TMI Blog2022 (1) TMI 812X X X X Extracts X X X X X X X X Extracts X X X X ..... onal charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. In the present case, the Barge was earlier on charter to M/s. Afcons Gunanusa Joint Venture who had imported it under a Bill of Entry dated October 22, 2010 with the declared value of ₹ 23.41 crores, which value was accepted by the Department. The declared value of the Barge in the Bill of Entry dated August 25, 2011 is US Dolla₹ 6,000,000.00, freight US Dolla₹ 5,000 and insurance US Dolla₹ 29,657.00 totaling US Dolla₹ 6,034,657.000 (CIF) equivalent to ₹ 26,97,49,167/- - contention of the appellant is that it had correctly declared the transaction value as the assessable value for the purposes of customs duty and it is also not the case of the Department that the assessable value declared by the appellant is not the transaction value since the entire case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Dated:- 18-1-2022 - MR. DILIP GUPTA, PRESIDENT AND MR. P.ANJANI KUMAR, MEMBER (TECHNICAL) Shri Anupam Dighe, Advocate for the Appellant Shri Ramesh Kumar, Authorized Representative for the Respondent ORDER Customs Appeal No. 87423 of 2014 has been filed by M/s. Bhambani Shipping Ltd [ the appellant ] to assail the order dated February 24, 2014 passed by the Commissioner of Customs(Import), Mumbai Zone-I [ the Commissioner ], by which the declared Cost, Insurance and Freight [ CIF ] value of the barge Halani Star [ the Barge ], imported and sought to be cleared through a Bill of Entry dated August 25, 2011, under rule 12 of the Customs Valuation (Determination of Value Of Imported Goods) [ 2007 Valuation Rules ] has been rejected and it has been re- determined under rule 9 of the 2007 Valuation Rules. The Barge has also been confiscated under section 111(m) of the Customs Act 1962 [ the Customs Act ] with an option to the importer to redeem it under section 125 of the Customs Act on payment of redemption fine of ₹ 3.5 crores. The order also seeks to confirm the demand of customs duty of ₹ 5.11 crores leviable on the Barge with equipments, spa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quipment, expected residual life and the enquiry in market, the fair and reasonable price in our opinion is US Dollar 6,000,000.00(FOB) [US Dollars Six Million only]. 7. The appellant filed a Home Consumption Bill of Entry on August 25, 2011 under section 46 of the Customs Act seeking clearance under First Check Examination procedure, as applicable to the imported old and used second hand machinery. The value declared in the said Bill of Entry was US Dollars 6,034,657.00 (CIF), equivalent to ₹ 26,97,49,167/-. This value, according to the appellant was based on the Invoice, MOU, Bill of Sale, Insurance and Chartered Engineer Certificate. The customs duty was calculated to be ₹ 4,12,70,061/-. 8. The First Check Examination Order was given with an instruction to conduct an examination under the supervision of Officers of SIIB (Import), who had gathered information that the said vessel was under invoiced to evade customs duty. 9. The Barge was examined by the Dock staff in the presence of SIIB Officers, who observed that considering the number of people that could be accommodated on the Barge and the accessories, equipments on board the vessel, the vessel appeared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed. 15. A show cause notice dated December 28, 2012 was thereafter, issued to the appellant and the Managing Director under section 124 read with section 28 of the Customs Act. The allegations contained in the show cause notice were denied by the appellant and the Managing Director. An order dated February 24, 2012 was, thereafter, passed by the Commissioner redeterming the value of the Barge and the relevant observations and findings are as follows: 20. The basic issue to the considered in the instant case is as to whether the Work accommodation Barge named Halani Star (hereinafter referred to as the impugned barge ) imported by M/s Bhambani Shipping Ltd. vide Bill of Entry No. 4460906 dated August 25, 2011 was willfully misdeclared in terms of value owing to suppression of facts. As a corollary thereof it is also to be decided as to whether the declared value is to be enhanced and duty demanded and confirmed on the value so enhanced . The liability to confiscation of the impugned barge on account of misdeclaration of value, if any and the consequent penal provisions to be invoked on the notices are the remaining issues which need consideration. xxxx xxxx xx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout recording his statement of cross examining him. Therefore, to pick holes in the certificate of Chartered Engineer without cross-examining him is not just and proper in law. Xxxxxxxxxx Thus, in this case the Chartered Engineer who had earlier given the valuation on the basis of the limited data made available to them had been appointed, on the request of the notice themselves, to inspect and verify the value of the equipments whose valuation had been left out in their report. Therefore, in the facts and circumstances of the case the case law relied upon by the notice is not applicable. (emphasis supplied) 16. Shri Anupam Dighe, learned counsel appearing for the appellant made the following submissions: i. The appellant had correctly declared the transaction value as the assessable value for the purpose of customs duty. It is not the case of the Department that the assessable value declared by the appellant is not the transaction value; ii. The entire case of the Department is based on the revised Valuation Report issued by the Chartered Engineer. On comparing the two Reports dated 22.07.2011 and 12.10.11, it can be seen that the vessel particulars, which had pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods can be initiated only under section 124 of the Custom Act and the goods can be confiscated under Section 125(1) of the Customs Act. The goods of the appellant were seized prior to assessment on 19.10.2011. The provisional assessment was made and provisional release of the Barge was granted only on 19.04.2012 when the appellant paid the customs duty of ₹ 5,15,62,600 and cleared the Barge. As such, it is not a case of short payment or non-payment of customs duty. In support of this submission reliance has been placed on Sri. Amit Rajkumar Singhania vs. Commissioner of Customs (ACC), Mumbai and others [ 2019-TIOL-2991-CESTAT-Mumbai ]; and Surendra R. Choudhary vs. Commissioner of Customs (Import), Nhava Sheva [ 2019 (369) ELT 1762 (Tri.-Mumbai) ]; ix. As there was no attempt to mis-declare the value of the Barge by the appellant, the goods cannot be liable to confiscation under section 111(m) of the Customs Act. As such, the confiscation and the consequent redemption deserve to be set aside; x. In any event, even if it is held that the Barge was liable to confiscation on technical grounds, the redemption fine should be nominal, considering the facts and circumsta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. 229 (Ker.) ]; iii. As the Managing Director himself had made the statement under section 108 of the Customs Act, the Department was justified in adopting the value. In support of this contention, reliance has been placed on the decision of the Tribunal in Sangeeta Metals (India) vs. Commr. of Customs (Import), Nhava Sheva [ 2015 (315) E.L.T. 74 (Tri-Mumbai) ]; iv. The value of the goods mentioned in the certificate issued by the Chartered Engineer has to be relied upon, since ignoring it would amount to a mistake apparent on the record. In support of this contention, reliance has been on the decision of the Tribunal in Alfa Traders vs. Commissioner of Customs, Cochin [ 2008 (233) E.L.T. 289 (Tri.-Bang.) ]; v. The demand was raised under section 28(4) read with section 125(2) of the Customs Act and the order has also confirmed the demand under section 28(4) read with section 125(2) of the Customs Act; vi. Penalty was correctly imposed the Managing Director. In support of this submission reliance has been placed upon the decision of the Madras High Court in Commr. of Cus. (AIR), Chennai vs. A.P. Pinherio [ 2014 (306) E.L.T. 349 (Mad.) ]; and vii. Where it is intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its amendment, is reproduced below: Section - 14 Valuation of goods - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force whereunder a duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in section 14(1) of the Act was noticed by the Supreme Court in paragraphs 22 and 23 of the judgment and they are reproduced below: 22. The underlying principle contained in amended sub-section (1) of Section 14 is to consider transaction value of the goods imported or exported for the purpose of customs duty. Transaction value is stated to be a price actually paid or payable for 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing US Dollars 6,034,657.000 (CIF) equivalent to ₹ 26,97,49,167/-. It needs to be noted that the appellant had purchased the said second hand Barge with all standard accessories for a transaction value of US Dollars 6,000,000.00 (FOB) to be paid directly to the bank account of the seller and the Bill of Sale was executed on July 05, 2011. Earlier M/s. Afcons Gunanusa Joint Venture had imported the said Barge under a Bill of Entry dated October 22, 2010, wherein the declared value was only ₹ 23.41 crores. 27. An inspection was carried out by Chartered Engineer of a Government Approved Inspection and Certification Agency, who opined that the fair and reasonable price of the Barge would be US Dollars 6,000,000.00 (FOB). Later on, at the instance of the Department, the Barge was again re-examined by the same Chartered Engineer, who this time issued a revised certificate and amended the FOB value from the Barge from US Dollars 6,000,000.00 (FOB) to US Dollars 7,385,500. 28. In paragraph 23 of the order, the Commissioner has noted why there was a change in the CIF value of the Barge and the said paragraph is reproduced below: 23. It is evident from the Para 9.6 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department that the assessable value declared by the appellant is not the transaction value since the entire case of the Department is based on the valuation report submitted by the Chartered Engineer. The second report submitted by the Chartered Engineer states that during their re-inspection, they had gathered complete vessel particulars regarding capacities and other technical specifications, which were not made available during the initial inspection. 31. It is, therefore, necessary to reproduce the relevant portion of the two reports. The relevant portion of the first report dated July 21, 2011 is reproduced below: DATED: July 22, 2011 CHARTERED ENGINEER CERTIFICATE With respect to the request for Halani Group, Mumbai, we carried out detailed survey/inspection of the One Old, Used Secondhand Non - Propelled Accommodation Barge HALANI STAR while she lay afloat at V-3, Anchorage, Mumbai Port on 21.07.2011. In regards we now report as under: 1. Purpose and Object of Inspection : : : : Whether the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20 tons/per day] 222 persons including 21 crew member b. Vessel Particulars Tank Capacities Fuel Oil Fresh Water Water Ballast Clear Desk Space Crane - 1 no. - Cap - 225 tons : : : : : 2 324 Cubic meters 2 642.56 Cubic meters 2 514.07 Cubic meters 3,018 Cubic meters 1,400 Square meters AMHOOIST 11750, Pedestal Crane 94 H Tubular Boom - Boom length - 45 mtrs. Engine: Cummins VT 1710 - C524, 515 HP c. Year Place of Built : 1982, Singapore d. Price of New Vessel in (YOM) : USD 20,000,000.00 Approx. Detailed Specifications, Certificate of Ownership attached herewith for HALANI STAR . 7. Nature of inspection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er: ******** 9.5 CIF valuation of Non - Propelled Accommodation Barge HALANI STAR as under: One Old, Used Secondhand Non - Propelled Accommodation Barge HALANI STAR . USD [FOB] 6,000,000.00 Add. On account of cost of on board spares, consumables, accessories, provisions Equipment on board with their respective capacities, YOM other technical specifications of equipments such as cranes, generators, compressors WMP, STP etc. USD [FOB] 1,385,000.00 Add. Freight USD 5,000.00 Add. Insurance USD 29,657,00 CIF valuation of Accommodation Barge HALANI STAR USD 7,419,657.00 33. A comparative study of the two certificates dated July 22, 2011 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 x 1,3030 kw - Make Caterpillar Model CAT-D - 399 Emergency Generator: lx 320 kw - Make Caterpillar Model CAT - D - 34112 3. In column 6.2 of Certificate: Compressors: 1 x Sullair 680 cfm 1 x Ingersoll 350 cfm 4. In column 6.2 of Certificate: Water Maker: Reverse Osmosis S-64B-436 [1 x 25 tons / per day - 1 x 20 tons / per day] 5. In column 9.6 of Certificate: FOB Valuation One Old, Used Secondhand Non-propelled Accommodation Barge HALANI STAR with related spares, accessories, consumables provisions on board Invoice Value: 6,000,000.00 Present Assessed Value US D 7.385.000.00 6. In column 8.5 of Certificate Comments on Valuation Taking into consideration the condition of the equipment, expected residual life and the enquiry in market, the fair and reasonable price in our opinion is USD 7,385,000.00 [FOB] [US Dollars Seven Million Three Hundred Eighty Five Thousand Only] 7. In column 9.4 of Certificate A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in their earlier report. Therefore, in the facts and circumstances of the case the case law relied upon by the noticee is not applicable. 37. It may be that the Managing Director of the appellant had made a request for re-inspection of the Barge by the same Chartered Engineer, but this cannot be made a ground to reject the cross examination claimed by the appellant, more particularly when a specific averment had been made by the appellant that all the vessel particulars had been made available to the Chartered Engineer earlier and the first report had been submitted on that basis after inspection of the Barge and that the description of the Barge and the equipments mentioned in both the valuation reports is the same. It was, therefore, necessary on the part of the Department to have examined the Chartered Engineer and also to have permitted the appellant to cross examine him. 38. Such a requirement is necessary is clear from the observations made by the Allahabad High Court in Commissioner of Central Excise vs. Kurele Pan Products Pvt. Ltd. [ 2014 (307) E.L.T. 42 (All.) ], wherein, it was held that documents cannot be relied upon if permission to cross examine the author ..... X X X X Extracts X X X X X X X X Extracts X X X X
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