TMI Blog2011 (4) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... d beads i.e. the goods which are not available with the department. Based on the ‘base price’ of glass Chatons and glass beads as indicated above, duty should be worked out on gross basis on the past consignments which are not available. - C/1276-1283/2002 - A/169-176/2011-WZB/C-I/(CSTB) - Dated:- 29-4-2011 - S/Shri P.G. Chacko, Sahab Singh, JJ. REPRESENTED BY : Shri V.S. Nankani, Advocate, for the Appellant. Shri K.M. Mondal, Spl. Consultant, for the Respondent. [Order per : Sahab Singh, Member (T)]. These are 8 appeals filed by the appellants against a common Order-in-Original CAO No. CC-42 43/2002 ADJN ACC dated 22-6-2002 passed by Commissioner of Customs, Air Cargo Complex, Mumbai disposing of two show-cause notices one dated 28-10-1996 relating to past 19 consignments and another dated 5-11-1996 relating to two live consignments. The details of the appeals are as under : - Appeal No. Name of the appellants Duty (Rs.) Penalty (Rs.) Redemption fine (Rs.) C/1276/02 Asia World Exports 63,36,669/- 65,00,000/- 6,00,000/- C/1277/02 Deepak Jewellers Pvt. Ltd. 16, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 15-7-1998 and in respect of other consignment show-cause notice issued is pending adjudication. 5. On the basis of investigation conducted by the department, it was alleged - (a) that S/Shri Suresh R. Punjabi, Deepak K. Punjabi, Kishore R. Punjabi and Sunil R. Punjabi (all brothers) had floated various firms, such as M/s. Deepak Jewellers Pvt. Ltd., M/s. Asia World Exports, M/s. Manish Manufacturers, M/s. Sunny Syndicate and these firms were importing glass chatons and beads of M/s. Swarovski and M/s. Preciosa by doing undervaluation with a view to evade duty and circumventing the EXIM Policy restrictions. (b) That as per the printed price list of M/s. Swarovski and M/s. Preciosa, their goods were sold on gross basis as per the price specified in the price list, which gave the price according to the article number, size, colour, effect, coating etc. The price list of Swarovski clearly incorporated the conditions of sale, which inter alia, showed that all prices were ex-factory in Austrian Shillings. There was no reference or indication of sale of goods on kg. basis. The price list of M/s. Swarovski was world wide FOB Austria. That similar imports effected by oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the undervalued invoices were to be understood in US Dollars and official invoices in 10 gross DEM. (h) That Shri Suresh Punjabi, when confronted with various incriminating documents had admitted in his statement recorded under Section 108 of the Customs Act, 1962 on 9-5-1996 that goods imported by them should have been priced in terms of gross basis but they had imported showing the said prices in kg. basis and thereby evaded the customs duty. He admitted the duty evasion to the tune of Rs. 10 lakhs and undertook to pay the same. 6. We have heard Shri V.S. Nankani, learned Counsel for the appellants and Shri K.M. Mondal, Spl. Consultant for the Revenue at length on several days. Submissions of Shri V.S. Nankani are summarized as under : - (i) The Commissioner was not correct in rejecting the transaction value as none of the four exceptional circumstances mentioned in Rule 4(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 was applicable in the present case. It was mandatory on the part of the department to have accepted the transaction value and there is no evidence or material on records nor any allegation in the show-cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntrary to the documentary evidence on record, viz. the manufacturer s invoice dated 15-3-1995. It is settled law that where there is a conflict between oral evidence and documents, the documentary evidence shall prevail over the oral statements. (vi) At the same time, the so-called purported confession as contained in the statement dated 9-5-1996 must be read as a whole. And it is not permissible to accept a part and reject the other part. The fact that the department itself has in the show-cause notice, demanded any amount more than Rs. 10 lakhs as admitted by Shri Suresh Punjabi, shows that the admission by Shri Suresh Punjabi of having ordered goods as per the price-list cannot be used against him. (vii) As regards the case pertaining to M/s. Preciosa, a direct shipment covered by invoice dated 27-9-1994, which was in US Dollars, was released on payment of duty on the invoice value in terms of the order dated 15-7-1998 of the Hon ble Bombay High Court in Writ Petition No. 798 of 1998. It therefore, follows that an invoice which contains the price in US Dollars was accepted as a genuine invoice. 7(a). The learned Advocate further submitted that the department has miscons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1994-95 were recovered from another party M/s. Mehta Trading House Pvt. Ltd. Learned Counsel submitted that the same price-lists were not accepted by the adjudicating authority as well as by this Tribunal as reported at 2007 (213) E.L.T. 54. The price-list of Preciosa was recovered from another party Shri Satish Vithlani. For the period from February, 1994 to July, 1995 none of the price-lists were recovered from the appellants. He further submitted that price-lists should be applicable if the terms and conditions thereof are agreed to by the parties. Perusal of the Swarovski s price list shows the same contains the following conditions :- (i) Prices applicable at the time of execution of the order shall prevail over prices when the order was placed; (ii) Second quality merchandise shall be available with a 25% reduction, except in case of Articles 1100 and 2000 and Articles Groups 3000, 5000 and 6000; (iii) Orders for second quality only cannot be accepted, but subject to availability of stock, an increase in the proportion of second quality may be possible; (iv) If merchandise excluding second quality is wanted, the order must be made out for first A-qual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase orders seized from the office premises of the appellant have no connection or correlation whatsoever to any of the consignment imported by the appellants and there is no evidence or material on record to show that three purported purchase orders were in fact placed with Swarovski or that they were in any manner whatsoever accepted or acted upon by the parties. The principle of First In and First Out (FIFO) is not in accordance with Section 14 of the Customs Act, 1962. The value of the goods depends on various factors such as colour, size, specifications, quantity, terms of payment etc. and, therefore, it is not possible to determine the assessable of the said goods on the basis of weighted average as done by the department. 13. The Counsel further argued that the determination of value as shown in Annexure-IV-A, B, C as well as in Annexure-V (1 to 19) of the show-cause notice is without any basis or substance. He further added that the department has failed to appreciate that the freight and insurance @ 20% and 1.25% respectively was erroneously added to the assessable value of the goods. In view of the above arguments, the Counsel submitted that the Order-in-Original passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... below : - (i) Recovery of incriminating documents including the Printed Price List of 1993 of M/s. Swarovski from the premises of the appellants. (ii) Inventory Panchnama dated 3-11-95 of the seized goods of past consignments. (iii) Examination Panchnama dt. 8-11-1995 of live consignments. (iv) Printed Price Lists of M/s. Swarovski of 1994 1995 obtained from M/s. F. M. Chinoy Co., Indenting Agent of M/s. Swarovski in India. (v) Product catalogue of M/s. Swarovski seized from M/s. Mehta Trading House Pvt. Ltd. (vi) Price list of M/s. Preciosa submitted by Shri Satish Vithlani, another importer of jewellery stones during investigation. (vii) Contemporaneous imports by other importers from M/s. Swarovski. 15.1 Examination of the incriminating documents which were in the form of correspondences between the Punjabi brothers and M/s. Swarovski and Preciosa, it was found that the appellants were resorting to undervaluation by importing the goods in transit via Dubai under the lower value invoices of one M/s. Mushrif Trading, Dubai showing the value on kg. basis. 16. Shri Mondal further stated in respect of the goods imported from M/s. Swarovski tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... jabi had held himself out as representing M/s. Mushrif Trading Est. and had sent a fax to M/s. Swarovski. Interestingly the said fax showed the address of M/s. Mushrif Trading Est. as Bombay and the fax number shown therein, i.e. 373971 belonged to the Punjabis at Bombay. 17. In case of goods imported from. M/s. Preciosa, he submits that as per printed price list of 1995 of M/s. Preciosa, it is seen that their goods were also sold on gross basis as per the printed price list (prices per 10 gross in DEM). However, in respect of certain variety of mixed goods, the price list also shows that the goods were available for sale on kg. basis, though at a much higher price. Be that as it may, Shri Suresh Punjabi and his brothers had also similar arrangements with M/s. Preciosa for under-invoicing and supply of goods in transit via Dubai. The fact that the Punjabi brothers successfully persuaded it to sell the goods to them via Dubai and that too at a lower price on kg. basis is evident from the letter dated 24-8-1995 from M/s. Preciosa to M/s. Manish Manufacturers, which stated the under-valued invoices were to be understood in U.S. Dollars official invoices in 10 gross DEM. 18. Rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner of Customs, Mumbai - 1988 (37) E.L.T. 118 (T). 22. Shri Mondal submitted that the appellants are relying on the case of Mehta Trading House Pvt. Ltd. v. Commissioner of Customs, Mumbai - 2007 (213) E.L.T. 54 (T) stating that the present case is similar to the cited case and the Tribunal has upheld the order of the Commissioner accepting that the goods imported from Swarovski on kg. basis were stock-lot. He submitted that this case has no application to the facts of the present case as in Mehta Trading s case, the goods were declared as stock-lot, and on detailed examination, the goods were found as declared, whereas in the present case, the goods have been declared as glass chatons and glass beads and only in three cases out of 19 consignments, the goods have been declared as glass chatons assorted and assorted glass beads . In any event, glass chatons assorted and assorted glass beads cannot be treated as stock-lot by any stretch of imagination. Further, the nature of incriminating documents found in the present case was totally different from Mehta Trading s case. Their reliance placed on this case is totally misplaced. 23. The order of the Tribunal in Mehta Tradin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the contrary. He submitted that documentary evidences in form of Bills of Entry, Import invoices, and packing lists filed with customs at the time of import do not support the appellant s claim that impugned goods are Stock Lot. Copies of Bills of Entry and relevant invoices and packing lists were tendered by the Consultant for Revenue at the time of hearing. On perusal of the same we did not find goods described as Stock Lot. On the contrary, we find that out of 19 past consignments, in 16 cases, goods have been described as Glass Chatons and Glass Beads. In two cases, goods have been described as Glass Chatons assorted and in one case goods have been described as Assorted Glass Beads . Consultant for the Revenue submitted that appellants have admitted in their reply to the show-cause notice that physical examination report of the goods confirmed that goods were found as per description and declaration made by them in Bs/E. In view of this clear admission, he submitted that their request for production of duplicate copies of Bs/E showing the examination report are not genuine. He also took us through their replies, particularly para 4 of the reply dated 1-9-1997 and also para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain gems without stating that the offer was on kg. basis. Appellants further relied upon the telex dt. 19-2-1997 from M/s. Swarovski to M/s. Asia World at page 459 of Paper Book Vol. II. This telex was in respect of discontinued stock whereas in appellant s case, goods were not discontinued as they were figuring in Price Lists regularly. These documents therefore do not support appellant s case. 25.9 Learned Counsel also referred to a letter dated 2-7-1990 from Gem and Jewellery Export Promotion Council which was addressed to M/s. Mehta Brothers clarifying the definition of Stock Lot. (Page 456 of Paper Book Vol. II). It is not the appellant s case that M/s. GJEPC have inspected their goods and opined the goods as Stock Lot. 25.10 Learned Consultant for the Revenue relied upon Tribunal s decision in the case of Aarkeyes Imports Corporation v. CC, Mumbai - 1988 (37) E.L.T. 118 (T.) which has held in para 10 as follows : 10. Even so stock lot sale was a one-shot affair and so long as goods are identical in all respects with those normally manufactured and traded, and goods have not become obsolete and their further manufacture not discontinued, the stock lot prices could not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y value and the Commissioner was not correct in relying upon the same. He took us through statement of Shri Suresh Punjabi as also the two affidavits of retraction. He has relied upon the following decisions to say that statements which have been retracted cannot be the basis for alleging undervaluation. (a) CC v. R.K. Tomar - 2008 (228) E.L.T. 232 (b) Vinod Solanki v. Union of India - 2009 (233) E.L.T. 157 (S.C.) = 2009 (13) S.T.R. 337 (S.C.). (c) Pankaj Gandhi v. CC - 2010 (249) E.L.T. 121 (d) Kishan Chand v. CC - 2008 (88) RLT 759 = 2009 (238) E.L.T. 530 (Tribunal). (e) CC (Import) v. Vikram Corporation (f) Opel Alloys (P) Ltd. v. CCE, Ghaziabad - 2005 (182) E.L.T. 64 (T) 26.1 Countering the submissions of learned counsel for the appellants learned consultant for the Revenue submitted that Shri Suresh Punjabi gave as many as 10 statements under Section 108 of the Customs Act, on various dates in his own handwriting in Hindi. His first statement was recorded on 27-10-1995 and last statement was recorded on 22-10-1996. In his statement dated 9-5-1996, Shri Suresh Punjabi has clearly admitted that they were placing orders on the manufacturers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not controverted by the revenue. Hence the Tribunal observed that the preponderance of probability is in favour of the appellant that the retraction was made immediately. But in the case before us, the retraction affidavit was submitted to the Commissioner after about 4 years. Therefore, this decision is not helpful to appellants. In the case of Vinod Solanki - 2009 (233) E.L.T. 157 (S.C.) = 2009 (13) S.T.R. 337 (S.C.), ld. Counsel referred to para 34 of the judgment wherein the Hon ble Apex Court has held that a person accused of commission of an offence is not expected to prove to the hilt that confession had been obtained from him by any inducement, threat or promise by a person in authority. The burden is on the prosecution to show that the confession is voluntary in nature and not obtained as an outcome of threat, etc. if the same is to be relied upon solely for the purpose of securing a conviction. In the case before us, the revenue has not relied solely on the statements of Shri Suresh Panjabi. His statements are corroborated by various other incriminating documents recovered from their promises. Therefore, this judgment is also not helpful to the appellants. In the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng upon the confessional statements dated 9-5-1996 and 10-5-1996 which are substantive evidence in terms of Section 108 of the Customs Act. 27.1 It is the claim of the appellants that they have imported the goods on weight basis from M/s. Mushrif Trading Est., Dubai which is an independent entity. Transaction between them is on principal to principal basis. They are not related to each other in terms of Valuation Rules, 1988. Their invoice value is genuine and should be accepted. 27.2 However according to Revenue, M/s. Mushrif Trading Est., Dubai is just an outfit created by Punjabi brothers in order to suppress the specification and value of the goods. According to Revenue, the Punjabi brothers were placing orders from Bombay on M/s. Swarovski and Preciosa for glass beads and glass chatons as per their price list but routed the goods in transit via Dubai under lower value invoices of M/s. Mushrif Trading Est., Dubai on weight basis instead of gross basis. 27.3 Learned Consultant for the Revenue submitted that various incriminating documents, mostly correspondences between them and Swarovski recovered from their premises clearly show that M/s. Mushrif Trading Est., Dubai was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HORE PUNJABI 27.5 In this connection, learned consultant who referred to a Fax dated 12-1-1994 (at page 173 of Revenue Paper Book Vol. I) sent by Shri Suresh Punjabi to M/s. Swarovski on behalf of M/s. Manish Manufacturer, Bombay stating inter alia that M/s. Mushrif General Trading were just working as Clearing and Forwarding Agents for them. The said Fax is reproduced below. FROM : Manish Manufacturers Bombay Fax 3719271 TO M/s. Swarovski, Austria Fax 0041-75-3990290/36 Attn. Mr. Alfred Steiner Our Ref. CR - 34/94 dt. 12-1-94 Your Ref. Pls. as - 07/94 dt. 10-1-94 Sub. HF Stones We are in receipt of your above fax, contents of which had our best attention. We have noted that your representative in Dubai is complaining regarding selling of HF stones in the local market by our clearing and forwarding agents, M/s. Mushrif General Trading. For this, we wish to mention that M/s. MGT in Duabi have been dealing in M/s. Swarovski HF stones from other sources since long before your contract with us in Bombay on May 1993. Presently also they are dealing in Ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to M/s. Swarovski sent by Punjabi placing orders for various items of Article Nos. 2000, 3700, 5000 of different size and colours on gross basis (Pg. 176 of Revenue Paper Book Vol. I); (v) Fax dt. 2-3-1994 from M/s. Manish Manufacturers to Swarovski sent by Suresh Punjabi placing order for various items of Article No. 1100, 1222, 2000, 3000 of different sizes and colours and quantity on gross basis (Pg. 167 of Revenue Paper Book Vol. I); (vi) Fax dt. 21-2-1994 from Manish Manufacturers to M/s. Swarovski sent by Suresh Punjabi for placing order for various items of Article No. 1122, 3700, 5301 1100 of various sizes and colours and quantity on gross basis (Pg. 168-169 of Revenue Paper Book Vol. I). Aforesaid documents show that Punjabi brothers were making correspondences with Swarovski for importing various Articles of different sizes, colours and quantity on gross basis. In fact, last three documents mentioned at Sr. No. iv to vi are purchase orders placed on M/s. Swarovski of various articles on gross basis. Above documents when shown to Mr. Suresh Punjabi during recording of his statement on 9-5-1996, he admitted that they were placing orders on Swarovski as per p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Taha Impex Invoice No. 0626586 dt. 16-3-1994; (iv) M/s. R.N. Jain Co. Invoice No. 0639825 dt. 15-3-1995; (v) M/s. R.R. Jariwala Invoice No. 0643105 dt. 14-6-1995; (vi) M/s. Niti Enterprises Invoice No. 0648129 dt. 24-10-1995. 29.2 We find from these invoices that sales of the goods was on gross basis and not on the weight basis and as per price list. 30. Ld. Counsel relied upon the following judgments of Hon ble Apex Court, (i) CC Calcutta v. South India Television Pvt. Ltd. - 2007 (214) E.L.T. 3 (S.C.); (ii) Mirah Exports Pvt. v. CC - 1998 (98) E.L.T. 3 (S.C.); (iii) Sounds-N-Images v. CC - 2000 (117) E.L.T. 538 (S.C.). The ld. Counsel referred to para 6 of the Apex Court s judgment in the case of CC, Calcutta v. South India Television (P) Ltd. - 2007 (214) E.L.T. 3 (S.C.). He said that the Hon ble Apex Court has observed that before rejecting the transaction value as incorrect or unacceptable, the department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s but the price list of M/s. Swarovski nowhere mentions the price list on kg. Moreover, correspondences seized from the importer s premises show that M/s. Swarovski have agreed to scheme of under-valuation to evade the duty by Punjabi brothers. Shri Suresh Punjabi has also admitted in his statement dt. 9-5-1996 that all imports from M/s. Swarovski were as per price list and on gross basis. In view of this scenario, we do not find fault in rejection of said invoice by the Commissioner. Appellants relied upon decision of CEGAT in case of Sai Impex v. Collector of Customs - 1992 (62) E.L.T. 616 (Tri.) in which it was held that manufacturer s invoice, if available and genuine is the best evidence of price of imported goods. As discussed in above para, invoice in the present case is not genuine and it is not as per the price list of the manufacturer. This decision is clearly distinguishable in the present case. From the above, it is clear that goods imported from M/s. Swarovski were undervalued to evade the duty. We hold that the Commissioner has rightly rejected the invoice value and demanded the duty as per the price list. 32. In the case of goods imported from M/s. Preciosa the dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken as per provisions of Rule 9(2)(c)(i) and (iii) of the Customs (Valuation) Rules, 1988 are, in our view, correct and the same is upheld. 34. Another point raised by the appellant is that demand of duty in respect of past consignments is hit by the limitation of time. We find that since the importer has misdeclared the value of the goods and we have already held that invoices issued by M/s. Mushrif Trading Est. are not genuine and bona fide invoices, the extended period under the provisions under Section 28(1) of the Customs Act will be applicable to them. 35. We shall now examine whether the Commissioner has correctly determined the value of the goods involved in the live consignments. We find that Bill of Entry No. 256 covers 3 packages of Swarovski brand of goods. In this case, the goods were examined under panchanama 8-11-1995. We find that the FOB value of the Chatons has been determined with reference to the size mentioned in the panchanama and price list of M/s. Swarovski in the year 1995. Thereafter 20% freight and 1.125% insurance of FOB value has been added and finally assessable value has been arrived at Rs. 18,55,366/-. We also find that before arriving at the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ordered quantity, in the case of other Bills of Entry as shown in Annexure-V (4) to Annexure-V (8) for Swarovski Chatons and Annexure-V (10) to Annexure-V (15) for Swarovski Beads, show-cause notice has determined the value on the basis of average unit value of all seized goods and ordered goods. These allocations have been demonstrated in Annexure-IV (C) to the show-cause notice. For the balance quantity, no article number could be ascertained in the absence of goods having been cleared. Regarding the allocation of the seized goods to the consignments of past clearances, they have been allocated on the basis of FIFO and have been allocated to the Bill of Entry cleared last and sequentially in the reverse way. The same have been demonstrated in Annexure-IV(A). We are, however, not fully satisfied with the methodology adopted by the department on the quantification of duty demand on the past consignments inasmuch as this method does not appear to be sound. We find that two different methods have been adopted by the Revenue in respect of the goods covered by the past consignments - value of some taken on gross basis and some on kg. basis. We are of the view that the total quan ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
