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2016 (2) TMI 616 - CESTAT NEW DELHI

2016 (2) TMI 616 - CESTAT NEW DELHI - TMI - Valuation - mis-declaration of import of 100% nylon lurex yarn (CTH 5602) as 100% nylon yarn - import against advance authorisation licence - It also came out during the investigation that the appellant did not have necessary machinery to carry out the manufacture of export goods, from 100% nylon yarn allowed to be imported duty free under advance authorisation and was also sending the differential amount to the supplier to cover undervaluation via haw .....

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s for doing so. Thus none of the judgements cited by the appellant come to its rescue in as much as rejection of the transaction value was clearly within the competence of the primary adjudicating authority.

To enhance the value to the same level at which the goods were assessed in the appellants own case and with his consent when imported just a couple of months earlier can in no way be called unreasonable comparison with contemporaneous imports. - Demand confirmed - Decided against .....

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pondent : Shri Amreesh Jain, AR ORDER PER R K SINGH : These appeals have been filed by Shri Dharam Pal Aggarwal, Shri Praveen Kumar, proprietor of M/s. Praveen Kumar Hosiery and Shri Salil Magoo against order-in-original dated 24.05.2010 in terms of which the following order was passed:- 42(a). The imported goods i.e. 8,000 kgs of 100% Nylon Lurex Yarn imported vide Bill of Entry No. 4032 dated 24.10.2007, are ordered to be classified as 100% Nylon Lurex Yarn under CTH 56060090, instead of 100% .....

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ation of Prices of the Imported Goods) Rules, 1988, as amended from time to time. 42(C) The goods i.e. 8,000 kgs, valued at ₹ 17,79,822/00, imported vide bill of entry No.004032 dated 24.10.07 (i.e. 2,600 kgs. out of 8000 kgs of 100% Nylon Lurex Yarn, having actual re-determined assessable value of ₹ 5,78,442/00 and the goods, i.e. 5,400 kgs of 100% Nylon Lurex Yarn, having re-determined assessable value ₹ 12,01,380/-, seized in factory premises), imported through CFS Ludhiana, .....

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1962 read with Notification No. 93/2004-Customs dated 10.9.2004 (as amended from time to time) alongwith interest payable thereon under section 28AB of the Customs Act, 1962. 42(f) I impose a penalty of ₹ 4,34,655/- (Rs. Four lacs, thirty four thousand, six hundred and fifty-five only) on Shri Parveen Kumar (Noticee No. 1), Prop. of M/s. Parveen Kumar Hosiery, Ludhiana under section 114A of the Customs Act, 1962, I refrain from imposing penalty on Noticee No. 1 under section 112(a) and 11 .....

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propriated towards the duty & interest liabilities of the noticee. 43(a). The goods i.e. 10,000 kgs of 100% of 100$ Nylon Lurex Yarn imported vide Bill of Entry No. 118910 dated 31.12.2007 are classified as 100% Nylon Lurex Yarn under CTH 5606.0090, instead of 100% Nylon Yarn under CTH 540219890 as declared by the noticee. 43(b) The total declared assessable value ₹ 11,26,958/- of the goods i.e. 10,000 Kgs. of 100% Nylon Lurex Yarn imported vide bill of entry No. 118910 dated 31.12.07 .....

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udhiana) which were imported vide bill of entry No. 118910 dated 31.12.07 through CFS, Ludhiana are confiscated under Section 111(d) and 111(m) of the Customs Act, 1962. However, in exercise of powers conferred upon me under section 125 of the Customs Act, 1962, I order the noticee to redeem the same on payment of redemption fine of ₹ 5,50,000/00 (Rs.Five lacs and fifty thousand only). 43(d) Duty amounting to ₹ 5,37,023/-, leviable on re-determined assessable value of ₹ 21,93,5 .....

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m imposing penalty on Noticee No.1 under section 112(a) and 112(b) of the Act ibid. 43(f) I impose a penalty of ₹ 2,50,000/00 (Rs.Two lacs and fifty thousand only) on Shri Salil Kumar Magoo (noticee No.2) s/o Parveen Kumar, Prop. of M/s. Parveen Kumar Hosiery, Ludhiana under Section 112 (a) & (b) of the Customs Act, 1962. 44. I impose a penalty of ₹ 1,00,000/00 (Rs. One lac only) on Shri Dharam Pal Aggarwal (Noticee No.3), Prop. M/s. Shakti International, Ludhiana under section 1 .....

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iery had taken advance authorisation as manufacturer exporter for duty free import of raw material, namely 100% nylon yarn (CTH 5402). Intelligence was received that it was importing 100% nylon lurex yarn (CTH 5602), mis-declared the description (as 100% nylon yarn) and value and cleared the same duty free under the said advance authorisation and was diverting it in the open market instead of using the same in the manufacture of export goods. It also came out during the investigation that the ap .....

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, undervaluation, hawala payment and diversion of imported goods. Shri Dharampal Aggarwal was the indenter, who admitted that Shri Praveen Kumar had requested him that the description of yarn should be shown as 100% nylon yarn 1/14 NM in place of 100% nylon lurex yarn 1/14 NM and value should also be adjusted and accordingly he had asked the overseas supplier to do so. E-mails recovered from the computer of e-mail account of Shri Praveen Kumar clearly showed that the goods were under-valued and .....

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Magoo (son of Mr. Praveen Kumar who admitted that he was looking after day-to-day functioning of M/s. Praveen Kumar Hosiery) have contended that - (i) chemical test report was not trustworthy; (ii) the goods can be got manufactured on job work basis; (iii) M/s. Praveen Hosiery had some machinery in its unit and got some work done from job workers; (iv) the statement of Shri SK Magoo was under duress; (v) the test report in respect of Bill of Entry No.4302 was still awaited. They questioned the .....

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the impugned order to contend that the evidences available in this case show that the allegations were clearly sustainable and so the impugned order was sustainable. 5. We have considered the contentions of all sides. We notice that Shri Praveen Kumar and Shri SK Magoo, did not submit any reply to the Show Cause Notice nor appeared for personal hearing inspite of repeated opportunities. In these circumstances, for them to question the chemical examination report and that too without any basis a .....

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M/s. Praveen Kumar Hosiery did not have machinery to manufacture the export goods out of the 100% nylon yarn. Shri Magoo also admitted that the goods were under-valued and the differential amount was sent through hawala. He also clearly admitted that the goods were imported for diverting and were sold to various buyers. Not only that, the job workers who, the appellant M/s. Praveen Kumar Hosiery, claimed to have manufactured the goods for it, categorically stated that they did not do so or the .....

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nder duress is totally untenable particularly when no evidence of duress / coercion is presented. It is seen that the e-mails as well as the evidence of hawala recovered during the investigation further corroborated the mis-declaration of description of goods as well as the value. It needs to be noted that M/s. Praveen Kumar Hosiery or Mr. Magoo did not submit any reply to the Show Cause Notice nor appeared for personal hearing. Thus, the primary adjudicating authority did not have any arguments .....

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ablish and sustain the allegation contained in Show Cause Notice on the principle of preponderance of probability if not on the principle of beyond reasonable doubt. It is not in dispute that the goods (100% nylon lurex yarn) were not allowed to be imported under advance authorisation issued to the appellant M/s. Praveen Kumar Hosiery by Joint DGFT and further the said advance authorisation required the goods allowed to be imported (namely 100% nylon yarn) to be used in the manufacture of expo .....

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atement on 16.02.2008 that he indented one consignment of nylon lurex yarn for M/s. Praveen Kumar Hosiery of 100% on the request of Mr. Praveen Kumar advised the supplier to misdeclare 100% nylon lurex yarn as 100% nylon yarn and also to undervalue the same. It is thus clear that Shri Dharampal Agarwal is clearly covered in the scope of Section 112(a) of the Customs Act, 1962 for inviting penalty thereunder. We find that having regard to the nature and magnitude of the offence and in view of the .....

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ed that (i) acceptance of enhanced value does not preclude it from challenging the same by way of appeal. (ii) The duty on the enhanced value was paid under protest. (iii) The evidence of contemporaneous imports as reflected in the NIDB data cannot be the criteria for enhancing the value is the NIDB data does not have a column for declared price. (iv) DRI alert was based on investigations which did not concern the appellant. Further DRI alert itself stated that it was a guideline. (v) The assess .....

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s. CC, Cochin 2004 (163) ENT 289 (SC) and Rabindra Chandra Paul CC (Prev.), Shillong [2007 - TIOL - 28 - SC - Customs]. 7. Per contra Ld. Department representative contended that (i) Rule 12 of the Customs Valuation Rules, 2007 provides for rejection of transaction value in case of reason to doubt the truth or accuracy of value declared and that there was sufficient ground in the present case to reject the transaction value under the shed rule. He relied upon the judgement in the cases of CC, Ca .....

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ert Notes dated 09.05.2011 but also on the basis of NIDB data with respect to similar goods imported during the contemporaneous period and therefore the enhancement of value was sustainable. 8. We have considered the contentions of both sides. The appellant is a regular importer of the impugned goods and in respect of imports of the impugned goods during the months of January and February, 2012, it declared the value which were less than the values declared in the Bills of Entry subject matter o .....

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it clearly stated that the declared values are liable to be rejected under Rule 12 of the Customs Valuation Rules, 2007 and relying on the recent past imports of the appellant itself assessed the value at US$ 2.80/KG, the Commissioner (Appeals) in a detailed order upheld the primary adjudication order. 10. The appellant has laid considerable stress on the point that there was no ground to reject the transaction value declared by the appellant.. We find that Section 14 (1) ibid clearly states th .....

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alue declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule (1) of rule 3. (2) At .....

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s totally reasonable to doubt the transaction value. Indeed the Ld. advocate for the appellant during the arguments conceded that there existed reasonable doubt to reject the transaction value but he questioned the enhancement of value saying that there was no legal basis for doing so. Thus none of the judgements cited by the appellant come to its rescue in as much as rejection of the transaction value was clearly within the competence of the primary adjudicating authority. 12. Having thus justi .....

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upon for valuing loudspeakers. In the present case also DRI alert was issued based upon a thorough analysis including concrete evidence recovered during investigations conducted against various importers. Not only that in the case of appellant itself the imports made during the months of January and February, 2012 were assessed at US$ 2.80/KG and that too with the consent of the appellant. We find that in the present case, the appellant gave it in writing that although it did not agree with the .....

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-IV (supra) it was held that guidelines for valuation of ball bearing issued by the mission of Customs Mumbai take into account average cost of material, wastage, manufacturing cost and other charges after extensive studies with cooperation/involvement of other digital authorities, prices observed in trade as well as other sources had legal bearing on assessment of ball bearings . The judgement of CESTAT in the case of Balaji International/Artex textiles (the appellant) No.C/A/52570 - 52612/2014 .....

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proceeded on the facts that the adjudicating authority has assessed the value without assigning any reason and that there was no basis to form a view to reject the transaction value and the authority did not pass a speaking order. None of these inadequacies exist in the present appeal. In the present appeal, sufficient ground exists for rejecting the transaction value as discussed earlier, and a speaking order has been passed for enhancing the value. The primary adjudication order is not a detai .....

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fication consented by the assessee, assessee was not debarred from seeking refund . This judgement did not in any way mean that the refund shall be necessary granted only because assessee questioned the classification earlier agreed to buy it. in the case of Eicher Tractors Ltd. and South India Television (supra) the Supreme Court clearly held that valuation has to be determined in accordance with the customs valuation rules. This legal position is well settled. In the present the appellant volu .....

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pugned orders are absurd or arbitrary. This issue is deliberately discussed in CESTAT judgements in the case of Grand Metal Industries (supra) and DJP International Vs. CC, New Delhi [Final Order No. 52361/2015 dated 01.07.2015], wherein the implication for consenting for enhancement of value and of foregoing the requirement of a show cause noticeably personal hearing have been discussed. The other case laws cited by the appellant adversely impinge upon the reasoning above. It is worth noting th .....

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