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TMI Blog2013 (10) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... below : Appeal No. Bill of Entry No. & Date Declared (CIF) Value (in Rs.) Assessed Value Confiscated Value OIO No. & Dt. R.F. (in Rs.) P.P. (in Rs.) Value acceptance Date (a) (b) (c) (d) (e) (f) (g) (h) (i) 282 8180148 dt. 10-10-12 12,29,224,94 14,35,193,87 14,20,503,03 245 dt. 1-10-12 2,84,,000/- 90,000 29-10-12 227 8365804 dt. 31-10-12 12,66,945,68 17,00,620,60 16,83,624,06 199 dt. 7-12-12 3,40,000/- 1,85,000 4-12-12 214 8466649 dt. 12-11-12 3,77,871,26 5,60,262,15 5,54,578,76 177 dt. 13-12-12 1,11,000/- 90,000 12-12- 12 210 8466644 dt. 12-11-12 2,75,818,44 3,51,842,28 3,48,236,29 176 dt. 13-12-12 70,000/- 80,000/- 12-12-12 150 8972043 dt. 8-1-13 38,43,867,43 52,66,348,21 52,13,376,77 66 dt. 7-2-13 10,43,000/- 3,91,000 4-2-13 313 7883094 dt. 7-9-12 6,25,154,75 6,31,406,30 7,93,491,87 285 dt. 10-10-12 1,60,000/- 80,000/- 3-10-12 294 8264413 dt. 19-10-12 6,32,132,38 9,43,044,88 9,33,726,77 278 dt. 20-11-12 1,87,000/- 1,30,000/- 12-11-12 288 8157072 dt. 8-10-12 6,41,334,75 8,18,105,85 8,10,005,79 244 dt. 18-10-12 1,62,000/- 42,000/- 18-10-12 286 8200816 dt. 12-10-12 7,93,651,75 8,01,588,27 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Old and Used Digital Multifunction Printer was restricted item as per the para 2.17 of Foreign Trade Policy 2009-20014 and paras 2.33 and 233A of HBP and could be imported only against valid specific license therefore said imported goods were liable for confiscation/penalty under Section 111(d) and 112(a) of CA, 1962. (ii) That, the appellant could not produce Load Port Chartered Engineer's certificate and could not be satisfied the department as to the extent of uses or non-uses of said machines after the sale but before export of said consignment therefore valuation under Rule 3 of Customs Valuation Rules, 2007 was not restored and Rule 9 of Customs Valuation Rules was applied. According to Standing Order No. 3/88 and 5/88, depreciation method was adopted as per suggestion of Chartered Engineer and found that computed value was higher than the declared and depreciated value and also added the freight and insurance thereafter total assessable value was worked out in column (J) of table 2 of para 4 of said OlO. (iii) That, the fine and penalty was restricted upto the tune of 10% & 5% applying the ratio of judgment 2009 (240) E.L.T. 336 of Hon'ble Kerala HC and 2009 (235) E.L.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any act or omission in relation to said imported goods rendering liable for confiscation therefore penalty under Section 112(a) not imposable. (x) That, appellant did not violated any provisions of Customs Act, 1962/Foreign Trade (Development & Regulation) Act or any law for the time being in force and OIO has been passed on the basis of surmise without any material on record to penalize the appellant. (xi) That, there is no violation of Section 111(d) and 111(m) therefore subject goods are not liable for confiscation and there is no question of invoking Section 112(a) of CA, 1962. (xii) That, the order passed by Addl. Commissioner is untenable and unsustainable and should be set aside and quashed. 5. Personal hearing was attended on 19-9-2013 by Advocate Shri Hashmukh Kundalia and Shri Ketan Kamdar and pleaded that it was a settled issue by Hon'ble Madras High Court and accepted by DGFT in consultation of Law Ministry. Shri Kundalia argued that in order portion of OIO, the lower authority wrongly invoked the Section 111(m) without any discussion of valuation. They also submitted case laws 2004 (177) E.L.T. 349 (Tri.-Bang.) in case of Shri Nakoda Impex v. CC and 2013 (293 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e satisfied, the transaction value under Rule 3 of CVR, 2007 can he applied in the importation of second hand machinery sold for export. It means after selling for export, the subject goods should be immediately imported without any further uses abroad. However if transaction value under Rule 3 is rejected, valuation of second hand machinery can be done under Rule 9 of CVR, 2007. The lower adjudicating authority noted that the importer neither did submit load port charted engineer certificate nor satisfied fully to department as to the extent of usage at load port after sale before actual export therefore having no documentary evidence, valuation under Rule 3 of CVR, 2007 was not restored. Although, the adjudicating authority did not reject the declared transaction value being not correct or any additional payment was made to supplier in addition to declared value but denied to restore Rule 3 of CVR, 2007 only because the appellant could not satisfied to the department regarding usage of said machines abroad after sale. However in date of invoice, date of packing list and filing date of bill of entry, there is hardly a difference of one and half month period therefore it cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age, extent of the re-conditioning, year of manufacture, model no., price when new, etc., are misdeclared either in the Chartered Engineer's Certificate or in the invoice. There will also be no difficulty in rejecting the transaction value in cases which are hit by the provisions to sub-rule (2) of Rule 3. Difficulties may however be faced in situations other than those described above. (v) {4} (i) Rule 12 empowers the Revenue not to determine the value of the imported goods on the basis of transaction value under Rule 3(1) of the Valuation Rules. The Tribunal decision in the case of Chandni International [2003 (153) E.L.T. 312] refers. (vi) {4(ii)} Rule 12 provides that when the proper officer has reason to doubt the truth or accuracy of the value declared, he may ask the importer to furnish further information or other evidence. If he still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of the goods cannot be accepted. It is therefore required to determine whether the evidences constitute reasonable doubt for the assessing officer to doubt the value of the goods. The Tribunal decision in the case of Sunny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ouse may consider issuing Public Notices giving names and addresses of Chartered Engineers, whom the trade can contact for issuance of CE Certificate. 10. The above C.B.E. & C. Circular 4/2008 is clear that 'declared value' can be rejected (a) if invoice/certificate of chartered engineer is manipulated/fraudulently obtained (b) if certain basic particulars of imported goods found to be misdeclared (c) if price is hit by the provisions to sub-rule (2) of Rule 3 (d) if the declared value of a second-hand machinery is found to be much below the value arrived at by the depreciation method on the basis of the certified price of the new machinery. 11. I find that in the said imported goods these above referred four ingredients are not existed and in most of the cases the depreciated value is less than declared value as mentioned in table-2 column G &H of said OIO therefore there was no reason before adjudicating authority to doubt the declared value. 12. The declared transaction value was arbitrarily rejected by adjudicating authority only to restore the Rule 9 of CVR, 2007 i.e. Residual method. - "(I) Subject to the provisions of rule 3, where the value of imported goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent that the declared transaction value is incorrect and/or that the respondent had made additional payment to the supplier over and above declared value. In view of these circumstances we are of the view that the allegation of misdeciaration of value is also without any basis and as such there is no infirmity in the order of the Commissioner (Appeals) on this point." 13. The appellant vide their letter (date mentioned in column I of table in para 1) informed to Addl. Commissioner, Customs that their declared value was correct and true but on account of 'Kolkata customs house practice' and 'to avoid further demurrage' they were accepting the value enhancement. I do not find any such practice of value enhancement in Kolkata Customs House. As per Article 265 of Constitution "No tax shall be levied or collected except by authority of law. There are decisions of different Hon'ble Benches of Tribunal on this issue. 14. The Hon'ble Kolkata Tribunal has taken a view that appellant's concurrence for enhancement of value established conduct of undervaluation. 2008 (231) E.L.T. 318 (Tri.-Kolkata) Royal Enterprises v. CC. (Port), Kolkata. 15. But held by Hon'ble Tribunal 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Customs Act provides for confiscation of the goods only if the goods declared in the bill of entry do not correspond in respect of the value or in any other material particular with the entry (bill of entry) made under the Act. In this case, the appellants had declared the goods correctly in description/quantity/value and classified them under proper chapter heading of Customs Tariff. Further, the Customs did not reject "declared transaction value being not true/genuine". However, being 'old and used capital goods' the consignment was ordered for 'first check examination' in presence of government approved Chartered Engineer for valuation purpose and to verify other parameters. On the report of Chartered Engineer, the Adjudicating Authority enhanced the declared value and accepted by appellant. 20. The Adjudicating Authority assessed the imported goods on enhanced value and ordered confiscation under two Sections i.e. 111(d) and Section 111(m) of CA, 1962 but gave option under Section 125 to release on payment of fine. Since, said imported goods were not restricted item under FTP/HBP/ITC as decided by Hon'ble Madras High Court and accepted by DGFT therefore there was no con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out by Chartered Engineer in column no. G&H table-2 but on notion it was enhanced by small amount in column no. (I) table-2 of OIO. Therefore there is no mala fide on record for undervaluation. The acceptance of enhanced value was not absolute but it was given only to avoid the mounting demurrages. In case 2008 (231) E.L.T. 318 (Tri.-Kolkata) Royal Enterprises v. Commissioner of Cus. (Port), Kolkata, the consent was given freely forgoing the right of SCN. But in this appeal the appellant gave his consent of enhancement to avoid the mounting demurrage. Concurrence means 'coming together'/ meeting of minds, agreement in opinion etc. but consent is a permission to do something/giving an affirmative response etc. In this case only acceptance of value enhancement was accorded by the appellant. Held by Hon'ble Tribunal in case 2012 (279) E.L.T. 394 (Tri.-Del.) C.C. v. Ajex & Turner Wire Dies Co. "Merely because the importer has cleared, the goods at enhanced value to save the demurrage charges or otherwise, by itself, does not mean that the importer is consenting to enhance the value. It is right of the importer to contest the enhancement and fact of clearance of goods, cannot preclud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med by Hon'ble Kerala High Court and same stand taken by Hon'ble Tribunal, Kolkata in M/s. Sambhav Enterprises cited in OIO for imposition of fine/penalty upto tune of 10% and 5% is relevant when goods were imported against the restriction of EXIM Policy but in this subject matter said imported goods were not imported against any restriction but were freely importable upto 28-2-2013 as discussed above in para 7. Moreover no margin of profit (MOP) was worked out. The adjudicating authority has given justification that said goods were not openly traded in usual course of trade in local market therefore margin of profit could not be worked out. This shows a highly casual approach to serious adjudication proceedings, which have financial implications. The spirit and intention of the concept of margin of profit appears to have been ignored by the Addl. Commissioner. It was held by Tribunal that "Determination of margin of profit is prime requirement of Section 125 of Customs Act, 1962" {2002 (142) E.L.T. 619 (Tri. - Mumbai), Bharat Chudasama v. CC. 24. The Supreme Court decision in the case of Jain Exports Pvt. Ltd. v. Union of India reported in 1990 (47) E.L.T. 213 (S.C.), wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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