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Commissioner of Customs (Sea) , Chennai Versus M/s. National Lamination Industries

2015 (11) TMI 377 - SUPREME COURT

Violation of EXIM policy - Undervaluation of goods - assessee had imported the same material declaring higher price which was cleared at Mumbai port - Held that:- Tribunal has not only misinterpreted the statements of two partners of the assessee, it has also sidetracked and ignored other relevant material. We have gone through the statements of the two partners of the assessee and find that there is a categorical admission on their part that the prices/values declared by them for imports throug .....

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idence, that too in the absence of any material given by the assessee in support of this plea. - no documentary evidence was produced by the assessee to support the plea that the goods at Chennai port were inferior in quality than the goods imported and cleared at Mumbai port and there was no warranty clause of the goods imported at Chennai

The goods imported by the assessee which were cleared at Mumbai port were found to be similar in nature. These imports were by the assessee itself .....

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Adv. Mr. B. Krishna Prasad,Adv For the Respondent : Mr. K. L. Janjani,Adv JUDGMENT A. K. Sikri, J. The respondent/assessee herein imported sixteen consignments of secondary/defective CRGO Electrical Steel in the form of Sheets, Coils, Strips and Cuttings, for which it filed different Bills of Entry. The unit price of the goods was declared as US$ 250 Per Metric Ton (PMT) for CRGO Electrical Steel Strips and US$ 300 PMT in respect of other variety of goods. The Directorate of Revenue Intelligence .....

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value of these goods assessed ranging between US$ 475 (C&F) to US$ 750 PMT (C&F). On that basis, the show cause notice proceeded as under: 15. In terms of Rule 3 of the Customs Valuation Rules, 1988, the value for the purpose of assessment shall be the transaction value of the goods under Rule 4 of the said Rules, ibid, the transaction value of the imported goods shall be the price actually paid or payable for the goods when sold for export to Indian adjusted in accordance with the provi .....

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CRGO through the Port of Mumbai / Nhava Sheva as against the values declared by M/s. Alfa for their imports (currently under investigation) through Port of Chennai, have not declared are price/ value at which such or like goods are ordinarily sold or offered for sale as contemplated under Section 14 of the Customs Act, 1962 read with Rule 4 of the Customs Valuation Rules, 1988 in as much as they have declared much lower values for their imports through the Port of Chennai as compared to the valu .....

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ffered for sale. 2) It is clear from the above that the main ground on the basis of which undervaluation of the goods was alleged was that the assessee had imported the same material declaring higher price which was cleared at Mumbai port. Order-in-Original was passed affirming the said show cause notice and the demand of differential duty, including interest contained therein. The assessee had taken up the defence that the goods imported at Mumbai port at a higher value were of better quality a .....

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filed appeal against this order before the Customs Excise & Service Tax Appellate Tribunal (in short 'CESTAT'). The CESTAT, vide impugned decision dated 18.07.2006, set aside the order of the Adjudicating Authority, by accepting the plea of the assessee and holding that the declared values representing the true and correct transaction value under Rule 4 of the Customs Valuation Rules and, therefore, was required to be accepted. 4) According to the Tribunal, the Commissioner had treat .....

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h the Order-in-Original, gave following reasons: 11. We also find substance in the contention that there is a variation between the prices of goods imported through Mumbai Port and through Chennai Port for the reason that, while the goods imported at Mumbai were under contract containing a guarantee clause, contracts under which the Chennai imports took place had no such clause. 12. There is yet another reason for rejecting loading and that is while applying Rule 8 of the Customs Valuation Rules .....

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done in fact, is to adopt the value of Mumbai imports of the appellants, which cannot be sustained for the reason that admittedly no similar or identical goods are found to have been contemporaneously imported elsewhere in India. Valuation under Rule 8 is also not sustainable for the reason that the rule provides that reasonable means for determining the value read with Customs Valuation Rules and Section 14(1) of the Customs Act have to be adopted and as per Section 14(1), time and place of de .....

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r, and clearly depicted that the assessee had shown the value of the same goods in question at a lesser price in the Bills of Entries filed by the assessee. He pointed out that on the basis of a specific information that the assessee and their sister concern M/s. Alfa Laminations, Plot No. B-8-9, IODC Industrial Area, Ringanwada, Daman. 396210 are importing consignments of Secondary Defective ARGO Electrical Steel in the form of Sheets in Coils/Steel Sheets/ Sheets in interleaved coils/Steel Str .....

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S$ 750 PMT (CIF), depending upon the nature of the product, whereas the goods were being cleared at declared/assessed values ranging from US$ 210 to US$ 300 PMT CIF for import through Chennai port. The learned senior counsel also argued that the Tribunal wrongly recorded that there was no admission in the statements of the partners. He pointed out that Mr. Mahendra Parekh, one of the Partners of M/s. National Lamination specifically admitted that they were importing through the port of Chennai s .....

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by them in their Bills of Entry should not be rejected and the same be refixed under the 'Best Judgment' method in terms of Rule 8 of the Valuation Rules, 1988 and the differential duty demanded apart from proposing confiscation of the goods and imposition of penalty. 6) Learned counsel also drew our attention to the Order-in- Original wherein the evidence collected against the assessee was discussed by the Adjudicating Authority in the following manner: I have perused the documents and .....

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nal, M/s. Trans Metal Gmbh, M/s. Orbit Metals Gmbh, M/s. Gold Arrow Metals, USA, ARB Metals, USA, Norek Trading etc. This list submitted by the importers in respect of imports by others indicate supplies made by M/s. J. Peason International in one case, M/s. Oribti Metals in 3 cases and M/s. Transmetal in 6 instances wherein the values were shown in the range of US$ 280 to US$ 350 PMT. On the other hand, the investigation brought out much clear and many more evidences of imports by others both t .....

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e importers should be accepted for assessment. Such imports were stray cases of lower values being adopted and in any case cannot form the basis of comparison when clear evidences are available to arrive the conclusion that the correct value of the goods was more than US$ 485 PMT when imported in any form. 7) Another significant material which was referred to by the learned counsel is the statement of the partners of the assessee wherein it was admitted that the prices/values declared by the ass .....

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not only misinterpreted the statements of two partners of the assessee, it has also sidetracked and ignored other relevant material. We have gone through the statements of the two partners of the assessee and find that there is a categorical admission on their part that the prices/values declared by them for imports through Chennai port for similar items was much less compared to the values declared at Mumbai port. At this juncture itself, it would also be pertinent to point out that while reco .....

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sser price. It was also explained that though there was guarantee clause in the contracts in respect of goods imported at Mumbai, no similar provision was there for the products imported and cleared at Chennai port. However, we find that assessee has not substantiated the aforesaid plea by producing the contract in respect of Mumbai port and Chennai port. In the absence thereof, it was not permissible for the Tribunal to accept this plea of the assessee. 9) There is yet another material circumst .....

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