9911796707
TMI Blog2017 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ical Literature and Original or Bank attested import documents. 2. On inspection, while examining documents accompanying the Bills of Entry, Customs noticed apparent misdeclaration in invoicing. 3.1 On further investigation, leading to recovery of incriminating documents, the following emerged : (i) Examination of goods covered by Bill of Entry No.550460 dated 05.11.2003, revealed that description of goods was not stated on the Flexitanks but the seal numbers only appeared thereon was declared in the Packing List. (ii) The Invoice and Packing List were obtained from different parties and the Invoice amount appearing on the Packing List differed with that in Bill of Entry. The Invoice and Packing List pertained to the same Bill of Lading. (iii) Scrutiny of documents recovered during the course of investigation revealed that the goods covered by Bill of Entry No.550460 dated 05.11.2003 were sold by M/s. KALMART SYSTEMS (M) SDN BHD, Malaysia to M/s. Aavanti Industries Pte. Ltd., Singapore at a price of USD 40,238.93 FOB for export to India. (iv) The invoice value mentioned in the Packing List was found to be USD 40,238.93 as against USD 30,470.23 (C&F) declared in the Bill o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.550460 dt. 05.11.2003, determination of unit price of goods at US$ 397.50 PMT (FOB), total assessable value of goods at Rs. 19,21,664/-, and corresponding duty liability at Rs. 9,76,206/- (ii) rejection of value of declared in Bill of Entry No.551112 dt. 07.11.2003, determination of unit price of goods at US$ 385 PMT (FOB), total assessable value of goods at Rs. 20,04,593/- and corresponding duty liability at Rs. 10,18,333/-. (iii) confiscation of the goods contained in both the Bills of Entry under Section 111 (m) of the Customs Act,1962 (iv) imposition of penalties on KSDL and General Foods Ltd. (now Ruchi Soya) under Section 112 (a) ibid. 5.1 Upon due process of adjudication, the original authority vide order dt. 30.09.2004 (Impugned Order) confirmed the aforesaid proposals. 5.2 The consequence of adjudication in respect of Bill of Entry No.550460 dated 05.11.2003 resulted as under: (a) Declared value was rejected and the unit price of the goods covered therein was determined at USD 397.50 PMT (FOB) under Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The total assessable value of the goods covered by that B/E was determined at Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chain of documents, such as Original Invoice, High Sea Sales Contract, details of service charges/commission paid, etc. to establish a link between the first international transfer of goods to the last transaction and in case of doubt regarding the truth or accuracy of the declared value, the Department may reject the declared transaction value. Thus, the said circular of the Board requires acceptance of the High Sea Sales as the transaction price subject to the condition that the same is found to be true and accurate. As discussed above, on examining in the light of the entire chain of documents including the original invoice as directed by the CBEC in the said circular, the declared price was found much lower than the actual price paid/payable for the goods sold for export to India, having no nexus or proximity with the original invoice price and such gross reduction for reasons other market fluctuations or other commercial considerations was not permissible in terms of Rule 4 (2) of Customs Valuation Rules. Accordingly, the declared price was found to be not acceptable as transaction value in terms of Rule 4 (2) ibid as discussed above and in the alternative, the price actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importation of the goods into India is concerned, there is only one set of invoices raised by the foreign supplier based at Singapore viz., Aavanti Industries Pte. Ltd. As per those invoices raised on General Foods Ltd., Chennai the goods are supplied at unit price of US$ 301/- PMT C&F. It is totally a different matter that the Singapore supplier viz. Aavanti Industries Pte Ltd. purchased these goods from two manufacturers based at Malaysia at a higher price i.e. US$ 397.50 PMT FOB (in respect of 101.230 MTs) and US$ 385.00 PMT FOB (in respect of 108.780 MTs). (b) As far as importation into India is concerned, the transaction is covered by the invoices raised by Aavanti Industries Pte. Ltd., Singapore on the Indian importer viz. General Foods Limited, Chennai (now Ruchi Soya) and the subsequent high seas sales invoice raised by General Foods Limited on the appellants. This transaction is covered by a firm contract entered into during June 2003 and based on such contract, the sale has been made by General Foods Ltd., Chennai on high seas sales basis to KSDL. (c) Hence, at what price the Singapore supplier of the goods has procured the material becomes totally irrelevant to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Malaysian manufacturers for supply of the material to him at Singapore can be treated as the price for the goods sold for export to India. 7. On the other hand, Shri K. Veerabhadra Reddy (JC), Ld. A.R for the Revenue supported the adjudication. 8. Heard both sides and have gone through the submissions made by them as well as facts on record. 9. The issue that therefore comes up for decision is the price of the goods that should be adopted for determining assessable value, namely, the prices at which the Singapore supplier procured the goods or otherwise the price at which the said supplier invoiced the goods to the high seas buyer. 10. Appellant has vociferously contended that they had entered into firm contract in June 2003 with General Foods (now Ruchi Soya); that the sale has been made by the latter on high seas basis to KSDL; hence at what price Singapore buyer-supplier of the goods has procured the material becomes totally irrelevant to the present transaction, since it is purely a transaction between Malayasian manufacturer and Singapore supplier. 11. To examine the defence plea of the appellants, various details concerning invoice, accompanying documents submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or supply of 750 MTs +/- 5 MTs of Palm Kernel Fatty Acid Distillate. 12. In respect of goods imported vide Bill of Entry No.550460 dt. 05-11-2003, the invoice that has been submitted is SO1/70/045445 dt. 17-10-2003 of M/s.Aavanti Industries, Singapore. The invoice value is shown as USD 301.00 PMT and US$ 30470.23 (C&F) for 101.23 MTs of Palm Kernel Fatty Acid Distillate. However, in the accompanying Bill of Lading dt. 10-10-2003, the shipper has been mentioned as M/s.Kalmart Systems, Malaysia. Even more curiously, the Certificate of Origin dt. 17-10-2003 submitted along with said Bill of Entry certifies the exporter as M/s.Kalmart Systems, Malaysia and party to be notified as M/s.General Foods Ltd., Chennai. The Bill of Lading number indicated therein is the same as that submitted by the appellant at the time of import. Most interestingly, invoice that is certified therein is not the invoice No.SO1/70/045445 dt. 17-10-2003 of M/s.Aavanti Industries, Singapore which was submitted along with Bill of Entry, but the Invoice No.KSS019903/370 dt. 10-10-2003 of Kalmart Systems, Malaysia for 101.230 MTs of Palm Kernel Fatty Acid Distillate. From the record, it emerges that this invoice ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng them in piecemeal to various buyers like the appellant at contracted prices. 14.2 On the other hand, what is seen is that exact quantity of impugned goods invoiced by Aavanti Industries, Singapore to General Foods Ltd., Chennai viz. 101.230 MTs pertaining to B/E 550640 dated 05-11-2003 and 108.780 MTs pertaining to B/E No.551112 dt. 07-11-2003, both filed by KSDL have been directly consigned and shipped directly from Port Klang, Malaysia to Chennai, by Kalmart Systems, Malaysia and Mamba SDN BHD, Malaysia respectively, in the same packing and containers indicated in the 'invoices' of Aavanti, Singapore instead of General Foods, Chennai. 14.3 It does not appeal to reason, then, as to why the identical goods, sold Free on Board (FOB) at Port Klang, Malaysia at USD 397.50 PMT and USD 385.00 PMT, as is evident from the respective invoices of Kalmart Systems, Malaysia and Mamba SDN BHD, Malaysia, then re-invoiced by Aavanti, Singapore, find their PMT cost plummeting downwards by around 24.2% and 21.8% respectively to 301 USD PMT, in spite of the Terms of Shipment now being shown as Cost & Freight and hence freight forming an additional cost component. 14.4 It is therefore ..... 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