TMI Blog2006 (3) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... S$ 5600 PMT (CIF), and ordering the deposit of ₹ 88,95,393/-(Rupees Eighty Eight Lakhs Ninety Five Thousand Three Hundred and Ninety Three only) paid by the appellant M/s. Radhey Shyam Ratanlal to be adjusted against their customs duty liabilities, and further holding that the goods imported vide bills of entry Nos. 171956 dated 24.2.2001, 17184 dated 23.2.2001, 171954 dated 24.2.2001, 171092 dated 19.2.2001, 171815 dated 23.2.2001, 171957 dated 24.2.2001, 171955 dated 24.2.2001, 165289 dated 9.1.2001, 169069 dated 5.2.2001 and 165287 dated 9.1.2001 were liable for confiscation under Section 111(m) of the Customs Act, 1962 as these goods were mis-declared with reference to their value and also holding that the goods imported vide bills of entry Nos. 171954 dated 24.2.2001 and 171814 dated 23.2.1001, were also liable to confiscation under Section 111(m) of the said Act as these were mis-declared with respect to their quantity. Since the goods were not available for confiscation, as they were provisionally released to the importer, the Commissioner imposed a fine of ₹ 2 lacs (Rupees Two Lakhs only) in lieu of confiscation. Penalty of ₹ 10 lacs (Rupees Ten Lakhs only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heth Mercantile Corporation also admitted that the cloves imported by them in March 2001 were at the re-negotiated price of US$ 5500 PMT, and they paid the differential amount of customs duty for clearing the two consignments provisionally. In the statement of Mr. Sanjeev Kumar Sharma, partner of M/s. R.S.K. Enterprises, it was admitted that they had imported consignment of cloves under bill of entry dated 7.3.2001 at the declared price of US$ 2900 PMT, though the actual price was US$ 5500 PMT. This firm also paid the differential duty in respect of these consignments. Mr. Balrajkumar Vinodkumar, proprietor of a concern, also admitted that the price declared by him in respect of the consignment of cloves imported under bill of entry dated 26.2.2001 was US$ 2900 PMT which was less than the actual price of US$ 5400 PMT. He also paid the differential duty and took provisional release of the goods. In the statement of Shri Mahendrakumar P. Parmar, Managing Director of M/s. Esjaypee Impex (P) Ltd., it was admitted that while submitting the documents for clearance of cloves under bill of entry dated 22.2.2001, he had declared the price of US$ 2900 PMT, but the actual price was US$ 5400. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e forty eight years of his business carrier. He stated that he never negotiated with M/s. IJIMASIA for cloves, but a person of that concern had once contacted him requesting for business. According to him, the appellant had contracted with M/s. Ketan Trading Co. of Singapore for supply of cloves. Under that contract M/s. Ketan Trading Co. was to supply cloves at a unit price of US$ 2600 PMT. According to him, the original contract was with M/s. Ketan Trading Co. for supply of 300 MTs and it was signed in November 2000. He was having only a photocopy of the said contract. He stated that the international market price of cloves in the beginning of 2001 was only US$ 2900 to US$ 3000 and that in February, March-April the price went up to US$ 5000 depending upon the quality. As regards the invoice bearing No. 624/2K-01 dated 7.2.2001 issued M/s. IJIM ASIA in the name of M/s. Ketan Trading Co., Singapore, showing consignment of 24.538 MTs of cloves at the rate of US$ 5600, he stated that one consignment was imported by him under bill of entry No. 171954 dated 24.2.2001, which was the same consignment mentioned and shown against invoice No. 624/2K-01 dated 7.2.2001. While seeking clearanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9069 dated 5.2.2001, the correct transaction value for the purpose of assessment was held to be US$ 5600 PMT, under Rule 5 of the Valuation Rules. It was further held that though initially the appellant had requested for cross-examination of all the importers referred in the show cause notice subsequently, by letter dated 13.8.2003, the advocates for the appellant had asked for cross-examination of five persons, namely, Mr. Bhumish Shah, Mr. Biharilal Ghura, Mr. Deepak C. Sheth, Mr. Balraj Kumar and Mr. Ashok Goyal. Notices were issued to all these for cross-examination. During the course of personal hearing Mr. Deepak C. Sheth and Mr. Ashok Goyal were cross-examined. Shri Bhumish Shah and Mr. Biharilal Ghura had sought some more time. However, on 12.11.2003, the advocate for the appellant pleaded that any further adjournment for personal hearing would amount to harassment and unnecessary delay in finalizing the case and requested that the case may be taken up for decision based on arguments and case law filed and excluding the statements of persons who had not appeared for cross-examination. In view of this stand taken up by the learned advocate for the appellant, personal hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 70 of the order on the ground that the recordings were not in accordance with the correspondence on record and that the advocates were being charged with dereliction of duty. It was stated in this communication, that the hearing was closed on 14.10.2003 as the department could not produce any witness. The learned senior advocate, therefore, argued that no reliance could have been placed on the statements of any of the three witnesses including Mr. Bhumish Shah out of five witnesses for whom request was made for cross-examination on behalf of the appellant. 4.1. In support of his contentions, the learned Counsel for the appellant placed reliance on the following decisions: (a) The decision of the Supreme Court in Commissioner of Customs, Mumbai v. Bureau Veritas reported in was cited for the proposition that both Section 14(1) and Rule 4 provided that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularized in Rule 4(2). (b) The decision of the Supreme Court in Eicher Tractors Ltd. v. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of value in the sequential scheme laid down under the Valuation Rules. It was submitted that the Hon'ble the Supreme Court had dismissed the appeal preferred against the said order as reported in (f) The decision of the Bombay High Court in Nagraj Walchand Jain v. G. Koruthu, Collector of Central Excise reported in 2000 (123) ELT 50(Bom.), was cited for the proposition that refusal to afford opportunity to cross-examine the witnesses relied on by the department violated the principles of natural justice. (g) The decision of the Tribunal in P. Chandra Kumar v. Commissioner of Customs (P), Calcutta reported in 2000 (116) 101 (Tri.), was cited to point out that where cross-examination was denied without recording any reason, the Tribunal held that the cross-examination of various persons and officers asked for by the appellant ought to have been allowed In the facts and circumstances of the case, the Tribunal set aside the order and remanded the case. It was observed in paragraph 2 of the order that, no doubt disallowing the cross-examination of witnesses or persons involved in seizure may not always be against the requirement of principles of nat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ected to. It was argued that the contemporaneous transactions reflected from the statements of various persons which have been considered by the Commissioner as well as the prices indicated in the reputed journals and the actual price reflected in the procurement invoice which connected the appellant were all cumulatively considered and the Commissioner had rightly rejected the contract on the ground that it was unreliable and adopted the value as reflected from the other transactions by following the provisions of Rule 5. It was submitted that there was clear reference to Rule 5 even in the show cause notice and it is not as if the Commissioner treated Rule 10A as a substantive provision for rejecting the transaction value put forth by the appellant. It was also argued that Mr. Bhumish Shah was only one of the various witnesses whose statements were recorded. Mr. Bhumish Shah was summoned by the Commissioner at the instance of the appellant. It was pointed out from the record of personal hearing at Exhibit 10 to the memo of appeal that on 14.10.2003 when the learned advocate for the appellant had cross-examined Mr. Deepak Sheth, it was recorded that Mr. Ashok Goyal had asked for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural justice are satisfied. (c) The decision of the Calcutta High Court in Tapan Kumar Biswas v. Union of India and Ors. reported in 1996 (63) ECR 546 (Calcutta), which was rendered in the context of the provisions of Section 124 of the said Act, was cited for the proposition that a noticee under Section 124 of the Customs Act had no right to cross-examine witnesses. The High Court relied upon the decision of the Supreme court in Kanungo Co. v. Commissioner of Customs and Ors. (supra) and the earlier decision of the Calcutta High Court in Kishanlal Agarwalla (supra), for this proposition. (d) The decision of the Supreme Court in Surjeet Singh Chhabra v. Union of India reported in was cited for the proposition that the Customs officers are not police officers and the confession though retracted is admissible and binds the petitioner who had confessed and therefore, there was no need to call punch witnesses for examination and cross-examination by the petitioner. (e) The decision of this Tribunal in Jagdish Shanker Trivedi, and Ors. v. Commissioner of Customs, Kanpur (Final Order Nos. 763-767/05-CUS dated 27.7.2005) reported in 2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the international market price prevailing at the time of the contract as well as at the time of physical import and also from the contemporaneous imports. It was held that the veracity of the contract was doubtful. It was also noted that the party had failed to produce the invoices relating to procurement of cloves by their supplier M/s Ketan Trading Co. in Singapore even though specifically asked for by the DRI, as required under Rule 10A of the Valuation Rules, 1988. The Commissioner held that the value of US$ 2600 PMT declared by the party could not be accepted as the value for the purpose of assessment in terms of the provisions of Section 14(1) of the said Act read with Rules 4 and 10A of the Valuation Rules. 7. Section 14 of the said Act relates to valuation of goods for the purposes of assessment and, inter alia, provides that the value of any goods chargeable to duty of customs shall be deemed to be the price at which such or like 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 buyer have no interest in the business of each other, or one of them ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time which may have no nexus with the time of importation, cannot be deemed to be the value of such goods. Therefore, even assuming for the sake of argument that a contract was entered into by the appellant with M/s. Ketan Trading Co. on 23.11.2000 for supply of cloves of Zanzibar/Indonesian origin at the rate of US$ 2600 PMT CIF Mumbai for a quantity of 300 MTs until December 2002, the value of such goods shall nonetheless be deemed to be the price at which they are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade and the price quoted in the contract will not be conclusive and the value of such goods which shall be deemed to be the price at which they are ordinarily sold at the time and place of importation, will govern the field for the purpose of imposition of Customs duty chargeable on such goods. As noted above, the price in respect of the imported goods shall be determined in accordance with the rules, subject to the provisions of Sub-section (1) of Section 14. This is why it has been provided under Rule 3(ii) that if the value cannot be determined under Clause (i) to be the transaction value, it shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational publication of repute indicating price of cloves in the international market, it appeared that the price of cloves on 27.11.2000 was US$ 4600 PMT which reached US$ 6300 on 26.3.2001. When the prices of cloves of Zanzibar and Indonesian origin were soaring high between US$ 4765 PMT to more than ₹ 6000/- PMT during the relevant period in which the imports were made by the appellant, it does not stand to reason why M/s Ketan Trading Co. should have agreed to supply cloves at the rate of US$ 2600 PMT for two years from November 2000. Therefore, the Commissioner was justified in not relying upon such a copy of the contract which did not inspire confidence. 9.2 It is also evident that the Commissioner had not simply relied upon the figures in the Public Ledger or in the Weekly Bulletin of the Spice Market published by the Ministry of Commerce and Industry. There was plethora of other evidence on record which indicated that the prices of cloves of Indonesian and Zanzibar origin were much higher and as per the figures which reflected in the aforesaid international publication, Public Ledger as well as the Weekly Bulletin of Spices Market. 10. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice of US$ 5400. Though the declared price of these goods was low, in the confessional statements the real price had come out. 10.3 The appellant's counsel had asked for cross-examination of only five persons whose statements were recorded and had not asked for cross-examination of the other persons, contents of whose statements which were reproduced in the show cause notice, clearly showed the real price of cloves imported by the respective importers, ranged between US$ 4450 to US$ 5500 between September 2000 and February 2001. Therefore, apart from the statement of Bhumish Shah on whom the focus was placed all throughout for arguing that he was not allowed to be cross-examined, there is other plethora of evidence to indicate that the real price at which the cloves were imported under the contemporaneous transactions, was around more than double the price US$ 2600 shown by the appellant on the strength of the purported contract dated 23.11.2000, said to have been entered into between the appellant and M/s Ketan Trading Co. 11. It is evident from the material on record that the adjudicating authority had given full opportunity of being heard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing upon their statements by observing in paragraph 68 of the impugned order that so many importers had admitted that the values were understated by them and they had voluntarily paid the differential duty and that none of them had retracted their confessional statements. All these statements were specifically set out in the show cause notice and have been also referred to in detail in the impugned order. Even Deepak Sheth and Ashok Goyal who were cross-examined and tried to support the appellant at such a late stage, had never retracted their confessional statements for nearly a period of two years. 12. Mr. Bhumish Shah had responded to the show cause notice issued for his cross-examination and had sought some more time, as noted above. He could not be cross-examined because the advocate for the appellant himself pleaded that any further personal hearing would amount to harassment and unnecessary delay and that the matter should be taken up for decision. All the particulars that Bhumish Shah had given in his statements were made known to the appellant in the show cause notice and the documents which were served. The appellants had failed to counter the documents su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was shown as US$ 137412.80. In this context, the bill of entry produced by the appellants bearing No. 171954 shows shipment of Zanzibar cloves of the gross weight of 25.790 MTs under the same container No. PCIU 9689164 and the date is indicated 7.2.2001. The invoice number of the invoice prepared by M/s. Ketan Trading Co. of the same date i.e. 7.2.2001 is mentioned. It can hardly be disputed that the goods covered by the bill of entry No. 171954 filed by the appellants were Zanzibar cloves which were shipped on 7.2.2001 in the container No. PCIU 9689164. The bill of entry indicates gross weight of 25.790 MTs, while the invoice prepared by IJIMASIA showed the quantity as 24.538 MTs and not the gross weight of 25.790 MTs. The price of these goods was admittedly shown as US$ 2600 PMT by the appellant on the basis of the order dated 23.11.2000. The contention that the invoice of IJIMASIA Pvt. Ltd. showing procurement of the same goods by M/s Ketan Trading Co. at the price of US$ 5600 was a concoction made by Bhumish Shah, can hardly be accepted in view of the intrinsic evidence showing that the goods were sent in the same container, the number of which is appearing in both the documen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the goods supplied by IJIMASIA to the appellant through Ketan Trading Co. The fact that IJIMASIA was having relations with Bhumish Shah in view of his appointment as consultant as well as indenter for various products exported by IJIMASIA to the Indian market and that in line with such appointment Bhumish Shah had to give feed back on information of the local market and book orders on behalf of IJIMASIA, is reflected from the appointment letter dated 30.5.2000. Therefore, there was nothing strange if Bhumish Shah produced the said invoice along with other documentary evidence before the authorities showing the transaction of Zanzibar cloves shipped by IJIMASIA directly to the appellant at the instance of Ketan Trading Co. through whom the appellant admittedly purchased the cloves. Despite being asked, the appellant never produced the procurement invoices to show the real price at the time of importation. Even in respect of the said transaction reflected in the invoice of IJIMASIA showing shipment of goods under the said container in which the appellant had received them, the appellant has never produced any contrary evidence to show that these were not the goods procured through ..... X X X X Extracts X X X X X X X X Extracts X X X X
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