TaxTMI 
TaxTMI 
2026 (6) TMI 1375
X X X X Extracts X X X X
X X X X Extracts X X X X
....issued by the Additional Director General [ADG] Directorate of Revenue Intelligence [DRI] Delhi Zonal Unit [DZU] Delhi. In the impugned order, the Commissioner rejected the declared values of the goods (watch parts and watch movements) imported by M/s. Jaipur Time Industries [The importer] through four ports, re-determined the values, confirmed demand of differential duty amounting to Rs. 1,25,83,928/- 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. 218/2011, 219/2011, 220/2011, 222/2011 and 223/2011 as follows: Appeal Appellant Dut/Fine/ Penalty (Rs.) Sections C/217/2011 Jaipur Time Industries (the importer) Duty Rs. 1,25,83,928/- Redemption fine Rs. 4,82,000/- Penalty Rs. 1,25,83,928/- Proviso to section 28(1) Confiscated under section 111(d) & (m) and fine imposed under sec....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eshav Krishnan appearing proxy for the counsel sought another adjournment. As the matter is over 15 years old, we have declined to adjourn the matter. The question which arises is how should this Tribunal decide if the appellant does not appear on the dates fixed for hearing has been decided by the Supreme Court in Shri Balaji Steel Re-Rolling Mills Versus Commissioner of Central Excise & Customs [2014 (36) S.T.R. 1201 (S.C.)] the relevant portion of which is reproduced below: 12. A similar question came up for consideration before this Court 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ibunal itself has passed proper order under Section 33(4). It follows from all this that the Appellate Tribunal is bound to give a proper decision on questions of fact as well as law which can only be done if the appeal is disposed of on the merits and not dismissed owing to the absence of the appellant. It was laid down as far back as the year 1953 by S.R. Das, J. (as he then was) in CIT, v. Mtt. Ar. S. Ar. Arunachalam Chettiar that the jurisdiction of the Tribunal and of the High Court is conditional on there being an order by the Appellate Tribunal 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....importer. x) Since the goods were not liable to confiscation, no penalties are imposable on the importer or others. xi) Simultaneous imposition of penalty under sections 112 and 114A of the Act is illegal. Submission of the Revenue 9. Learned special counsel for the Revenue made the following submissions: i) The importer herein and five related firms viz., (i) Rochi Ram & Sons, (ii) Rajasthan Watch Manufacturers; (iii) M/s Rochees Watch Pvt. Ltd., (iv) Rochees Time Pvt. Ltd. and (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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ere declared before the Customs. ix) 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. x) 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. xi) 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. xii) 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. xiii) With respect to straps/metal band, watch case, plastic case & Metal strap/Band, the value was r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ansaction 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 evidence which clearly establishes the reasonableness and accuracy ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 which are made by producers in the country of exportation for expor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orted 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 these rules, the value of the imported goods shall be the value ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 1,10,48,270/- 2,5,29,793/- ii ICD Patparganj, New Delhi 11,96,498/- 18,69,493/- iii JNPT, Nhava Sheva 56,48,377/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the Rules. The reasons for rejecting the transaction values given in the impugned order and summarized 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 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er Bill of Entry (say, if there were no contemporaneous imports during the relevant period). Neither the operative part of the order nor the Annexures to the SCN which it refers to give any indication as to which Rule was adopted for which good imported under which Bill of Entry or parcel and why. 22. However, in the discussion part of the impugned order in paragraphs 166.1 to 166.10, the methods of valuation adopted have been given for each category of goods without referring to the Bill of Entry, i.e., all goods of a particular category were valued following the same method and logic. We proceed to examine these. 23. Lead brass strips (coils) PVC Films, leaded brass strips (Coils), PVC Films, screen pronging ink and PVA Abrasive wheel : In paragraph 166.1, it is mentioned that leaded brass strips of Japan Origin, screen printing ink & PVA Abrasive wheel of China origin were imported under invoice no. LW 9069/06 dated 12.1.2006 by suppressing the actual transaction value as is evident from the invoices issued by the actual suppliers of Hong Kong which invoices were retrieved from the computer of the importer which showed that the goods were purchased by Shri Ishwar Das Moolr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eaded brass strips, screen printing ink. In paragraphs 166.5, 166.5.1 and 166.6 of the impugned order, the values of these goods were re-determined based on the contemporaneous imports of similar goods imported into India. We find no reason to interfere with the re-determination of values of these goods and the consequential confirmation of demand. 28. Watch dials. In paragraph 166.7 of the impugned order, the values of two consignments of watch dials were re-determined under Valuation Rule 8 as it was found not possible to determine the values under Rule 5 (transaction values of identical goods),Rule 6 (transaction values of similar goods) or Rule 7 (sale price of such goods in India). We find the assertion in the impugned order that no identical or even similar Watch dials were imported or sold in India during the relevant period unbelievable. Watch dials are not some hi-tech or rare or unusual goods. How likely is it that in a country of almost a billion people (even during the relevant time), watch dials were not imported, or sold during the relevant period (two financial years 2003-2004 and 2005-2006)? Having asserted so, the Commissioner has, in the impugned order, determi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en cost sheet' recovered during the seizure. Clearly, the hand written cost sheet cannot form the basis for determining the value of the imported goods under Rule 8 because such a cost sheet is not consistent with the principles of Rules 5,6 &7. The demand on this count cannot be sustained and is accordingly set aside. 31. O-Rings: In paragraph 166.9, the declared values of these 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. Since there were no other invoices, in the impugned order an invoice issued by the actual supplier M/s. Kelvin Far East Ltd., Hong Kong retrieved from the computer of the importer. Since this value was on FOB basis, adding cost of transport on notional basis, re-determined the value per ring and confirmed differential customs duty demand of Rs. 4,154/-. We find no reason to interfere with this re-determination. 32. Various other items: In paragraph 166.10 of the impugned order it is said that there were no imports of identical or similar goods nor sales o....