TMI Blog2011 (11) TMI 619X X X X Extracts X X X X X X X X Extracts X X X X ..... vered by Bill of Entry. Being aggrieved with the order they filed an appeal before this Bench. HELD THAT:- It is also seen that the high seas seller from whom the appellants purchased the scrap also imported the same for their individual use as well for trading. It is significant that during the period of dispute the high seas sellers had either imported scrap for their own use or sold the same to other individuals or companies at the same price as was for the appellants. In all these cases the goods were allowed to be cleared and no objection was raised by the Revenue. The contentions of M/s. Baheti Metals, therefore, are acceptable as we do not find why these assessments were resorted and the goods were allowed to be cleared. the value declared in the Bill of Entry has been correctly stated and the transaction value of the goods in question in terms of Section 14 of the Act read with Rule 4 of the Rules is correctly declared particularly when other Bills of Entry are assessed at the lower price. We find that there is no mis-declaration of the value and the allegation is unsustainable to that extent. The provisions of Section 11M of the Act therefore cannot be invoked and no pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on Shri Jamnalal Maliwal, authorized signatory of M/s. Baheti Metals Ferro Alloys Ltd. Further, personal penalties were imposed as under : Sl. Noticee Penalty (Rs. in figures) Penalty (Rupees, in words) 1 Shri Purshottam Parolia 25,00,000/- Twenty-Five Lakh only. 2. Shri Ehsan Haji Amin Gadawala 50,00,000/- Fifty Lakh only. 3. Shri Gajendrakumar Mittal 5,00,000/- Five Lakh only. 4. Shri Bipin Chhabra 5,00,000/- Five Lakh only. 5. M/s. Ghanshyam Metal Udyog 65,00,000/- Sixty-Five Lakh only. 6. M/s. B.R. Metals Alloys 10,00,000/- Ten Lakh only. 7. M/s. Shree Saibaba Metals 17,00,000/- Seventeen Lakh only. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ium scraps imported by M/s. Baheti under Section 14(1) of the Customs Act, 1962 read with Rule 8 of the Customs Valuation Rules, 1988. In doing so, he has taken into account the statements of the Managing Director of M/s. Baheti, its authorized signatory, statements of High Seas Sellers, Indenters as also the documentary evidences in the form of e-mails received by the indenters from the overseas supplier that were retrieved from the computer system resumed from the premises of the indenters, one invoice issued by the Overseas Supplier, M/s. F.J. Church Sons, London received from the High Commission of India, Trade Department, London and also the Valuation Alert Circular No. 14/2005, dated 16-12-2005 issued by the Director General of Valuation. (b) Ld. Counsel for M/s. Baheti made voluminous submissions and raised various contentions against the impugned order. He contended that the basis for raising demand is the DGOV Alert Circular No. 14/2005 and the solitary invoice of M/s. F.J. Church Sons, London which is unsigned, unstamped and unattested. He said that the Commissioner s reliance on LME is not correct in view of the Hon ble Apex Court s judgment in the case of C.C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e declared by them are true and correct. It is settled law that where the contemporaneous import prices are available it is not open to the department to discard the same and to proceed to value goods under the other provisions of the said Rules. The evidences led by the Appellants clearly demonstrate that the values mentioned in the Bills of Entry reflect the correct value. The DRI had in its possession the names and other details of all buyers/consignment agents yet no investigation at that end has been done to ascertain the correct position. (e) The value of goods imported by the Appellants need to be determined in terms of Section 14 of the said Act read with the provisions of the said Rules once transaction value is rejected as held in the case of Varsha Plastics Pvt. Ltd. v. UOI reported in 2009 (235) E.L.T. 193 (S.C.). Thus, without the transaction value being rejected in the first place it was not open to the Respondent to have proceeded to re-value the said goods This is more so in light of the various contemporaneous import records made available by the Appellants. Rule 3 of the said Rules provides that the value of the imported goods shall be transaction value. Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... information. This circular states that as per Customs Tariff, there are 34 types of Aluminium Scraps. However, analysis of import data from NIDB revealed that 15 types of scraps account for more than 90% of total volume of imported Aluminium Scraps. The quantity imported, average price and minimum price as per the study of DGOV for all these 15 grades is shown in Annexure-1 to the circular. The prominent grades are tread, twitch, trump, taint/tabor etc. Prices of all the 15 grades have been linked to the price of prime metal as traded on LME in the form of discount from the price of prime metal. It is highlighted that these prices are indicative prices and are on lower side. The circular also states that prices of scrap depend upon the extent of metal recovery from the scrap and type of the scrap. The Alert Circular is, therefore, a valuable guide to the assessing officers for the purpose of assessment of aluminium scraps. Having regard to this, no fault can be found with the impugned order for taking assistance of this circular. This apart, it is well known the world over that the prices of aluminium scraps in the international market depend on the LME prices. This has also been a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on order or placed before the Hon ble Tribunal. This is precisely the reason that the Tribunal did not accept the LME price. However, in the present case, apart from the statements of the indenters stating payment of differential value to the overseas suppliers, the Department has also cited numerous instances in the form of e-mails showing payment of differential value to the foreign suppliers by the importers, though these are not directly pertaining to M/s. Baheti. But these are certainly circumstantial evidences against Baheti. Therefore, the afore-cited judgment is not an authority to say that LME price cannot be relied upon even where there are circumstantial and indirect evidences indicating payment of differential value over above the invoice value. Therefore, this judgment of the Hon ble Apex Court is not helpful to M/s. Baheti. Invoice No. 12558/1, dated 1-2-2004 issued by M/s. F.J. Church Sons Ltd. (d) This invoice has been obtained by the Department from HM Revenue Customs Authorities, UK through the High Commission of India, Trade Department, London under cover of its letter No. CT/VI/10/2007 FS, dated 6-9-2007 along with a copy of Sales Advice Note (Was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not bear proper signature or official seal of the foreign customs officers. However, in the present case, the invoice for advance issued by M/s. F.J. Church Sons, London, though unsigned, was obtained from H.M. Revenue Customs Authorities, UK through the Diplomatic Channel. Hence the authenticity of this document cannot be doubted. Therefore, the afore-cited judgments do not advance the case of M/s. Baheti. (f) In most of the cases of imports, orders were placed by the importers with the overseas suppliers verbally through the indenters who actually acted as their conduit. None of the importers opened any letter of credit. Documents were retired from the banks against cash payment. These are certain significant factors clearly indicating that the transactions between the importers and the overseas suppliers and the transactions between high sea sellers and M/s. Baheti were not straight, thereby paving the way for preponderance of probabilities which have been taken into consideration by the Commissioner in the impugned order. (g) Ld. Counsel for M/s. Baheti contended that the Commissioner has not taken into account the contemporaneous imports as reflected in NIDB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... become final. According to him, the Department s action amounts to reopening of the closed cases. It is submitted that just because in some cases the Department has not preferred any appeal, that does not necessarily mean that the Department is debarred from filing appeals or agitating in subsequent cases. Reliance is placed in this regard on the judgment of the Apex Court in the case of C.K. Gangadharan v. Commissioner of Income Tax, Cochin - 2008 (228) E.L.T. 497 (S.C.) and Commissioner of Income Tax, Central Kanpur v. J.K. Charitable Trust - 2008 (232) E.L.T. 769 (S.C.). 6. We have sailed through the various facts and circumstances of the case and had gone through the various case laws in this regard. The department primarily relied upon the report, dated 6-9-2007 of the UK Customs received through the Indian High Commission, London (IHC) which in turn refers to invoice, dated 1-2-2004 and a purported sales advice note, dated 29-1-2004 of M/s. F.J. Church. According to the department the purported invoice dated 1-2-2004 received through the IHC is allegedly the real/actual invoice issued to M/s. Ghanshyam Metal which shows a difference of USD 988.760. The payment of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is based on surmises and not actual imports. 8. In any case there is no evidence of actual imports of bottle skelton under any contract at the purported actual price of the USD 1525 during the period. Further the allegations are based on e-mail dated 5-5-2004, for supply of Bottle Skelton to Ghanshyam Metal by S.A. Metal, recovered from the computers of Primetal, which discloses the actual price of the goods as being USD 1525 as against the draft contract for USD 800 dollars. However, there is no evidence of actual import of Bottle Skelton by M/s. Ghanshyam Metal from S.A. Metal. The details in the Bill of Entry do not support any such allegation. We are to look into the practice of transaction that the aluminium scrap sold by the Appellants to SSM was purchased from M/s. Karnavati Metals Prodcuts Pvt. Ltd. (originally generated as bus scrap at Gujarat State Road Transport Corp (GSRTC) @ ₹ 80 per kg. and therefore, the Appellants sale price of ₹ 81.25 per kg. (difference of ₹ 0.69 per kg = 0.85%) is fair and true as per the prevailing market rates. The Appellants purchased total 206.667 MTs of local aluminium scrap from GSRTC and others in the 2005-2006 out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2006 (196) E.L.T. 212 (T) (e) Palco Metals Ltd. v. C.C. - 2009 (234) E.L.T. 472 (T) (f) Adani Exports Ltd. - 2000 (116) E.L.T. 715 (T) (g) C.C. v. Dimple Overseas Ltd. - 2007 (220) E.L.T. (103) (h) Shiv Cables and Wire Industries (India) v. C.C. - 2004 (178) E.L.T. 762 (T). 11. On the basis of the above judgments we are of opinion that the LME prices do not pertain to metal scrap which are merely indicative of the prime quality metals. Section 14 reads as follows : SECTION 14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oms Act, 1962. - The Agreement on implementation of Article VII of the G.A.T.T. was brought into force in India on 14-8-1988 . The preamble of the Agreement clarifies the object and reason of such uniform code of valuation as : (a) The need for a fair, uniform and neutral system for the valuation of goods which precludes the use of arbitrary or fictitious customs value. (b) That the basis for valuation of the goods for Customs purposes, should to the greatest extent possible, be the transaction value of the goods. (c) That the customs value should be based on simple and equitable criteria consistent with commercial practices. (d) That the valuation procedures should be of general application without distinction between source of supply and should not be used to combat dumping. The charge from deemed value to actual value (transaction value) necessitated the corresponding change in valuation rules. Whereby the discretionary power under Rule 8 of the revenue was eliminated and a corresponding obligation was cast on the importer for declaration of value under Rule 10 of GATT Valuation Rules of 1988 (Refer Rule 10 GAT Valuation Rules in Volume II of Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai - 2006 (202) E.L.T. 561 at P. 568 (S.C.) According to the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and Sec. 14(1)(A) of the Customs Act, the value of the imported goods shall be the transaction value. It is only if the transaction value cannot be determined, then the value can be determined by proceeding sequentially through Rules 5 to 8. Rule 4 provides that the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule (9). Rule 4(2) specifically says that the transaction value of imported goods under sub-rule (1) shall be accepted except in the situation covered by the proviso to Rule 4(2). Rule 5 provides that transaction value of identical goods must be ascertained and that should be taken for the purpose of assessment. Rule 5(3) says that in applying that rule, if more than one transaction has taken place, the lowest of such value shall be used to determine the value of the imported goods. If such determination is not possible under Rules 3, 4 and 5, the transaction value of similar goods should be ascertained under Rule ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commissioner of Customs (Appeals) pursuant to which the lower authorities have finalized the assessment rejecting LME as the basis and determining the assessable value either on the basis of contemporaneous import or accepting the transaction value. The details are as follows : Details of 15 Bill of Entry Sr.No. Bill of Entry No. OIO No./Order in Assessment OIA No. Order in Original No. 1 140205 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/ 34/2007/Gr.IV 2 141638 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/70/2007/Gr.IV 3 140026 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD KDL/AC/AK/DENOVO/65/2007/Gr.IV 4 139545 S/40-132/2005/GR IV PART II (154 to 164 - KDL) Cus/Commr(A)/AHD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 9. I find that the declared invoice value has been rejected as transaction value by enhancing the value on the basis of DOV Alert Circular No. 14/2005, dated 16-12-2005 on the basis of LME price, which reflects the market prices prevailing of prime metal. In case transaction value is rejected the value is required to be determined by proceeding sequentially through the Rule 5 to 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 read with Section 14 of the Customs Act, 1962. But in this case it has not been followed scrupulously. In this context, I rely upon the case of M/s. Adani Exports Ltd. v. Commissioner of Customs, Vishakhapatnam - 2000 (116) E.L.T. 715 (Tribunal) wherein it has been ordered that enhancing the value of HDPE (IG) and HDPE (FG) on PLATTS price are not legally sustainable unless there are any convincing evidence of any fraud in the declared value with respect to. Also in the above said case it was observed that mere two informal quotation of local office of foreign manufacturer in India can not be treated as contemporaneous import and unless there are fraudulent declaration of transaction value in the invoices and also the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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