TMI Blog2016 (1) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... assumed that price of the M/s. Shreenath and M/s. GNG & Co. are correct, the price of contemporaneous goods adopted at the time of assessment and clearance of the goods which is lowest between the two contemporaneous value, the further enhancement cannot be done. In this legal position, the adjudicating authority has erred in applying the alleged value of M/s. Shreenath and M/s. GNG & Co. for enhancement of the value. In the case of present appellant, this legal position has been reinforced by the case of SRK enterprises [2012 (11) TMI 735 - CESTAT, MUMBAI] The impugned order has given much weightage to the fact that there is substantial difference in price declared to the customs, price at which goods sold to M/s. Telebrand India and price at which imported goods were sold by M/s. Telebrand to the ultimate customers. On this basis Ld. Commissioner observed that this difference in price shows that prices of the imported goods were undervalued. In this regard, it is our observation that firstly even if there is difference between import price and sale price of the said goods in the domestic market, the difference cannot be made the basis for holding that the price of the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the imported goods, M/s. Telebrand and M/s. Tele Product were seized. On the basis of detailed investigation, a show cause notice No. F.No. VIII/CG-25/S D/4/06/1163 dated 31/3/2010 came to be issued wherein it was proposed to demand of differential duty on the undervalued amount, to confiscate the seized goods and to impose penalties. The said show cause notice was adjudicated wherein the Ld. Commissioner confirmed the charges and proposal made in the show cause notice. Confirmation of charges was made on the basis of following evidences and findings thereon. As per the statement of Shri Narendra Mehta of M/s. Rico Gems Corporation dated 30/5/2006 and 20/1/2010, it is M/s. Telebrand who negotiated the price of the goods with the foreign supplier and Shri Hitesh Israni of M/s. Telebrand used to send the copy of invoice to Shri Narendra Mehta for making payment and clearance of the goods; that Shri. Narendra Mehta of M/s. Rico Gems in his statement dated 10/3/2010 accepted that they were importing the goods on behalf of the M/s. Telebrand India Private Ltd. and price of the goods was being negotiated by Shri Hitesh Israni of Telebrand. On asking him that as per the letter issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 on being asked about the differential value between the value mentioned in report of Customs, Hong Kong and the invoices submitted to the Custom of 1940 pcs of imported goods, he stated that he made payment on the basis of invoice given to him by Shri Hitesh Israni of M/s. Telebrand and details of actual price or differential value can be explained by Shri Hitesh Israni only, since Hitesh Israni ws the person who dealt with the supplier and sent the invoices which were in the name of M/s. Rico Gems for making the payment; that M/s. Rico Gems imported Orbiteck gym equipment double @30 dollars per pc which is the actual cost from the files seized. From the office of Rico, a message was found which was sent by Shri Hitesh Israni to Shri. Mehta on 13/3/3005 (sic) on the subject 5-in-1 Sofa Ii (20 inch container) which read as : make the payment of attached invoice dated 20/2/3005 (sic) (PO. CNI 1897) of Creative Nation International ltd for supply of Air-O-Space Soft bed and the other invoice CNI no. 1896 dated 20/3/2005 of the same party, supply of same product. Goods namely 120 set of Slim and Lift (body trimmer) exported under the shipping bill No. 5863859 dated 31/12/2005 were a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts' submission that the price of goods imported by M/s. Rico Gems was once enhanced on the basis of contemporaneous import therefore the same cannot be enhanced further, the adjudicating authority contended that further enhancement was proposed on the basis of evidence gathered from various persons' statements and documentary evidence. As regard the evidentionary value of letter dated 14/5/2007 of Excise department, Hong Kong such documentary evidence is admissible under Section 139 of the Customs Act, 1962. On limitation, Ld. Commissioner contended that importer has mis-declared description and value of the imported goods hence have suppressed the facts so larger period of limitation prescribed in the proviso under Section 28 (1) of the Act, is invokable in this case. As per the findings of the impugned order, the Ld. Commissioner has relied upon the prices arrived at an investigation in respect of the goods imported by M/s. GNG and M/s. Shreenath for holding undervaluation in respect of goods imported by M/s. Rico Gems Corporation. Being aggrieved by the impugned order dated 14/2/2013 appellants filed these appeals. 3. Shri J.C. Patel, Ld. Counsel for the appellant, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hong Kong Excise Department and for which no basis is indicated in the Notice for enhancing the value. (f) At the time of import itself, the customs department had enhanced the values based on the prices of contemporary imports of identical goods by other importers. (g) As laid down in the following judgments, when at the time of import and clearance, the Customs had enhanced the value of the goods based on contemporary imports; a subsequent notice for further enhancement of the value is not sustainable: CC V Paras Electronics - 2009 (246) ELT 231 CC v Lord Shiva Overseas - 2005 (181) ELT 213 Shimnit Machine Tools Equipment Ltd v CC - 2006 (204) ELT 630 Vitesse Export Import v CC - 2008 (224) ELT 241 SRK Enterprises v CC - 2012 (280) ELT 264 (h) The very fact that the values of the Appellants' imports had been enhanced at the time of import by comparison with the prices of contemporary imports would show that there are contemporary imports at prices at which the Appellants' goods have been assessed. Under Rules 5 and 6 of the Customs Valuation Rules 1988, where there are two or more values of contemporary imports accepted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imports of GNG Co and Shreenath Enterprises were only up to March 2006. For the period April 2006 to November 2008 there were contemporary imports of other importers and the Appellant's value had already been enhanced based on such contemporary imports. (l) The cross examination of representatives of GNG Shreenath Enterprises clearly reveals that their statements and Pages 124 and 125 of the seized documents are unreliable for arriving at a finding of undervaluation. (m) Appellants by Telebrands India P. Ltd. The Notice does not allege nor does the Commissioner finds that the Appellants had received any amount from Telebrands India P. Ltd. over and above the price charged by the Appellants to them in the Appellants' sales bills. The Appellants' proprietor has in his statements explained that the price that the Appellants charged Telebrands India P. Ltd was arrived at by adding to the import price, expenses and the Appellants' profit. The Notice and the Commissioner's order does not dispute this position. Thus applying the provisions of Rule 7 of the Customs Valuation Rules 1998, it would follow that the import price on which the Appellants had paid du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not dealing with any of the aforesaid submissions made before him. He seriously erred in holding that such documentary evidences are admissible under Section 139 of the Customs Act 1962. The Commissioner erred in not appreciating authenticated copies of the invoices of Creative Nations International Limited, Philippines referred to in the letter of 14 th May 2007 of Deputy Head, Trade Investigation, Hong Kong have not been received and hence Section 139 is not applicable. As held by the Supreme Court in the case of Collector v East Punjab Traders - 1997 (89) ELT 11 (SC), for the presumption under Section 139 to apply, authenticated copies of the Invoices referred to in the report ought to have been obtained from the Hong Kong Customs. (o) In the present case apart from the fact that the Annexure to the Report is not even signed, the authenticated copies of the alleged Invoices of Creative Nations International Ltd in Philippines referred to in the said Annexure have not been provided. It is not known what were the goods mentioned in the said alleged Invoices of Philippines. Nor are the dates of such alleged Invoices indicated. (p) It is submitted that there is no admission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (s) The Commissioner should have held that the said statement dated 18-3-2010 was involuntary and the same had not even been signed by the officer who recorded the same. The Commissioner should have followed the decision of the Hon'ble Tribunal rendered in case of Manoj Kumar-vs-Commissioner of Customs (Kanpur) 2004 (176) ELT 811 which was cited before him and in which in identical circumstances it was held that when the statement was not signed by the officer of Customs who purported to have recorded the same such statement was inadmissible in law. (t) Without prejudice to the aforesaid, assuming without admitting for the sake of arguments only, that the said statement dated 18-3-2010 can be taken as evidence, it is submitted that the same is palpably wrong and on the very fact of it incorrect. In the said statement the Appellants' Proprietor has purportedly stated that the price of the said goods in the International market were higher than the price declared in the invoices to the Customs. This is completely false inasmuch as the prices declared in the respective Bills of Entries, under which the said goods were cleared, and the connected invoices are duly supporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmal period of limitation of six months prescribed under Section 28(1) of the Customs Act, 1962. It is submitted that the larger period of limitation prescribed in the proviso to Section 28(1) has no application to the present case. The enhancement of the value of the Appellants' imports is made based on the statements of Prakashchandra Pandya and Nandgopal Govindwamy Naidu, Partners of GNG CO and Pages 124 and 125 of the documents recovered from them. These statements were recorded and the documents were recovered in April 2006. The bulk of the Appellants' imports are after the recording of the said statements and the recovery of the said documents and the same were therefore available with the department when the Appellants' imports were made and assessed to duty. In other words the material on the basis of which the value of the Appellants' imports is sought to be enhanced by the present Notice was already available with the department at the time when the Appellants' imprts were made and assessed to duty. It was therefore open to the department at the stage of import itself to have relied upon the said material while assessing the goods to duty. In these c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re imposition of penalty on the firm under Section 114A and on the proprietor under Section 112(a) amounts to imposing the said two penalties on one and the same person which is prohibited by the fifth proviso to Section 114 A. (y) Firstly, Section 114 AA of the Customs Act 1962 was introduced with effect from 13-7-2006 and hence cannot apply in respect of imports made before that date. Secondly, apart from the fact that the section 114AA applies to export frauds where mere documents are filed without there being any export goods to claim export incentives which is not the case here. Section 114 AA is therefore clearly inapplicable in the present case. Secondly, apart from the fact that appellants have not knowingly or intentionally made, signed or used or caused to be made signed or used any false or incorrect declaration, statement or document, as would be apparent from the Twenty Seventh Report of the Standing Committee of Finance wherein insertion of Section 114AA was discussed at para 62. 4. Shri V.K. Singh Ld. Special Consultant appearing on behalf of the revenue reiterates findings of the impugned order. He further submits as under:- (i) As may be observed from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... covered in the said value of US$45.00. (vi) In case of export vide shipping bill no. 5863859 dated 31.12.05, 120 sets of slim and lift (body trimmer) were exported at US$ 4 per piece totaling US$ 480 to M/s Hotbrand (FZE) Sarjah, UAE and the export was under free shipping bill and same product was imported at US$ 1 per piece, Shri Mehta stated that value at the time of import declared on the basis of invoice sent to him by Shri Israni and in this case also the actual value was fixed on the basis of the actual value of the goods. (vii) Immediately after detection of case M/s Rico Gem started importing the item Obriteck Cycle doubling its value (earlier value of the goods was US$ 15 per piece, there after it became US$ 30 per piece. (viii) That identical goods imported by M/s GNG Co and M/s Shreenath Enterprises were sold by M/s Telebrand at the same price and investigation in the matter of these companies (M/s GNG Co and M/s Shreenath Enterprises) shows that they have imported the goods by mis-declaring the value. (ix) As regards submission that once value was enhanced by the department after referring to NIDB Data, value could not be further enhanced, I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of filing of reply / hearing. Therefore the statement dated 18.03.2010 can be considered as an evidence. (xi) As regards submission that value can not be enhanced on the basis of show cause notice issued to another person, it is submitted that investigation in the mater has shown that Appellant was not even aware of the actual value of the goods as they had not negotiated the value with the supplier and had actually imported the goods on behalf of M/s Telebrand and had declared the value on the basis of invoice supplied to them by Shri Hitesh Israni of M/s Telebrand. It is also seen that Shri Hitesh Israni / Telebrand was purchasing identical imported goods from M/s GNG and Company and M/s Shreenath Enterprises having same country of origin and were selling both the goods at the same price. It is therefore reasonable to believe that import price of the goods imported by the appellant and M/s GNG Co and M/s Shreenath Enterprises was same. Investigation in the matter of import of these goods, M/s GNG Co and M/s Shreenath Enterprises has revealed that they have mis-declared the value of the imported goods. Further evidences discussed in sub para (i) to (vii) above also sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this is case where appellant has given incorrect declaration regarding correctness of the value of goods. The value subsequently found to have been mis-declared, therefore has correctly been confirmed invoking the extended period of limitation. Reliance is placed on (i) 2010 (256) ELT 369, Commissioner of C.Ex., Surat-I vs Neminath Fabics and (ii) 2010 (260) ELT 17 (SC) (SC) Commissioner of Central Excise, Aurangabad vs Bajaj Auto. (xiv) It is well settled law the Department is not required to prove its case with mathematical precision. Evidence as discussed above clearly shows that appellant had misdeclared the value of the imported goods in order to evade the payment of duty. (xv) As regards imposition of penalty on M/s Telebrand and shri Hitesh Israni kind attention is invited to the findings of the Adjudicating Authority in para 69 of the order In this regard, as already discussed above while analyzing the statements of various persons involved in this case I find that Shri Hitesh Israni in his statement dated 8.03.2010 has stated that all the goods imported by M/s Rico Gems Corporation and received by him are of standard quality goods which are identical to the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n appraising officer cannot give immunity from further proceedings regarding mis-declaration of value. It is submitted that the present case is not one where the Appellant somehow got the custom officer to load the value a bit. In the present case the values were loaded based on values of contemporary imports. (ii) In the said case of AG Incorporation the Tribunal has in Para 17.7.1 observed that the decision in the case of Lord Shiva Overseas was taken on the facts of that case. The facts in AG Incorporation were found to be different because in case of AG Incorporation as noted in Para 9 the subsequent enhancement was done on the basis of data of contemporaneous imports. In the present case the initial enhancement itself has been done on the basis of contemporaneous imports and hence the facts of the present case are identical to the decisions relied upon by the Appellant and the decision in AG Incorporation cannot apply to the present case. (iii) Further, in the present case, even assuming while denying that the goods imported by GNG Co and Shreenath Enterprises which are relied upon by the Commissioner were identical and contemporary to the Appellants' imports and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equire that authenticated copies of the foreign documents should be produced by customs and (iii) Thirdly, the report in the present case is not being relied upon along with other evidence but is the sole evidence in the case of Inflatable sofa-bed. (c) The Learned Special Consultant for Revenue referred to the portion of the statement of the Appellant's Proprietor and argued that Slim Lift which was imported at US $ 1 per piece was exported at US $ 4 per piece which according to the Revenue's consultant was stated as the actual value of the goods. It is submitted that the said inference drawn by Revenue's consultant is a distortion of the statement. It is clear from the statement that as far as the import price is concerned it was US $ 1 per piece and that this was the actual import price and also that the export price of US $ 4 per piece was the actual export price. When US $ 4 per piece is stated to be the actual export price it does not follow that US $ 1 per piece was not the actual import price. An export price can be higher than the import price. What is significant is that there is no statement that anything over and above US 2 per piece was paid for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of similar goods. We find that the there is no evidence for linking and adopting the price of similar goods imported by M/s. Shreenath and M/s. GNG Co. In the independent investigation against M/s. Rico Gems, no evidences as regard the undervaluation in respect of goods imported by the appellant M/s. Rico Gems were found, outcome of the investigation against M/s. Shreenath and M/s. GNG Co. cannot be used for enhancement of value of the goods imported by M/s. Rico Gems. If the price of M/s. Shreenath and M/s. GNG Co. is adopted, at the most it can be done considering the same as price of the contemporaneous goods that too when the alleged price against both the firms is conclusively held correct. Even in such case, we observe that at the time of assessment and clearance of the goods, the customs officers have already enhanced the value considering the contemporaneous value of the identical goods. As per Rule 5 and 6 of the Customs Valuations Rules, 1988 where there are two or more values of contemporaneous imports are available the lowest of such value has to be adopted. In the present case, the department also accepted the contemporaneous import price at the time of clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imported Sauna Solution, Inflatable Chair, Salon Shaper, Twist shape, Air-O-Space, Juice Extractor, etc. There is absolutely no cogent material whatsoever in the Notice issue to the Appellants for proposing enhancement of the value of the said goods. When these goods were not imported by Shreenath and GNG, reliance of contemporaneous value of goods of these firms is absolutely incorrect. Moreover Imports made by M/s. Rico Gems are during the period April 2006 to November, 2008 whereas import of M/s. Shreenath and M/s. GNG Co. were made only up to march, 2006. For the period April, 2006 to November, 2008 there were contemporaneous import available of other importer and the value of the import of the appellant had already been enhanced based on such contemporaneous import. In this fact, during the period April, 2006 to November, 2008 the contemporaneous import of M/s. Shreenath and M/s. GNG Co. were not in existence, therefore there is no reason to apply the value of M/s. Shreenath and M/s. GNG Co. during the prevailing period prior to the import made by the appellant i.e. before 31 March, 2006. The Adjudicating authority taken the price of M/s. Shreenath and M/s. GNG Co. o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ta has admitted the undervaluation. We find that Shri Mehta has filed an affidavit dated 19/3/2010 wherein he explained under what circumstances the statement was recorded and he stated that statement was recorded under coercion and threat. The adjudicating authority rejecting the said affidavit given reasoning that though the affidavit was made immediately after recording the statement but the same was produced to the Adjudicating authority alongwith reply to the show cause notice. We also find that the statement has not been recorded by the Gazetted officer and it was not signed by Gazetted officer. In the circumstances (i) Shri. Narendra Mehta retracted the statement in the form of affidavit (ii) the statement was not signed (iii) in the earlier statements there was no admission regarding the undervaluation by Shri Narendra Mehta (iv) even the so called admission of Shri Narendra Mehta is not supported by any corroborative evidences, therefore it cannot be said that Shri Narendra Mehta accepted the undervaluation and the said statement cannot be accepted as evidence. As per the ratio laid down by the Tribunal in Manoj Kumar vs Commissioner of Customs (Kanpur), 2004 (176) ELT 811 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antity and unit price of the goods nor any dates of such alleged Invoices indicated. The invoice numbers mentioned on the same for comparison are not even tallying. Secondly, in the said letter, there is caveat to the effect that said documents can not be shown/copied to third party or use in any proceedings. The covering letter of Consulate General of India to the DRI makes it clear that said letter bearing the said caveat and if caveat report has to be obtained the procedure under mutual legal assistance ordinance, Hong Kong SAR ought to be followed by DRI. It is not on record that DRI has followed the procedure or made any effort to procure the caveat free report. It is also fact that authenticated copies of invoices of Creative Nation International Ltd., Philippines have not been forwarded with the said letter. In absence of the authenticated invoice, reliance cannot be placed on the said report. We find that Ld. Commissioner has not dealt with the submission of the appellant made in this regard properly. He erred in holding that such documentary evidences are admissible under Section 139 of the Customs Act 1962. The Section 139 of the Customs Act, 1962 is reproduced below: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (89) ELT 11 (SC), for the presumption under Section 139 to apply, authenticated copies of the invoices referred to in the report ought to have been obtained from the Hong Kong Customs. The judgment of this tribunal in Best Co v CC (supra) which is relied upon by the department is not applicable in the facts of the instant case. In the present case the Hong Kong Customs report has not provided any documents under Mutual Legal Assistance Agreement/ ordinance but has only provided some information exercising informally extra-territorial jurisdiction. As per the observations of the Hon'ble Supreme Court in the case of CC v South India Television P. ltd. - 2007 (214) ELT 3 (SC) and Collector vs East Punjab Traders - 1997 (89) ELT 11 (SC) the authenticated copies of the foreign documents should have been produced by Customs. 8.6 In view of the above facts and legal position, mere unsigned annexure without copies of invoices referred thereunder, this report cannot be accepted as evidence. 9. From the above discussions, it is clear that the revenue could not establish the undervaluation with tangible evidence. In this position, the valuation of the imported goods in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is also a valid plea in the present proceedings. The sole basis for demanding duty in the Notice is based on the imports of similar goods by others. In the present case, at the time of assessment, a major part of the consignment, transaction value has been accepted and for certain imports of lesser quantity, the declared value was rejected and the department applied itself and raised the value and the clearances were effected. The department once again now feels that the assessment arrived at by raising the values was not correct and is required to be reopened and the values reassessed and fix at a higher level. This cannot be permitter under Section 28 of the Customs Act, 1962, after six months. The information on the basis of which the department is now proposing to enhance the value was always with the department when the earlier enhancement was arrived at. 14. In this view of the matter, we would find a very good case of time bar in favour of the appellants in this case. From the above judgment, it is seen that demand for longer period cannot be made when the enhancement of price is made on the basis of price of contemporaneous import. In the present case also similar f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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