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2020 (2) TMI 644

..... arious overseas suppliers either directly or through their indenter or purchased the same from various high seas sellers at a grossly undervalued price - HELD THAT:- The demand in the present case has been confirmed under Rule 4 of the Customs Valuation Rules, 1988 by applying price band to LME prices as per Alert circular No. 14/2005 dated 16.12.2005 issued by the Director General of Valuation. Apart from the above, the demand has been confirmed by relying upon the statements of co-appellants viz, the partners of AMA, indenting agents, etc., 3 insurance policies and Brussel Report in relation to one import consignment. The adjudicating authority has proceeded to redetermine the value of imported aluminium scrap on the basis of the DGOV circular without considering and overlooking the contemporaneous data available before it on record. It is a settled 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 IN .....

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..... ging in undervaluation of Aluminium scrap. The said investigation led to search being conducted by the officers of DRI at the premises of M/s AMA and other importers of Aluminium scrap. Statements of partners of M/s AMA, their high seas sellers, their Customs house agent and other importers of Aluminium scrap were recorded. The investigation culminated into issuance of Show cause notice (SCN) dated 28.03.2008. The allegation raised against M/s AMA, in the said SCN was that they had imported various consignments of Aluminium scrap from various overseas suppliers either directly or through their indenter or purchased the same from various high seas sellers at a grossly undervalued price, in order to evade customs duty and they were sending the differential amount of money to the representatives of the overseas suppliers in cash. In the said SCN 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; Stat .....

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..... nfiscation of seized goods and in respect of goods which could not be seized, it proposed to impose redemption fine. Penalty under Section 114A/112 of the Customs Act, 1962 was proposed upon M/s AMA and under Section 112 (b) upon the co-appellants. 8. The differential duty demand as proposed in the SCN was confirmed vide Impugned order dated 26.03.2019 except demand in respect to 20 Bills of Entry by holding that the said Bills of Entry were provisionally assessed and hence duty cannot be demanded under Section 28 of the Customs Act, 1962 for the said Bills of Entry. Penalty was imposed on M/s AMA under Section 114 A of the Customs Act, 1962 and under Section 112 (b) on co-appellants. 9. Shri Jitendra Motwani, Learned Counsel, appearing for the Appellants during the course of hearing made following submissions:- It is not in dispute that in 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 Re .....

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..... s Baheti Metals & Alloys. Based on the said comparison chart it was demonstrated that the goods in the present case were valued at a higher price or at par with the goods imported in the case M/s Sunland Metal Recycling Industries and M/s Baheti Metals & Alloys. He further submitted that it is settled law that if the value of the contemporaneous goods are available, the same shall be the basis for re-determining the prices. As stated above, in the instant case the prices of contemporaneous imports were less or at par with the import price declared by M/s AMA. Hence, the present demand is not sustainable for this reason as well. Reliance was placed on the following decisions to support the aforesaid contention. - Eicher Tractors V/s Commissioner - [2000 (122) ELT 322] - Varsha Plastics Pvt. Ltd V/s Commissioner - [2000 (122) ELT 322] - 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 r .....

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..... e statements of co-appellants were contradictory to documentary evidence and it is settled law that documentary evidence would prevail over the oral evidence. In the present case, the documentary evidence in the form of contemporaneous data support the case of the Appellants and hence the adjudicating authority erred by placing reliance on the statements of co-appellants i.e. partners of M/s AMA. Reliance was placed on the following decisions to support the aforesaid contention. - Philip Fernandes v/s Commissioner 2002 (146) E.L.T 180 - R.P Industries v/s Collector 1996 (82) E.L.T 129 - Commissioner v/s Latex Chemicals 2005 (181) E.L.T. 138 (Tri. - Del.) Statements of co-noticees cannot be relied upon without any corroboration. In the present case, there is no independent corroboration in the form of documentary evidence to establish under 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 c .....

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..... oforma invoice also seems to have been received through fax and is not the original. Hence, the authenticity of these documents is highly questionable and therefore, these documents cannot be relied upon for alleging under-valuation, especially when there is no evidence of payment being done by M/s AMA which is over and above the declared price. It is settled law that without authenticated copies of the foreign documents relied upon, the report being furnished cannot be relied upon for enhancement of value. Reliance was placed on the following decisions to support the aforesaid contention. - CC v/s South India Television P Ltd 2007 (214) ELT 3 (SC) - Collector v/s East Punjab Traders 1997 (89) ELT 11 (SC) It is settled law that applying the LME price minus discount band as per the DGOV circular for valuation of scrap is absolutely wrong. Reliance 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/1187 .....

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..... n the present case, and the Assistant Commissioner of Customs, Group - IV, JNCH, vide order dated 18.05.2009 confirmed the demand. Being aggrieved M/s AMA filed an appeal before the Commissioner of Customs (Appeals), who vide order dated 09.09.2010 set aside the aforesaid order by holding enhancement of value based on the DGOV circular without any evidence of contemporaneous import is not sustainable. Thereafter the Department filed an appeal before the Hon ble CESTAT who vide Order dated 10.7.2012, confirmed the order passed by the Commissioner (Appeals), wherein it has been held that, addition in value based on the same basis as in the present case, is deemed inappropriate in absence of any evidence of contemporaneous import at a higher price. Hence, he submitted that the decision of Hon ble CESTAT is squarely applicable to the present case 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 .....

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..... the case M/s Sunland Metal (supra) as the allegation and evidence relied upon in both the cases are similar in nature. 11.1 We note that the adjudicating authority has proceeded to redetermine the value of imported aluminium scrap on the basis of the DGOV circular without considering and overlooking the contemporaneous data available before it on record. It is a settled 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 V/s South India Television (P) Ltd. reported in 2007 (214) ELT 3 (SC). As mentioned above, the Appellant during the hearing has submitted a comparison chart 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 S .....

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..... ity. We are of the view 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 the contemporaneous goods are available, the same shall be basis for re-determining the prices. Whereas in the case of instant demands the prices of contemporaneous imports were same as that of Appellant and hence the LME Prices reduced by discount band could not have been basis for re-determining the prices and rejecting the declared value. The Appellant has pointed out that identical goods were imported in case of Pushpak Metal Corporation 2014 (312) ELT 381 which were imported during the same period and comparable with Appellant s import price. The said prices were upheld by the Tribunal and it was held that value cannot be determined on the basis of LME prices. 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 A .....

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..... e of the goods declared is ridiculously low, which of course the Assessing Authority has to justify, he must proceed to determine valuation of goods by following Customs Valuation Rules. The availability of evidence of contemporaneous import of the same goods obviously provides the best guide for determination of value of the import of goods but in the absence of evidence of contemporaneous import, reference to foreign journal for finding out correct international price of imported goods may not be irrelevant. 5.5 In the instant case, the proposition in the show cause notice is that the value of the contemporaneous imports indicated a higher price. If that be so, that should have been the starting point for determination of value of the imported goods and not some other basis. Further even when we take the values of the contemporaneous imports, 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. T .....

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..... ed thus : In the present case as mentioned above, even though there is a reference to contemporaneous import in the order passed by the Deputy commissioner no material regarding such import has been placed before us or made available by the appellant at any point of time. Therefore, assessment in this case has to be taken as having been made purely on the basis of LME Bulletin without any corroborative evidence of imports at or near that price which is not permissible under law. We, therefore, set aside the impugned order and allowed the appeal. 5. Not being satisfied with the said order, the revenue is before us in this appeal. 6. We have heard Mr. Biswajit Bhattacharya, learned Additional Solicitor General on behalf of the revenue. The assessee remains unrepresented. 7. Learned counsel submits that since the LME bulletin is a true indicator 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 .....

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..... Vs. GKN Sinter Metals Limited - 2010 (254) E.L.T. A43 (S.C.)] Same analogy has been taken by the Tribunal in case of Bothra Metal & Alloys 2013 (9) TMI 546. It is therefore absolutely clear that the redetermination of value based upon LME prices less discount band as per DGOV Alert Circular supra is not sustainable. 7. From the above judgments it is absolutely clear that applying the LME price minus discount band as per SMRI bulletin or DGIV Circular No. 14/2005 dt. 16.12.2005 is absolutely wrong. The Appellant has also relied upon the letter F. No. S/26 - Misc-1040/2005 GrIV dt. 13.02.2006 of the Commissioner of Customs, Nhava Sheva wherein the Commissioner in reference to Valuation of Aluminium Scrap under Alert Circular No. 14/2005 issued under F. No. VAL/TECH/37/2005 dt. 16.12.2005 has stated that there is no linear correlation between 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 pr .....

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..... temporaneous import, reference to foreign journals for finding out the correct international prices for the purpose of Section 14 of the Customs Act is not irrelevant. Since contemporaneous import prices were available in the present case as being noted but not accepted by the Commissioner in the Order-in- Original, departmental case for undervaluation become weak and appeal in Supreme Court is not merited We find from the communication dated 29.10.2008 of the Institute of Scrap Re-cycling Industries, INC (ISRI), wherein they have stated as under : We have been asked to explain how aluminum scrap prices are determined. Please be advised that ISRI, as a trade association, does not become involved in scrap pricing. However, our understanding of the market is that scrap prices are determined through negotiations between buyers and sellers, based 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 exch .....

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..... 007, he has stated that the import price of Aluminium Scrap was negotiated by applying different discount bands ranging from 5% to 35% to the LME price of various grades, viz. Trump, Tense, Taldon, Trob etc., which corresponded to the discount band provided in Alert Circular No. 14/2005 dated 16.12.2005 of the Director General of Valuation. In such a case, we are inclined to accept the submission of the Appellant that initially the investigating officers were attempting to apply 80% of the LME, but later on realizing that even the Director General of Valuation was not recommending valuation of 80% of the LME, the statement of Shri Sushil Agarwal was recorded to match the discount band, as per DGOV Circular. In such view of the facts, we do not find any reason to rely upon the statement of Shri Agarwal to support the allegation of undervaluation 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 .....

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..... n the apex court held as under : 6.According to us, not allowing the assessee to crossexamine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to crossexamine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by 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 .....

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..... nts could not have been relied upon. Especially in case of Mihir Bhatt, Ehsan Amin Gadawala where the only evidence was their own statements stating undervaluation. In case of other persons also in the light of above facts, the adjudicating authority should have allowed the cross examination. In absence of the opportunity to cross examine the above persons, we are of the view that no reliance can be placed upon their statements. Our views are supported by the judgment of Hon ble High Court of Gujarat in case of CC Vs. Motabhai Iron & Steel Industries 2015 (316) ELT 374 (GUJ) wherein the Hon ble High Court has held that no reliance can be placed on the statement of such witness who has not subjected himself to cross-examination by the affected party . Similarly we are of the view that no reliance can be placed on the alleged recovery of 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 Abst .....

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..... ssment, hence cannot be raised in reply to show cause notice under section 28. The contention of adjudicating authority is not sustainable as when notice under section 28 is issued to an assessee, he can contest the whole assessment to say that duty is not payable for a reason not taken up at the time of original assessment. He is entitled for all reliefs/ exemption associated with the assessment. The issues is well settled by the Tribunal s order in case of Decora Ceramics P. Ltd. 1998 (100) ELT 297, Lili Foam Indus. P. Ltd. 1990 (46) ELT 462, Bakeman Home Products P. Ltd. 1997 (95) ELT 278. 13. Further, we also find that in respect of 550 Bills of entries covered under Annexure - C, 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 Electroni .....

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..... he basis of the LME price as stated in the DGOV circular supra. We find that the Tribunal in the case of M/s Sunland Metal (supra) 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. 11.5 The Adjudicating authority in order to justify the LME based valuation has relied upon the statements of Shri Vipul Agarwal and Samir Agarwal. The Appellant has objected to such reliance, as the statements were retracted immediately and the same are contradictory to documentary evidence i.e. contemporaneous import price. The Appellant has pleaded that retracted statements cannot be accepted as evidence for confirmation of demand and the said retraction was immediately sent by RPAD to the office of DRI. The adjudicating authority 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 n .....

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..... w more so when even in the present proceedings no evidence has been produced by the department in support of the unsubstantiated claim of cash being paid towards the differential value. 11.6. We are also in agreement with the Appellant that the statements of witnesses cannot be relied upon as they failed to appear for cross-examination. The Appellant had sought cross examination of the witnesses and had justified the reason for the same. We observe that even though the adjudicating authority had granted cross examination of certain witnesses i.e Mr Ramesh Jain, Mr Azad Derasaria, Mr Narendra Jain and Mr Rajeshwar Dubey none appeared for the same. We are of the view that the Department is bound to enforce the presence of the witnesses whose cross-examination was sought by the Appellant. Our views are based on the following decisions Tulsyan 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, t .....

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..... documents with the report has no relevance as the same were not authenticated and relates to transaction between two different parties of which the Appellant is not a party of. The department through the First Secretary (Trade), Embassy of India, Brussels had obtained a report of the Belgium Customs Authorities along with its enclosures. We note that the enclosure contains a proforma invoice dated 15.04.2003 issued by M/s. Huron Valley Europe NV on M/s. Ni-Met, New York and the document is in Dutch. It is a document of a sales transaction of a European Company selling goods to an American Company in which Appellant is not involved. The same goods has been sold to the Appellant by Ni-Met under a separate independent business transaction, hence the aforesaid report cannot be applied to present import. In any event, we observe that supplier i.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 Bil .....

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