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2018 (12) TMI 173

al trade are traded with reference to their length, width and thickness. The weight of such plates is never the basis or criteria for trading in such goods. The weight of such steel plates is never determined by actually weighing them on a weigh scale but is always computed with reference to a scientifically approved universal formula which is 7.85kg/dm3. - Held that:- The demand for the differential duty is not sustainable both on facts and as well as in law. It is not in dispute that the transaction value as determined in terms of Section 14 of the Act, is required to be taken as the basis for computing the assessable value on which the duty is to be assessed. It is nobody’s case that the importer has paid anything over and above the declared value for the goods in question. It is also nobody’s case that any of the exceptions provided for in proviso to Rule 3(2) of the Customs Valuation (Determination of Value of Imported goods) Rules, 2007 are attracted to the facts of the instant case, thereby warranting rejection of the transaction value. - It is settled law laid down by the Hon’ble Apex Court in the case of Eicher Tractors Ltd vs Commissioner of Customs [2000 (11) TMI .....

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ht was arrived at by first arriving at the tare weight of the truck trailer and thereafter arriving at the weight of the truck trailer with the steel plates loaded on it. - Further, the allegation of suppression arrived at by the Respondent, on the premise that the difference between the declared and the actual weight being more than 1% would not have come to the notice had physical weighment had not been done, is completely untenable. - Appeal allowed - decided in favor of appellant. - Appeal No. C/12056/2015-DB - A/12700/2018 - 3-12-2018 - Mr. Ramesh Nair, Member (Judicial) And Mr. Raju, Member (Technical) Shri Vipin Jain, Ms. Dimple Gohil & Ms. Manya Bhardwaj, Advocates for the Appellant Shri Jeetesh Nagori, Additional Commissioner (AR) for the Respondent ORDER Per: Ramesh Nair This appeal is directed against order-in-original dated 29.10.2015 passed by the Principal Commissioner, Customs Mundra, wherein the following order was passed:- (i) I order confiscation of 2605.480 (2281.112+324.368) MTs of HR Steel Plates valued at Rs.Rs.13,80,54,382/- (122999765/- + 1,50,54,617/-) under Section 111(d)(j)(l)(m) and (o) of the Customs Act, 1962 read with Section 120 of the C .....

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done at weigh bridge No. 8 of the CFS CG-7. The CBI officers drawn a Panchanama detailing therein as to the goods found in excess than the goods declared in the relevant Bills of Entry and shown by the port personnel in the documents given by them to the transporters. The CBI officers handed over the said intercepted goods to the custodian of CFS CG-7. The appellant vide their letter dated 21.03.2013 and 22.03.2013 requested the CBI, Gandhinagar and concerned officers for delivery of the imported goods to carry out their production of Steel Pipes. Consequently, the importers submitted an undertaking dated 23.06.2013 that the entire cargo arrived in the captioned vessels shall be weighed by the custodian during the delivery and in case while taking delivery, if the weight is found to be in excess the same shall be debited in Advance License. Subsequently, on furnishing an undertaking by the appellant, the goods after weighment were cleared on provisional basis. On the weighment of the goods, it was found that the goods physically imported were not found in excess as compared to the weight declared in the respective bills of entry. Therefore, the excess cargo was provisionally cleare .....

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tes which were supplied to the appellant were in excess of what had been requisitioned for or paid for or that the length, width or thickness of the plates was different from what had been declared in the Bills of Entry. The Appellant submits that it is also nobody s case that the weight declared by it was different from what had been declared by the suppliers or that the weight declared was not by applying the scientifically approved formula, which is applied universally while trading in the steel plates. Therefore, no adverse inference could have been drawn against the appellant on the premise that on physical weighment, the weight of the plates was found to be different from what had been declared based on the supplier s documents even though all other parameters such as length, width or thickness, number of pieces as also the weight based on the universally approved formula as declared in the supplier s documents, were found to be correct and unexceptionable. He submits that it is not in dispute that world over as also in India, the standards which have been laid down in respect of steel plates envisage that the mass of the steel plates shall be expressed with reference to the .....

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of plates is to be computed by applying a scientific formula and the said standard does not refer to physical weighment as a basis for computing the mass/weight of steel plates. He submits that the Adjudicating Authority has erred in overlooking the certificates furnished by the traders/ manufacturers who are of world repute, wherein they had certified that the steel plates are traded with reference to their theoretical weight. 4.2 Without prejudice to the above submissions, ld. Counsel further submits that in the purchase orders placed on its suppliers for the supply of steel plates provided for a tolerance of at least -0/+2% with respect to the quantity, which was expressed with reference to the number of plates as also the weight arrived at on the basis of the scientific formula. In some other purchase orders, the tolerance prescribed was with respect to the thickness, width and length of the plates being ordered. He submits that the Adjudicating Authority, without taking note of the fact that the purchase orders themselves contemplated of positive tolerance in the weight by up to 2% and did not provide for a negative tolerance and consequently no adverse inference could have b .....

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try which is common for the goods removed against several hundred trucks- trailers was distributed for the purpose of comparison amongst the various truck trailers, under cover of which the material was moved out of the port. He submits that in the absence of evidence regarding the authenticity and genuineness on the basis of which the so called physical weight of the steel plates had been computed, no adverse inference can be drawn against the appellant. He submits that the Adjudicating Authority has also not examined and/or ruled out the aspect of there being a human error and/or a calibration error while computing the gross weight of the truck trailer tare weight of the truck and comparing it with the weight declared in the Bills of Entry. He further submits that the Adjudicating Authority has erred in holding that while taking delivery of the goods from the custodian, the appellant had not disputed the manner in which the weighment was undertaken. This finding in the impugned order clearly shows that the Adjudicating Authority has failed to discharge his obligation. The Adjudicating Authority was required to examine whether there was any infirmity in the procedure of weighment .....

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nt did not get altered as a consequence of the alleged excess quantity having been shipped. He further submits that the entire impugned order has been passed with reference to the instructions contained in Public Notice No. 17/2010 dated 29.06.2010 issued by the Commissioner of Customs, Kandla. He submits that even if the said circular was to be applied, admittedly even then as per the said circular, if there was a deviation noted from the declared weight, the deviation is required to be debited in the license, is available. In the instant case, the appellant has been from the time when the investigation was being conducted, right till its reply to the notice as also in the course of personal hearing, has submitted over and over again that if there is any difference in weight, the same may be debited in the license and it has produced the license for this purpose. The Adjudicating Authority has however ignored the same for the reasons best known to him. He submits that the Notification No. 96/2009 dated 11.09.2009, in terms of which the advance licenses have been issued provide for exemption from the levy of customs duty subject to the condition that: (i) the authorization is produ .....

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goods which was not imported into India. However, on imports in excess of what had been declared, the transaction value was not required to be altered even if there was a slight variation as a consequence of which a higher quantity was imported as the transaction value did not change in respect of the said imports. He further submits that the demand of duty is wholly illegal inasmuch as there is no change in the transaction value of the goods, and regardless of the weight of the consignment, the actual price paid for the goods is the same and since the duty is chargeable on ad-valorem basis, with no change in the invoice price or the transaction value, the question of differential duty, does not arise at all. 4.5 As regard limitation, ld. Counsel submits that the Adjudicating Authority has erred in invoking the extended period for demanding duty as he has failed to appreciate that weight declared by it on the import documents was what had been declared by the supplier who were manufacturer/ traders of international repute. The Adjudicating Authority has overlooked the fact that for the extended period to be invoked there had to be deliberate suppression, misstatement with an inten .....

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excess weight to the tune of 2605.480 metric tonnes, in respect of the HR Plates imported by the Appellant; (ii) whether the alleged undeclared excess quantity of HR plates was liable to confiscation under Section 111(d),(j),(l),(m),(n),(o) of the Customs Act; and the Appellant are liable to consequent penalties. 7. We are of the view that the demand for the differential duty is not sustainable both on facts and as well as in law. It is not in dispute that the transaction value as determined in terms of Section 14 of the Act, is required to be taken as the basis for computing the assessable value on which the duty is to be assessed. It is nobody s case that the importer has paid anything over and above the declared value for the goods in question. It is also nobody s case that any of the exceptions provided for in proviso to Rule 3(2) of the Customs Valuation (Determination of Value of Imported goods) Rules, 2007 are attracted to the facts of the instant case, thereby warranting rejection of the transaction value. 8. It is settled law laid down by the Hon ble Apex Court in the case of Eicher Tractors Ltd vs Commissioner of Customs reported in 122 ELT (321) that it is only when the .....

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er, is required to be adjusted in accordance with the provisions of Rule 10. The transaction value post its adjustment in terms of Rule 10 is required to be accepted as stipulated in Rule 3(2) subject to the exceptions provided for therein. It is nobody s case that price is not the sole consideration or that any of the exception provided for in the proviso to Rule 3(2) are attracted, this being the case there is no basis for enhancing the value on an arbitrary basis without reference to the statutory provision of Section 14 and the provisions of the Valuation Rules, 2007. 9. In the instant case, we find that the adjudicating authority has not come to a conclusion that the transaction value as adjusted in accordance with the provisions of Rule 10, was incorrect or mis-declared and was required to be rejected and the assessable value re-computed under the valuation rules. The adjudicating authority has in a completely ad-hoc and arbitrary manner, without any reference to any provisions of the law and as also without following the provisions of the Valuation Rules, which lay down a codified manner of re-computing the value, arrived at an assessable value which has no legal basis or sa .....

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ll be loaded with adjudication with appropriate redemption fine and penalty. 9.2. It appears from the said Public Notices that the weight variation upto 1% is to be accepted and ignored irrespective of the nature and type of the commodity. We are unable to persuade ourselves to accept this proposition. In our view there cannot be a thumb rule in such cases. The extent of permissible variation between the declared and actual weight has to be with reference to the type of commodity qua which the said difference is being evaluated. For eg: a commodity like diamond, it would be impermissible to accept and ignore 1% difference between the declared and the actual weight. However for a commodity like HR steel plates, which is an over dimensional cargo having a length of approximately 12.5 metres and width of 3 to 4 metres and a surface area of above approximately 50 sq. metres, it is completely unreasonable and illogical to apply 1% as the acceptable difference between the declared and the actual weight. In coming to this conclusion we are guided by the Indian Standard specification 1852:1985 which provides the specification for rolling and cutting tolerance for hot rolled steel products. .....

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ntity arrived at on a physical weighment basis, is 2605.480 metric tonnes. In percentage terms the difference works out to 3.57 % over the declared weight which is well within the prescribed standard variation of + 5% / - 2.5% envisaged in the Indian Standard specifications. 10. In our view, undisputedly, when steel plates are globally traded based on their theoretical weight as has been contended by the appellant, which also appears to be the position as is evident from the Indian Standard specification as also the Japanese Standard specification, we feel that the weight tolerance envisaged in the trade notice referred to by the Respondent in the impugned order qua such steel plates has to be taken at + 5% / -2.5% and not at 1% as has been adopted by the Respondent. It is only in a case where the difference between the declared weight and the actual weight exceeds the tolerance limits prescribed in the Indian Standards specification can the matter be taken up for adjudication for examining whether any fine is leviable or penalty is imposable. 11. In the facts of the present case it is not in dispute that the difference between the theoretical weight that has been declared on the b .....

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