TMI Blog2019 (3) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... en raised against such importers. The case of the Appellant is squarely covered by the Tribunal’s order in case of Vijay Leather Stores [2007 (2) TMI 498 - CESTAT, BANGALORE] as the same and similar goods were also imported on same price and the allegation of undervaluation thus would not sustain. The records of contemporaneous imports and the data have not been considered by the adjudicating authority and in such cases, we find that there is no case of demand against the Appellant. The goods at the time of importation were physically examined by Customs authorities and were found as per the declared description. Thus, in absence of any contrary evidence, the value of rejected grade timber cannot be enhanced on the basis of good quality timber. Reliability on statements - Held that:- The burden to prove under-valuation lies upon the Revenue by bringing credible and cogent evidence, whereas the submissions made by the Appellant clearly shows that in the present case, except third party documents and statements, no evidence has been brought by the Revenue on record - The statements of Shri Avinash Jindal and Shri Rajendra Agarwal and their employee corroborated which was co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etails of packing list of timbers in the name of various parties, both printed and hand-written details of rates at which the materials were to be invoiced. The documents and e-mail correspondence and computerized documents of Shri Rajendra Agarwal and Shri Avinash Jindal show that the Appellant declared lower price whereas the actual price of the goods was much higher. In seized records, name of Beena was reflecting and in one of the files, certain entries of receipt of payments in cash from various parties in relation to timber business was found and the name of the Appellant was also indicated. Shri Avinash Jindal in his statement submitted copy of incoming and outgoing e-mails retrieved from his e-mail ID, which contained details of Timber bought and sold to sellers and buyers showing actual and declared value, amount received and transferred, offers of timber received and sent etc. Based on the data retrieved from the hard disc from Shri Rajendra Agrawal, it was alleged that:- i) Number of container wise packing lists was found with name of several importers including the Appellant to whom the same were destined. These packing lists were mostly of Tanzania and Sudan timbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessable value on the basis of various documents / records as per Section 14 (1) of the Customs Act read with Rules 4, 5 and 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and to demand differential duties of customs for the imports made during the disputed period. Penalties u/s 112/114A of the Act was also proposed. 4. The Appellant contested the show cause notice on the ground that the statements were given under coercion and duress. During cross examination Shri Rajendra Agarwal and Shri Avinash Jindal resiled from their statements and also refused the veracity of the seized documents. The Appellant also pleaded that the case was booked on documents/ records of third parties with no connection with them and there is no corroborative evidence. The Adjudicating authority vide order No. KDL/COMMR/PVRR/122/2016-17 dated 31.01.2017 confirmed demands against the Appellant. Accordingly differential duty of ₹ 2,01,92,213/- was confirmed against the appellant along with equivalent penalty. Penalty was also imposed u/s 112(A) against the Appellant. Penalty was also imposed upon Shri Rajendra Agarwal and Shri Avinash Jindal. Hence the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout looking in to the contents in a single day as he was forced to sign the papers. Shri Vineet Jha never offered himself for cross examination and, thus, his statement cannot be relied upon. The statement of Shri Deepak Maloo, proprietor of the Appellant firm was recorded under duress and coercion and there are no evidence to substantiate the allegations and the findings of the Revenue that the Appellant declared the lower value of the imported goods. Almost all the e-mails relied upon by the Revenue were found from the e-mail IDs of Shri Avinash Jindal and Shri Rajendra Agarwal. Documents retrieved from the e-mail IDs are non- incriminating and no replies were sent by the Appellant in response to the e-mail sent by Shri Avinash Jindal and Shri Rajendra Agarwal. No incriminating documents were found during the course of investigation from the Appellant. E-mails retrieved from the e-mail ID of the Appellant do not show any objectionable contents which leads to the conclusion that the Appellant was in no manner involved in under-valuation of the goods. There are numerous discrepancies in the documents found from Shri Avinash Jindal or Shri Rajendra Agarwal. 5.2. He draws our a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by them. He relies upon the judgment in cases of Truwood Private Limitd Vs Commissioner of Customs 2006 (204) ELT 288, Bureau Veritas Vs CC 2003 (156) ELT 688 (T) as affirmed by the Hon ble Supreme Court in 2005 (181) ELT 3 (SC). 5.5. Ld. Counsel also relies upon the report made by the Forestry and Beekeeping Division of Ministry of Natural Resources Tourism of United Republic of Tanzania, which shows that the sale price of sawn Timber in the same country was (approx.) US$ 130 PMT as against proposed enhancement value of $ 600 to $ 800 PMT. He submits that it is not practically possible to enhance the value more than five times and therefore the finding of the Adjudicating authority for enhancement of value is incorrect and arbitrary. He further submits that more than 33 per cent of the total imports made by the Appellant, was of rejected grade /short length / off-size / off cut size timber. Despite the fact that they have substantially imported rejected grade timber, the impugned show cause notice and the order did not appreciate the facts while enhancing the value of the rejected Timber, as per the value of good quality timber. The goods were examined at the time of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by other importers for importation of identical goods from the same suppliers which shows that importers situated across India has imported the same quality Timber in each of the disputed years, for which demand has been confirmed against the Appellant. The value declared by these importers are more or less at the same price at which the appellant imported the goods and the Revenue has not challenged the valuation of other importers at all nor initiated any investigation against such importers. He submits that since the Revenue has accepted the value of goods imported by other importers, it clearly shows that the price declared by the Appellant has to be accepted. He also draws our attention to the copy of Export Declaration forms along with release orders, which were filed by the exporters in their countries for clearance of goods in India and submits that the valuation of such importers was not challenged. He also submits that the charges of undervaluation or mis-declaring the quantities are also not sustainable as the Customs department physically inspected the contents of the container of the imported goods and it is only after process of examination, the appellant were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Agarwal, related to emails retrieved from their e-mail IDs. Rule-3 of the Customs Valuation Rule provides for valuation of imported goods on the basis of transaction value. The same has to be accepted unless the transaction falls under the exceptions carved out in Rule 3 (iii) of the Customs Valuation Rules. In the present case, the transaction do not fall under any of the exceptions enumerated under Rule 3 (iii) of the said rules and, therefore, the transaction value has to be accepted. 5.11 He relies upon the judgments in the cases of C.C. vs Bureau Veritas 2005) (181) ELT 3 (SC), Eicher Tractors Ltd vs CC 2000 (122) ELT 321 (SC), Peekay Steel Castings Pvt Ltd Vs CC 2016 (340) ELT 389 (Tri, Bang) and C.C. vs South India Television (P) Ltd 2007 (214) ELT 3 (SC). He also relies upon the judgment in the cases of Vijay Leather Stores vs. CCU, Vishakhapatnam 2007 (215) ELT 304 (Tri, Bang), Karan Traders vs. Joint Commissioner, Central Excise- 2016 (339) ELT 249 (Mad), Indo Green Textiles Pvt. Limited vs. CCE 2007 (212) ELT 343, H. Kumar Gadecha Vs. CC 2009 (243) ELT 248, CC Vs. Adani Exports Ltd 1999 (111) ELT 143 (T) maintained by Hon ble Supreme Court in 2004 (167) ELT 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the hard disc stated that he did not know how to operate the computer and he never made any handwritten entries over the documents. With regard to his signing the seized documents, he stated that he had signed the documents without seeing the contents on the insistence of the officers. Shri Avinash Jindal, in his cross examination, stated that he was only a commission agent as well as he is in business of imports, but never prepared import invoices in India on behalf of the suppliers nor negotiated the price with India parties. He also deposed that he seldom sold the goods on high sea sale basis to the Appellant but never maintained the alleged documents stated in the show cause notice. That his statement was kept ready by the investigating authority and he was told to sign the prepared statements. He had signed more than 4,000 pages without looking its contents in a single day. The cross examination of Shri Vineet Jha could not be done as he did not offer for the cross examination. We find that the demand is based upon the documents alleged to have been seized from above persons which are third parties and their statements. However, once these persons have retracted from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter cutting and processing, the average cost of yielded material comes to $ 160 to $ 200 per CBM, thus, enhancing the value by 60%. Considering the ocean freight and other charges and transportation of goods to India, the price would be around $ 300 per CBM. Adding 10% profit margin, the price of the goods would be around $ 330 per CBM whereas, the Appellant imported the same material at $ 350 to $ 400, which is quite normal. Thus, the value enhancement by the adjudicating authority to $ 650 to $ 800 is not practical. 7.3. In case of Bill of Entries of Goods imported from Tanzania, the revenue has not been able to conclusively show that the goods were undervalued by Appellant with help of any independent evidence. The Appellant has brought out various instances to show that even the third party records seized from Rajendra Agarwal and Shri Avinash Jindal are not reliable enough. For instance in case of demand under Annexure D 1, the Revenue has relied upon the documents of Hard disk of Shri Rajendra Aagarwal i.e file found in file path live data /01/Agarwal-Teak 19.01.2010 said to be related to Bill of entry Nos. 137753 dated 25.06.2009 and 141411 dated 16.09.2009. It is all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eak 19.01.2010 and livedata/01/Accounts/Ambrish Bhai does not match. The quality mentioned in file path live data/02/Agarwal-Teak 19.01.2010 is for Ripper quality timber whereas the show cause notice alleged that it is Repla quality. Even though the aforesaid records are in respect of 12 containers but the prices in each document varies. In case of Repla quality of Timber the documents mentioned in contained different prices of the goods, which leads to suspicion about the authenticity of these documents. In case of Bill of Entry No. 145909 dt 30.12.2009, 14760 dt 2.2.10 and 148338 dt 16.2.2010 reliance has been placed upon account statement named A/c Export Trading , which was found from Shri Rajendra Agarwal. On the basis of same, under-valuation has been alleged. We find that the document is of Shri Rajendra Agarwal and it mentions the number of container and quantity and rate of material. The value mentioned in A/c Export Trading is not comparable with the corresponding bill of entry. The Customs authority at the time of importation, after examination of the goods, has enhanced the value from US$ 350 to US$ 422 per CBM. In such case, the enhancement made in the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny independent evidence. No evidence is forthcoming that the value and quantity of goods mentioned in the invoice are final or agreed upon or it was not changed subsequent to sending of the invoice. Even the quantity shown in all the containers are same, which is not possible. Further, the quantity mentioned in the e-mail does not match with the quantity mentioned in the bill of entry. At the time of importation, the goods were re-assessed and the value were enhanced. In case of Bill of Entry No.156846 dated 22.07.2010, the Revenue has compared the same with the accounts statement found in hard disk retrieved from Shri Rajendra Agarwal and in file path livedata / 01/account (Avinash) 26.7.2010. It is alleged that the statement indicates that the Appellant purchased said material from the Ivory Coast for US$ 55400. The packing list sent by Shri Avinash Jindal through e-mail to one Shri Sunil Gupta has also been relied upon. On the basis of container number on the packing list matching with the bill of entry filed by the Appellant, it is alleged that the Appellant under-valued the imports. 7.8. The account statement has been relied upon to show that the value of material of US$ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f pieces, CBM, average rate and amount that has been alleged to be corresponding to the materials imported by the Appellant. On the basis of such e-mails and statement of Shri Deepak Maloo, it was held that the goods were under-valued. We find that the material mentioned in e-mail was not imported by the Appellant. None of the container numbers or any particulars identified in the e-mail corresponds to any of the containers imported by the Appellant under subject bill of entry. The Appellant has denied the statement of Shri Deepak Maloo as having been undertaken under pressure and duress. As per the Appellant, Shri Deepak Maloo was never shown the said documents but was forced to state that he has seen and signed the documents. The relied upon email was never shown to the Appellant. In such view of facts it cannot be concluded that the materials were imported by the Appellant or they were imported at the rates mentioned, hence the demand is incorrect. 7.10. In case of Bill of Entry No. 3420395 dated 5.5.2011 on the basis of invoice located in file path live data/01/DC215/Summary found from the hard disk of Shri Rajendra Agrawal, it is alleged that two containers of Sudan timbe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Avinash Jindal, however, the same has been retracted in cross examination and, thus, cannot be relied upon. 8. In some cases for alleging undervaluation, reliance has been made upon the e-mail between Shri Avinash Jindal and Shri Sunil Gupta on account of Timber allegedly purchased by the Appellant. However we find that the Appellant was not a party to such e-mails. The Appellants were never shown these e-mails during the questioning. The e-mails were private exchange between Shri Avinash Jindal and Shri Sunil Gupta and cannot be used to demand the differential duty. In case of some of the email relied upon even the quantity and the number of pieces do not match. There is no evidence that the said materials were actually imported at any other value than the one declared by the Appellant. Only for the reason that the container and numbers mentioned in the email match with those listed on the Bill of Entry of the Appellant, it is not sufficient to prove that the material was under-valued. Even, assuming that the material indicated against the container number mentioned in the bill of entry matches the container imported by the Appellant, but there is no clear evidence to determine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which even the investigating authority stated as official payment. The name of the Appellant does not appear in sub-heading Cash , which clearly shows that the imported material was not undervalued by the Appellant. Shri Deepak Maloo, proprietor of the appellant in his statement was not questioned about such statements. 11. The SCN has also relied upon packing list of 2 containers of Timber from file path livedata/01/2x20containers packing list OT (Bina Sales Corpn)/Sheet 1 . However, it is seen that there is no bill of entry of the Appellant corresponding to the container number indicated in the packing list. It does not show as to how the Appellant is identified with such packing lists. Even if assumed so, there is no evidence that the containers were under-valued. We also find that Shri Deepak Maloo in his statement dated 17.10.2013 has stated that the rate of material imported from Sudan were re-negotiated with Shri Rajendra Agarwal after it was imported due to inferior quality and in case of material imported from Ecuador, which was purchased on high sea sales, the payment of the same was made to the seller after unloading of the material. He also stated that the actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given the import data of Timbers from the same country and same size and similar period, which shows that there are a number of instances and evidences of contemporaneous imports which are of the same price as declared by the Appellant. In terms of Rule 3 the transaction value has to be accepted unless it falls under the exceptions carved out in Rule 3 (iii) of Custom Valuation Rules. Since this is not the case the transactional value has to be accepted as held by the Hon ble Apex Court in case of BUREAU VERITAS 2005 (181) E.L.T. 3 (S.C.). In case of M/s Eicher Tractors Limited - 2000 (122) E.L.T. 321 (S.C.), the Hon ble Apex Court has held as under : 13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other Rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have seen that the appellants have given enormous evidence to show that the value of contemporaneous imports in respect of other importers is more or less the same as those of the appellants. In these circumstances, we do not find any valid reason for enhancement of the Transaction Value. Further, the documents received from M/s. MSAS Blue Skies in respect of M/s. Maxworth Plywood Pvt. Ltd. has not been supplied to the appellants and the lower authority has not allowed the appellant to cross-examine the representatives of M/S. MSAS Blue Skies. This amounts to the denial of Principles of Natural Justice. Moreover, in M/s. Maxworth Plywood case, the corrigendum, revising the demand of duty, was issued on 31-12-2003. In those circumstances, the period of limitation should be reckoned from 31-12-2003. In that case, the demand also would be time-barred. As the demand of duty is not sustainable in view of our above findings, penalty under Section 114A and the demand of interest are not maintainable. The Orders-in-Original cannot be sustained. Hence, we, allow these appeals with consequential relief, if any. The aforesaid order was upheld by the Hon ble Apex Court as reported in Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determining the price at which goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion. 7. Applying the above tests to the facts of the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion envisaged a situation where payment of price stood deferred. Therefore, this decision of the Supreme Court directs the Revenue to decide the validity of the particular value instead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules. 14. In the present case the Appellant has imported goods on correct transactional value and the allegation of undervaluation are not supported by any cogent evidence. Further the goods by other importers are also on same price. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds or records of any payment made in cash or recovery of any unaccounted cash which can be supported the cases that the Appellant has indulged in under-valuation. From the difference between the declared value and the price at which the goods were sold in the domestic market, there appears to be a normal profit margin. The Revenue has not investigated even a single buyer, who has purchased such imported goods from the Appellant, to ascertain the correct position. The Appellant has taken insurance policy for the goods for the transit for foreign loading port to India and the price shown in such insurance document is the declared price. It is coupled with the fact that the Forestry Beekeeping Division of Ministry of Natural Resources Tourism of Tanzania has shown the sale price of Timber as $ 130 PMT as against the enhanced value of $ 600 to $ 800. It is not disputed that the Appellant had imported the rejected grade / short length / off size/ off cut size timber, which is more than 33% of the quantity of the imported timber. In such case, there was no reason to enhance the value of rejected timber as per good quality timber. 16. The goods at the time of importation were physi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods imported from both Pingtai as well as Zuelling when compared to the concentration of similar Vitamins in the products imported by these appellants. We have seen these Analysis Certificates on record and we find that the difference between the two is very wide and certainly not marginal. We find that the major value element of such Vitamin Mixes is derived from the active ingredients in such ingredients namely the major Vitamins and not the fillers and other impurities. Therefore, we find that when there is such a wide difference in the concentration of such active ingredients in the products imported vis-a-vis the contemporaneous imports relied upon by the department, therefore we cannot subscribe to the view that the two sets of products are even comparable products. 13. With respect to the contemporaneous import relied upon by the importer namely that by M/s. Victoria Marines, the department has brushed it aside saying that it. was a clever set-up by associates of the importers to pave the way for the bigger quantity of imports subsequently at much higher prices. Even if the department harbours such suspicions, there is nothing on record to show that detailed inve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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