TMI Blog2023 (8) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... ntemporaneous prices, the lowest of the prices has to be adopted for the purpose of valuation. The basis for enhancement of the value of the impugned goods is the declared/assessed value of similar imports by M/s. Star Mint Fields Pvt. Ltd., Surat which are found to be provisionally assessed. On this count also the enhancement of the declared value is not sustainable and is not in accordance with the provision of Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The proper officer can, on certain reasons , raise doubts about the truth or accuracy of declared value and these certain reasons can be higher value of identical / similar goods of comparable quantities in a comparable transaction, abnormal discounts or abnormal deduction from competitive prices, mis-declaration on parameters such as description, quality, quantity, country of origin, year of manufacture or production, non-declaration of parameters such as brand and grade and fraudulent or manipulated documents. In these appeals, the only reason for rejecting the transaction value is on account of noticing higher values of the contemporaneous impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt consignment was undervalued, officers of DRI, Tuticorin have seized the goods on 27.12.2011 as the declared value at US$ 5.15 per Kg for Nylon Knitted Grey Fabrics, and at US$ 3.90 per Kg for Polyester Nylon Knitted Grey Fabrics was considered low compared to the contemporaneous imports which were valued at US$ 8.55 per kg for Grey Warp Knitting Fabrics specification square net 52 semi dull and US$ 9.2 per kg for grey warp knitting fabric specification square net 52 bright in respect of Invoice No. H07HD054 dated 31.05.2011 of Fujian Holy Trading Company Ltd., China pertaining to the importer M/s. Sai Enterprise, Surat which were imported thorugh Nhave Sheva, Mumbai. 2. On examination, it was found that the imported consignment contained 1976.10 kgs of square net fabrics with slip as Semi Dull and 8511.9 kgs of square net fabrics with slip as Bright . 3. Further, the Revenue noticed two imports of Warp Knitted Fabrics at Tuticorin by M/s. Sainath Knittex Pvt. Ltd., Surat where the value declared of Nylon Warp Knitted Fabrics was at US$ 9.0 and US$ 7.22 respectively. The consignment under seizure was bought on high seas sales basis by M/s. Murugan K.S., on 15.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1962 who handled the above consignment whose operations are also reported to be managed by Mr. Murugan K.S. But, it is to be pointed out that it is not known whether there is any appeal by M/s. MKS Shipping Agencies P Ltd., Tuticorin CHA regarding the penalty imposed on them as above. 5.2 Being aggrieved, the appellant have filed an appeal with the Commissioner of Customs and Central Excise (Appeals), Tiruchirapalli who rejected their appeal. As such Mr. K.S. Murugan (appellant) came on appeal before this forum. 6. The appellant has submitted the following contentions as revealed from their reply to the Show Cause Notice and also the grounds of appeal. (i) The proposal for rejection of the declared value and enhancement of value was misconceived and contrary to specific legal provisions in the Customs Act and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as well as the law laid down in the case of M/s. Eicher Tractors Ltd., [2000 (122) ELT 321 (SC)]. The imported goods need to be assessed to Customs Duty at their transaction value, unless for valid reasons for rejection of the same. In order to reject the transaction value, the circumstances en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nylon Knitted Fabric 1976.10 3.90 7706.79 At the time of drawing the Mahazar, DRI relied on the following:- S. No. Invoice details Desc. Of goods Rate Decl. per Kg in USD Importer 1 Inv. No. H07HD054 dt. 31.05.2011 of Fujian Holly Trading Company Ltd., China. Grey Warp Knitting fabric Square Net 52 bright. [Compared with Nylon Knitted Fabrics] 9.2 Sai Enterprise 2 Grey Warp Knitting Fabric, Square net 52 Semi Dull [Compared with Polyester Nylon Knitted Fabric] 8.55 In the Show Cause Notice, DRI had relied on imports made by M/s. Sainath Knitex Pvt. Ltd. S. No. B/E No. Date Commodity Supplier Value Decl. by Importer in USD Value assessed in USD 1 4775029/28.09.2011 Nylon Warp Knitted Fabr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igh Seas to the appellant at the following price. a. Nylon Knitted Grey Fabrics - US$ 5.15 plus 2% - US$ 5.253 b. Polyester Nylon Knitted Fabrics - US$ 3.90 plus 2% - US$ 3.978. 8. Even higher values proposed in the Show Cause Notice were taken for assessment, the differential duty would come only to Rs.5,54,910/-. But, the original adjudicating authority had imposed redemption fine of Rs.20 lakhs and penalty of Rs.13 lakhs on the appellant which are abnormally disproportionate to the allegation of mis-declaration of the value of the imported goods. 9. The appellant has put forth that he has amply demonstrated that the contemporaneous imports and the goods in the impugned consignment were not same in quality or quantity and so comparison is not in accordance with law. 10. It is submitted by the appellant that the goods taken for comparison pertaining to M/s. Star Mint Fields P Ltd. were provisionally assessed and their value cannot be taken for the purpose of assessment and market value of the imported goods was not ascertained which is mandatory for the purpose of determination of fine and penalty. According to the provisions of Rules 4 and 5 of the Customs Valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the appellant and the Revenue and also available records in the appeal. 15.2 We find that the following issues are required to be answered in the present appeal:- (i) Whether the enhancement of assessable value of the impugned goods under Rule 4 ibid read with Section 14(i) of the Customs Act, 1962 is legally sustainable in the facts and circumstances of the case? (ii) Consequently, whether the order of confiscation and imposition of penalty on the importer is justified? 16. The appellant has imported Nylon Knitted Grey Fabrics declaring a unit value of US$ 5.15/kg and Polyester Nylon Knitted Grey Fabrics declaring a unit value of US$ 3.9/kg purchased on high seas sales‟ basis. The Revenue suspected that the importer has undervalued the goods basing on the two contemporary imports of similar goods imported by M/s. Sai Enterprises from Fujian Holy Trading Company Ltd., China, where the value declared for grey warp knitting fabrics was US$ 9.2/kg and US$ 8.55/kg. Enhancement of the transaction value is also based on the proposed imports made by M/s. Sainath Knitex Pvt. Ltd., Surat as under:- S. No. B/E No. Date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the type of fabric i.e, whether grey, semi dull or dull or bright and the quality of fabric and even width affect the price of the products. Even in case of the contemporary imports relied upon by the Department all other factors remaining the same, grey warp knitting fabric Bright‟ value was declared at US$ 9.2/kg whereas Semi Dull‟ was declared at US$ 8.55/kg. Similarly the values of Nylon Warp Knitted Fabrics with semi dull and grey having an effect on the price. The contentions of the appellant that where more than one price are available as the contemporaneous prices, the lowest of the prices has to be adopted for the purpose of valuation. We agree with these arguments of the appellant. We also take note of the fact that the imported goods are still lying pending clearance in the custody of the Department. 19.1 During the hearing before the Tribunal, the appellant has produced the following letter in support of his contention that the imports by M/s. Star Mint Fields Pvt. Ltd., Surat were provisionally assessed and are still pending for test report and as such relying on the values of these Bills of Entry is not in accordance with the Customs Valuation (Det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prices by the lower adjudicating authority it is not possible to decide whether the decision of enhancement is reasonable or whether it is in accordance with the valuation provisions or not. 22. We find there was no allegation that the importer has mis-declared the description of goods or whether any excess quantity found or whether there is any mis-declaration of brand or country of origin or type or as to any other aspect in relation to imported goods. 23. We also find that the appellant has clearly explained the sequence of events in respect of impugned goods as to what rate the manufacturer has sold the goods to M/s. J.S. Fashions (L.L.C), Dubai and at what rate M/s. J.S. Fashions has sold to M/s. Sainath Knitex Pvt. Ltd., Surat and considering the rate at which he has purchased the goods on high seas sales‟ from M/s. Sainath Knitex Pvt. Ltd., Surat and considering the fact that Department‟s reliance was mainly on the basis of the values declared by M/s. Star Mint Fields Pvt. Ltd., Surat, we hold that enhancement resorted to is not legally justified and so un-sustainable. We also find that redemption fine and penalty imposed on the appellant are dis-proporti ..... 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