TMI Blog2013 (3) TMI 347X X X X Extracts X X X X X X X X Extracts X X X X ..... son to insist of producing proof of aspects which could be easily hidden in the circumstances of the case. On an overall appreciation of facts before us we find the following relevant facts. The impugned imported goods are something needed by many manufacturers in India. The importers are neither manufacturers who consume the goods in their own manufacturing process or traders, who import the goods and make available the goods at competitive prices to manufacturers in India at arm’s length. The importers in question were acting as mere conduits between suppliers in China and actual buyers who used it in further manufacture and having close nexus with the supplier in China. In fact there is only one person behind the three importers. This person cannot demonstrate any special skill or circumstances enabling him to get the impugned goods at low prices. The inference of undervaluation in such circumstances is quite reasonable. So when contemporaneous imports of the goods are shown the burden to prove bona fides definitely shifted to the importers. At such a juncture the main defense is that they had not declared the full details at the time of import and hence their goods were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was to a much higher extent. The present proceedings involve orders passed to load value based on such investigations and confirming duty along with interest and penalties. 3. Digital Satellite Receiver consists of five main parts namely, 1. Main PCB Board, 2. Power Supply Board, 3. Front Panel with PCB, 4. Remote Control, 5. Wires and cables. 4. The appellants were declaring prices of US $ 2.6 to US $ 3.9 per piece whereas intelligence received by DRI was to the effect that the cost of Main PCB was around US $ 16 per piece i.e. approximately HK $117, considering that during the period US $ was approximately 7.73 times costlier than Hongkong Dollar. 5. Revenue conducted investigations and collected evidence to support their case. The facts brought out are broadly the following : (i) The importers were just conduits for import transactions between firms of connected persons in China and India. For example M/s. Quantum Mecca Co. Ltd., Hongkong in which Mr. Pankaj Surna was a Director, supplied goods to AG Corporation. AG Corporation imported the goods and sold it to Rishav Udyog which was a proprietorship firm of Mr. Kamal Pat Surana who was brother of the fat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed cost of PCB Board was estimated at Rs. 2054. Set Top Boxes were costing about US $ 25 to US $ 30 per unit and the mother Board was around 70% of the cost of the product value. 9. Revenue relies on the following data of contemporaneous imports as indicated in para 22(i) of the impugned order : Sl. No. Bill of Entry No. Date Name of the importer Value declared (in US $) Product Description Quantity Imported 1. 823307 27-11-2004 A.G. Incorporation 3.2 (equivalent to 25 HK $) Populated PCB for Receiver 3000 pcs 2. 896588 15-3-2005 A.G. Incorporation 3.3 (equivalent to 26 HK $) Populated PCB for Receiver 2000 pcs 3. 808285 3-11-2004 Catvision Products Ltd. 10.75 (CIF) Main Board for digital Satellite Receiver 505 pcs 4. 822179 14-3-2005 Electronic Enterprises 10 (CIF) Main Board for digital Satellite Receiver 5050 pcs 5. 602404 5-11-2004 MCBS Pvt. Ltd. 14 (FOB) Populated PCB 5000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trade Declarations submitted by the exporter of goods at Honkong. One of the declarations was correlated with the corresponding imports effected by M/s. AG Incorporation. After scrutiny of the value declared in the said export declaration Revenue came to the conclusion that the value declared therein was far higher than the value declared in the corresponding bill of entry No. 796262, dated 16-10-2004 and invoice No. QM-1003, dated 12-10-2004 filed by M/s. A.G. Incorporation at the time of import of goods into India. 13.2 The details of the export declaration Trade Declaration No. R 21858187004 L7 filed on 18-11-2004 vis a vis corresponding bill of entry are summarised below. 13.3 This declaration given to Hongkong customs covered goods declared as Components of VCD valued at HK $ 187200/- filed on 18-11-2004. It covered 51 cartons weighing 712 Kgs. shipped by Flt. No. CX 753 of 12-10-2004 under Master Airway Bill Number 160-HKG-51716980. 13.4 The Corresponding Bill of Entry filed with Indian Customs was 796262, dated 16-10-2004. This BE showed 51 packages weighing 712 Kgs. The flight details also matched. So correspondence between the declaration furnished abroad and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e firm s import business was looked after by her brother-in-law Shri Ajay Kumar Agarwal. (d) Mrs. Kapila Agarwal, partner M/s. A.G. Incorporation was a house-wife and according to her, the firms import business was looked after by her husband Shri Ajay Kumar Agarwal. (e) Mrs. Aparna Agarwal, partner M/s. A.G. Incorporation was a housewife and according to her, the firm s import business was looked after by her brother-in-law Shri Ajay Kumar Agarwal. (f) Shri Nirmal Kumar Agarwal, Director M/s. Coir Cushion Ltd. was in transportation business, based at Bangalore and according to him the respective Directors/partners of each of the firms concerned took decisions about the business activities in these firms. (g) Shri Ajay Kumar Agarwal, on 18-1-2006 in his statement inter alia stated that he was looking after the day to day work of M/s. Coir Cushion Ltd. M/s. A.G. Incorporation and M/s. Overseas Business Corp.; that they had imported totally 65000 pcs (approx.) of populated PCB for receiver in all the three companies put together as under : From Quantum Meca Co. Ltd. Hongkong 57000 pieces From New Leaf International Hongkong 6000 pieces From Wichmore Enterprises Hongkong ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Entry and no. of pieces No. of pieces Ass. Value declared Revised CIF Value Differential Duty confirmed 1 A.G. Incorporation 1 BE 1000 148995 977781 334628 2 A.G. Incorporation 18 BEs 47165 6945902 22110732 5952091 3 Coir Cushions Ltd. 8 BEs 16600 2423254 7839825 2187949 4 Overseas Business Corporation 1 BE 1010 155616 466620 125570 15.2 Further penalties under Section 114A equal to the duties confirmed have been imposed on the three importers. Further penalty of Rs. 25 lakhs has been imposed on Shri. Ajay Kumar Agrawal, who was the main person behind such imports, under Section 112(a) of the Customs Act. 16. After hearing both sides and going through the case records we find the issues to be considered in dispute to be the following : (i) Since the customs officers loaded value once at the time of imports to a certain extent whether further proceeding for loading value for a second time can be initiated on the basis of new evidence. (ii) To w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsistent with Section 28 of the Customs Act and appears to be canvassed a judge made law. So it is necessary to see whether the judges really made a law like that and there is a need to examine this contention closely. It would be proper to examine the decision according to the hierarchy of the Courts giving such decisions. 17.3 The case of Mohan Meakins Ltd. 17.3.1 In this case, after issuing a notice as contemplated under Section 124 of the Act, to the importer of the goods in question and adjudication proceeding under Section 125 had been conducted and the goods in question were released on payment of redemption fine. The question before the court was whether another proceeding can be initiated for confiscation of the goods in the hands of bona fide purchaser alleging under valuation which was not adjudicated during the first proceedings. The Hon ble Apex Court held that in such an event it matters little whether the adjudication was under which sub-clause of Section 111 because whichever is the sub-clause, there was an obligation on the adjudicating authority to find out the market value of the goods so imported and to collect all duty and other charges payable on the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as allowed. The Central Board of Excise Customs, in exercise of power, conferred under Section 129D of the Customs Act called for the relevant record and after perusal, passed an order directing the Collector of Customs to make an application to Customs, Excise Gold (Control) Appellate Tribunal under Section 129D of the Customs Act, 1962. 7. In the present case, the importer filed bill of entry in respect of goods imported and bill of entry was assessed as per the provisions of Section 47 of the Customs Act and the clearance was allowed by the Collector of Customs after satisfying the conditions laid down under Section 47 of the Customs Act. In view of the decision of the Hon ble Madras High Court in the case of Best Crompton Engineering (supra), the order passed under Section 47 of the Customs Act is not an administrative order, therefore, the Central Board of Excise Customs, while exercising its powers conferred under Section 129D of the Customs Act, is competent to review such order. 17.5.2 This order is cited basically to argue that the order of assessment on a bill of a Bill of Entry is an order which can be appealed against. Nothing turns out from this case on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of goods, its classification, contemporaneous values, market values etc. and then resort to an assessment of loading. Piece meal value loading re-adjudication is not envisaged under the Custom Act, 1962 and cannot be upheld more so when valuations as determined on the BE and assessed would be an order appealable adjudication order [see CC, Cochin v. Arvind Exports (P) Ltd. - 2001 (130) E.L.T. 54 (LB)]. No. review/appeal against such an order of determination of value by the proper officer was taken by Revenue. The loading for USD 0.05 per pcs to USD 0.10 per pcs is final. 17.7.2 The above decision is taken on the facts of the case and cannot read to infer an absolute law that assessment made under Section 47 cannot be opened through notice issued under Section 28 of the Customs Act, because there are judgements which lays down decisions to the contrary view canvassed by the appellants. Firstly let us see the decision of the Apex Court in the case of UOI v. Jain Shudh Vanaspati - 1996 (86) E.L.T. 460 (S.C). Two paragraphs from the decision are reproduced below : 5. It is patent that a show cause notice under the provisions of Section 28 for payment of Customs duties not levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set right by initiation of the process of confiscation of the fraudulently cleared goods under Section 124. 17.8 The above view has been adopted in CCE v. Re-rolling Mills Ltd. -1997 (94) E.L.T. 8 (S.C.) and a plethora of decisions of the Tribunal like (i) ITI Ltd. v. CC - 2008 (228) E.L.T. 78 (Tri.-Mum.) (ii) Rahul Ramanbhai Patel v. CC - 2010 (256) E.L.T. 424 (Tri.-Mum.) 17.9 The above being the position we do not consider it proper to throw this case at the threshold and we propose to look at the quality of the evidence. 18. The issue as to what extent the decision in the case of Eicher Tractors Ltd. is relevant in this case 18.1 The next issue to be examined is the import of the decision of the Hon ble Apex Court in the case of Eicher Tractors Ltd. v. CC - 2000 (122) E.L.T. 321 (S.C.). This decision is often quoted to throw out under valuation cases booked by Revenue on the ground no proof of payment other than what was declared has been adduced by Revenue. It is quite relevant to look into the facts of the case as recorded in para 1 of the order are as under : M/s. Eicher Tractors Ltd., the appellant before us, manufacturers tractors and tractor engines in In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1). 18.3 Nothing from the said case can apply to the facts of this case where there are evidences to prove the undervaluation of the goods except evidence regarding remittance of the extra consideration. It is in the context of this that Revenue is pointing out that the transaction was between closely related persons, with the appellants acting just as conduits, who could easily do such transactions without getting noticed by Government authorities. Existence of certain facts has to inferred based on acts that are proved and there is no reason to insist of producing proof of aspects which could be easily hidden in the circumstances of the case. 19. The issue whether the allegation that appellants were conduits for imports between closely related person relevant for determining under valuation. 19.1 The next issue is whether the transaction value can be rejected for the reason that supplier in China and the person to whom the goods were sold by the importer were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lower price compared to the price at which the appellants had purchased the tiles. Notification No. 50/2002-Cus., dated 2-5-2002 was issued by the Central Government imposing antidumping duty on tiles imported from China. We also note that there is no actual incidence of import of goods at a lesser value, which has been brought on record during investigation. Inquiries conducted by independent persons for value of tiles with manufactures in China shows that the value was lesser than that at which tiles were imported by the appellants. Regarding the order placed with the M/s. Keda Group (Hong Kong) for 600 x 600 mm sized tiles @ US $ 3.73 per piece, the appellants, contention that this price was not correct and amendment in the order was carried out vide purchase order amendment dated 5-8-2001 amending the price to US $ 3.725 is tenable. 19.2 In the above circumstances the following observation was made by Tribunal : 8. The value declared by the appellant cannot be doubted merely because the partners of the sellers (M/s. Noble Electronics, Hong Kong) were brother and father of one of the Directors of the appellant-company in India, for the reason that they do not fall within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... act parameters of the goods imported or whether, the burden had shifted to the appellants when the Revenue points out that other importers are importing the goods at prices 4 to 5 time higher and the fact that the importers are importing the goods and supplying only to selected buyers who because of their close relationship with the supplier is in a position to make adjustment of extra consideration without any easy trace of such adjustment. In our view it had shifted to the importers and they had done nothing to discharge this burden to show that the PCBs were without tuners and tuners were imported separately or that the PCBs were for monochrome reception only or that the PCBs were for reception of free channels only. If such was the position it would have been easy for the appellants to demonstrate such position since most of the imported goods were sold to one buyer only who was manufacturing DTH Reception apparatus from the goods imported by the appellants. Thus arguments for difference in quality for different types of MCBs are raised but no proof adduced that the goods were of inferior quality. If there was such possible explanation the most appropriate time to disclose such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of South India Televisions Pvt. Ltd. The goods imported was Ceramic Capacitors. The importer declared a price of HK $ 6 per 1000 pcs. The case of Revenue was based on export declarations filed abroad. Th export declaration were just Xerox copies which were not authenticated by HongKong Customs. The authenticity of the declaration was doubtful. The imported supported the declared price by relying on various contemporaneous imports made during the above period by other importers. There was also an infirmity that the assistant Commissioner adopted Rule 8 of the valuation rules without going sequentially through from Rule 5 to Rule 7. There was no evidence of contemporaneous imports at higher price at all. 20.8 Case of J.D. Organics This was a case of import of 4,5 Dinitro Crysazine. The case of Revenue was that prior to Oct 99 the importer was importing the same goods from the same supplier at the price of US $ 18.7 per Kg. In Oct 99 the importer filed a Bill of entry declaring price of US$ 13.2 per Kg. The appellant in that case was the only importer of the goods. Revenue had no evidence of contemporaneous imports or other evidence to prove remittance of extra money. Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ascertained. The offence complained of is a serious economic offence where it is not the individual who is affected but the entire community is aggrieved. The offence has been committed with a calculation and deliberate design with an eye on the personal profit is regardless of the consequences to the community. 9. In my considered opinion which collar crimes, economic offences are eating into the sinus of our society and are required to be dealt with firmly in order to establish, trust and faith of the community in the administration of justice. The investigation are still in progress and the valuation complained off may increase further. I am of the opinion that it is not necessary that case of the accused should have been referred for adjudication. Since law on the subject is very clear and prosecution can be initiated against the accused for the alleged violation. In view of the above background, I am not inclined to admit the accused on bail at this stage. The application is dismissed. 21.3 The Magistrate did not give much credence to the statement in bail application because he refused the bail application on that day. The further application for bail filed before th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original Commissioner should have accepted such customs attested export declaration as the final proof of correctness of the value of the goods declared at the time of importation by the appellant. In this context the appellants raise the following arguments - (i) the export declarations were original copies and not attested photocopies; (ii) the declarations were all version 1 and no second version had been filed in these cases; (iii) In case he had any doubt, Commissioner could have at least sent these declarations for verification to Hong Kong through official channels, since a customs representative is based in Hong Kong; (iv) Commissioner s observations and findings are without any evidence/proof; (v) Commissioner s rejection of export declarations shows his biased mind; (vi) There was complete violation of natural justice since he failed to do justice. 23.2 The appellants have also raised the issue that the declaration produced by Revenue is not original of the declaration. We do not find any substance in this argument because the report is a report taken from computer data base of Hong Kong Customs where such declarations are filed electronically. So there wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mination was fatal to the case made out. 25. Issue of different Valuation Rule adopted for confirmation of duty. 25.1 The Counsel argues that the proposal in the SCN was for increasing the value based on Rule 4(2)(b) of the Valuation Rules. But the adjudicator changed the Rule to 4(2)(g). So they did not have opportunity to make their submission why the new Rule quoted was not applicable to the case. 25.2 This contention is with reference to para 54 of the impugned order which reads as under : 54. It has been further contended that the declared import price satisfied the requirement of Rule 7 of the Customs Valuation Rules, 1988 and that the said DTH being sold in the market at a price of Rs. 1100 to Rs. 1150 and if value suggested by DRI was taken, costing will exceed Rs. 1100. I would like to mention here that the said price of the goods i.e. Rs. 1100 is the price at which the notice and other importees who were manipulating the value of the main boards, were selling the goods. Shri Gyan Chand Jain MD M/s. Modern Communication in his statement under section 108 of the Customs Act, 1962 has inter alia stated that the challenger series STB price in local market is Rs. 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice of Rs. 1100 to Rs. 1200. The above analysis clearly suggests that the proposed value also satisfied the conditions of Rule 7 of the Valuation Rules, 1988 which is not the case with the declared value. As such the plea that their declared value satisfied the requirement of Rule 7 of the Valuation Rules is not accepted. 25.3 From the above paragraph we do not see any change in the basis for making the demand the demand is confirmed as per the proposal in para 31.6 of SCN. The above para only explains how the value suggested is only reasonable even if Rule 4(2)(g) is taken into account. 26. The argument that the appellants were importing odd lot goods. There is also an argument that the appellants were importing stock lots and they were able to get the goods very cheap. But the imports were made in 26 different consignments spread over four months which does not give credence to this claim. 27. Thus out of the various arguments raised, the only arguments of merit are (1) that the declaration No. R 21858187004 L7 filed on 18-11-2004 made at Hong Kong Customs was a result of an error and (ii) that the Revenue has not proved that the prices taken as reference are not of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence their goods were different. The specifications declared at the time of importation are sketchy. There is nothing to show that the goods manufactured using the components imported by them were of any inferior quality. In fact their prices were competitive only to the extent of duty evasion engineered in these imports. Once the burden had shifted to the importer to prove that the declared values were correct the appellants have hardly done anything to discharge such burden except arguments about possible difference in specifications which they chose not to declare at the time of import. They only want to take advantage of the fact that their declarations were vague at the time of import and for that reason their price has to be considered to be lower. 30. The other edifice of defence sought to be built is something constructed by borrowing different sentences from different decisions of courts written in the context of the facts of each case as explained with reference to major cases cited. Of course many more such decisions can be examined and shown how the decisions cannot build an edifice of defence in this case. For the sake of brevity it is not being attempted. 31 ..... 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