TMI Blog2023 (9) TMI 576X X X X Extracts X X X X X X X X Extracts X X X X ..... .Marubeni. The documents of payment show that appellant has paid only the amount as per contract. The ground put forward by the department to reject the transaction value declared for some items cannot be accepted when the amount fixed is for the entire project import. In the case of AGARWAL INDUSTRIES VERSUS COMMISSIONER OF CUSTOMS, VIZAG [ 2005 (8) TMI 225 - CESTAT, BANGALORE] the Tribunal held that the transaction value arrived at purely on commercial considerations based on contracts, transaction value not to be rejected unless established with reason. Delay in passing the assessment - HELD THAT:- There is considerable delay of more than 13 years after the date of report of DRI (8/2006) till the order of finalization (27.09.2019). The department has not been able to explain this delay. The higher forums have held that in such situations, in unreasonable delay in adjudication / finalization of assessment the show cause notice itself is liable to be quashed. The finalization has happened after 15 years of provisional assessment which is extremely inordinate delay, and also against the instructions issued by CBIC as to finalization of Project Import Assessments The dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... security deposit of Rs.84 lakhs. The Project was registered under Project Import for concessional rate of duty of goods falling under CTH 9801. The imports under the bills of entry were assessed under provisional assessment as per Project Import Regulations, 1986. The list of items to be imported as per the above letter of Government of Tamil Nadu is as below : TABLE A Sr. No. Description of Goods CIF value (Japanese Yen) CIF value (USD) 1. Combustion Turbine System 6,64,68,32,877 2. Steam Turbine System 2,21,56,10,59 3. Sea water System / Desalination System 1,18,62,835 4. Balance of Plant 2,63,26,406 5. Electricals Control Equipments 84,52,403 6. Fuel System 6,53,429 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplied by M/s.Stone and Webstar invoiced through M/s. Marubeni. 6. In the 3rd segment, goods relating to Sea water System/Desalination System , in the 4th segment, goods relating to Balance of Plant , in the 5th segment, goods relating to Electrical and Control Equipment and in the 6th segment, goods relating to Fuel System were imported by M/s.PPN availing concessional benefits of Customs duty. 7. After the erection and commissioning of the power plant, M/s.PPN submitted a proposal to the Commissioner of Customs, Seaport Chennai requesting for finalization of provisional assessment vide their letter dated 26.12.2002. The matter was taken up for finalization of the project, based on their submissions. It was noted by the department that there was undervaluation of the goods supplied to appellant sourced by M/s.Stone Webstar through M/s.Marubeni. On such final assessment, the original authority vide order impugned herein held as under : (a) I order finalization of all the Bills of Entry under Section 18 (3) of the Customs Act, 1962. (b) I confirm the demand of Rs. 9,54,10,789/-(Rupees Nine Crores Fifty Four Lakhs Ten Thousand Seven Hundred and Eighty Nine on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 999 The Respondents registered the project of the Appellant and issued a Project Intimation letter in F . No . S37 / 11 / 1999.The Appellant executed bank guarantees and also deposited an amount of Rs. 84 lakhs as security deposit. The goods were imported during the period from 10.2.2000 to 20.12.2001. 3. 26.12.2002 The appellant as per letter dated 26.12.2002 requested the Commissioner of Customs to finalize the provisional assessment. 4. 17.06.2003 The Petition s Counsel sent a letter to the Assistant Commissioner of Customs requesting him to finalise the assessments in respect of the imports made by them. 5. 10.07.2003 The Appellant s Counsel sent a letter to the Assistant Commissioner of Customs requesting to finalise the assessments in respect of the imports made by them. 6. 29.11.2003 Letter from the Appellant to the Commissioner of Customs requesting them to finalise the assessments 7. 09.02.2004 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. It was contended by DRI that the goods were undervalued. An investigation report appears to have been sent to the Commissioner of Customs as per F. No. VIII/26/194/2006-DRI dated 4.10.2007. The appellant was kept in dark as to the investigation report made by the DRI. 20 15.02.2017 Letter from the Appellant s Counsel to the Assistant Commissioner of Customs requesting him to finalise the assessment. 21 25.02.2017 Letter from the Appellant s Counsel to the Commissioner of Customs requesting them to finalise the assessment. 22 05.09.2017 Bank Guarantees executed by the Appellant were periodically renewed. 23 05.03.2018 Final Reminder sent by the Appellant s Counsel to the Commissioner of Customs. 24 22.5.2018 The appellant preferred a writ petition bearing no. 6492 and 6493 of 2018 seeking direction from the Hon ble High Court to the Department to finalize the assessment and return the huge cash security deposit made fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g various grounds including the ground that the proposal to impose fine was not part of the original demand notice dated 22.05.2018. The Commissioner (Appeals) passed the impugned order-in-appeal Seaport C.Cus.II No.136/2021 dated 19.03.2021 and has remanded the case back to the LAA to pass appropriate orders as deemed fit. Aggrieved by the said order-in-appeal dated 19.03.2021, the appellant has filed appeal no. C/40230/2021 before this Hon ble Tribunal. 10. On merits, the learned counsel submitted that there is no undervaluation of goods. The appellant has made the payment as per the contract to M/s.Marubeni. There is no evidence of any amount paid to M/s.Marubeni over and above the contract value. Merely because M/s.Marubeni had procured some of the items from other sources at a higher price the transaction value cannot be rejected so as to enhance the value declared by appellant and demand higher duty. The final assessment has been done by department after a huge time gap and without factual or legal basis to demand differential duty. 11. The decision in the case of J. Sheik Parith Vs CC (Seaports-Exports), Chennai - 2020 (374) ELT 15 (Mad.) was relied by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) was higher than the amount collected by M/s.Marubeni from appellant This is because the appellant has entered into contract for the entire project with M/s.Marubeni, and the appellant has to pay only such contract value to M/s.Marubeni. The transaction value declared is genuine and correct. The view taken by the department is highly erroneous. 13. It is submitted by the learned counsel that the demand of differential duty and the penalty imposed on the appellant (PPN) cannot sustain both on merits as well as on the ground of violation of principles of natural justice. 14. Ld. Consultant Sri R.Srinivasan appeared and argued for the appellant viz. M/s.Marubeni. He submitted that it is the case of the department that M/s.Marubeni procured goods from other vendors and supplied the same to M/s.PPN at lower prices which resulted in payment of lesser customs duty by M/s.PPN in the following segments : S. No. Item of Work Name of the sub-contractor Amount as per contract registered with Customs Sub-contracted amount 4. Sea Water / Desalination System ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e shall be the transaction value i.e. price actually paid or payable for the goods exported to India. In the present case, the transaction value declared is the price actually paid by them for the subject imports The product imported is the very same product mentioned in the Contract. Even the specifications of the imported product are exactly the same as the specifications of the product mentioned in the Contract. In the circumstances, the value declared which is the same as the value mentioned in the Contract ought to be accepted Thus, what has been contracted for, is what has been imported. There is no dispute regarding this. In order to honour the contract entered, the Appellant chose to supply the goods as per the contract price, even though the price at which they bought some of the goods from the sub-contractor was slightly more. The payment has been made through banking channels and it is not the case of the Department that M/s. PPN had paid a higher amount than what has been declared. Further, in the instant case, none of the circumstances specified under Rule 3(2) of the Valuation Rules exist, and nor is it the contention of the custom department that any of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck assessment by a simplified process of classification and valuation, the goods imported under Project Import Scheme are placed under a single Tariff Heading 9801 in the Customs Tariff Act, 1975. 17. It is thus submitted by the learned consultant that the declared price is the true transaction value of the imported goods. The levy of duty should be on the transaction value declared and rejection of the value of the imported goods is per se incorrect and liable to be set aside as being contrary to the well settled legal position. Consequently, no penalty is imposable on the Appellant. 18. The SCN proposing to confiscate goods and impose penalty was also barred by limitation of time. 18.1 Though no time limit has been prescribed for issuance of SCN Under Section 124 of the Act., the courts in various cases have time and again held that SCN under Section 124 of the Act cannot be issued beyond five years from the date of import. 18.2 Further, the fact that the goods were provisionally assessed under Section 18 of the Customs Act, 1962, which are not finalised so far is not relevant for the purposes of initiating penal proceedings. Further, the Appellant, being a foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings initiated vide the SCN is liable to be quashed. Reliance for the same is also placed on the following cases - a) Universal Generics Private Limited vs. UOI reported in 1993 (68) ELT 27 (Bom) b) Shree Vallab Glass Works Ltd. Vs. CCE reported in 1999 (112) ELT 619 (T) c) Government of India v. Citadel Fine Pharmaceuticals - 1989 (42) E.L.T. 515 (S.C.) d) E.C. Bose Co. Pvt. Ltd. v. Union of India - 1992 (58) E.L.T. 432 (Cal) e) Wilco Company v. Union of India - 2003 (151) E.L.T. 49 (Mad). f) Milton Plastics Ltd. - 2007 (216) E.L.T. 210. Customs Act has no extra-territorial jurisdiction. 24. The Customs Act, 1962 has no extra-terrotorial jurisdiction. No penalty can be imposed on foreign entities under the Customs Act. 25. It is submitted that as per Section 1(2) of the Customs Act, 1962 as it stood during the relevant time, the provisions of the Customs Act, 1962 extend only to the whole of India and not beyond India. Further, the authorities in India have no jurisdiction under law to try a person in respect of something which was done beyond India and in a foreign country which will not come within the mischief of the provisions of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 59) (SC). 32. Moreover, the case involves interpretation of the provisions of the Customs Act. As already submitted, the Appellant acted in bonafide belief. It has been held by the Hon ble Tribunal in a large number of cases that no penalty is imposable in cases involving interpretation of the statutory provisions. Some of these cases are as under: a) Auro Textile vs. Commissioner of Central Excise, Chandigarh 2010 (253) ELT 35 (Tri.-Del.); b) Hindustan Lever Ltd. vs. Commissioner of Central Excise, Lucknow 2010 (250) ELT 251 (Tri.-Del.); c) Prem Fabricators vs. Commissioner of Central Excise, Ahmedabad-II 2010 (250) ELT 260 (Tri.-Ahmd.); d) Whiteline Chemicals vs. Commissioner of Central Excise, Surat 2009 (229) ELT 95 (Tri.-Ahmd.); e) Delphi Automotive Systems vs. Commissioner of Central Excise, Noida 2004 (163) ELT 47 (Tri.-Del.). The proceedings are ultra vires the powers and jurisdiction of the Asst. Commissioner. 33. Moreover, the impugned proceedings are Ultra Vires being beyond the jurisdiction of the Assistant / Deputy Commissioner of Customs. It is submitted that in terms of Section 122 of the Customs Act, read with Notification issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... star. The appellant has to pay in total the contract value. It is this value that has been split into various segments. M/s.PPN has to pay only this contract value and need not pay any amount higher even if M/s.Marubeni has procured some goods at a higher price. This is clear from the agreements which reads as under : Scope of Work The scope of work under this Agreement (the Foreign Supply ) shall cover the supply and delivery of all equipment and materials of non-Indian origin as contemplated by the General Terms and Conditions. The detailed scope of Foreign Supply is set forth in the Project Contract. Payment Obligations of Owner The Contract Amount shall be One Hundred Forty-Eight Million, Three Hundred Ninety-Three Thousand U.S. Dollars (US$ 148,393,000), as such amount may be adjusted pursuant to the provisions of the Project Contract. Owner shall pay: (a) the Contract Amount (b) all Indian Taxes as may be applicable to the Foreign Supply; and (c) such other sums as shall become due and payable to Contractor from time to time. In each case, in accordance with the General Terms and Conditions. In view of the transfer of title to equipment, m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals) upheld the order of the lower authority. This Bench had an occasion to deal with similar issues. In the case of Andhra Sugars Ltd. v. CC, Vizag, by Final Order No. 976/2005, dated. 22-6-2005 [2006 (193) E.L.T. 68 (Tribunal)], a majority view was taken that transaction value can be rejected only if any of the situations mentioned in Rule 4(2) of the Customs Valuation Rules, 1988 warrant the same. While taking such a decision, the Bench followed the decision of the Apex Court in the case of Eicher Tractors Ltd. v. CC, Mumbai - 2000 (122) E.L.T. 321 (S.C.). In the above mentioned case, the Supreme Court has held that in the absence of special circumstances , price of imported goods is to be determined under Section 14(1)(A) in accordance with the Customs Valuation Rules, 1988. The special circumstances have been statutorily particularised in Rule 4(2) and in the absence of these exceptions, it is mandatory for Customs to accept the price actually paid or payable for the goods in the particular transaction. In all the cases, we find that the transaction value has been arrived at purely on commercial considerations based on contracts. The supplier, in order to honour t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bound to assess the duty on the transaction value. It was further held that Rule 4 is directly relatable to Section 14(1) of the Act. Section 14(1) read with Rule 4 provides that the price paid by the importer in the ordinary course of commerce shall be taken to be the value in the absence of any special circumstances indicated in Section 14(1). Therefore, what should be accepted as the value for the purpose of assessment is the price actually paid for the particular transaction, unless the price is unacceptable for the reasons set out in Rule 4(2). [Also See : Rabindra Chandra Paul v. Commissioner of Customs (Preventive), Shillong, (2007) 3 SCC 93 = 2007 (209) E.L.T. 326 (S.C.)] 13 . Applying the above principles to the facts in hand, we are of the opinion that the revenue erred in rejecting the invoice price. As stated above, in the present case the whole controversy arose on account of difference in price of the same commodity, contracted to be supplied under different contracts entered into at different points in time. As aforesaid, in the instant case, admittedly the contract for supply of crude sunflower seed oil @ US $ 435 CIF/PMT was entered into on 26th June 2001. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment of Project Imports, Baggage and Postal Imports. Para 5 lays down instructions for Finalization of assessments which reads as under : 5. Finalisation of contract: 5.1 Under Regulation 7 of the PIR, 1986 the importer is required to submit, within three months from the date of clearance of the last consignment or within such extended time as the proper officer may allow, the following documents for the purpose of finalization of the assessment: (i) A reconciliation statement i.e. a statement showing the description, quantity and value of goods imported along with a certificate from a registered Chartered Engineer certifying the installation of each of the imported items of machinery; (ii) Copies of the Bills of Entry, invoices, and the final payment certificate is insisted upon only in cases where the contract provides that the amount of the transaction will be finally settled after completion of the supplies. 5.2 To ensure that the imported goods have actually been used for the projects for which these were imported, plant site verification may be done in cases where value of the project contract exceeds Rs.1 crore. In other cases, plant site verific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Single Bench also records that the respondents have taken enormous time in completing the provisional assessment. In such circumstances, we are of the view that some relief should be granted to the appellant especially when they have effected cash deposit of Rs.84 lakhs, when they have imported the products and furnished Bank Guarantee of Rs.13.77 Crores. The Bank Guarantee has been kept renewed since then and according to the learned counsel for the appellant, bank charges itself is more than Rs.2.35 crores. Assuming without admitting upon adjudication of the show cause notice, the proposal therein is confirmed, the entire liability may be around Rs.11 crores and assuming the assessee files appeal, the minimum pre-deposit required to be made would be Rs.7.5% of the disputed demand. 8. Thus, taking into consideration the peculiar facts and Circumstances of the case, we are of the view that partial relief can be granted to the appellant so as to enable them to tide over the financial crisis, which they are stated to be undergoing at present. However, we are convinced that the other directions issued by the learned Single Bench directing the appellant to participate in the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
