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TMI Blog2011 (4) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000/- 90,00,000/- 20,00,000/- 10,00,000/- 8,00,000/- C/1279/02 Suresh Punjabi (Director of Deepak Jewellers Pvt. Ltd. & Prop. of Asia World Exports) ---- 10,00,000/- 50,00,000/- ---- C/1280/02 Kishor Punjabi (Director of Deepak Jewellers Pvt. Ltd. & Partner of Manish Manufacturers) ---- 10,00,000/- ---- C/1281/02 Sunil Punjabi (Director of Deepak Jewellers Pvt. Ltd. & Prop. of Sunny Syndicate) ---- 5,00,000/- ---- C/1282/02 Deepak Punjabi (Director of Deepak Jewellers Pvt. Ltd.) ---- 5,00,000/- ---- 2. The facts of the case are that one Suresh Punjabi imported glass beads and chatons used in imitation jewellery. There are total 21 consignments out of which 19 consignments were already cleared by the importer and 2 consignments are live consignments imported by M/s. Sunny Syndicate. Summary of the 19 consignments which were cleared are mentioned in Annexure-VI of the show-cause notice dated 28-10-1996. 3. In respect of two live consignments, a separate show-cause notice dated 5-11-1996 was issued, which covered two Bills of Entry No. 255 & 256 both dated 1-11-1995. Out of two live consignments, one pertains to goods supplied by M/s. Preciosa, Czech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ying all the goods through ports other than India. Initially, M/s. Swarovski was reluctant to this proposal but subsequently following a personal meeting in May, 1993, with Mr. A. Steiner of M/s. Swarovski in Mumbai, M/s. Swarovski agreed to accept the orders of the firms of Punjabis for supply in transit via Dubai. From the correspondences, it appeared that Shri Suresh Punjabi had assured M/s. Swarovski that M/s. Mushrif Trading, Dubai were just working as forwarding agents and shipping the entire consignments to them in Mumbai. (d) That M/s. Mushrif Trading Est. (also known as Mushrif General Trading) was an outfit floated or controlled by Shri Suresh Punjabi in Dubai with a view to acting as a conduit and intermediary invoicing agents for the purpose of raising lower value invoices. The above fact was evidenced from the documents during the search of the office premises of the importer. (e) That Shri Suresh Punjabi and his brothers had been placing orders to M/s. Swarovski according to article number, size, colour etc. as given in the price list and product catalogue of M/s. Swarovski. Three purchase orders of various dates had been re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the statements of Shri Suresh Punjabi and correspondences between M/s. Swarovski and Punjabis as well as M/s. Preciosa and Punjabis to reject the transaction value. There are 10 statements of Shri Suresh Punjabi recorded in the present case. Except the statement dated 9-5-1996, all other statements, i.e. 3 recorded prior to 9-5-1996 and 6 recorded after 9-5-1996 are exculpatory. The statement dated 9-5-1996 is involuntary on the following grounds : - (a) The statement was recorded for the entire day and well past mid-night on 10-5-1996. (b) Statement on the previous day i.e. 8-5-1996 was also recorded until 10 P.M. on that day. (c) Shri Suresh Punjabi was induced to make the statement and pay Rs. 10 lakhs on the assurance of release of the two live consignments as can be seen from letter dated 15-5-1996 and letter dated 3-7-1996. (d) The statement has been retracted as can be seen from the two affidavits dated 18-5-1996 and 16-7-1996. (e) The statement is also contrary to the nature of the packing and the terms & conditions of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that the department has misconstrued and mis-interpreted the correspondence with M/s. Swarovski and Preciosa and reached at erroneous conclusion that M/s. Mushrif Trading Est. was working only as forwarding agent. According to them, M/s. Mushrif Trading Est. is a legal and independent entity and relation between M/s. Mushrif and the appellants is on principal to principal basis. The correspondence with M/s. Swarovski merely shows that M/s. Swarovski was extremely reluctant to do the business with the appellant in India on ground of having the existing arrangement with M/s. F.M. Chinoy & Co. and ultimately after a series of correspondence, M/s. Swarovski had agreed to sell the goods to another entity outside India. Based on the understanding, M/s. Swarovski had sold the goods to M/s. Mushrif Trading Est. and after attaining normal profit M/s. Mushrif in turn had sold the goods to the appellant in India. Therefore, M/s. Mushrif came into existence for the commercial purpose. 7(b). The department has also not proved that any amount over and above the invoice value was paid to M/s. Mushrif. Therefore, rejection of the invoice value of the M/s. Mushrif is not val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-quality; (v) An extra 15% will be added to the price as quality for first quality; (vi) Minimum quantity to be ordered per article and size as printed in the last column; which are also applicable to individual items making up the order i.e. also to colour; (vii) Orders for smaller amount cannot be accepted; (viii) The price-list is subject to general conditions of business as stated in orders, order confirmation and invoices; (ix) The price-list contains a unit of packing for each article in terms of gross/dozen/pieces; (x) The minimum order is indicated in the last column of each price-list; (xi) There is no 10% discount available in the price-list; (xii) There is also no 2% L/C discount available in the price-list. 10. He further submitted that one of the conditions of the price-list is that the packing unit should be as per the price-list, whereas in the present case, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 by the Commissioner is to be set aside. 14. Submissions of Shri K.M. Mondal, learned Spl. Consultant are summarized as below : - (i) Shri Mondal submitted that Shri Suresh Punjabi gave as many as 10 statements under Section 108 of the Customs Act, 1962 on various dates in his own hand writing in Hindi. His first statement was dtd. 27-10-1995 and the last statement was dtd. 22-10-1996. However, he did not mention even on 22-10-1996 that he had retracted his earlier statements, particularly the statement dtd. 9-5-1996 & 10-5-1996. This apart, after the statement dated 9-5-1996 & 10-5-1996, he had paid a sum of Rs. 10 lakh towards part payment of evaded duty (i.e. Rs. 5 lakhs vide D.D. No. 24268 dtd. 10-5-1996 and Rs. 5 lakhs vide D.D. No. 011051 dtd. 14-5-1996). (ii) If his statement dated 9-5-1996 and 10-5-1996 was not voluntary and given un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mporaneous 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 that - (i) As per the printed Price Lists of M/s. Swarovski, their goods were sold on 'gross basis' as per the price specified therein which gave the price according to article number, size, colour, effects, coatings, etc. The price lists of Swarovski clearly incorporated the condition 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. That the Swarovski had the same price list world-wide FOB Austria, as confirmed by the fax dated 5-9-1989 of Mr. P. Heigel of M/s. Swarovski sent to M/s. Crystal Corporation, Bombay. (ii) In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Regarding the contemporaneous import, the learned Consultant submitted that the other importers were importing the goods from M/s. Swarovski on gross basis as per the prices indicated in the price-list. In this connection, he relied upon the statement of Shri K.F. Chinoy, partner of M/s. F.M. Chinoy and Co., authorized Indenting Agent of M/s. Swarovski and statement of Shri Sumesh D. Jain. 19. He further submitted that the Panchanama dated 3-11-1995 showed that the goods were in the unit packing on gross basis and similarly the goods covered by the two live Bills of Entry were also found to be in gross packin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Trading's case is in jeopardy inasmuch as the said order has been appealed in the Hon'ble Supreme Court vide Civil Appeal D. No. 28063 of 2008 and hence the said order has not attained any finality. In this connection, reliance was placed on the judgment of the Hon'ble Supreme Court in the case of UOI v. West Coast Paper Mills Ltd. - 2004 (164) E.L.T. 375 (S.C.). 24.1 We have duly considered the submissions made by both sides including written submissions. We find that main issue to be decided by us is whether the impugned goods namely, glass beads and glass chatons, manufactured by M/s. Swa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 4 of the reply dated 30-6-1997. 25.3 We have seen para 4 of the reply dated 1-9-1997 submitted by M/s. Asia World Exports at page 301 of Paper Book Vol. I. Relevant portion of para 4 reads as under : "4. The Bills of Entry filed by us were duly supported by all the documents including invoices. The examination report confirms that goods were also as per the description and declaration made by us in the Bill of Entry". 25.4 We have also seen para 4 of the reply dated 30-6-1997 submitted by M/s. Sunny Syndicate at page 325-326 of Paper Book Vol. I. The sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otion 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 be considered as the prices ordinarily charged in course of international trade". 25.11 Learned Counsel heavily relied upon CESTAT decision in Mehta Trading House Pvt. Ltd. - 2007 (213) E.L.T. 54 (Tri.-Mum.). CESTAT in this case has upheld the order passed by the Commissioner accepting the goods imported from Swarovski on kg. basis as Stock Lot. 25.12 We find that in the case of M/s. Mehta Trading House Pvt. Ltd., each of the 16 consignments were declared as Stock Lot which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 as per printed price list and product catalogue and imported goods on gross basis but shown to Customs on Kilo basis and thereby paid less duty. He admitted his mistake and was willing to pay Rs. 10 lakhs towards evaded duty. However even on 27-10-1996 Shri Suresh Punjabi did not mention that he had retracted his earlier statements dated 9-5-1996 & 10-5-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of CC, Mumbai v. R.K. Tomar - 2008 (228) E.L.T. 232, the Tribunal found sufficient evidence to indicate that the statement of the concerned person was obtained under duress, whereas in the case at hand no evidence was placed before us to show that the statement of Shri Suresh Punjabi was obtained under duress. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 an outfit floated by Shri Suresh Punjabi to act as intermediary invoicing agent to raise lower value invoices. He further submitted that M/s. Swarovski was well known to Shri Suresh Punjabi and his brothers for a long time and that they were persistently trying to persuade M/s. Swarovski to supply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... US FULL FREIGHT RATE WHICH WERE TREMENDOUSLY VERY HIGH. SO PLEASE MAKE SURE THAT WHENEVER YOU ARE SENDING CRYSTAL MEMORIES AND CRYSTAL FIGURE ITEMS PLEASE SEND ON C&F BASIS WITH THE BEST FREIGHT RATE. THANKS & REGARDS - KISHORE 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stria sent by Managing Director (Pg. 181, 182 of Revenue Paper Book Vol. I). This letter shows interest of Punjabi brothers for import of various items of Article Nos. 5301, 3700, 5000, 5400, 5200, 1100, 4710, 4715 of various sizes and colours and quantity on gross basis; (iii) Fax dated 9-2-1993 from M/s. Crystal Corporation to M/s. Swarovski sent by Kishore (Page 178 of Revenue Paper Book Vol. I). This Fax shows interest for import of various items of different sizes and colours and quantity on gross basis; (iv) FAX dated 6-12-1993 from Manish Manufacturers 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of M/s. Swarovski has also stated that all purchase orders of Swarovski are on gross basis and as per the price list R.N. Jain, another importer, also stated in his statement that they had been importing goods from Swarovski on gross basis. Moreover, the Revenue has cited the six instances of contemporaneous imports to prove its case that Swarovski goods are sold on gross basis as per the printed price list. The six instances cited in the show-cause notice are as under : (i) M/s. Patanwala Enterprises Invoice No. 0605613 dated 7-8-1992; (ii) M/s. Niti Enterprises Invoice No. 06220712 dt. 1-10-1993; (iii) 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is. Reading this judgment we find that in this case the only evidence relied upon by the department was a fax message setting out a quotation by one party in Singapore to another party in Singapore and hence the Hon'ble Apex Court so observed. In the case before us the nature of evidence is entirely different as already discussed. Therefore, this decision has also no application to the facts of the case before us. 31. Another point raised by the appellant is that in case of imports made by M/s. Manish manufacturers, goods were directly imported from M/s. Swarovski as per the invoice. This invoice shows the prices on kg. basis 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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epting the invoice value of mixed lot in US$ per kilogram as per High Court's order. We are, therefore, inclined to extend the benefit of doubt to the appellants in so far as Preciosa goods are concerned, both live and past. Accordingly, Commissioner's order in respect of Preciosa goods is to be set aside. 33. Appellants also contend that the Revenue has taken the 20% freight and 1.125% insurance of the FOB value of the goods. This is not correct. According to the learned counsel of the appellants, it is possible to ascertain the actual freight and actual insurance in respect of the goods. But we find that he has not provided any material either before us or before the adjudicating authority. In the absence of any data made available, freight and insurance 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. ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the first bill of entry, the balance quantity has been allocated to the second bill of entry of Chatons, i.e., Bill of Entry No. 8972 dated 17-5-1994. But by this time of import, two more orders have been placed. Therefore, considering that, the remnants of the first order and part of the second order have been held to have been put to the second consignment. The second order has not been completely exhausted in the consignment brought vide Bill of Entry No. 8972 dated 17-5-1994. The balance of the second order has been allocated to third consignment brought in Bill of Entry No. 1533 dated 6-11-1994. This method has been followed in the case of beads as well as chatons till the ordered quantity by way of consolidated weight is exhausted in this sequence. After exhaustion 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, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to the past consignments. 37. (i) In the result, in view of our foregoing findings, the Commissioner's order in respect of Preciosa goods is set aside; (ii) The Commissioner's finding in respect of valuation of Swarovski goods of live consignment and the seized goods of past consignments is upheld; (iii) While confirming the Commissioner's order relating to the live consignment of Swarovski goods, we find that fine and penalty imposed are quite excessive. We would therefore deem it appropriate to reduce fine to Rs. 4,00,000/- (Rupees four lakhs only) and reduce penalties to Rs. 1,00,000/- (Rupees one lakh only) and Rs. 50,000/- (Rupees fifty thousand only) on M/s. Sunny Syndicate and Shri Suresh Punjabi respectively. (iv) We, therefore, confirm the order of confiscation of seized goods of past consignments but reduce redemption fine to Rs. 4,00,000/- (Rupees four lakhs only). (v) As we are remanding the matter pertaining to past consignments in respect of goods not available with Department for redetermination of value and requantification of duty, we set aside the impugned order per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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