- 112(b) 2. In Customs Appeal No. 213/2011 and Customs Appeal No. 214/2011, no specific g....
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.... in The Commissioner of Income-Tax, Madras v. S. Chenniappa Mudaliar, Madurai - 1969 (1) SCC 591 wherein this Court considered the provisions of Section 33 of the Income-tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 which gave power to the Tribunal to dismiss the appeal for want of prosecution. For ready reference, Section 33(4) of the Income Tax Act, 1922 and Rule 24 of the Appellate Tribunal Rules, 1946 are reproduced below :- Section 33(4) of the Income Tax Act, 1922 "33(4). The Appellate Tribunal may, after giving both parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, and shall communicate any such orders to the assessee and to the Commissioner." Rule 24 of the Appellate Tribunal Rules, 1946 "24. Where on the day fixed for hearing or any other day to which the hearing may be adjourned, the appellant does not appear when the appeal is called on for hearing, the Tribunal may dismiss the appeal for default or may hear it ex parte." Considering the aforesaid provisions, this Court held as under :- "7. The scheme of the provisions of the Act relating to the Appellate....
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.... which may be said to be one under Section 33(4) and a question of law arising out of such an order. The Special Bench, in the present case, while examining this aspect quite appositely referred to the observations of Venkatarama Aiyar, J. in CIT v. Scindia Steam Navigation Co. Ltd. indicating the necessity of the disposal of the appeal on the merits by the Appellate Tribunal. This is how the learned judge had put the matter in the form of interrogation : "How can it be said that the Tribunal should seek for advice on a question which it was not called upon to consider and in respect of which it had no opportunity of deciding whether the decision of the Court should be sought." Thus looking at the substantive provisions of the Act there is no escape from the conclusion that under Section 33(4) the Appellate Tribunal has to dispose of the appeal on the merits and cannot short-circuit the same by dismissing it for default of appearance." 13. Applying the principles laid down in the aforesaid case to the facts of the present case, as the two provisions are similar, we are of the considered opinion that the Tribunal could not have dismissed the appeal filed b....
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.... (v) M/s. HMD Exim Pvt. Ltd. were engaged in manufacture of wrist watches and wall clocks for which purpose, various parts like watch cases, watch movements, watch, dials, hands, leather straps, metal bands and winding knobs, etc. were imported from Hong Kong. Intelligence was gathered by DRI that all the above firms were controlled by Shri Ishwar Das Moolrajani, and were evading customs by mis-declaring the value and description of the goods imported. The officers searched the premises of the importer and its partners and directors on 23.6.2006 and seized relevant records. After conducting a detailed investigation in the matter, DRI issued SCN dated 19.6.2007 to the importer and others. ii) The proposals in the SCN were decided by the Commissioner in the impugned order rejecting the transaction value of the imported goods under Rule 10A of the Customs Valuation (Determination of Prices of Imported Goods) Rules, 1988 [Valuation Rules] re-determining the value, confirming demand of differential duty, confiscating the imported goods, and imposing penalties. iii) As per section 14 of the Act and Rule 3 of the Valuation Rules, the transaction value shall ....
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.... invoice of the same number were found and the lower values were declared before the Customs. x) Shri Ishwar Das Moolrajani paid the actual price to the Hong Kong suppliers in cash through Shri R K Mansukhani and others during his visits to Hong Kong. Shri Moolrajani had, with him even signed and unsigned copies of invoices in the name of Legend Watch, HK and even letters addressed by this firm to the bank in India for remission of payments. He also had various letterheads of the exporting companies. xi) The appellants cannot disown the invoices issued by the HK suppliers calling them third parties because these were the companies which sold them the goods. xii) With reference to Leather straps the duplicate invoice no. LW/8843/05 dated 30.9.2005, was not the original invoice and the discrepancies between the two were pointed out by the importer in its letter dated 29.11.2010 although a copy of this letter was not enclosed with the appeal. xiii) With respect to Watch dials also the same logic would apply and the re-determination of value was based on the invoices of the actual supplier of the goods. xiv) With respect to straps/metal band....
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.... the proper officer instead of making some adjustments to the transaction value as in Rule 9. If the proper officer rejects the transaction value under Rule 10A, the value should be determined sequentially through Rules 5 to 8. 14. The relevant Rules are reproduced below: Rule 5 Transaction value of identical goods. -(1) (a) Subject to the provisions of Rule 3 of these rules, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued. (b) In applying this rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods. (c) Where no sale referred to in clause (b) of sub-rule (1) of this rule, 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 evi....
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.... of this rule, be based on the unit price at which the imported goods or identical or similar imported goods are sold in India, at the earliest date after importation but before the expiry of ninety days after such importation. (3) (a) If neither the imported goods nor identical nor similar imported goods are sold in India in the condition as imported, then, the value shall be based on the unit price at which the imported goods, after further processing, are sold in the greatest aggregate quantity to persons who are not related to the seller in India. (b) In such determination, due allowance shall be made for the value added by processing and the deductions provided for in items (i) to (iii) of sub-rule (1) of this rule. 7A. Computed value. - Subject to the provisions of Rule 3, the value of imported goods shall be based on a computed value, which shall consist of the sum of:- (a) the cost or value of materials and fabrication or other processing employed in producing the imported goods; (b) Aan amount for profit and general expenses equal to that usually reflected in sales of goods of the same class or kind as the goods being valued whi....
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....dies, moulds and similar items used in the production of the imported goods; (iii) materials consumed in the production of the imported goods; (iv) engineering, development, art work, design work, and plans and sketches undertaken elsewhere than in India and necessary for the production of the imported goods; (c) royalties and licence fees related to the imported goods that the buyer is required to pay, directly or indirectly, as a condition of the sale of the goods being valued, to the extent that such royalties and fees are not included in the price actually paid or payable; (d) the value of any part of the proceeds of any subsequent resale, disposal or use of the imported goods that accrues, directly or indirectly, to the seller; (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 payments are not included in the price actually paid or payable. (2) For the purposes of sub-section (1) and sub-section (1A) of Section 14 of the Customs Act, 1962 (52 of 1962) and ....
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....ed goods cannot be determined under the provisions of sub-rule (1) of Rule 4. (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). 15. In the impugned order, the transaction values were rejected under Valuation Rule 10A and the values were re-determined. The relevant part of the impugned order is reproduced below: "ORDER 1. I reject under Rule 10A of the Customs Valuation (Determination of prices of the imported goods) Rules, 1988, the assessable value declared in the Bill of Entry and the Import Declaration and I redetermine under Rules 4,5,6,7, 7A &8 of the Customs Valuation (Determination of Price of Imported Goods) Rules 1988, the correct value as under in respect of consignments detailed in Annexure A-I, II, III & IV :- S. No. Name of the Port Declared assessable value Redetermined value i Ports at Jaipur 22,90,520/- 68,40,028/- ii ACC, Sahar, Mumbai 3,62,388/- ....
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....in the submissions of the learned special counsel as follows: (i) The importer and five other importer firms were all related and owned by the same set of people with Shri Ishwar Das Molrajani being the main person. The goods were imported from Legend Manufacturers Ltd. Hong Kong, Compu Xpress, Hong Kong and Royal Exports Hong Kong. The Hong Kong based firms were also owned and managed by the same family. Thus, they are related persons. (ii) The above relationship was never declared before the Customs and it was found during investigation evidenced both by the documents recovered during the investigation as well as the statements. (iii) Some of the invoices- both signed and unsigned and letterheads of the exporter firms of Hong Kong were recovered from the appellants premises during investigation which further goes to show that the importer and the exporters were related persons. (iv) The prices in the invoices which were declared were exceptionally low. (v) The differential amount between the prices declared in the Bills of Entry and corresponding invoices and the actual price was paid in cash to the Hong Kong suppliers. 19. As per R....
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.... part of the order nor the Annexures I & II of the SCN which it refers to give any indication as to which Rule was adopted for which good imported under which Bill of Entry and why. 22. However, in the discussion part of the impugned order in paragraphs 166.1 to 166.9, the methods of valuation adopted have been given for each category of goods but without referring to the Bill of Entry, i.e., all goods of a particular category imported under any Bill of Entry were valued following the same method and logic. We proceed to examine these. 23. Watch dials: In paragraph 166.1, it is mentioned that Rule 8 was adopted to determine the value because there were no transaction values of identical goods or of similar goods and there was no sale price of identical or similar goods in India nor was there any cost data to compute the cost of manufacture of the goods in India. Hence, Rule 8 was adopted. 24. We find the assertion in the impugned order that no identical or even similar Watch dials were imported or sold or manufactured in India during the relevant period unbelievable. The goods in question are not some hi-tech or rare or unusual goods. How is it likely that in a country of ....
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....etermination of value of Watch dials and the consequent demand therefore, cannot be sustained. 26. Leather straps: In paragraph 166.2, it is mentioned that Rule 5 was adopted to determine the values. The declared price was US$ 0.06 per piece (equivalent to HK$ 0.46 per piece) whereas duplicate invoices were discovered which showed the prices as HK$ 0.96 per piece. The Commissioner adopted this price and confirmed differential duty of Rs. 13,401/-. We find no reason to interfere with this part of the demand and accordingly uphold it. 27. Watch cases with straps/ metal bands: In paragraph 166.3, the declared values of these goods were rejected and it is recorded that there were no transaction values of identical goods or similar goods or sale prices or manufacturing costs of such goods and hence Rules 5,6,7& 7A would not apply and the value was re-determined following Rule 8. As with watch dials, we find it unbelievable that there were no imports of either identical or similar watch cases and there were no sales of imported watch cases also in India and nobody manufactured watch cases also in India and for that reason Rules 5,6,7 and 7A could not be applied. The price was redet....