TMI Blog2020 (3) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... has established the case of undervaluation by reliable evidence. Valuation - rejection of transaction value - allegation is that the appellants and their overseas suppliers are related and therefore the transaction value declared requires to be rejected - HELD THAT:- The learned Commissioner has dealt the issue at length and came to the conclusion that the appellants and the overseas suppliers are not related. However, learned Commissioner sets out a case on the basis of the contents in the emails - the learned Commissioner has arrived at the conclusion that there was under valuation to the extent of USD 120 PMT. Learned Counsel submits that price shown at 625 USD PMT was an offer price; Shri Anand Mathur informed Gulf Petrochem, vide mail dated 9.5.11, that they did not agree to the price and the same was not commercially viable. She submits that as per prevailing practice 15-20% discount was given and they got 20% discount. Though Shri Rutul Shah in his statement dated 13.2.2012 stated that 625 USD was Proforma price and value declared to customs was USD 505; however he did not accept that there is undervaluation; Shri Nikharv Shah in his statement dated 16.2.2012 said he was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AE; the appellants made enquiries; procured quotations from various manufacturers; benchmarked the same against the price of Bitumen grade 60/70 sold by M/s. Indian Oil Corporation (IOC), a manufacturer; evaluated the same to ascertain the price feasibility, vendors /manufactures past track record in adhering to supply schedule, quality control etc. and placed orders. Officers of DRI, Ahmedabad visited and searched the office premises of the Appellants on 09.01.2012and seized certain files and copied certain data in two DVDs. DRI issued 3 separate Show Cause Notices, in respect of imports at different ports. It was alleged that the appellants misdeclared country of origin; GSEC (appellant) Gulf Petrochem were related parties; appellants misdeclared value, to evade payment of Customs Duty and that Shri Anand Mathur, Shri Nikharv Hashmukh Shah, Shri S K Gowri Shankar and Shri Sachin Saxena abetted with GSEC Ltd. to undervalue the said goods. The Commissioner, vide Order No.26/2014dated 30.07.2014/22.08.2014, confirmed the demand of customs duty of ₹ 2, 17, 95,982 along with interest; imposed a penalty of ₹ 44, 28,101+₹ 25, 00,000on the appellants; imposed a penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Panchnama cannot be relied upon as it violated the principles of natural justice; appellant requested for the inspection of DVDs and for the copy of the same but has been denied; denial of cross examination of the Panch witnesses and copy of the DVD constitutes violation of the principles of natural justice. She relied on the following rulings as to requisites to be followed in drawing panchnama. (i). Kuber Tobacco Products Ltd Vs Commissioner of C. Ex. Delhi, (2013 (290) ELT 545 (Tri-Del) (ii). M.P. Jain vs. CC, 1988 (37) ELT 577 (Tribunal) (iii). Laxmi Prasad Vs CE, 2009 (248) ELT 489 (Tri - Kolkata) (iv). Plastic DuniyaVs CCE, 2005 (190) ELT 381 (Tri- Del) (v). GunwantraiHarivallabha Jani, Ranvir Bidi Works Vs CCE, 1987 (29) ELT 151 (Tri) 4. Learned counsel further submits that authenticity of emails copied into DVD is in doubt due to non-presence of Panch witnesses, denial of opportunity to cross-examine the witnesses (Panch), and the fact that statement of Shri Rakesh Shah was not recoded; it is a settled law that an electronic record shall not be admitted in evidence unless the requirements under Section 65B of Indian Evidence Act, 1872(al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as per the import documents, which is U.A.E, and he further deposed that there is no extra benefit accrued if the country of origin is declared as U.A.E or Iran. In a catena of decisions, it is held that charge of misdeclaration cannot be sustained against the importer when Bills of Entry were filed based on documents received from foreign suppliers. She relies on the following cases. (i). Surya Roshni Ltd Vs CC 2002 (147) ELT 84 (ii). Shri Ganesh International Vs CCE 2004 (174) ELT 171 (iii). Porcelain Crafts components Exim (P) Ltd Vs CC, 2001 (138) ELT 471 (iv). CC Vs Essar Projects Ltd 2004 (165) EST 537 (v). Ganapati International vs. CC, 2001 (130) ELT 370 (vi). Makali Metals Pvt. Ltd. vs. CC, 2001 (138) ELT 607 Where there is no change in duty payable, the wrong mentioning of country of origin would not amount to misdeclaration as affirmed in the following cases. (i). BEL India Trade Pvt Ltd Vs CC New Delhi 2007 (216) ELT 441 (Tri Del). (ii). Saboo George Vs CC Kandla 2008 (230) ELT 535 (Tri. - Del.) (iii). CC (EP) Mumbai-I Vs Paras Industries 2010 (257) ELT 481 (Bom) 6. Learned counsel submits that appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfied, the value is to be accepted, being the transaction value. She relies upon the following rulings. (i). Eicher Tractors Limited - 2000 (122) ELT 321 (SC) . (ii). Jai Bharat Steel Industry - 2005 (192) ELT 792 (SC) (iii). Bureau Veritas - 2005 (181) ELT 3 (SC) (iv). Bansal Industries - 2002 (147) ELT 967 (SC) (v). Aryan Chemicals - Order dated 19.02.2013 by Commissioner (Appeals), Ahmedabad 8. Counsel submits that simple replacement of transaction value with the highest price of comparable goods is not permitted by Section 14 of the Customs Act 1962 or the said Rules; in the instant case, there is no specific evidence on record which brings out that transaction value between GSEC and foreign suppliers has been influenced by non-commercial consideration, and that invoice price does not reflect or reveal the real transaction value; Tribunal, in the case of Oswal Fats Oil Vs CC 2007 (220) ELT 795 (T), held that fixed price for goods would not remain same for the imported goods when the price fluctuates in reality, and the price in a particular transaction can be rejected only when there is information or evidence that transaction was not a comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers placed with the suppliers; Shri Rutul Shah in his statement dated 13.02.2012 stated that as per Proforma Invoice No.153, actual price was US$ 625 PMT the price declared to Customs was US$ 505; he did not admit that there was any undervaluation of goods and any differential amount was paid to the suppliers; Shri Nikhrav Shah in his statement dated 16.02.2012 shown unawareness about difference of US$ 120 and how the payment was made to Gulf Petrochem. 10. Learned counsel also submits that in respect of Bill of Entry No. 100 dated 24.10.2011 and emails pertaining to Bill of Entry No.100, appellants, in their reply submitted that emails copied into DVDs cannot be relied upon as evidence; finding was made, based on e-mail dated 26.10.2011 exchanged between Shri Gowri Shanker and Shri Sachin Saxena; the said e-mail cannot be relied upon; appellants provided official email ID to all employees and strictly instructed not to deal with any of the suppliers or buyers with their personal e-mail Id; respective persons were only shown the emails but were not asked to comment upon; in the present case, Shri Gowri Shanker marked the purported e-mail to Sachin Saxena on his personal e-mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicated in journals of repute are relevant and to be considered when transaction value provided is in doubt or not determinable; price at which appellants sold the imported goods in the domestic market is comparable with the price at which IOC sold; in the complete absence of any evidence or material on the above facts, it cannot be held that undervaluation of goods took place and thus re-determination of value of the said goods is not needed; in case of C.C. vs. Initiating Explosives (I) Ltd., 2008 (224) ELT 343, the Supreme Court held that the burden to prove undervaluation lies squarely on the Revenue and the same was not discharged; therefore, there is no case made out for redetermination of declared value; Tribunal in case of Truwoods Pvt Ltd Vs Commissioner of Cus, Vishakhapatnam, 2006 (204) ELT 288 held that where there is evidence of contemporaneous imports, the transaction value cannot be determined on any other basis; as there is complete absence of evidence of contemporaneous imports at higher prices and, therefore, the transaction value needs to be accepted. 13. Shri Gopa Kumar, Joint Commissioner, Authorised Representative, appearing for the department, reite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d; therefore, allegation of tampering made as last resort is meaningless; the authenticity of the mails was accepted in statements; there is no violation of the conditions of Section 138C of the Customs Act, 1962, as the computer from which the e-mails were retrieved was in regular use and in was in control of appellants; data download from the official computer was certified by Sri. Rakesh Shah, Chairman and MD; courts have admitted electronic evidence under the provisions of Sec 65B of the evidence Act and same is acceptable under Sec 138C of the Customs Act, 1962; Hon ble Delhi High Court upheld the same in (i). M/s. ICICI Bank Ltd Vs Vinod (ii) Kundan Singh Vs the State (2015) and (iii) M. P. Goenka Vs Commissioner of Customs. 16. Replying to the allegation of non-adherence to the principles of Natural Justice, learned AR submits that the SCN was issued in time and ample opportunities were given to the appellants to explain their position; appellants persons appended signatures to the evidences relied upon; requests for cross examination of Shri Nikharv Shah, Shri Sachin Saxena, Shri Gowri Shankar, Shri Nimesh Shah and Shri Hasmukh N. Hangu (Panch witnesses) were sought; th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements of Anand Mathur, Nikharv Shah, Scahin Saxen and Gowri Shankar were taken out in duress; the same were not withdrawn/retracted. Shri Gowri Shankar, MD, M/s. Gosma Trading Co, on seeing email dated 15.09.2011, accepted that the value declared to customs by appellants was less by about 110 USD per MT; on seeing email dated 09.09.2011, he accepted that the price of M/s. Prime Tankers was less by about USD 110 per MT and they have not informed Customs about the discount (Para 4.2 of the O-i-O). Shri Rutul K. Shah, Deputy Manager (Accounts), of the appellant, on seeing e-mail dated 10.06.2011, admitted that an amount of ₹ 2 Crore was shown as payable to M/s. Gulf Petrochem indicated that extra money was being repatriated to the supplier M/s Gulf Petrochem (Para 4.3 of the Oi- O). Sri Anand Mathur, admitted in his statement dated 30.04.2012, that the e-mails shown as evidence were exchanged among him/other officials of his company, Shri Nikahrv Shah of M/s AEP and Shri Gowri Shankar of M/s. Gosma Trading with various officials of M/s. Gulf Petrochem / M/s. Prime Tankers. AR submits that there are strong evidences in the undervaluation adopted by the appellants; appellant s co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the presence of Panch witnesses and Shri Rakesh Shah. Contrary to this, the learned AR submits that it is clear from the Panchnama that the Panch witnesses were present during the entire proceedings of Panchnama on 9/01/2012. It is not forthcoming from the Panchnama that the panchas were not present during the entire proceedings. Regarding the e-mails, the Panchnama states that they (officers) also find a desktop computer installed in the chamber (of Shri Shaishav Shah) and recovered certain documents there from and placed them in made up file; they also find a desktop computer installed in the chamber and switch on the same and verify data stored therein and find certain e-mails useful for their investigation and they copied these emails useful for investigation and they copied the mails in a DVD and marked the same as DVD1 . Similar wordings are there to indicate the copying of emails from DVD2. In this connection, we find that Delhi Bench of the Tribunal has gone into the issue of drawl of Panchnama and seizure of documents in the case of Kuber Tobacco Products Ltd. Vs. CCE, New Delhi [2013(290) ELT 545 (Tri. Del.)]. The Tribunal has pointed out various lacunae in the Panchnama ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and procedural infirmities in the Panchnama proceedings noted above, it is apparent that the entire proceedings have lost their credibility and serious doubt arises even about the credibility of the materials stated to have been collected in the course of such proceedings. 22. Keeping the above findings in the background and going through the Panchnama in the instant case, we find that the Panchnama in question also suffers from the various discrepancies discussed in the case referred above. Coming to the precise issue of taking out the emails from respective computers, the Panchnama does not record the vital questions relating to the start of computers and copying of the emails. We find that learned counsel has raised certain vital questions as to where was the computer; what type of a computer it was; what was the password for opening of the computer; how did the officers get the password; if they got from others, who was the other person; what was the email id; what was the password of the email id etc. We find that Panchnama does not answer these questions. We also find that statement of the responsible person i.e. Shri Rakesh Shah, Chairman and MD, was not recorded, who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signature the emails were copied on to the DVDs). The records also do not contain the statements of either Shri Shaishav Shah or Shri Rakesh Shah . It is very surprising that the statement of Shri Shaishav Shah, from whose computer data was retrieved in his absence, was not recoded. Statement of Shri Rakesh Shah, Chairman and MD of the appellant, who was available throughout the search, was also not recorded. Learned counsel relies on the judgment of Hon ble Supreme Court in the case of Anwar P.V. Vs. P.K. Basheer (supra). We find that apex court observes as follows: - 14. Under Section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied : (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced; (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under Section 65B(2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of computer printouts from the seized laptops and other electronic devices have not been accompanied by a certificate as required by Section 138C(2) as above. In the absence of such certificate, in view of the unambiguous language in the judgment of the Hon ble Supreme Court (supra), the said electronic documents cannot be relied upon by the Revenue for confirmation of differential duty on the appellant. In the present case, the main evidence on which, Revenue has sought to establish the case of undervaluation and misdeclaration of the imported goods is in the form of the computer printouts taken out from the laptops and other electronic devices seized from the residential premises of Shri Nikhil Asrani, Director in respect of which the requirement of Section 138C (2) has not been satisfied. On this ground, the impugned order suffers from uncurable error and hence, is liable to be set aside. In view of the above, we find that the electronic evidence discussed relied upon in the show-cause notice were not obtained as per the procedure laid down under Section 65B of Indian Evidence Act, 1872 or Section 138C of Customs Act, 1962, as rightly submitted by the counsel for the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reliance is now on the statements of two persons, who are in fact co-noticees in the subject case. In absence of any documents to show that either the capital was shared or profit and loss was shared, it is not possible to rely only on the statements to hold that the said two firms are related. (iii) (Para 67.5) Mere recommendation of particular person/company for appointment as vessel operator/shipping company does not make Gulf Petrochem GSEC related persons. Similarly sending of daily sales reports or intimating difference in the quantity will also not make them related, as these are normal business practices. Customs Act or the CVR, 2007 do not consider such acts as amounting to related persons. (iv) (Para 67.6) Shri Anand Mathur has requested to revise the proforma invoice as the cargo was shifted to Karwar. There is no request for reduction in the CIF value; No other invoice is forthcoming indicating that the final price was again reduced to USD 482.As there is increase in the price for which bill of entry is also filed and duty is paid on such higher value, it cannot be said that GSEC have influenced the price. (v) (Para 67.7) on examining the e-mail d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her price in contemporaneous imports, and in the absence of violation of any condition of Rule 3(1) of CVR, 1988, it was not correct to reject the declared value. We find that learned Commissioner has arrived at the conclusion that there was under valuation to the extent of USD 120 PMT. Learned Counsel submits that price shown at 625 USD PMT was an offer price; Shri Anand Mathur informed Gulf Petrochem, vide mail dated 9.5.11, that they did not agree to the price and the same was not commercially viable. She submits that as per prevailing practice 15-20% discount was given and they got 20% discount. Though Shri Rutul Shah in his statement dated 13.2.2012 stated that 625 USD was Proforma price and value declared to customs was USD 505; however he did not accept that there is undervaluation; Shri Nikharv Shah in his statement dated 16.2.2012 said he was unaware of difference of USD 120 in the transaction. 28. We find that learned Commissioner has proceeded on the figures found in emails without ascertaining if the same were finalised. We find that learned Commissioner accepted the declared price in respect of Bills of Entry and revised the same in some Bills of Entry. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uss the conditions violated if any therein. However, we find that learned Commissioner has not given any reasons to indicate as to how the declared prices were rejected under the provisions of Customs Valuation Rules. We find that Apex Court in the case of Eicher Tractor Ltd. supra have laid down that 7. The rules which have been framed are the Customs, Valuation (Determination of Price of Imported Goods) Rules, 1988. The rules came into force on 16th August, 1988. Under Rule 3(i) the value of imported goods shall be the transaction value . Transaction value ' has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4(1) in turn states : The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules. 8. Reading Rule 3(i) and Rule 4(1) together, it is clear that a mandate has been cast on the authorities to accept the price actually paid or payable for the goods in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , unless of course the price is unacceptable for the reasons set out in Rule 4(2). Payable in the context of the language of Rule 4(1) must, therefore, be read as referring to the particular transaction and payability in respect of the transaction envisages a situation where payment of price may be deferred. 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 same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on under CVR, 1988/2007 to consider the quotation price/quoted price to be assessable value. 31. We find that there is no evidence placed to show that there has been a flow-back of money from the importer to the overseas suppliers. Under these circumstances, we find that the prices declared by the appellants need to be considered as assessable value. We find that in the absence of evidence to effect that there is no flow-back, declared prices cannot be rejected in view of the judgment of the Tribunal in Impex Steel and Bearing Co 2014(302) ELT 464 (Tri- Del) and Shri Maruthi Nandan Impex 2014(302) ELT 406 (Tri- Mum).The chairman/MD, of the appellant, was not questioned either about the discrepancies or on the averments of other persons. It is surprising that the investigations were concluded without questioning the Top man or without giving the reasons as to why such person is only a dummy and someone else was managing the affairs. We find that the department has missed out on an opportunity to fortify its own case. 32. We find that the appellants have submitted the prevailing international prices on the basis of certain commercial documents. The same were not considered in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared as the import documents indicated the COO to be UAE. She however, submits that they had nothing to gain in terms of duty payable by misdeclaring COO as there is no differential duty. On going through the records we find that at least in two instances, as observed in the OIO, COO was declared to be Iran. However, the OIO is silent on action, taken by the department in respect of those consignments, other than provisional assessment. The OIO is silent if any action, such as seizure or informing RBI etc, taken in respect of such consignments. The OIO doesn t link the misdeclaration to the redetermination of value also. Therefore, the department, though established the misdeclaration, did not proceed further to discuss the consequences and penal action, thereby supporting the counsel s contention that it has no bearing on the case. We find that the department was well within its right to seize the goods for such misdeclaration and impose penalties under Section 112 of Customs Act, 1962, notwithstanding the fact that the appellants had nothing to gain financially by such an action as there was no differential duty involved. We find that mens rea is not an essential prerequisite ..... X X X X Extracts X X X X X X X X Extracts X X X X
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