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2020 (2) TMI 644

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..... led law that if the declared value is to be rejected in that case the CVR, 2008 has to be applied sequentially i.e. Rule 5 and 6 is to be applied. If the value of contemporaneous goods are available, the same shall be basis for redetermination of value, as held by Apex Court in the case of COMMISSIONER OF CUSTOMS, CALCUTTA VERSUS SOUTH INDIA TELEVISION (P) LTD. [2007 (7) TMI 9 - SUPREME COURT]. The adjudicating authority in the present case has confirmed the demand on the basis of the LME price as stated in the DGOV circular - the Tribunal in the case of M/s Sunland Metal [2019 (10) TMI 113 - CESTAT AHMEDABAD] after considering the various case laws and communication/clarification given by the then CBEC/ISRI has held that LME price cannot be the basis for redetermination of value of scrap. Liability of additional duty of Customs in respect of scrap - HELD THAT:- The Appellant herein is entitled for all reliefs/ exemption associated with the assessment. Appeal allowed - decided in favor of appellant. - Customs Miscellaneous (EH) Application No. 10858 of 2019 And Customs Appeal No. 11756 of 2019, 12058 of 2019, 12059 of 2019, 11315 of 2019 - A/10478-10481/2020 - Dated:- 13-2-2020 - H .....

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..... CN the Department relied upon following evidences to support the charge of undervaluation of imported goods i.e. Aluminium scrap: Alert circular no.14/2005 dated 16.12.2005 issued from F.No Val/TECH/37/2005 of Directorate of valuation (DGOV circular); Statements of Mr Vipul Agarwal, wherein he had confirmed the content of aforesaid circular; Statements of Mr Samir Agarwal; 3 insurance policies seized from the office premise of M/s AMA; Letter from First Secretary (trade), Embassy of India, Brussels in relation to one of the import of Aluminium scrap; Third party evidences such as three email correspondences found relevant to the imports of Aluminium scrap by M/s Sunland Alloys and other documents/statements which are stated at Annexure B of the SCN; 6. Accordingly, vide the said SCN, the following demands were sought to be confirmed in relation to imports made by M/s AMA from Ports of Nhava Sheva, Kandla and ICD Tughlaqabad. Nhava Sheva Port - The differential Customs duty amounting to ₹ 4,91,64,242/- (Rupees Four Crores Ninety One Lacs Sixty Four Thousand Two Hundred and Forty Two only) as detailed in the Annexure-A-1 to the notice, short paid on the said goods, should not b .....

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..... the present case duty is demanded on the re-determined value of Aluminium scrap of various grades by adopting the LME prices of Virgin metal and applying discounts as per the aforesaid DGOV circular. It is also not in dispute that in the present case, the demand is raised on the basis of the evidence recovered in the case of M/s Sunland Metal Recycling Industries and the same is evident from the statement of Mr Vipul Agarwal. This Hon ble Tribunal in the case of M/s Sunland Metal Recycling Industries, vide Order No. A/11871-11874/2019 dated 01.10.2019, have set aside the demand by holding that contemporaneous import evidence produced by the party show that there was no undervaluation and furthermore held that LME price cannot be applied for purpose of valuation of scrap. He submitted that the ratio of aforesaid decision is squarely applicable to the present case because not only the facts of the present case is similar to the case of M/s Sunland Metal Recycling Industries but also the evidence relied upon for alleging undervaluation is same. Hence, it was submitted that the demand in the present case is not sustainable and should be set aside by following the aforesaid decision. H .....

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..... - Commissioner of Customs, Calcutta V/s South India Television (P) Ltd. reported in 2007 (214) ELT 3 (SC) - CC v/s Sanjivani Non-Ferrous Trading Pvt Ltd in Civil Appeal No. 18300-18305 of 2017 He further submitted that the Statements of Partners i.e. co-appellants cannot be relied upon as the same was recorded under duress and hence, they were retracted immediately. It was submitted that the retracted statements cannot be accepted as evidence for confirmation of demand. He submitted that the adjudicating authority erred in discarding the retractions of co-appellants by holding that the same may not have been received by the investigating officers i.e. DRI. He submitted that the adjudicating authority failed to appreciate that the co-appellants after recording of their statements had immediately retracted the same and had sent their retraction to the office of DRI by registered post. It is settled law that if registered letter is not returned back undelivered, then it is presumed served and onus is on Department to show that they have not received it. In the present case, the aforesaid registered letters were not returned back and Commissioner has erroneously held that because the .....

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..... valuation of the goods. The co-noticees did not appear for cross examination and therefore the statements cannot be relied upon. The decision of this Hon ble Tribunal in Sunland Metal (supra) is applicable on this count too. Hence, the statements of other co-accused cannot be relied upon for confirmation of demand. He further submitted although cross-examination was allowed for some of the co-noticees, however they did not make themselves for cross. He submitted that that the Hon ble Gujarat High Court has in CC v Motabhai Iron & Steel Indutries - 2015 (316) ELT 374 (Guj) clearly laid down that where the person whose statement is relied upon by the department does not appear for cross-examination, no reliance can be placed on his statement. Further reliance is made on the following decisions to support the aforesaid contention. Basudev Garg v CC - 2013 (294) ELT 353 (Del), Andaman Timber Industries v CCE- 2015 (324) ELT 641 (SC). He further submitted that the reliance placed on insurance policy in the SCN as well as Impugned order for confirmation of demand is misplaced and mis-conceived. It is settled law that adoption of insurance value for alleging under-valuation is not pro .....

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..... liance was placed on the following decisions to support the aforesaid contention. - Bharathi Rubber Lining & Allied Services P Ltd 2013 (287) ELT 124 - CCU, New Delhi v/s Prabhu Dayal Prem Chand 2010 (253) ELT 353 (SC) - GKN Sinter Metals Ltd v/s CCE, Pune 2008 (232) ELT 692 (Tri-Mum) - M/s Sunland Metal Recycling Industries, Order No. A/11871-11874/2019 dated 01.10.2019 - Pushpak Metal Corporation v CC - 2014 (312) ELT 381, - Even the Central Board of Excise and Customs has while accepting the decision in Pushpak Metal Corporation v CC - 2014 (312) ELT 381, categorically taken the view that recourse to LME prices cannot be taken to substantiate charge of undervaluation when contemporaneous import of almost same prices was available during the material time. He also submitted that M/s AMA had submitted certificate from most of their suppliers from whom majority of the material was directly imported, who had stated that they had not received any additional payment from them. This clearly indicates that M/s AMA had not undervalued the imported goods and there is no evidence produced by the Department to substantiate the allegation that the differential amount was paid by M/s AMA .....

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..... se as well as in their own case the demand has been set aside by the aforesaid order. Confirmation of demand in respect of Bills of Entry that were finally assessed after enhancing the value is bad in law. He submitted that in respect of 166 Bills of Entry that were finally assessed after enhancement of value, the demand raised by the SCN is not sustainable, since all the said Bills of entry has been finally assessed and an order of out of charge thereon had been passed, no demand of duty can survive without the said order on the respective Bills of Entry being challenged and set aside. Reliance was placed on the of cases of CC v/s Lord Shiva Overseas 2005 (181) ELT 213, Malhotra Impex v/s CC 2006 (203) ELT 561 and CC v/s Paras Electronics 2009 (246) ELT 231. No additional duty of customs (CVD) is payable in respect of Scrap since these are not manufactured products. It is settled law as laid down by the Hon ble Supreme Court in the case of Hyderabad Industries Ltd v UOI- 1999 (108) ELT 321 (SC) that if an article is not liable to excise duty since it is not a manufactured product, no additional duty of customs can be levied on the import of such article. That demand is barred by l .....

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..... giving prices of imported goods imported by it, Sunland Metal (supra) and Baheti Metal (supra) and submitted that the prices declared by it are either higher or at par with the prices of both Sunland Metal (supra) and Baheti Metal (supra) respectively and hence comparable. Ongoing through the comparison chart and annexures to SCN issued to both Sunland Metals (supra) and Baheti Metals (supra) we are in agreement with the submissions of the Appellant that the import prices declared by it are indeed comparable with the prices of M/s Sunland Metal (supra) and Pushpak Metal Corporation (supra). We note that in the case of Sunland Metal (supra) prices declared by it were found identical to prices declared by other importers viz., Baheti Metal reported as Pushpak Metal Corporation - 2014 (312) ELT 381 and the order passed in Pushpak Metal has been accepted by the Central Board of Excise & Custom. Various submissions have been made by the Appellant herein to assail the impugned order and heavy reliance has been placed on the decision of this Tribunal in Sunland Metal (supra). Before dealing with the submissions of the AMA, we find it fit to reproduce the relevant portion of the order .....

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..... Also that the said decision was accepted by the CBEC. The Appellant has annexed comparison sheet showing the prices in their case and in case of Baheti Metal which was reported as Puspak metal case supra. We find that when the prices in case of Pushpak metal case supra has been accepted by the revenue and the same are contemporary prices to the Appellant s import, in that case the value redetermined vide the impugned order by taking LME Prices as basis is not sustainable. Hence we do not find any reason to uphold the demand confirmed against Appellant as above. 6. In case of demands made under Annexure- ‗C on Aluminium Scrap, it is observed that several imports were made through Nhava Sheva Port and the assessments were provisional. The Order No. 2958/09 AM (I) was passed for finalization of assessment and the prices were enhanced by applying LME. The Appellant approached Commissioner (Appeal) who vide Order-in-Appeal dt. 09.09.2010 set aside the enhancement. The revenue s appeal against said orderin- appeal also stands dismissed as reported in Bharathi Rubber Lining & Allied Services P. Ltd. 2013 (287) ELT 124. In such case there is no ground to redetermine the value as .....

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..... rts, the lowest of such value has to be adopted as provided for in Rule 6 and not the highest. In the instant case no such thing has been done by the assessing officer. 5.6 In view of the above, we do not find any infirmity in the observation of the Commissioner (Appeals) that the DGOV Circular cannot override the provisions of Valuation Rules. The Hon ble Apex Court in the case of Commissioner of Customs, Calcutta v. South India Television - 2007 (214) E.L.T. 3 (S.C.) had held that casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value. The invoice price is not sacrosanct but before rejecting the invoice price, the department has to give cogent reasons for such rejection. The assessing authority has to examine each and every case on merits for deciding its validity and he cannot form a view to reject all transaction values on the basis of some general criteria based on DGOV Circular and on that basis load the value of imports uniformly across board. This Tribunal in the case of FSP (India) Pvt. Ltd. (cited supra) held that uniform loading based on general criteria is not permissible. In case of CCU, NEW DELHI Vs. PRABHU DAYAL PREM .....

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..... or of current international prices of metals, the adjudicating authority was justified in adopting the price of the said two metals as notified by the LME, and therefore, the Tribunal was not justified in quashing the additional customs duty determined to be payable on the imports in question. 8. We are unable to persuade ourselves to agree with the learned counsel. It is manifest from the aforeextracted order of the Tribunal that no details of any contemporaneous imports or any other material indicating the price notified by the LME had either been referred to by the adjudicating Officer in the adjudication order or such material was placed before the Tribunal at the time of hearing of the appeal. Learned counsel for the Revenue has not been able to controvert the said observations by the Tribunal. In that view of the matter no fault can be found with the order passed by the Tribunal setting aside the additional demand created against the assessee. In case of GKN SINTER METALS LIMITED Vs. CCE, Pune 2008 (232) E.L.T. 692 (Tri. - Mumbai), the tribunal held as under : 2. We have heard both sides. We find that the prices in the LME bulletin for prime metal are only indicative and cann .....

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..... ween the prices of Aluminium Metal and prices of Aluminium Scrap quoted in Metal Bulletin. The main excerpts of the above communication of the Commissioner Nhava Sheva clearly mentions as under: 2. A. B. ……………………. the enquiries with the trade reveal that in case the difference between the prime metal and scrap is indeed so small, it does not make economic sense to go in for purchase of scrap. Inquiries from the trade have revealed that the Aluminium Scrap is used for melting purpose and remelted Aluminium Ingots produced out of it has a sale price of 8 to 10% lower than the virgin metal. This also includes manufacturing cost and the recovery of the metal from scrap is never 100%. 3. ……………………………….. 4. It may also be mentioned that there is no linear correlation between the prices of Aluminium Metal and the prices of Aluminium Scrap quoted in the Metal Bulletin. …………………….. 5. It can be seen that the prices of Aluminium Scrap has not changed in spite of surge in the prices of Aluminium Metal .....

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..... ed upon then current market information derived from a variety of sources, including trade press such as the American Metal Market and the Metal Bulletin, as well as future markets. These information sources are utilized as a general market trend basis for negotiation. It should be noted that scrap metal is not traded directly on the futures exchanges - rather it is alloy ingots derived from scrap material that are traded on some of the exchanges such as the London Metal Exchange (LME). 8. In view of above communication of ISRI it is absolutely clear that the scrap price would depend on many factors and the LME based price cannot be applied blindly to imports of scrap for the purpose of valuation. 9. Most pertinently we find that the whole case is also based upon allegation that the differential amount was paid by the Appellant through Hawala Channels or transfer. However we find that in the show cause notice not a single person was identified or investigations were made as whom the differential value amount was handed over. Except naming Chaganlal no person has been named. There is no evidence as to how the Appellant came into possession of cash alleged to be differential amount t .....

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..... tion on the part of the Appellant. The Appellant has pleaded that it is incomprehensible that Shri Sushil Agarwal, who was in business of imports of Aluminium Scraps and Zinc Scrap since last many years would state that the prices of Scrap would be equal to the prices of metal content. It is a known fact that re-cycling of scrap would not result into recovery of entire metal content as there would be a process loss, cost to be incurred for conversion of scrap to metal. Such metal produced from Scrap cannot command same price as that of virgin metal. We find that the Appellant had sought cross examination of Shri Sushil Agarwal under Rule 138B of the Customs Act. The allegation of undervaluation are based upon the letters of Indian Consulates and statements of indentors namely Shri Anil Parolia of Nihon Ispat, Shri TarunJhingon, Shri Ehsan Amin Gadawala and Shri Mihir Bhat as well as letters from Indian Consulate at U.S.A in reference to import of 32 consignments of Zinc Ash, Indian Consulate at UK in respect of 11 Consignment imported from Sunberg and Indian Consulate at Singapore in respect of 2 consignments imported from PWT Australia. The Appellant had sought cross examination o .....

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..... y the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that crossexamination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to crossexamine those dealers and what extraction the appellant wanted from them. 7. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. T .....

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..... email from indentor Shri TarunJhingon as no opportunity of cross examination of panch witness and officers was given to Appellant. We further find that during the visit to the factory of M/s SMRI, the officers had questioned the employee of M/s SMRI namely Shri Rajesh Kumar Trivedi, C. Haridas and Nikhil Jain on the basis of documents called Abstract of LME Price of Aluminium Scrap and Zinc Scrap to which said employees had stated that the Appellant s declared price was less. This document was handed over to the Appellant on 20.02.2018 and it contained Pages 1 to 8 lowest & Highest Zinc prices of a day and the next 10 pages tiled MP Prices & Archive containing low price of the day alongwith 80% of said price. However we find that nowhere the said papers contain prices of Aluminium or Zinc Scrap. Also no prices of Aluminium Scrap is issued by the LME as it is not concerned with scrap pricing. Hence the allegation that the Appellant s declared price was less than the mentioned in said document does not hold any substance. We also find that the Appellant had sought cross examination of the officers for the source and authenticity of such document and 80% formula derived by off .....

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..... y since no appeal/review was filed against such order, is not sustainable. There cannot be any reassessment of the said values, which had become final for want of appeal against the same. Our views are supported by judgments in case CC vs Lord Shiva Overseas - 2005 (181) ELT 213, Malhotra Impex vs CC - 2006 (203) ELT 561 and CC vs Paras Electronics - 2009 (246) ELT 231. 14. In respect of export declaration in respect of one consignment shipped from New Zealand and 11 consignments shipped from Spain, we are in agreement with the submission of the Appellant that such declarations have no relevance as the same were not authenticated by the News Zealand Customs and Spanish Customs. Even otherwise also most of these declarations are in respect of goods viz. Iron and Steel i.e other than those imported by the Appellants and the Appellant are not consignees. Even in some declarations, the goods are Iron & Steel scrap which were not imported by Appellant. Even the values has not been re-determined on the basis of such declarations and hence the same are not relevant in the instant case. 11.2 We note that in the above case, prices declared by Baheti Metal (supra) reported as Pushpak Met .....

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..... y in the impugned order has chosen to not consider the retraction letter on the ground that looking at the same it cannot be inferred that the same were received by the DRI. We are of the view that the said approach of the adjudicating authority is incorrect as the reason for not considering the retraction appears to be presumptive in nature as no evidence has been produced to show that the DRI was not in receipt of the said letters. Be that as it may we note that statements cannot be the sole reason to confirm the charge of undervaluation and the same has to be corroborated with documentary evidence. In the present case the documentary evidence in the form of contemporaneous import data, produced by the AMA, is contrary to the oral statements. It is settled law that in case of difference between documentary evidence and oral evidence the former should be given precedence and later should be ignored. In view of the settled law, we are of the view that the statements of co-appellants and other witnesses cannot be relied upon or the same cannot be the sole basis to confirm the charge of undervaluation as the same is contrary to documentary evidence which is in the form of contemporan .....

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..... NEC Ltd v/s Commissioner of Customs, Chennai reported in 2003 (157) E.L.T 627 (Mad); Rama Shyama Papers Ltd v/s Commissioner of C.EX, Lucknow reported in 2004 (168) E.L.T 494 (Tri-del and Shalimar Agencies v/s Commissioner of Customs, Kandla reported in 2000 (120) E.L.T 166 (Tribunal). Since the witnesses failed to appear for cross-examination, their statements cannot be relied upon. Similar view has been taken by us in Sunland Metal (supra) in Para 10 to 12 of the order and we reiterate the same. 11.7. In respect of reliance placed upon 3 insurance policies for confirmation of demand, we are in agreement with the Appellant that the same cannot be relied upon for confirmation of demand. The adjudicating authority has relied upon 3 insurance policies in respect of purchase of consignments of scrap from M/s. Sims Group Limited, North Sydney, Australia, M/s. Istanbul Recycling Ltd., Istanbul and M/s. Stena Metal International, Gothenburg for upholding the charge of under valuation. On perusal of the policy certificates it is clear that the beneficiaries in each case, is the supplier himself. We are of the view that supplier could have obtained a higher insurance cover for his own bene .....

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..... e M/s. Ni-met had subsequently issued a specific letter stating that the goods have been sold to the Appellant at a much lower price than the price that it was purchased and the contents of the said letter have not been disputed in the order. Hence, the aforesaid report cannot be relied upon. 11.9. Further, we also find that in respect of 166 Bills of entry value was already enhanced at the time of assessment and hence further proposal to re-enhance the value when the earlier assessment order has attained finality since no appeal/review was filed against such order, is not sustainable. There cannot be any reassessment of the said values, which had become final for want of appeal against the same. Our views are supported by judgments in case CC vs Lord Shiva Overseas - 2005 (181) ELT 213, Malhotra Impex vs CC - 2006 (203) ELT 561 and CC vs Paras Electronics - 2009 (246) ELT 231. Similar view has been expressed by us in para 13 of the Sunland Metal order (supra) and we respectfully follow the same. 11.10. We also find that as in the case of Sunland Metals (supra), recorded in para 6 of the order, in Appellant s own case of 50 Bills of Entry the Commissioner (Appeal) who vide Order-in .....

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