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Crown Lifters Versus Commissioner of Customs (Import) , Mumbai

2016 (2) TMI 389 - CESTAT MUMBAI

Valuation - import of cranes - evasion of customs duty by: (i) working out the assessable value of cranes at ₹ 20/- per kg. to ₹ 40/- per kg., (ii) suppressing freight charges paid to the shipping line, (iii) preparing invoices on CIF basis whereas the purchase is mostly on FOB basis, (iv) getting bills of lading prepared to show fraudulently that the freight is pre-paid. - Held that:- whole case of undervaluation is essentially based on statements of certain people and the confessio .....

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ificates produced by the appellant indicating the value of machinery as well as the invoices presented at the time of import are manipulated. It is not on record that any query was made regarding the genuineness of these documents.

The adjudicating authority has neither followed the principles of natural justice as indicated in the paragraphs above nor has he followed the correct legal principles to arrive at the transaction value. Therefore the case needs to be remanded for fresh adj .....

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. Crown Lifters Pvt. Ltd., Shri Karim K. Jaria (Partner of Crown Lifters and Director of M/s. Crown Lifters Pvt. Ltd.) and Shri Madan Lalwani, employee of CHA M/s. M. Dharamdas & Co. against the impugned order dated 31-1-2014 passed by the Commissioner of Customs (Import), Mumbai. 2. Facts are that on the basis of an intelligence, Directorate of Revenue Intelligence gathered that a syndicate is working in import of cranes and evading customs duty by: (i) working out the assessable value .....

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is less than ₹ 40/- per kg. on weight basis, customs authorities will not accept the value for assessment purposes. He also gave names of importers of cranes for whom customs clearance work was attended to by him. He disclosed that for his No. 2 account related to work of crane importers, he had 18 employees. 2.1 The premises of one Shri Brijesh Gala who was said to be engaged in transferring money overseas through hawala on behalf of crane importers was searched and his statement rec .....

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f of Shri Karim Jaria. 2.2 Shri Akhil and Shri Jeetu Patel in their statements confirmed the facts stated by Shri Brijesh Gala. 2.3  The statements of Shri Karim Jaria were recorded on 19-11-2010 and on 10-7-2012. He stated that initially he was doing the business of cranes in a partnership firm and later from 2007-2008 in a Private Limited Company. He admitted that he was paying Shri Madan Lalwani 5% of the value of the cranes in cash in addition to 1% agency charges paid by way of ch .....

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arance of the cranes. In his further statement dated 19-7-2012, Shri Karim Jaria admitted undervaluation in the import of cranes by M/s. Crown Lifters and M/s. Crown Lifters Pvt. Ltd. and submitted the correct CIF/FOB price of 35 consignments of cranes/accessories imported and stated that he had destroyed all correspondence/documents etc. related to the import of cranes. It was determined by Customs that out of the above 35 consignments, 14 consignments were cleared on under-stated values, 9 of .....

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n Lifters, Crown Lifters Pvt. Ltd., Shri Karim Jaria and Shri Madan Lalwani. Penalty was also imposed under Section 114A on Crown Lifters Pvt. Ltd. The Commissioner in his findings at para 24.3 of the impugned Order recorded that the amount of ₹ 1.5 crores deposited during investigations by Shri Karim Jaria is adjusted against duty payable and interest payable on the cranes imported by Crane Lifters (partnership) for the period which is beyond 5 years from the date of show cause notice as .....

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d prior to the investigations do not have matching values and the value is much higher and sometimes even if enhancement of value is done by Customs, the value remains between ₹ 18 per kg. to ₹ 36 per kg. He further contended -that the statement of Shri Brijesh Gala cannot be taken as evidence because it does not contain the name of the appellant. The show cause notice does not indicate whether the statements of Shri Brijesh are corroborated by Shri Akhil and Shri Jeeetu Patel whose .....

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n must be provided of people whose statements have been taken behind his back : Aggarwal Rolling Mill v. Commissioner - 2015 (317) E.L.T. 145 (Tri.-Del.), Swadeshi Polytex v. Collector - 2000 (122) E.L.T. 641 (S.C.); 4.1 Further that in terms of the provisions of Section 138B(2) of the Customs Act, 1962, statements made by a person before any officer of Customs during the course of any enquiry cannot be taken as evidence without giving an opportunity of cross-examination. 4.2 According .....

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department claims. 4.3 On the issue of valuation the contention is that they buy second-hand cranes in auction. Such cranes are generally available at very low prices. In some cases the auction is conducted by M/s. Ritchie Bros and cranes sold on as is where is basis , the payments made through regular banking channels as per the invoices raised on the appellants. They submitted chartered engineer certificates in respect of all cranes imported by them from the port of origin. The second-ha .....

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hartered engineers that is M/s. Bureau Veritas (India) Private Ltd. 4.5 It is the contention that the amount deposited by them before the issue of show cause notice has been adjusted/appropriated against the duty demand relating to 9 cranes which were imported beyond the period of five years from the date of show cause notice. This is not permissible under the law in view of the judgment of the Tribunal in the case of Photokina v. Commissioner Mumbai, reported at 2008 (223) E.L.T. 398 (Tri. .....

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cleared on values suggested by him on weight basis. He was merely informing the importers about the practice adopted by Customs to benchmark the valuation of cranes. There is no evidence that he advised the importers to undervalue. No finding is recorded in the order of Commissioner regarding the cross-examination sought by him. The show cause notice fails to discuss on what ground immunity was given to Shri Brijesh Gala. Reliance was placed on the Tribunal judgment in the case of S.Y. Ranade v. .....

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ormer to conduct the customs clearance work. He maintained three accounts out of which one account (account No. 2) was under his exclusive control dealing with, inter alia, second-hand cranes. He advises the importers that if the price of the cranes is less than ₹ 40 per kg. by its weight, then Customs authorities will not accept it. He also referred to the statement of Shri Brijesh Gala who accepted that all hawala transactions were entered into by him in undervaluation of the cranes. He .....

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arefully considered the submissions of both sides. 7. We shall first address the issue of the deposit made by the appellant before the issue of the show cause notice. We do not agree with the Commissioner s findings that the duty amount and interest amount deposited by the importer is adjustable against the duty and interest said to be recoverable for the period beyond five years from the date of SCN. There is no finding as to how the amount deposited has been apportioned to be precisely th .....

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asion. In fact the appellant has alleged coercion. In fact we agree with the reliance on the case of Photokina (supra). This judgment relied on the Hon ble High Court of Madras decision in the case of Pilmen Agents (Private) Ltd. - 2000 (126) E.L.T. 79 (Mad.). Therefore we hold that the amount deposited cannot be appropriated as being duty and interest payable for the period beyond 5 years. It has to be proved that the amount deposited by the appellant during the investigation and before the iss .....

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oes not implicate the appellant. Statements of Shri Akhil and Shri Jeetu Patel who were named by Shri Brijesh Gala as having abetted in the transfer of money abroad, have not been referred to either in the show cause notice or in the adjudication order. A conclusion therefore can be drawn, unless otherwise proved by Revenue, that the statements of Shri Brijesh Gala are not corroborated by the statements of Akhil and Shri Jeetu Patel. The most significant point to note is that Shri Brijesh Gala t .....

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tended that cross-examination of persons whose evidence was relied upon such as Shri Brijesh Gala, was not allowed. In his findings the Commissioner simply brushes aside the request by stating that he does not find any compelling reason for offering the cross-examination. The Commissioner relies on various judgments to state that cross-examination is not a matter of right. We find that the reliance placed on these judgments is misplaced and misunderstood. The judgments need to be appreciated in .....

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ation orders/examination reports in respect of the cranes. The denial by the adjudicating authority is without any sound reasoning. Summary rejection of this request for the reason that (para 24.7 of Impugned order) the investigation has commercially established undervaluation with the help of confessional statements and other documentary evidences is devoid of merits. 7.4 The use of the word documentary evidence in para 24.7 of the order leaves us guessing as to what is the real documentar .....

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at the value of the goods which are alleged to be undervalued. The Commissioner first relies on the statement of Shri Karim Jaria who has stated/admitted the true transaction values. We find it strange that a person could recall the value of each of the 14 consignments imported as far back as 2006 without the backing of any paper or other form of record. Further we note that the description of the cranes bear the year of manufacture. There is nothing on record to show that enquiries were made t .....

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it weight which clearly indicates that the department was not following any scientific method to determine the value of the cranes. The Commissioner has not verified whether such a practice existed and if so, why ? 7.6 The Commissioner while justifying the value admitted by Shri Karim Jaria found them to be at par with values ascertained on the basis of prevailing market price of similar cranes. The records do not reveal anything about such enquiry and the market price determined. From wher .....

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arned AR on the case of American Eyelight Pvt. Ltd. (supra) is completely out of context. In that case the value was determined on the basis of a market survey conducted in the presence of the appellant. No details of such exercise undertaken has been shown in the Order and therefore a sweeping generalization by the Commissioner based on judgment of the Hon ble Apex Court in the case of CC v. D. Bhoormull - 1983 (13) E.L.T. 1546 and in the case of Commissioner v. Systems and Components Pvt. Ltd. .....

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