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2016 (3) TMI 294 - CESTAT CHENNAI

2016 (3) TMI 294 - CESTAT CHENNAI - 2016 (338) E.L.T. 123 (Tri. - Chennai) - Classification - Amezcua Chi Pendant - Whether goods imported is classifiable under Chapter Heading 71179090 as Imitation Jewellery or under Chapter Heading 70189090 as Articles of Glass - Held that:- the imported goods is a circular glass piece fitted with stainless steel bezel. It is an advanced mineral-based round glass made from high temperature "Nano-Engineered Glass" and it has positive energy field. By wearing th .....

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tation Jewellery/Articles of Jewellery and differential duty of demanded on account of change of classification and rate of duty is upheld. - Valuation - Rejection of transaction value declared and enhanced the same - Redetermination under Rule 9 of CVR, 2007 - Held that:- the imported goods is specialized articles of glass and cannot be compared with high value imported watches. The Product Launch Proposal Form (PLPF) of watches of the supplier is only intended for how the pricing should be .....

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ment of value under Rule 9 of CVR and the L.A has loaded the price by adopting the PLPF cost sheets of Quranos watches and La Retrograde watches. Therefore, declared value is accepted as transaction value and should not be enhanced under Rule 9 ibid. Also demand of differential duty on enhanced value is set aside. - Confiscation - Misclassification of goods - Redemption fine - Held that:- imported goods required to be confiscated to the extent of misclassification of goods. Redemption fine t .....

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r of appellant - Appeal Nos. C/41801/2014, C/41802/2014 - Final Order No. 40432-40433/2016 - Dated:- 9-3-2016 - Shri R. Periasami, Technical Member And Shri P.K. Choudhary, Judicial Member For the Appellant : Shri B.G.Chidananda URS, Advocate , Shri S. Venugopal, Advocate For the Respondent : Shri B. Balamurugan, AC (AR) ORDER Per P. K. Choudhary The present two appeals are arising out of OIO dt. 25.4.2014 passed by Commissioner of Customs (Seaport-Import), Chennai. 2. The brief facts of the cas .....

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tion, as well as undervaluation, the Bill of Entry was taken up for re-assessment before clearance. Detailed investigations were conducted by SIIB of Customs. The goods were examined, mahazars were drawn. On examination, the goods were found to be only 'glass pendant' having markings 'Made in Germany', thereby showing the country of origin as Germany, whereas the goods imported and declared by the appellant were that of Malaysian origin. On further examination and as per the prod .....

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However, appellants have not availed provisional release of the goods. After completing the investigation, show cause notice dt. 14.11.2015 was issued. Para-14 of the SCN is reproduced as under :- "14) a) In view of the above, the importer, M/s. Transview Enterprise India Ltd., New Delhi, with their branch office at Bangalore, is hereby called upon to show cause within 15 days of receipt of this notice, to the Commissioner of Customs (Seaport-Import), at Custom House, Chennai-1, as to why: .....

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ted and should not be considered as Germany. iii) M/s Transview Enterprise India Pvt Ltd, the importer, M/s QNET Ltd., HK, supplier and M/s Vihaan Direct Selling India Pvt Ltd., the sub-franchisee, should not be treated to be related as provided under rule 2(2) of the Customs Valuation (Determination of value Imported Goods) Rules 2007, and why it should not be treated that such existence of relationship was suppressed by the importer while filing the Bill of entry 8746111 dated 12/12/2012 for c .....

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he value of the imported goods namely Amezcua chi Pendant 1 should not be re-determined at ₹ 15,42,86,221/- under Rule 9(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as discussed above for the purposes of assessment of the goods to duty under Section 17 read with section 14 of the Customs Act, 1962 and why the differential duty of ₹ 31,28,253/- already paid by the importer on account of classificationvide TR6 Challan No. MCM 0102834 dated 24/01/2 .....

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elationship and misdeclaration of true transaction value for the purposes of assessment of the imported goods under section 14 read with section 17 of the Customs Act, 1962. vii) Penalty should not be imposed on M/sTransview Enterprise India Pvt.Ltd., M/s Vihaan Direct Selling India Pvt Ltd., Bangalore, under section I12(a) read with section 114AA of the Customs Act,1962, for rendering the goods liable for confiscation. viii) Penalty should not be imposed on Mr. Suresh Thimiri, the CEO, Director .....

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12/12/2012. b) The noticees are also directed to state whether they desire to be heard in person. Incase no reply is received in response to this Show Cause Notice or the noticee does not appear for personal hearing on the date and time mentioned above, it will be inferred as if they have nothing to state and the case will be decided ex-parte based on available facts and evidences on record." 3. The Commissioner in his impugned order dt. 25.4.2014 rejected the classification and re-classif .....

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ds under Section 111 (m) of the Customs Act. However, he gave an option to redeem the goods on payment of fine of ₹ 60 lakhs. He imposed penalty of ₹ 30 lakhs on viz. Shri Suresh Thimiri, CEO and Director under Section 112 (a) and imposed penalty of ₹ 30 lakhs on Shri Suresh Thimiri, Director under Section 114AA of the Customs Act. and also appropriated the amount of ₹ 31,28,253/- voluntarily paid by appellant towards customs duty. Hence the present appeals. 4. The learne .....

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endant and also filed the product literature. He submits that the goods are originally supplied by a company in Germany. 4.1. On the classification issue, he submits that Artificial Jewellery is rightly classifiable under Chapter 71 and the product is ready to wear artificial jewellery. He drew our attention to Chapter Note 9 and Chapter Note 11 of Chapter 71 annexed at page 62 in the additional typed set. He explained the product with literature that "Amezcua Chi Pendant" is an advanc .....

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ewellery" under Heading 71179090. He further submits that the goods cannot be classified under Chapter 70. He drew our attention to Chapter Note 1 (b) of Chapter 70 where this chapter 70 does not cover Articles of Chapter 71 viz. "Imitation jewellery" and submits that chapter heading 7018 covers only "Glass beads, imitation pearls, imitation precious or semi-precious stones and similar glass smallwares, and articles thereof other than imitation jewellery, glass eyes other tha .....

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Hongkong and submits that appellant is a subsidiary of M/s.Transview, Singapore which holds 99% of shares in the appellant company before the adjudicating authority. He further submits that they replied to SCN all the documents which revealed transaction value and requested for special valuation whereas same has not been considered, instead the goods were seized and the counsel submits that once the adjudicating authority holds that both appellant and the supplier are related persons, he has no .....

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saction value. The payments made to overseas supplier was related to royalty on import of these pendants, maintenance of software and other administrative expenses and also payments were made for not only this item imported but also other 20 items. He submits that as per the agreement they imported more than 20 items. Therefore, whatever payments made to the supplier does not exclusively relate to the present import and it is not a condition of sale. 4.3 Regarding undervaluation, he submits that .....

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India only in 2012 and hence no PLPF was created for the same as PLPF is created during the launch of a new product. PLPF only indicates how the price is to be adopted after importation in India, till it reaches the customer and he relied page 365 wherein copy of PLPF for "Quaranos watch" is available and explained that the product watch is sold on the retail price and the commission has been worked out taking into account of the landed cost. He further submits that even by taking not .....

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product is a pendant having special properties it has been sold through various multi-level chains through independent representatives. Therefore, transaction is at arm's length; sales commission is involved, therefore, retail selling price has been worked for ₹ 8522/-. He further submits that for determining the assessable value of imported goods, retail sale price was not correctly applied and submits that based on the PLPF of Quranos watches, the value has been enhanced from declar .....

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ot acceptable which is not in conformity with Valuation Rules. 4.4. The adjudicating authority has not discussed while rejecting the transaction value as to how value has been arrived at and not given any findings for the rejection of declared price and invoked Rule 9 of CVR without any comparable price. He submits that department failed to provide comparison of actual value by any method as per CVR while rejecting the value and failed to show how addition has been made. 4.5 Regarding allegation .....

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en worked out and no unintended benefit was availed by the appellant by misdeclaring the country of origin. Since SCN and adjudication order price has been enhanced based on the watches, enhancement of value is not sustainable. He relied on the following citations :- (1) Eicher Tractors Ltd. Vs CC Mumbai 2000 (122) ELT 321 (SC) (2) CC Vs Ferodo India Pvt. Ltd. 2008 (224) ELT 23 (SC) (3) CC New Delhi Vs Polyglass Acrylic Mfg. Co. Ltd. 2014 (301) ELT 545 (Tri.-Del.) He submits that Tribunal cannot .....

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onwards of the OIO and on valuation, he referred to para34.3 and also the worksheet annexed to the SCN. He submits that appellant imported the same product cleared to Air Cargo Customs as Pharmaceutical product classifiable under 38220090. He submits that as per the copies of agreement, the supplier and the importer is related. Therefore, the invoice price is not the normal transaction value. He further submits that Bill of Entry was filed along with declaration. They have not only misdeclared t .....

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her relevant documents. The issue before us for consideration is whether the goods Amezcua Chi Pendant" imported from M/s.QNET Ltd., Hong Kong is classifiable under Chapter Heading 71179090 as Imitation Jewellery as claimed by the appellant or classifiable under Chapter Heading 70189090 as Articles of Glass as assessed by Revenue and whether rejection of transaction value and enhancing the same is correct or otherwise and whether confiscation of goods, demand and fine and penalty is sustain .....

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duty. Since the appellant has not availed the provisional release of the goods, the Customs (SIIB) completed the investigation and issued show cause notice and the same was adjudicated. The entire dispute relates to live Bill of Entry No.8746111 dt.12.12.2012 and the goods are still lying in Customs custody. 8. We now propose to discuss the classification issue of the imported goods. Appellants contended that the imported goods are rightly classifiable under Chapter 71 as 'artificial jewell .....

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rsonal use of a kind normally carried in the pocket, in the handbag or on the person (for example, cigar or cigarette cases, snuff boxes, cachou or pill boxes, powder boxes, chain purses or prayer beads). These articles maybe combined or set for example, with natural or cultured pearls, precious or semi-precious stones synthetic or reconstructed precious or semi-precious stones, tortoise shell, mother-of-pearl, ivory, natural or reconstituted amber, jet or coral. ... ... ... 11. For the purposes .....

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n from the above definition, as per Note 11, the definition of Imitation jewellery means Articles of Jewellery as defined in Note 9(a), but it does not include buttons, or other articles of Heading 9606, or dress-combs, hair slides, hair pins etc. As already discussed in the brief facts, the imported goods is a circular glass piece fitted with stainless steel bezel. From the literature and the original catalogue produced, we find, it is an advanced mineral-based round glass made from high temper .....

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for enhancing beauty. Whereas it is evident that it is not made for regular use as jewellery. Merely the glass is fitted with a metal frame cannot qualify as an imitation jewellery to be classifiable under Chapter 71. Further, we find that the primary function of the imported goods is not as artificial jewellery but sold to only through multi-level marketing on one-to-one basis. From the above facts, it is established that the 'Chi Pendant' is not an artificial jewellery worn by any per .....

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in the preceding paragraph regarding classification, that the goods are not imitation jewellery, therefore, it is not hit by Chapter 1(b) of Chapter 70. Therefore, we find that the goods are covered under appropriate heading 7018 as other articles of glass other than prosthetic articles. Accordingly, we hold that the goods are rightly classifiable under 70189090 of CTH and chargeable to appropriate duty and the adjudicating authority classifying the goods viz. Amezcua Chi Pendant under Chapter H .....

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dt. 2.4.2012 (iii) Customer Support Service Agreement dt. 12.4.2012 (iv) Sponsorship Rights Agreement dt. 8.10.2012 (v) Trade Mark Sub-Licence Agreement dt.12.4.2014 with Quest IyonPte. Ltd., Singapore. In view of the franchisee agreement, the appellants have to pay royalty which is fixed as the percentage of the sales turnover of the franchisee i.e. appellant. We find that the adjudicating authority having held that the parties are related persons but not proposed for loading of any royalty on .....

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e appellants and sold in the retail market. By taking the value of watches as per PLPF cost sheet the adjudicating authority rejected the declared value of US$ 79.61/per price and enhanced to US$ 274.61/per piece. Whereas we find that the item imported in the present consignment is Amezcua Chi Pendant made of glass and the retail sale price of the watches cannot be compared in the imported goods. Further, the PLPF cost sheet of Quranos watches only relates to post-importation and retail sales th .....

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of watches of the supplier is only intended for how the pricing should be done in the subsequent retail sale through multi-level marketing pattern. In the absence of PLPF for Amezcua Chi Pendant , the PLPF of Quranos watches and Retrograde watches cannot be adopted for determining the value under Rule 9. In this regard, we rely on the decision of Hon ble Supreme Court in Eicher Tractors Vs CC (supra) and in the case of CC Vs Ferodo India Pvt. Ltd. (supra) wherein the Hon ble Apex Court in the a .....

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nts. 25. Rule 4(3)(b) of the CVR, 1988 provides for an opportunity for the importer to demonstrate that the transaction value closely approximates to a test value. A number of factors, therefore, have to be taken into consideration in determining whether one value closely approximates to another value. These factors include the nature of the imported goods, the nature of the industry itself, the difference in values etc. As stated above, Rule 4(3)(a) and Rule 4(3)(b) of the CVR, 1988 provides fo .....

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nhanced royalty or if the Department finds that the buyer had misled the Department by such pricing adjustments then the adjudicating authority would be justified in adding the royalty/licence fees payment to the price of the imported goods. Therefore, it cannot be said that the Consideration Clause in TAA is not relevant. Ultimately, the test of close approximation of values require all circumstances to be taken into account. It is keeping in mind the Consideration Clause along with other surro .....

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ut the enhancement of value under Rule 9 of CVR and the L.A has loaded the price by adopting the PLPF cost sheets of Quranos watches and La Retrograde watches. We hold that the L.A order rejecting declared value and enhancing the value by taking the price of "Quranos" and Retrograde Watches is without any basis and not supported by the principles of valuation under CVR and not sustainable. Accordingly, we hold that the declared value is accepted as transaction value for the purpose of .....

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