TMI Blog2008 (12) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ghvi. 2. The brief facts of the case are that M/s. Plastotex were engaged in import of polystyrene sheets from one M/s. SIBU of whom he claims to be the sole distributor for India. Pursuant to some information that the said company was misdeclaring the value of the polystyrene sheets imported by it, a statement of its director Shri Sanghvi was recorded, wherein he had admitted about import of cut to size polystyrene sheets and submitted copies of 8 invoices issued by the supplier SIBU, which were produced by them before the Customs authorities during the clearance of polystyrene sheets from December 1998 to December 2000. These 8 invoices were verified by DRI through Indian High Commission at London which revealed that M/s. Plastotex had grossly undervalued the polystyrene sheets imported by them from M/s. SIBU. Enquiries revealed that Plastotex and SIBU had an understanding, whereby SIBU was required to issue invoice to Plastotex indicating only 25% of the actual value of the goods and the remaining 75% was to be paid by Plastotex separately by Telegraphic Transfer (TT). The attested copies of the invoice indicating the actual value against each of the 8 invoices were obtained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he invoices supplied by SIBU and on the 10 consignments in the proportion in which undervaluation was done. The show cause notice was adjudicated by the Commissioner who confirmed the demand of differential duty with interest amounting to Rs. 19,11,797 and imposed a penalty of equivalent amount under 114A. A penalty of Rs. 5 lakhs was also imposed on Sanghvi. Further, during the search operations a stock of 233 polystyrene sheets and 4350 mtrs of rubber plastics totally valued at Rs. 11,34,000 was also found and seized. The Commissioner has confiscated this stock also with an option to redeem the same on payment of redemption fine of Rs. 5 lakhs. 5. The ld. Advocate for the appellant submits that the entire case has been, made out on the basis of a report received from the Indian High Commission indicating that the supplier SIBU was undervaluing the goods by issuing invoices indicating only 25% of the actual value at the instance of Plastotex. He took us through the said report of the Indian High Commission which did say that the enquiries conducted in Austria revealed that Plastotex had grossly undervalued polystyrene sheets imported from SIBU and SIBU have claimed that the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m 1997 to 2001 and if the claim of SIBU is accepted that they have not received the payment of 75% they would not have continued to do business with him and therefore, the statement made by SIBU cannot be relied upon. It was submitted that the appellants were cross tallying the yearly ended balance with SIBU's auditor and the auditor of SIBU was sending the statement for balance confirmation to the appellant which was duly confirmed by the appellant as per the books of accounts certified by CAs and SIBU had never taken any objection for the confirmed balance from 1997 to 2001. He produced some such letters regarding confirmation before us. Reference was also invited to some quotations obtained by them from suppliers during 1998-99, wherein the price varied from $4.20 to $5 per kg, some of which were FOB. It was submitted that department has not conducted any enquiries through Trade magazine and others which could have revealed that the imported goods were being sold in the international market at the price declared by them. Further as regards the 10 consignments cleared during the year 1998, there is no evidence whatsoever either in the form of enquiry or in the nature of statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2058 dated 24-9-99 submitted to customs was showing value as US $ 1249.11 and invoice No. 3609 dated 15-2-99 was showing the value as US $ 1183.47 which are exactly 25% of the amount shown in the fax No. 639. Fax No. 344 dated 30-3-2000 states that SIBU was to pay a commission of US $ 2399.47 and the total amount due through TT (75%) was $32,560.22 and after adjustment of the commission the total amount payable would come to $30,160.76. The fax makes it very clear that the bank remittance plus TT are 100% of invoice. A copy of this fax was received from the High Commission and were sent on the fax no. of the importer and though the accountant denied of seeing such fax he submitted that it may have remained with Shri Sanghvi, the director. There is a letter dated 21-4-00 from Plastotex to the supplier acknowledging the receipt of the fax and promising to start making payment from May and finish in June 2000 with interest. He apologised for the talk on telephone and reiterated his relations as a brother. Reference was invited to fax no. 769 dated 3.5.99 wherein SIBU had send reminder for payment against invoice nos. 2058/24-9-98, 3048/23-3-99, 3609/15-5-99 which also shows that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by M/s. SIBU matched with export declaration submitted at the port of export. Further, the invoice gave the break-up of the material which is in pieces and there are a large number of qualities mentioned in the invoice. The price are indicated up to two decimal points for different varieties and the sum total matches with the total value of the invoice and the invoice submitted with the customs is exact 25% of the total value. The invoice submitted with the customs does not declare the different qualities of polystyrene sheets whereas the appellants have themselves in the reply to the show cause notice referred to different qualities of polystyrene sheets. Further, the price also differs for different sizes of the polystyrene sheets and they are sold by size rather than weight. The price also vary from $2.74 to $4.44 which itself establishes that the price is based on the quality of the polystyrene sheets. This also has been confirmed by the appellant in their reply wherein they have referred to some trade journals quoting prices of different finishes of the polystyrene sheets and vary from Rs. 50/kg to Rs. 1200/kg. Strangely in their reply to the show cause notice they have refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on was resorted to in respect of the 8 consignments the same must have been resorted to in respect of earlier consignments also. This is not acceptable as the two periods are different. The earlier imports start from period 15-10-1997 to 10-7-98, while the period of import in respect of 8 consignment is 23-12-1998 to 18-12-2000. There is not a single iota of evidence in respect of these consignments as not even the supplier has been asked about the undervaluation in respect of these 10 consignments. The entire enquiry was limited to 8 consignments only. There is no reference to any contemporaneous imports during the relevant period nor any assertion that the international price remained the same during both the periods. Further, the price of the polystyrene sheets varies according to the quality and it is not clear as to which qualities have been imported. Duty cannot be demanded on the basis of the presumptions and conjectures in the absence of any evidence of any nature. In view of this demand relating to these 10 consignments amounting to Rs. 6,00,610/- as reflected in the Annexure B of the show cause notice is set aside. Since this was the case of suppression/misdeclaration of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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