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2016 (2) TMI 389 - CESTAT MUMBAI

2016 (2) TMI 389 - CESTAT MUMBAI - 2015 (328) E.L.T. 590 (Tri. - 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 undervalua .....

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ent. Then there is no evidence to show that the Chartered Accountant’s Certificates 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 t .....

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s are filed by the appellants M/s. Crown Lifters (Partnership concern), M/s. 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 .....

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e generally advises the importers of cranes that if the price of the crane 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 thr .....

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also stated that he had transferred ₹ 2 crores approx abroad on behalf 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 val .....

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er another deposit of ₹ 50 lakhs was also made by them to get the clearance 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 .....

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g penalties both under Sections 112(a) and 114AA of the Customs Act on Crown 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) fo .....

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which is less than ₹ 40 per kg. on weight basis, the cranes purchased 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 .....

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Reliance is placed on the following judgments to say that cross-examination 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 evid .....

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enhanced by the officers, the price per kg remains much lower than what the 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 re .....

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investigations the appellants were directed to get a certificate from the chartered 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 o .....

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The allegation against him is that he advised importers to get the cranes 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. .....

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Shri Vikram Jhangiani partner of M/s. M. Ramdas & Co who allowed the former 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 .....

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on done by Customs authorities is not sustainable in law. 6. We have carefully 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 fin .....

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cive measures. But in the present case the deposit actually arises on persuasion. 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 am .....

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name of the appellant. Similarly the statement of Shri Madan Lalwani also does 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 .....

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nable to appreciate these gaps in the proceedings. 7.2 The Counsel contended 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 judgmen .....

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of natural justice has been violated is the denial of copies of the examination 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 .....

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7.5 We may now go to the method adopted by the Commissioner to arrive 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 .....

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be a practice of assessing the value of cranes on the basis of value per unit 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 re .....

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d with Section 14(1) of the Customs Act. 7.7 The reliance placed by learned 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. .....

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