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TMI Blog2013 (4) TMI 653X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the goods imported. We find that value was sought to be enhanced by treating the impugned goods as other than old and used garments; and by comparing the sale price of earlier imported old and used garments. There is no specific findings as to how many articles are other than old and used articles, therefore, this aspect is required to be determined followed by valuation thereof. In these circumstances the case is remanded to ld. Commissioner for deciding the issue afresh while keeping in view our above observations. It is made clear that all the issues are kept open. Both sides are at liberty to produce documents in their support. Needless to say a reasonable opportunity of hearing may be granted to the appellant. The appeal is allowed by way of Remand. - C-88, 107, 110, 111, 151, 154-156/2010 - A-554-561/KOL/2012 - Dated:- 9-8-2012 - Shri S.K. Gaule and Dr. D.M. Misra, JJ. Dr. Samir Chakraborty, S/Shri Hasmukh Kundalia, Abhijit Biswas and V.N. Drivedi, Advocates, for the Appellant. Shri M.K. Sil, Spl. Counsel, for the Respondent. [Order per : S.K. Gaule, Member (T)]. - Heard both sides. 2. These appeals (including the appeals filed by Revenue) are dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... independent witnesses under Panchanama proceeding. The said re-examination revealed the following : (i) All the 873 bales of the consignment borne some code word/phrase on its cover; (ii) Bales having same code word/phrase were containing the same articles; for example, the bales having code of L.C.P. (New) were found to be containing Ladies Cotton Pant only. (iii) The break-up of articles found in the consignment was as under : Code word/phrase as found mentioned on the face of the bales Description of goods found No. of bales found Mens Ski Jacket, Light Zipper Jacket Jacket 31 Children Sweater Sweater 34 L.C.P., L.C.P. (New), Ladies Cotton Pant Ladies Cotton Pant 219* Ladies Rayon Pant, LCP (New), Ladies Poly Pant (new) Aeroplane Brand 78 Mens Nylon Jogging Pant Track Suit 6 Atheletic Jersey Jersey 4 Mens White Shirt, Mens Cordruoy Shirt, Mens Shirt Cotton Shirt (W/C) 69 Mens Cordruoy Shirt Cordruoy Shirt 19 Boys T Shirt, White Printed T Shirt T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 36/2000-Cus., dated 8th May, 2000, discussed supra, would be several times higher than those imposable in case of the consignment containing only sweater, miscellaneous items, tops and trousers, as reported earlier in the Custom House Examination report. 3.7 Thereby statement of Shri Prabhat Manna, one of the Partners of M/s. Gee Pee International, the Custom House Agent for the subject consignment in his statement dated 12-9-2008 stated that the majority of the import consignments handled by them is that of old and used worn clothing. The details of the concerned firms are not readily available with him. However, all the said worn clothing consignments were under control of the following persons who interacted and provided the clearance jobs to them (M/s. Gee Pee International). Statement of Mohd. Umar Khan (3-2-2009), Proprietor of A.N. Impex and Shri Deepak Das (dated 20-2-2011), one of the partners of said M/s. Ma Vabatarini Enterprise were also recorded. In his statement dated 15-9-2008, he reiterated his earlier statement dated 12-9-2008. Summons were issued to record statement of Md. Shakir Mohammed Md. Umar Khan, proprietor of M/s. A.N. Impex. However, he did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere initiated for misdeclaration and undervaluation and accordingly a show cause notice was issued against M/s. A.N. Impex, Gee Pee International, Prabhat Manna, Gautam Adhikary, Shri N.C. Roy Chowdhury, Shri Shyamal Mondal, Shri S.C. Saha Shri M. Meena. 3.11 Vide impugned order KOL/CUS/PORT/06/2010, dated 26-2-2010 the adjudicating authority ordered as under : (i) The ld. Commissioner rejected the claim on classification of M/s. A.N. Impex under 6309.00 and classified the items in various sub‑headings as per para 135(a) of Table VI of impugned Order-in-Original. He rejected the value declared and enhanced from Rs. 8,44,501.40 (CIF) and enhanced to Rs. 32,06,174.40 and confirmed the demand of duty of Rs. 1,86,16,209/- and appropriated duty of Rs. 1,80,555/- paid by M/s. A.N. Impex. He ordered confiscation of goods. However, gave an option to redeem the goods on payment of fine of Rs. 16.00 Lakhs (Rupees Sixteen Lakhs only). (ii) He imposed a penalty of Rs. 8.00 Lakhs (Rupees Eight Lakhs only) against M/s. A.N. Impex under Section 112 of CA., 1962, imposed a penalty of Rs. 3.00 Lakhs against M/s. Gee Pee International, CHA and penalty of Rs. 50,000/- on Shri Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements in Chapter Note 3 to Chapter 63 and in the HSN Explanatory Notes. The fumigation certificate also vindicates that the goods are old and used and the parameters adopted by DRI to view the goods as not having any sign of appreciable wear without an expert opinion is incomprehensible particularly when DRI has valued the goods on the basis of alleged market prices of worn clothing. 4.1.2 As regards the valuation is concerned, the contention is that the enhancement of value based on extraneous considerations like the purchase register and the statement of M/s. Ma Vabatarini Enterprises without subjecting them to the testimony of cross-examination has no evidentiary value and cannot be the basis for re-determination of value under Rule 9 of CVR 2007 that too, skipping preceding rules of CVR, 2007 particularly when value under Rules 4 and 5 were available to the DRI at the click of a button which has been deliberately suppressed. The Adjudicating Authority has further erred by not considering the value of contemporaneous import of similar goods and the decisions cited by the appellant. Reference was made to the documents wherefrom it would be seen that similar goods have been cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bill of Entry according to the export document of the Foreign Supplier, there can be no mis-declaration of the goods and the goods are not confiscable under Section 111(m) of the Customs Act, 1962. This legal position has been upheld in the following judgments : (i) Kriti Sales Corporation v. Commissioner - 2008 (232) E.L.T. 151 (Tri. - Del.) (ii) All Seas Marine Contracts SA v. Commissioner - 2011 (272) E.L.T. 619 (Tri.) (iii) Vinayaka allies Pvt. Ltd. v. Commissioner - 2009 (246) E.L.T. 540 (Tri.) The fact which is acknowledged by the DRI officers is that 78 Bales were totally damaged. The contention is that not a single piece of evidence in form of Invoice or Sale document has been recovered from M/s. Ma Vabatarini Enterprises, not did they disclose any such evidence as authentication/correctness of the entries contained in the Purchase Register in the said firm. Shri Deepak Das s statement has been relied upon but the said statement has no evidentiary value since he is not a party to this proceeding and even after allowing cross-examination by the Adjudicating Authority, the Department did not produce him for cross-examination. Therefore, the said Register a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there is no allegation in the SCN nor finding that price of said goods being negotiated by appellant or its partners including Ma Vabatarini Enterprise. Even according to SCN, the appellant only carried out delivery of earlier consignments of similar goods and received payment for the same on behalf of the owner of the importers. The contention is that there is no allegation nor finding that the appellants imported the goods earlier and Ma Vabatarini sold as new goods. In the SCN as well as in the order-in-original it is a fact that Ma Vabatarini is a purchaser and dealer of old and used goods. In the SCN itself the value of the imported goods has been arrived on the basis of alleged highest purchase price of M/s. Ma Vabatarini i.e. the highest purchase price of the old and used goods. The contention is that the conclusion arrived by the ld. Commr. is that the immigration certificate showed with the goods were old and used. In these circumstances in no manner whatsoever the appellant could be said to have been aware that the goods imported was nothing but old and used garments. The contention is that the CHA was aware of the contention of appellants. Hence the wholesale price o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 All the 873 Bales of the consignment had some code word/phrase on the outer transparent covers (packing materials) which could be seen on visual inspection without even strip opening the same. 5.2.3 Bales having Code LCP (New) were found to contain only Ladies Cotton Pant not any other item. It is submitted that DRI during re-examination first inspected the bales and found the code word/phrase written on each bale. Thereafter, on burst opening a few bales having same codeword/phrase the items were found same as those marked on the bales. Accordingly, about 10% of the bales were burst opened rest were strip opened since the items contained therein were the same as that marked on outside the bales. 5.2.4 The question of burst opening all the bales during re-examination by DRI had not been contemplated in view of the fact that by burst opening a few bales and strip opening all the bales it could be satisfactorily established the content of each of the bales as the bales have respective code word/phrase. It may be pointed out that the entire consignment is still in the warehouse under the control of Customs pending clearance. 5.2.5 As regards the appreciable wears, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ascertained even without strip opening or burst opening, simply visible on the outer packaging of the bales. In support they produced certain photographs. For example LCP (new) denotes bale containing Ladies Cotton Pant. Even if one can go by the code word on the bales only, such type of error could not have happened. 5.2.8 As regards valuation, the contention is that the investigation was carried out with one Ma Vabatarini Enterprise, the wholesale trader for such imported goods. It was found that Mr. Umar Khan of Ma Vabatarini Enterprise repeatedly violated exim policy hence the penalty imposed. From the Register of Ma Vabatarini Enterprise, the wholesale price of goods were ascertained and the redemption fine and penalty imposed were accordingly determined. The contention is that most of the NIDB data provided by the importer at the time of adjudication belongs to clearance through Kolkata Port only and the import value also varied widely from Rs. 10/- Kg. to Rs. 137/Kg. which also proved that without knowing the exact composition of each consignment, value cannot be compared with each other. Ld. adjudicating authority also discussed in detail why he had accepted the valuatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination of such consignments and no such sign were found in the examination carried out earlier. The contention is that in case the Department or DRI wanted to revise the old practice, the Examination Committee ought to have been put on this to notice. They placed reliance on Hon ble High Court of Calcutta decision in the case of Mercantile Express Co. Ltd. v. Assistant Collector of Customs [1978 (2) E.L.T. (J552) (Cal.)] and in the case of Sandip Agarwal v. Collector of Customs - 1992 (62) E.L.T. 528. The contention is that they are also protected under Section 155 of Customs Act, 1962, they have placed reliance on Hon ble Supreme Court s decision in the case of Fernandes v. State - 1996 (82) E.L.T. 433 (S.C.). 7.1 We have carefully considered the submissions and perused the records. We find that the entire case is built on the premise that the impugned goods are other than Old and Used garments claimed to be classifiable under Chapter 6309 of CTA 1975. Undisputedly the consignment was initially examined by the Customs Examination Committee as per existing practice by strip opening without burst opening the bales and on examination found that : Bond CWC, Maheshtalla B/E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter, the investigating authority had adopted correct procedures for re-examination of the goods and had drawn panchanamas to this effect in presence of independent witnesses and representative of the Custom House Agent. During cross examination, the panchanama witnesses also did not state anything contrary to the content of the panchanamas drawn and relied upon with the show cause notice. Hence, I hold that most of the garments, as stated in the show cause notice, were having no signs of appreciable wear and the same were not to be considered as old and used garment classifiable under heading 63.09 of the Customs Tariff Act, 1975 as claimed by the importer and therefore the goods merit classification under respective Customs Tariff Heading of each type of garment under Customs Tariff Act, 1975 as mentioned in Table VI of the show cause notice, which is also reproduced in paragraph 18 supra. Thus ld. Commissioner held that most of the garments were having no sign of appreciable wear therefore not classifiable under Heading 6309 of CTA, 1975. Chapter Note 3 to Chapter Heading 6309 provides as under : 7.3 The Note 3 to the said Chapter 63 specifies articles which merit class ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how many articles have little sign of appreciable wear. The DRI proceeded on the basis that the particular type of Code No. carries similar goods, since the bales carried consignment of cloth of various kinds only, merely on presumption, it cannot be held to carry same type of articles. It is a cardinal principle that while fixing the liabilities the same should be specific and not based on mere estimation or guess work. Undisputedly, the consignment was not subjected to 100% examination and no scientific method of sampling was followed. We are of the opinion that the sample test by DRI could not be appropriate in the present case while challenging the earlier report of the Examination Committee, especially when re-examination of the consignment was resorted to by shunning the report of examination carried out earlier by the Examination Committee. 7.6 So far as valuation is concerned, value was initially enhanced by the Customs Authorities from 0.417 per kg. to USD 0.60 initially. DRI sought to enhance the value of the articles treating them other than old and used article . As regards valuation, ld. Commissioner has found as under : On the contention that sale price of goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation have been done in terms of Rule 9 of Customs Valuation Rules, 2007. Rule 12 of CVR provides that : Rejection of declared value - (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule (1) of Rule 3. (2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation : (1) For the removal of doubts, it is hereby declared that : (i) This rule by itself does not provide a method for determination of value, it provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t rules. 7.10 We also find that in CC, Mumbai v. J.D. Orgochem Ltd. reported in 2008 (226) E.L.T. 9 (S.C.), the Apex Court relied on its decision in Eicher Tractors Ltd. v. CC, Mumbai - 2000 (122) E.L.T. 321 (S.C.) which is extracted hereunder : 14. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. It was observed : In the case before us, it is not alleged that the appellant has mis-declaced the price actually paid nor was there a mis-description of the goods imported as was the case in Portia Sales Corporation. It is also not the respondent s case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. The Apex Court in CC, Calcutta v. South India Television Pvt. Ltd. [2007 (21 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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