TaxTMI 
TaxTMI 
2005 (7) TMI 216
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....irector. Also a mandatory penalty of the equivalent amount of Rs. 57,98,140/- on the said erstwhile partnership firm, under Section 114A of the Act has been imposed and has directed payment of interest by the said firm on the above purported duty amount in terms of the Section 28AB of the Act and directed that the sum of Rs. 10,00,000/- deposited under protest by the said erstwhile partnership firm during the course of investigation be adjusted towards the purported duty demand of Rs. 57,98,140/-. 1.2 During the years 1997, 1998 and 1999, the said partnership firm imported at Air Cargo Complex, Sahar, Mumbai, 38 consignments of diverse models and diverse specifications of Proxima Projectors. Projector, Systems Lamp Assembly, Lamp Replacement, Digital Light Projectors, etc. with identification number prefix and suffix given by the overseas manufacturers. All items imported (hereinafter referred to as the 'said goods') have numbers for identification purpose with distinct prefix and suffix, which would be evident from the items of imports, e.g., PROXIMA DP-LSI, PROXIMA DP 5900D, PROXIMA DP 5800D, PROXIMA DP 9200, MODEL DP 4200. POLYSILICON 5610D, DP 4200, POLYSILICON MODEL 5610P, ....
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....ues against which the appellant's Company has filed an appeal and an application for the stay before this Hon'ble Tribunal No. C/459/2001 being decided separately. 1.5 Enquiries were however continued and a SCN dated 16-5-2002 was issued by officers of Sahar Air Cargo alleging misdeclaration of value and demanding duty under proviso to Section 28 of the Customs Act, 1962. The duty demands as made were confirmed. 1.6 Vide order dated 23-6-2004 the Commissioner confirmed the demands of duty with interest on enhancing the valuation as proposed. Penalties under the provision of the Act were imposed on the importer & the partner. Hence this appeal. 2.1 A perusal of the impugned order reveals that the Commissioner has arrived at his conclusions after considering and recording the main allegation in Para 42 thereof, as regards the imported to have evaded Customs duty on imports of Proxima projectors by placing reliance on the investigation report submitted by the US Customs and the statement of Shri M.M. Gupta Managing Partner of the importer by (i) getting the sales routed through another firm namely PROFORMA in the US allegedly....
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....rson & when no reasons exist in the statement to show why it was not recorded in deponents own handwriting it would prove the said statements to be not voluntary. (ii) No prudent businessmen would immediately admit to short levy without going through the records. This only indicates that Gupta was forced to sign a prepared confession. (iii) No further enquiries have been made from Gupta about how he compensated 'Proforma' for sending undervalued goods to India. No bank verification of further sales effected by Gupta & the importer charging for after sales service etc. was verified as was submitted before us. This would call for not accepting the statement to be true voluntary confession. (iv) The annexure of the statement dated 15-7-2003 Shri Gupta has mentioned that he does not agree with the amounts and that would indicate no reason why he should subsequently give confessional statements. (v) There is no material on record to indicate remittance of differential sums. Undervaluation cannot be assumed from a lower sa....
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....' sent on which this report is based is being kept away by Revenue, a report originating & based on the same cannot be found to be valid evidence. The distinguishing attempted can be held to be only baseless & devoid of any merit and a ritual to distinguish and not follow the Supreme Courts decision. We find the Commissioner has not even cared to deal with the Tribunal decision in case of V.K. Impex cited before him. This order is to be set aside on this ground itself of US Customs report not reliable. 2.5 (a) The ld. Advocate for the appellants have brought out the following ambiguity & discrepancy & shortcoming in the U.S. Customs report. (i) At Page 3 of the said report it has been categorically stated that, "the informations on the SEDs and spread sheet provided by the Government of India was incomplete description (model number, series number etc.). In most cases it was not possible to match his information with the sales invoices of PROXIMA". U.S.A. investigating agency has clearly admitted that it was not possible for them to match informations provided by the Indian Customs with the....
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....t they were "unable to identify from any of the documentation available" reason given is "missing model number" (viii) Apart from above said report discloses that there were several other instances where the investigating agency was unable to identify items, model number and series numbers. The mere observation by the US Agent of an undervaluation without arriving at any reason in the year 2001 for imports of 1997 to 1999 the only material now being relied sans the statement of Gupta, be a reason to proceed with this show cause notice on undervaluation. In view of the ambiguity, discrepency & short coming shown in this report, the said report of US Customs cannot be relied upon. Burden to prove undervaluation is on the department. They can discharge the same by relying on evidence & material that is of cogent & tangible nature. In Puja International [1995 (76) E.L.T. 69] this Tribunal held that 'assessable value' cannot be determined on basis of assumption & presumption. Suspicion created by the material in this case is not sufficient to reject the transaction value as held in Indo-Swiss Time [1996 (88) E.L.T. 77]. We, respectfully concurring, would conclude in similar manner....
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....d report : "The information on the SEDs and the spread sheet provided by the Government of India was incomplete description (model number, series number, etc). In most cases it was not possible to match this information with the sales invoices from Proxima". It is settled and evident that a purported Report, based on incomplete information, can have no evidentiary value in the eye of law nor can a charge of undervaluation against an assessee/importer be made on the basis of such incomplete and/or purported Report, which is based on assumptions and presumptions at the most. (c) The said purported Report is vague and clearly indicates that the same is based on assumptions and presumptions and thus cannot be relied upon. In this respect, inter alia, the following observations at Page 4/13 of the said purported Report is relevant : "Reporting Agent was able to match up some of these items and observe that there is some indication of undervaluation on the export documentation" ………………………………….. "Proxima indicated that the 1998 price for the DP 5500 is $ 3,600.00 each, the total for five would be $ 18,000....
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....nce to "PROXIMA's invoices." If no invoice was prepared or generated by PROXIMA for export nor SEDs prepared by them, then how could there by an allegation that "some indication of undervaluation on the export documentation" of PROFORMA, another legal identity, as has been observed in the said purported Report, on the basis of invoices of PROXIMA for their alleged sale of the goods to PROFORMA in USA. No documentary evidence in the form invoices from PROXIMA to PROFORMA were obtained by the US Customs. In absence of such document it is not possible to ascertain the sale pattern of PROXIMA to PROFORMA including discount offered. More so when the US Report is an unsigned piece of evidence. Therefore no credence can be given to the said self contradictory US Customs Report nor any reliance placed thereon. This is incredible. (f) In Para 46 of the impugned order the Commissioner has held that in some cases the model numbers are not accurately shown and that the suffixes such as A, B, C and D with the model number are missing and that the same does not make any material difference since the information supplied is according to each line....
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....on by the buyer in India is on record. The difference in prices of 'Proxima' & invoice price of ' Proforma' was explained by the importer to Indian Customs by the manufacturer in Norway vide letter dated 30-7-98 & 3-11-98. This letter clarifies that "Proforma" is an authorised distributor of 'Proxima' & is to assist the manufacturer in developing the India market & as a MVAD (Master Value Added Distributor) Proforma was eligible to 40% discount & the importer in India being on official channel Partner in India of Proforma the price of Proforma to India buyer would be correct. Commissioner has not caused any enquiry on these letter, dated 30-7-98 & 3-11-98 & has summarily rejected the same by holding that,- "I am afraid this explanation lacks conviction when the investigation conducted by US Customs show against many of the models are the prices that were received by Proxima from Proforma & such prices were much higher than they declared for imports. If Proforma had got any discount they would have reflected in the prices then". The rejection by the Commissioner of the stand/explanation by Proxima vide their two letters is in his own personal opinion & not founded on facts as ....
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.... is factually in correct in view of the two letters from the manufacturers four years earlier on record of the department & the plea taken in the written reply to this notice. (c) The case has been built on a prejudice & the order being biased & not passed in an impartial manner is also evident from - (i) In S. No. 5 of Annexure A, goods were imported from ASK Proxima, Norway and not from USA hence the value of this item reported by the US Customs from Proxima to Proforma was irrelevant as the same had been mistakenly shown to have been sold by Proxima to Proforma where as the fact of the matter is that they have imported these items from Norway. (ii) S. No. 1 of Annexure B where in Model Projector LS1 was directly imported from Proxima USA, whereas the value adopted in above Annexure B was value charged by Proxima to Proforma as per US Customs report. Since the model had been directly imported from Proxima USA, there was no question of adopting the value charged by Proxima to Proforma and value of this item could not be enhanced and the exces....