TMI Blog2020 (12) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... ] examined the provisions of section 14 of the Customs Act as it stood prior to 2007 and also as it stood after the amendment in 2007. It noticed that under the unamended provision, the principle was to find out the valuation of goods by reference to the value and it introduced a determining / fictional provision by stipulating that the value of all the goods would be the price at which such or like goods are ordinarily sold . However, under the amended provisions, the valuation is based on the transaction‟ price namely, the price actually paid or payable for the goods . What has to be seen under section 14(1) of the Customs Act, as amended in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of importation. Sub-section (1) of section 14 of the Customs Act also makes it clear that the price actually paid or payable for the goods will not be treated as transaction value‟ where the buyer and the seller are related to each other. As per the first proviso to the amende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e officer to have mentioned in the show cause notice why the provisions of sub-section (4) of section 28, which permits notice to be issued within five years, were being invoked. In the absence of any charge in the show cause notice and finding in the order passed by the Principal Commissioner, the confirmation of the demand cannot also be sustained - it is not possible to sustain the order dated May 30, 2019 passed by the Principal Commissioner. Appeal allowed - decided in favor of appellant. - CUSTOMS APPEAL NO. 52251-52254 OF 2019 and CUSTOMS APPEAL NO. 52277 OF 2019 - FINAL ORDER NO. 51642-51646/2020 - Dated:- 17-12-2020 - MR. JUSTICE DILIP GUPTA, PRESIDENT AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Shri Alok Aggarwal, Shri Shubham Tyagi and Ms. Vartika Kashyap Advocates for the Appellant Shri Sunil Kumar, Authorised Representative of the Department ORDER Customs Appeal No. 522534 of 2019 has been filed by M/s Shubham Chemicals Solvents Ltd. [the Appellant] to assail the order dated May 30, 2019 passed by the Principal Commissioner of Customs, New Delhi [the Principal Commissioner] The order seeks to reject the assessable value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ifference of US$ 1681.49 per MT and the landed value of the goods. Landed value‟ has been defined to mean the assessable value as determined under the Customs Act and includes all duties of customs, except duties levied under sections 3, 8B, 9 and 9A of the Customs Tariff Act, 1975[Tariff Act]. According to the Department, the Appellant had artificially increased the transaction value of melamine to over US$ 1681.49 per MT so as to evade anti-dumping duty. Accordingly, show cause notices were issued. The Principal Commissioner has, by the impugned order, rejected the assessable value declared by the Appellant and redetermined the assessable value as a result of which anti-dumping duty has been levied on the Appellant with interest and penalty. 5. The Appellant had contended that the goods were imported under proper Bills of Entry based on High Sea Sales Contract and that all the payments had been made through bank transactions in terms of the contracts and that proper customs duty had been paid. Thus, the goods did not attract anti-dumping duty in terms of the Notification dated February 19, 2010. 6. The Principal Commissioner framed the following four issues for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was correctly invoked. 10. In regard to the third issue, the Principal Commissioner found that the goods had already been released and, therefore, were not available for confiscation and, therefore, refrained from imposing any redemption fine. 11. In regard to the fourth issue, as to whether any penal action could be taken, the Principal Commissioner found that since the charge of over valuation of the imported goods and evasion of anti-dumping duty had been established and the goods were liable to confiscation under section 111(m) of the Customs Act, the importers, namely, M/s Shubham Chemicals Solvents Ltd., M/s Chemical Connection and M/s Aishwarya Overseas were liable for penal action. The Principal Commissioner also found that penalty had to be imposed upon Ajay Kapur, Manish Singhal, Sharad Verma and Kishori Saran Goel under sections 112(a) and 114AA of the Customs Act. 12. Shri Alok Aggarwal, learned Counsel appearing for the Appellants, made the following submissions : (i) The Principal Commissioner has relied upon certain statements, with which neither the Appellants were confronted nor was cross-examination permitted, to hold that the price of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner of Customs, Cochin [ 2016 (331) ELT 402 (Ker.)]; (c) Sudhir Sharma vs. Commissioner of Customs [ 2015 (319) ELT 450 (Del)]; (d) Ahmednagar Rolling Mills Pvt. Ltd. vs. Commissioner of Central Excise, Aurangabad [ 2014 (300) ELT 119 (Tri.-Mumbai)]; (e) Sharad Ramdas Sangle vs. Commissioner of Central Excise Customs, Aurangabad [2017 (347) ELT 413 (Bom.)]; and (f) Telestar Travels Pvt. Ltd. vs. Special Director of Enforcement [ 2013 (289) ELT 3 (SC)]; (ii) The High Sea Sales agreements were only paper transactions to increase the value the goods imported with the sole purpose of evading anti-dumping duty and cannot be considered as normal business transactions; (iii) Customs duty amounting to ₹ 32,80,042/- towards the import of 110 MTs melamine imported by M/s Aishwarya Overseas was paid by Ajay Kapur in advance, when in the normal course of business the customs duty is discharged by the firm importing the goods; and (iv) The present case is not a case of tax avoidance, but of tax evasion since anti-dumping duty was evaded by using fake paper transactions. 14. The submissions advanced by the learned Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fication Country of origin Country of export Producer Exporter Amount Unit of measure -ment Currency 1. 2 3 4 5 6 7 8 9 10 11 1. 2933 61 00 Melamine Melamine China PR Any Any Any 1681.49 Metric tonne US Dollar 2. 2933 61 00 Melamine Melamine Any country other than China PR China PR Any Any 1681.49 Metric tonne US Dollar 2. The anti-dumping duty imposed under this notification shall be effective f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 4184440 dt. 26.12.2013 63 1550.00 1721.43 6327679 0 1635862 4. 4537990 dt. 03.02.2014 44 1649.90 1832.38 4651823 0 1202611 5. 4537995 dt. 03.02.2014 88 1649.90 1832.38 9303645 0 2405223 6. 4691492 dt. 20.02.2014 88 1675.00 1860.25 9559028 0 2471246 7. 5082362 dt. 02.04.2014 88 1552.00 1723.64 8688262 0 2246131 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sale, for delivery at the time and place of importation or exportation, as the case may be, in the course of international trade, where - (a) where the seller and buyer have no interest in the business of each other; or (b) one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. (1A) Subject to the provisions of sub-section (1), the price referred to in that sub-section in respect of imported goods shall be determined in accordance with the rules made in this behalf. (2) Notwithstanding anything contained in sub-section (1) or sub-section (1A), if the Board is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the goods when sold for export to India for delivery at the time and place of importation. Therefore, it is the price which is actually paid or payable for delivery at the time and place of importation, which is to be treated as transaction value. However, this sub-section (1) further makes it clear that the price actually paid or payable for the goods will not be treated as transaction value where the buyer and the seller are related with each other . In such cases, there can be a presumption that the actual price which is paid or payable for such goods is not the true reflection of the value of the goods. This Section also provides that normal price would be the sole consideration for the sale. However, this may be subject to such other conditions which can be specified in the form of Rules made in this behalf. 23 As per the first proviso of the amended Section 14(1), in the transaction value of the imported goods, certain charges are to be added which are in the form of amount paid or payable for costs and services including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lamine imported and cleared by the said firms at the time of import to India were not the correct transaction values since the importers of melamine had resorted to evasion of anti-dumping duty by over valuation of the goods imported. In this connection, the Principal Commissioner placed reliance on the statements of co-noticees, Manish Singhal, Sharad Verma and Kishori Saran Goel. As noticed above, anti-dumping duty was leviable on the import of melamine from China in terms of the Notification dated February 19, 2010. This Notification provides that anti-dumping duty shall be imposed at the rate which is equivalent to the difference of US$ 1681.49 per MT and the landed value of the goods. 24. It has been submitted on behalf of the 3 firms that denial of cross-examination of these 3 co-noticees had vitiated the order. This contention was not accepted by the Principal Commissioner for the reason that no prejudice had been caused by not allowing the cross-examination of the 3 co-noticees. The relevant portion of the order on this aspect is reproduced below:- Find that the above Co-Noticees had tendered their statements voluntarily and they had not retracted their said sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is valuable right of the accused/noticee in quasi-judicial proceeding which can have adverse consequences for them. (emphasis supplied) 27. The Delhi High Court in Commissioner of Central Excise, Delhi II v/s Balajee Perfumes [ 2017 (358) E.L.T. 87 (Del.) ], while dealing with a Central Excise matter, also observed that unless the makers of the statements are not available, there is no justification to deny the right of cross-examination. 28. The Punjab and Haryana High Court in Jindal Drugs also observed that reliance can be placed on the statements made only if the persons who made the statements had been subjected to cross-examination. The relevant portion of the judgement is reproduced below:- 25. (iv) Once examination-in-chief, of the makers of the statements, on whom the Revenue seeks to rely in adjudication proceedings, takes place, and a copy thereof is made available to the assessee, it would be open to the assesse to seek permission to cross-examine the persons who have made the said statements , should it choose to do so. In case any such request is made by the assessee, it would be incumbent on the adjudicating authority, i.e., on Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the Appellant with the said statements but also permit cross-examination of these three persons who had given statements regarding the valuation of the imported goods, for it is these statements that formed the basis for holding that the value of the imported goods had been inflated. These statements could not have been taken into consideration for determination of the transaction value since the Appellant was not confronted with these statements and permission to cross-examine them was rejected. The decisions relied upon by the learned Authorized Representative of the Department are on their own facts and would not advance the submissions of the Representative. 33. Thus, if the statements cannot be relied upon, and the only reason given by the Principal Commissioner to deny cross-examination was absence of prejudice‟, the finding recorded by the Principal Commissioner that the value of the imported goods had been inflated on the basis of these statements cannot be accepted. 34. What needs to be noticed is that all the imports were made on the basis of High Sea Sales agreements which were executed and payments were made through proper banking channels. High Sea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the department made an attempt to reduce the transaction value so that anti-dumping duty could be imposed because of the mode provided in the Notification for charging anti-dumping duty. 39. It is seen that in terms of Notification dated February 19, 2010, anti-dumping duty was imposed on goods originating from China at a rate that was equivalent to difference between US$ 1681.49 per MT and the landed value. Thus, if the landed value was more than US$ 1681.49 per MT, no anti-dumping duty was required to be paid. The Central Government took cognisance of this lacuna and by a subsequent Notification dated January 28, 2016 provided that anti-dumping duty would be levied at the rate equal to a specified fixed amount. Thus, w.e.f. February 19, 2020 anti-dumping duty is not dependent on the difference between US$ 1681.49 per MT and the landed value. 40. Learned Counsel for the Appellant has also submitted that the extended period of limitation contemplated under sub-section (4) of section 28 of the Customs Act could not have been invoked in the facts and circumstances of the case as there was no wilful mis-statement or suppression of facts with intent to evade payment of anti- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount specified in the notice. Hence, the time limit for serving the show cause notice had been already barred. Further section 28 of the Customs Act, 1962 also provides for demanding the duty within 5 year if any duty has not been levied/short levied or has not been paid/ short paid by reason of collusion or any wilful mis-statement or suppression of facts by the importer or the agent or employer of the importer. In the instant case the show cause notice does not contain any allegation whatsoever of any facts constituting any collusion or mis-statement or suppression of facts against the noticee for the purpose of invoking the extended period of limitation under the provisions of section 28 of the Customs Act, 1962 and in this regard, attention is drawn on the Apex Court judgement in the case of Collector of Customs vs. H.M.M. Limited [reported in 1995 (76) ELT 497 (S.C.)], wherein Hon‟ble Supreme Court held that limitation for extended period was not invocable unless the show cause put the assesse to notice specifically as to which of various commissions or omissions stated in the proviso to section 11-A(1) of the Central Excise and Salt Act had been committed; that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded in evading payment of anti-dumping duty. 46. In this connection it would be appropriate to refer to certain decisions regarding invocation of the extended period of limitation, though in the context of the provisions of section 11(A) of the Excise Act. 47. In Pushpam Pharmaceuticals Co. vs. Commissioner of Central Excise, Bombay [ 1995(78)ELT 401 (SC) ], the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. It is in this context that the Supreme Court observed that since suppression of facts ‟had been used in the company of strong words such as fraud, collusion, or wilful default, suppression of facts must be deliberate and with an inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. 49. These two decisions in Pushpam Pharmaceuticals Co. and Anand Nishikawa Company Ltd. were followed by the Supreme Court in a subsequent decision of the Supreme Court in Uniworth Textile Limited vs. Commissioner of Central Excise, Raipur [2013 (288) ELT 161(SC)] and the observations are: 18. We are in complete agreement with the principal enunciated in the above decisions, in light of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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