TMI Blog2005 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty of the equivalent amount of Rs. 57,98,140/- on the said erstwhile partnership firm, under Section 114A of the Act has been imposed and has directed payment of interest by the said firm on the above purported duty amount in terms of the Section 28AB of the Act and directed that the sum of Rs. 10,00,000/- deposited under protest by the said erstwhile partnership firm during the course of investigation be adjusted towards the purported duty demand of Rs. 57,98,140/-. 1.2 During the years 1997, 1998 and 1999, the said partnership firm imported at Air Cargo Complex, Sahar, Mumbai, 38 consignments of diverse models and diverse specifications of Proxima Projectors. Projector, Systems Lamp Assembly, Lamp Replacement, Digital Light Projectors, etc. with identification number prefix and suffix given by the overseas manufacturers. All items imported (hereinafter referred to as the 'said goods') have numbers for identification purpose with distinct prefix and suffix, which would be evident from the items of imports, e.g., PROXIMA DP-LSI, PROXIMA DP 5900D, PROXIMA DP 5800D, PROXIMA DP 9200, MODEL DP 4200. POLYSILICON 5610D, DP 4200, POLYSILICON MODEL 5610P, 5610P, POLYSILICON DP 5610P, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t's Company has filed an appeal and an application for the stay before this Hon'ble Tribunal No. C/459/2001 being decided separately. 1.5 Enquiries were however continued and a SCN dated 16-5-2002 was issued by officers of Sahar Air Cargo alleging misdeclaration of value and demanding duty under proviso to Section 28 of the Customs Act, 1962. The duty demands as made were confirmed. 1.6 Vide order dated 23-6-2004 the Commissioner confirmed the demands of duty with interest on enhancing the valuation as proposed. Penalties under the provision of the Act were imposed on the importer the partner. Hence this appeal. 2.1 A perusal of the impugned order reveals that the Commissioner has arrived at his conclusions after considering and recording the main allegation in Para 42 thereof, as regards the imported to have evaded Customs duty on imports of Proxima projectors by placing reliance on the investigation report submitted by the US Customs and the statement of Shri M.M. Gupta Managing Partner of the importer by (i) getting the sales routed through another firm namely PROFORMA in the US allegedly the price paid by PROFORMA to PROXIMA was much higher than that reflected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent businessmen would immediately admit to short levy without going through the records. This only indicates that Gupta was forced to sign a prepared confession. (iii) No further enquiries have been made from Gupta about how he compensated 'Proforma' for sending undervalued goods to India. No bank verification of further sales effected by Gupta the importer charging for after sales service etc. was verified as was submitted before us. This would call for not accepting the statement to be true voluntary confession. (iv) The annexure of the statement dated 15-7-2003 Shri Gupta has mentioned that he does not agree with the amounts and that would indicate no reason why he should subsequently give confessional statements. (v) There is no material on record to indicate remittance of differential sums. Undervaluation cannot be assumed from a lower sale price itself the Commissioner has erred; since the allegedly reliable statements do admit of no such differentials in imports accounts. Once these colourable statements of confession are discarded and are not to be looked at, the only material left in the US Customs Report. 2.3 Examining the US Customs Repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner has not even cared to deal with the Tribunal decision in case of V.K. Impex cited before him. This order is to be set aside on this ground itself of US Customs report not reliable. 2.5 (a) The ld. Advocate for the appellants have brought out the following ambiguity discrepancy shortcoming in the U.S. Customs report. (i) At Page 3 of the said report it has been categorically stated that, "the informations on the SEDs and spread sheet provided by the Government of India was incomplete description (model number, series number etc.). In most cases it was not possible to match his information with the sales invoices of PROXIMA". U.S.A. investigating agency has clearly admitted that it was not possible for them to match informations provided by the Indian Customs with the sales invoices of PROXIMA. Obviously, said U.S.A. report is based on assumption and presumption and directionless. (ii) "Reporting Agent was able to match up some of these items and observe that there is some indication of undervaluation on the Export documentation". (iii) Said investigation carried out at the offices of PROXIMA revealed that PROXIMA did not prepare any in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In view of the ambiguity, discrepency short coming shown in this report, the said report of US Customs cannot be relied upon. Burden to prove undervaluation is on the department. They can discharge the same by relying on evidence material that is of cogent tangible nature. In Puja International [1995 (76) E.L.T. 69] this Tribunal held that 'assessable value' cannot be determined on basis of assumption presumption. Suspicion created by the material in this case is not sufficient to reject the transaction value as held in Indo-Swiss Time [1996 (88) E.L.T. 77]. We, respectfully concurring, would conclude in similar manner on the basis of the material herein. (b) Commissioner is placing reliance on sole evidence i.e. 'U.S. Customs Report' by treating the same as independent material, when it is solicited material based on a 'Spread Sheet ' prompted by the investigators that 'Spread Sheet' is being kept as a well guarded secret. It is evident that the said report relies upon and is based on incomplete and incorrect misleading information supplied to US authorities as is evident from the following plea made. (a) From Page 3/13 of the said purported Report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on assumptions and presumptions and thus cannot be relied upon. In this respect, inter alia, the following observations at Page 4/13 of the said purported Report is relevant : "Reporting Agent was able to match up some of these items and observe that there is some indication of undervaluation on the export documentation" .. "Proxima indicated that the 1998 price for the DP 5500 is $ 3,600.00 each, the total for five would be $ 18,000.00 US. Proxima did not indicate which model of the DP 5500 was purchased by PROFORMA (A, B, C or D) the suffix would further influence the price of the projector" .. "Proxima indicated that PROFORMA paid 4,500.00 each for the DP 5500 in 1998 for a total of $ 22,500. Again, no suffix was indicated in the model number". It is thus evident the relevant and proper materials, necessary to correlate goods imported and forming the subject matter of alleged investigation with the alleged prices of sale in USA was also not available and that the entire exercise, resulting in the purported Report, was no assumptions, presumptions, and/or incomplete information. No reliance in law can be placed, therefore, on such an alleged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edible. (f) In Para 46 of the impugned order the Commissioner has held that in some cases the model numbers are not accurately shown and that the suffixes such as A, B, C and D with the model number are missing and that the same does not make any material difference since the information supplied is according to each line of the "Spread Sheet" supplied by Indian Customs and this "Spread Sheet contains the actual import particulars. This is ex facie incorrect. As per the purported Report the invoice amount represents Proxima's alleged price on Proforma. It states that ''Proxima's invoices indicates that Proforma paid ..........". The same does not say that Proforma exported the said goods at these prices. Moreover, there is nothing in the impugned order or the purported Report to show that the Proxima had stated that they had received the invoiced amounts from Proforma. For these reasons also, the said purported Report is an unreliable document. (g) The concluding portion of the purported report of the USA Customs reads as under : "It appears that PROFORMA is undervaluing the projection equipment exported to India. Since there is no loss of revenue to the Unite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... higher than they declared for imports. If Proforma had got any discount they would have reflected in the prices then". The rejection by the Commissioner of the stand/explanation by Proxima vide their two letters is in his own personal opinion not founded on facts as has been held by him, of prices actually received by Proxima from Proforma. The US report only states "Proforma paid ...." There is nothing to conclude that Proxima received. There was no enquiry made with Proxima by the Commissioner. It is not submitted, can be taken judicial notice that in business distributor gets commission after sales are effected when the commission of 40% mentioned in their letters is reckoned, then their appears to be no undervaluation. 12.7 (a) These two letters on record, are much earlier to the initiation of the present proceedings. They are found to be relevant to explain the variation in the prices. The observations of the Commissioner of the importer to have not provided any credible satisfactory explanation to justify the prices is therefore factually incorrect. The appellant in Para 14 of the reply to the Show Cause Notice dated 27-11-2003 had clearly mentioned that the sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the value charged by Proxima to Proforma and value of this item could not be enhanced and the excess differential customs duty proposed to be levied of Rs. 1,54,651/- needed to be dropped. (iii) As per S. No. 27 of the US Customs report (S. No. 20 of Annexure A of the Indian Customs) the model shown was DP 5610 whereas the model actually imported as per invoice No. 147410 was DP 5610 P. Hence the value reported by the US Customs in respect of Model DP 5610 could not be adopted for Model DP 5610 P actually imported as mentioned above. (iv) As per S. No. 3 of Annexure B US Customs had reported model Polysilicon Projector 5500 D whereas the model actually imported was Polysilicon Projector 5500. Hence the value reported by US Customs for model 5500 D could not be adopted for the model 5500 actually imported. (v) S. No. 7 and S. No. 4 of Annexure A where for the model at S. No. 7 i.e. DP 5900 D the value shown was US $ 3650 per unit, imported on 19th September, 1998, whereas for the same Model at S. No. 4 imported on 13th October, 1998 value shown is US $ 4500 per unit. This showed an upward trend of 23.28% within a period of less than a month. This was contr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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