TMI Blog2009 (8) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... er board itself prescribe re export of goods in absence of any K.P. Certificate, hence absolute confiscation of rough diamond not warranted in light of fact that K.P. Certificate is valid and corresponds to value of rough diamonds declared by appellant. goods allowed to be re-exported without any redemption fine in the fact of case. - C/444-462/2008 - A/1770-1788/2009-WZB/AHD - Dated:- 7-8-2009 - Ms. Archana Wadhwa, Member (J) and Shri B.S.V. Murthy, Member (T) S/Shri J.C. Patel, Naresh Thacker and Hardik Modh, Advocates, for the Appellant. Shri Rajendra Nagar, SDR, for the Respondent. [Order per: Archana Wadhwa, Member (J)]. - All the appeals are being disposed off by a common order as they arise out of the same impugned order passed by the Commissioner vide which he has absolutely confiscated the rough diamonds imported by the appellant and imposed penalties of varying amounts on the ground that the said rough diamonds were over-valued. 2. After hearing both sides duly represented by Shri J.C. Patel, Shri Naresh Thacker, Shri Hardik Modh, Advocates for the assessee and Shri Rajendra Nagar, SDR for the Revenue, we find that the various firms impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the said report, the value of the said imported consignments of rough diamonds was ranging from 0.40 USD/Carat to 20 USD/Carat. They, accordingly, submitted their report under the cover of their letter dated 28-7-03. 5. Even the said report dated 25-7-03 was not accepted by the Revenue and another panel was constituted to examine and assess the value of the imported rough diamonds. As per the third report dated 15-11-03, the value was much on the lower side, which value stand accepted by the Commissioner in his impugned order. 6. Thereafter, after completing the formality, the diamonds were placed under seizure under Panchnama on 29-7-03. Subsequently, search operations were conducted at the premises of all the importers and the statements of representatives of importing firms were recorded on various dates admitting that the rough diamonds were overvalued. 7. On the above basis, proceedings were initiated against them which culminated into passing of the impugned order by Commissioner absolutely confiscating the rough diamonds and imposing penalty. The said order is impugned before us. 8. The appellants have very strongly contested the findings of the adjudicating a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el members. Shri Patel has further submitted that even cross-examination of Shri Y.K. Choudhary during adjudication revealed that only a letter was received from DRI stating that they were sending new panel from GJEPC, inasmuch as they have intelligence that value given by the first panel was not correct. To the same effect is the result of cross-examination of Shri B.K. Sharma, Appraiser, DRI, Surat, indicating that it was decided to have a second panel on the advice of DRI, Mumbai. He submits that valuation of diamonds being in conformity with the declared value, as accepted by first panel, the constitution of the second panel was not in accordance with the law and subsequent reports date 25-7-03 and 15-11-03 are simply indicative of the fact that Revenue wanted to establish their allegations of over-valuation at any cost. Even though, the Commissioner has accepted that valuation of the rough diamonds is dependent upon the subjective satisfaction of the person well-versed in the examination and valuation of the said goods, valuation done by the expert in their first report date 10-6-03 should have been accepted. Further, the' show cause notice indicates that the value given by sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even understanding the contents of the same. Inasmuch as the members of panel constituted subsequently, had neither requisite qualification nor experience to opine on the valuation of the imported rough diamonds and the earlier panel being comprised of experts and technically qualified members, first report date 10-6-03 has to be adopted instead of subsequent report given on 25-7-03 and 15-11-03. 11. The appellants have further contended that even the subsequent reports are not in consonance with the provisions of Section 14 of the Customs Act, 1962. Value stand defined in Section 2(41) of the Customs Act, 1962 and the value of the imported goods determined in accordance with the provisions of Section 14. As per Section 14, the value of the imported goods shall be the price on which such light goods are offered for sale in the course of international trade for delivery at the time and place of importation. There being no other import of contemporaneous goods and the subsequent panel's report being based upon the subjective satisfaction of the person consisting the same, the value given by said panel cannot be held to be in accordance with the above provisions. The appellants have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 111(d), the same has been arrived at on the ground that KP certificate admittedly produced by the importer do not cover the goods in question. The Commissioner has relied upon the Board's circular and Para 7 thereof for absolute confiscation. However, the appellants have drawn our attention to the Para 6 of the same circular laying down that when rough diamonds are imported without KP certificate, which is not produced within 7 working days, the said goods would be sent back to the exporting authority i.e. certifying authority of the country of origin. As the import of rough diamonds without KP certificate is not permissible under the import policy, the appellants have contended that Board has prescribed re-export of the goods in spite of such prohibition. In the present case, requisite KP certificates, have been produced and as such absolute confiscation was not warranted and the Commissioner should have allowed re-export of the goods. They have relied upon the Larger Bench decision of the Tribunal in case of M/s. A.K. Jewellers v. CC, Mumbai, 2003 (155) E.L.T. 585 (Tri.-LB), laying down that even if the goods are ordered to be confiscated under Section 111(d) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt given by the subsequently constituted expert panel, was not fair and just. The valuation given by the subsequent panel, when read with the statements of various persons, lead to inevitable conclusion that the value of the rough diamonds in question was on higher side. However, on being questioned as to whether the rough diamonds were exempted from payment of duty, in which case the valuation question would not be of much relevance, learned SDR fairly agree that the rough diamonds were not leviable to pay duty but submits that as per intelligence report of DRI, such over-valuation was being done by the importer for other illegal activities. As regards absolute confiscation, not being in accordance with the law, and the appellants request to allow re-export, in the light of the Board's Circular No. 53/2003-Cus., dated 23-6-03, he leaves the matter to the discretion of the Bench. As regards penalty, though he admits that in terms of provisions of Tribunal's decision in case of M/s. Suraj Diamonds (India) Ltd. v. CC (Airport), Mumbai, 2008 (227) E.L.T. 471 (Tribunal) = 2008 (86) RLT 400 (CESTAT-Mum.), No penalty is imposable on the ground of alleged misdeclaration of value, when the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om IIT, which was also obtained at the instance of department, was contradictory. Report in favour of the appellant by Government department cannot be rejected on superfluous ground. By applying the ratio of above decision to the facts of the instant case, we really fail to understand as to how the valuation report of first expert panel, which was constituted by the department itself, and was given by the experts in the field, can be ignored without assigning any reason for such rejection. What prompted the Revenue to go for second and third panel, is a grey area without any reasons being put forth by the Revenue. We may observe here that it is not at the whims and fancies of the officers to go on constituting the panel till a report acceptable to them is obtained. This would amount to making mockery of the justice. There is no indication that the seven members of the first panel were either influenced or any other reason to give a wrong report so as to discard the same. The panel constituted was consisting of expert members in the field and it is not only difficult but seems to be impossible to accept that said members would have given an unacceptable report. Apart from that we no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of investigation, cannot be made sole basis for upholding the charge of over-valuation against them. The various decisions relied upon by the appellant duly support their above contention. Reference at this stage is made to Tribunal's decision in the case of CC, Calcutta v. M/s. Ramapati Exports, 2002 (142) E.L.T. 77 (Tri.-Kolkata) as affirmed by Hon'ble Supreme Court in 2002 (145) E.L.T. A247 (S.C.). 21. We also agree with the learned advocate that the charges of mis-declaration in valuation of the goods, are required to be proved by production of reliable and affirmative evidence. Valuation enhanced on the basis of opinions of experts cannot be held to be in accordance with the settled law on the issue inasmuch as the transaction value has to be first rejected by adopting suitable mode for changing the valuation of the goods under consideration. In the present case, Revenue has not adduced any evidence on record to show that the invoices were not reflecting the correct value of the rough diamonds or they were fake and bogus invoices. There is also no allegation of any relationship between the appellant and foreign supplier of the goods, thus, casting any shadow of doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22. By applying the ratio of the above decision to the facts of the instant case, we find that there is virtually no other evidence on record to indicate that the goods in question were over-valued. 23. As regards absolute confiscation of the goods, it is seen that the same has been done under the provisions of Section 111(m) and 111(d) of the Customs Act. Having already held that there was no over-valuation of the goods, confiscation under Section 111(m) cannot be upheld. As regards confiscation under Section 111(d), the same has been ordered on the ground that KP certificate produced by the importer do not cover the goods in question and reliance has been made on the Board's Circular No. 53/2003-Cus, dated 23-6-03. The said circular issued by the CBEC is to the effect that in terms of Para 2.2 of the export/import (EXIM) policy, as amended by Notification No. 23/2002-07, dated 26-12-07 issued by Director General of Foreign Trade, no import/export of rough diamonds shall be permitted unless the shipment particulars are accompanied by Kimberly Process (KP certificate) required under the procedure specified by GJEPC. As recorded in the impugned order of the Commissioner, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll, invoice, packing list etc. to the GJEPC for verification and certification. The GJEPC scrutinizes the documents and if found in order, makes endorsements on the copy of the KP certificate, certifying details mentioned therein. The importer/CHA shall present the KP certificate endorsed by GJEPC along with the required import documents while filing the Bill of Entry for seeking clearance of the rough diamonds. The importer shall declare the KP certificate number and date on all the copies of the Bill of Entry below the precise description of the goods. The Bill of Entry ill be assessed as usual after physically examining 25% of the consignment, subject to minimum of one lot. Customs will endorse the copy of KP certificate verified by GJEPC to the effect that goods have been cleared vide Bill of Entry No.___dt.______and retain the original. The authorized representative of GJEPC will collect all the original KP certificates retained by the Customs at 6.00 PM on each working day and the copy of the KP certificate (endorsed by GJEPC) which was filed with the bill of entry will be handed back to the importer/CHA." 22.4 The CBEC circular No. 53/2003 Cus., dated 23-6-03 (supra), fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that as they have not been able make any payment to their foreign supplier and as the consequent of the rough diamonds does not stand remitted to the exporter, they have requested for re-shipment of the goods. We find no reasons for rejecting the above request of the appellant. Having held that there was no contravention as regards value or production of K.P. certificate, the import consignments are permitted to be re-exported without any redemption fine. 26. As regards penalty, we take note of the Tribunal's decision in case of Suraj Diamonds (India) Ltd. v. CC (Airport) Mumbai, 2008 (227) E.L.T. 471 (Tribunal) = 2008 (86) RLT 400 wherein Tribunal by taking note of the precedent decisions in case of M/s. Nalakath Spices Trading Co., 2007 (213) E.L.T. 283 (Tribunal) = 2007 (80) RLT 797 (CESTAT-Bang.), Shree Subhadra Industries v. CCE Chennai, 2001 (137) E.L.T. 1405 (Tri.-Chennai) and M/s. Jay AR Enterprises, 2007 (210) E.L.T. 459 Tribunal = 2007 79 RLT 291 CESTAT-Chennai has held that inasmuch as import of rough diamonds were exempted from payment of duty and were not dutiable, no penalty can be imposed under the provisions of Section 112 of the Customs Act, 1962. By following t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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