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2020 (2) TMI 480 - AT - CustomsValuation of imported goods - undervaluation of Zinc and aluminium scrap imported - rejection of declared value - re-determination of the value of scrap items based on the fact that the import price of the said items were much lower than the prevailing prices contained in the bulletin published by the London Metal Exchange (LME) - admissibility of evidence - imposition of penalty u/s 112(a) of CA. HELD THAT:- In the case in hand, the appellant M/s Sunland Alloys had entered into contract with the overseas suppliers for importation of the scrap items in question. Pursuant to the contractual norms, the goods were supplied by the overseas entities under the cover of commercial invoices, bearing the reference of description of goods, quantity, price etc. On the basis of the import documents, the appellant had filed the Bills of Entry before the jurisdictional Customs Authorities for duty assessment and for clearance of the imported consignments for home consumption. It is not the case of Revenue that over and above the contractual amount, the appellant had paid any other amount either to the overseas supplier or any other person in context with importation of the subject goods. Further, Revenue has also not alleged that the appellant had any interest in the business of the overseas suppliers and vice-versa. The assessment has to be made under Section 14 ibid read with Rule 4(1) of the Customs Valuation Rules, 1988 and the provisions of Rule 3(ii) ibid should not be applicable for re-determination of the declared value. In this context, the Hon’ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [2000 (11) TMI 139 - SUPREME COURT] have held that when the transaction value under Rule 4 is rejected, then under Rule 3(ii), the value shall be determined by proceeding sequentially through Rule 5 to 8 of the Rules; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), then there is no question of determining the value under the subsequent rules - the department has not made any valid case for rejection of the declared transaction value. Admissibility of evidence - HELD THAT:- The learned counsel for the appellants has challenged the validity of the printouts taken from the Laptop of Shri Jhingon on the point that mandatory provisions and conditions of Section 138C of Customs Act, 1962 have not been complied with. We find that the Panchnama dated 25/04/2006 simply mentions that the DRI officers also searched one Laptop of Shri Tarun Jhingon and one CPU for further investigation. Details of seized documents and laptop and CPU were given in the Annexure to Panchnama. It is evident from the Panchnama that the seizure of the Laptop was not in terms of Section 138C ibid. Moreover, we find that such evidence was declared to be not admissible On perusal of the relevant contents of the certificate dated 29.10.2008, it transpires that ISRI has not prescribed any specific discount band on the price fixed by the LME for consideration of transaction value of the scrap items in question. Further, the impugned order has also relied upon the Alert Circular No. 14/2005 dated 16.12.2005 issued by Director General of Valuation for re-determination and enhancing the declared value. The said circular only provides for average price difference between the price of prime metal and different grades of scrap as determined on the basis of study of difference in prices of scrap and prime metal. The circular only requires the department staff to check possible under valuation, after ensuring all relevant specifications. However, the said circular cannot have over riding effect on the valuation provisions contained in the customs statute and as such, the transaction/declared value cannot be rejected merely on the basis of specifications provided in the DGOV Circular dated 16.12.2005. Revenue has concluded on the basis of stray third party evidences as above have alleged undervaluation on the basis of the statements of the concerned persons alone, which are not corroborated by any documentary evidence and therefore, their reliability, is not free from doubt. The allegation of undervaluation is not sustained. Consequentially, the seizure, demand of differential duty, fine and penalty on M/s. Sunland Alloys do not survive - the seizure and duty demand are not sustainable and as a corollary, the penalties also are liable to be set aside. Appeal allowed - decided in favor of appellant.
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