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TMI Blog2013 (8) TMI 508X X X X Extracts X X X X X X X X Extracts X X X X ..... d the details of the transactions were available with the Department for cross-checking. Additional evidence cannot be allowed to be submitted and considered at the appellate stage - the delay was almost 10 years after the issue of show-cause notice - the request of the Department was very strange and quite unconvincing – Request for filing additional evidence at this stage since it appears to be only a ploy to delay the case further could not be accepted - the present market value arrived at by the assesse were within permissible limits – assesse had realized the full export proceeds through proper banking channels and within the extended period granted by the Reserve Bank of India - Merely because there had been a delay in the realization of export proceeds the Department’s conclusion that the entire transaction was a sham one had no basis and had to be rejected totally - DEPB credit claimed @22% of the FOB value by the assesse was rightly entitled – order set aside – penalty Set aside – Decided in favor of assesse. - C/R-292-294/2001 - A/173-175/KOL/2011 - Dated:- 27-5-2011 - Shri S.S. Kang and P.R. Chandrasekharan, JJ. Dr. Samir Chakraborty, Advocate, for the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngineering Works and S.F. Forging Pvt. Ltd. under AR-4 forms. The appellant filed the Shipping Bills under claim for DEPB. The Customs Authorities made a provisional assessment and Let Export orders were passed on provisional basis. Between May and August, 1999, all the 16 consignments (hereinafter referred to as the goods ) were shipped. In the Shipping Bills, the appellant company claimed DEPB benefit @ 22% on the FOB value as notified. The Present Market Value [ PMV ] was declared to be 1.36 rupees for each 6.35mm. Stainless Steel ball and 72 paisa for each of 3.17 mm Stainless Steel ball. The goods exported were as per AISI Specifications No. 316. The total FOB value of goods exported declared in the shipping bills amounted to Rs. 14,91,89,854.00. 3.1 At the time of export, the representative samples were taken from 15 out of the 16 consignments and the officers of Directorate of Revenue Intelligence ( DRI in short) sent the goods for testing whereupon the goods were found to be conforming to AISI standard in all respects. 4. On April 11, 2001 a show cause notice was issued under Section 124 read with Section 113 of the Customs Act, 1962 (hereinafter referred to as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... non-technology-based products and are general insurance agents. (v) The payments made to PCS were made by M/s. Dudly Enterprises, the buyer s agent, which is run by a firm namely, Singapore Aryan of Indian Origin. The raw material prices quoted to two local suppliers namely, M/s. Pioneer Engineering Works and M/s. S.F. Forging are varying considerably. (vi) Though the goods were claimed to be of intricate quality, neither any of the export documents nor the local suppliers invoices or bills have any indication with reference to the so-called specification/quality. (vii) No inspection certificate could be produced in support of the quality under verification of the goods. The suppliers had received only 1/4/1/3 or the so-called sale-value amount, but did not receive huge sums of money which were due as balance of payments towards supply of the goods for over a year. 8. In the light of the above observations, the Commissioner came to the conclusion that the entire transaction has taken place in a manner not consistent with normal trade practice. The cost of production of steel balls of 6.35 mm dia. works out to 85-90 paise per piece, whereas the present market value d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rging Pvt. Ltd., Kolkata, M/s. Durga Steel Industries, Kolkata, M/s. Pioneer Engineering Works, Kolkata. They have produced copies of 45 invoices in respect of their purchases and have also given the details of the payments made to these suppliers giving details of Account Payee Cheques/Drafts issued by them for these purchases. From these documents, it is seen that they have paid a price of Rs. 1.10 to Rs. 1.25 in the case of steel balls of 6.35 mm diameter and a price of 70 paise in the case of steel balls of 3.17 mm diameter. As against this, the FOB value of exports made by them works out to 70 paise in respect of steel balls of 3.17 mm and Rs. 1.30 in respect of steel balls of 6.35 mm. Thus the PMV as well as the FOB values declared by them in respect of the transactions are fully corroborated or supported by documentary evidences submitted by them in respect of these transactions. (c) They have also argued that the Department has relied upon the quotations received from Kwality Balls Compay, Jaipur. The said quotation was in respect of steel balls of AISI 304 grade which is an inferior quality compared to AISI 316 grade exported by them and therefore, the two prices are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er piece 000004064 dated 22-9-1998 ARJUN AUTOMOBILES P.L. 800 Great Gross 13,82,400 pcs 6.35 mm Rs. 17,86,410/- Rs. 1.29 per piece 00002074 dated 15-2-1999 (f) As regards the allegation that they have obtained a fake quotation from M/s. Micro Balls Company, Jaipur, the said allegation is based on the statement of Shri Arun Gupta. However, the said statement is not a relied-upon document and no copy thereof, has been made available to the Appellant and therefore, the allegation based on the said statement is not legally sustainable. (g) The Commissioner has relied on certain facts to come to the conclusion that the shipping bills and the export invoices did not reflect the correct transaction value and that the subject goods were over invoiced and, hence their FOB value were to be rejected. These purported facts/conclusions, most of which are irrelevant for the purpose of determining the issue involved herein, as per settled principles, are dealt with hereunder in seriatim :- a) The authorised signatory Sri N.F. Bachhawat admitted in his statement that he had no idea about the quality and use of the exported goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnational, more or less the same price could be produced by the noticees. Documents evidencing export of similar goods at more or less the same price were submitted to the Department. Further, one of the manufacturer-supplier of the steel balls, Pioneer Engineering Works, Kolkata, from whom the appellant-company purchased a part of the export goods, confirmed before the DRI authorities, as recorded in the statement dated June 9, 2001 of Mr. Rajesh Gupta, recorded under Section 108 of the Customs Act that it had sold 20736600 pieces of steel balls to one Arjun Automobiles P. Ltd. to whom the supplies were effected under AR4 forms and payment for such supply had been realised by it from the said party. On specific question being made by the DRI authorities, it was answered by the said Mr. Rajesh Gupta that the steel balls supplied to Arjun Automobiles P. Ltd. were of similar nature and price to that of the said goods supplied by the said firm to the appellant-company. (e) In support of their value, a fake quotation was submitted by the noticees and they are silent in their reply about the same. This allegation has no substance whatsoever. There is no material on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found by the Department itself conforming to the quality/grade declared. (i) Vide a letter dated April 3, 2001, Sri Parasmal Lodha stated that they had not received any quotation from any other supplier other than the suppliers from whom they purchased the goods. The abovequoted answers of Mr. Parasmal Lodha under (b) above clearly is complete answer to this purported finding. 10. In the light of these submissions, they have averred that they have proved the genuinity and bona fide nature of the transactions. The other observations made by the Commissioner that export of steel balls is not their primary activity; that the buyer, M/s. Ria Multiple Enterprises are engaged in IT products and General Insurance business; that the export transactions have been entered into without any letter of credit etc. have no basis to come to the conclusion that the transactions undertaken by them are sham transactions. 11. The counsel for the Department on the other hand reiterates the findings of the Adjudicating Authority and also submits that - (i) the appellant-firm has not produced the purchase bills and payment details for all their transactions and the bills pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntal counsel sought adjournment on one ground or another but during this period no mention was made of the so called additional evidence and even during the date of hearing in this case on 21-4-2011, the Advocate for the Department did not make any mention of any such additional evidence available with the Department. Only in the written submissions submitted on 29-4-2011 the Advocate is making a plea for wanting to submit additional evidences. If the Department wanted to rely on this crucial evidence, it was incumbent upon them to produce the same before the adjudicating and appellate authorities at the relevant point of time, which they failed to do, which shows the utter carelessness with which the Department has been dealing with the case. It is a settled position in law that additional evidence cannot be allowed to be submitted and considered at the appellate stage. In the instant case the delay is almost 10 years after the issue of show-cause notice. It therefore, appears that the request of the Department is very strange and quite unconvincing. Hence, we have no hesitation in rejecting the request for filing additional evidence at this stage since it appears to be only a plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or PMV of goods depends on the market conditions of demand and supply and normally, it will be more than the cost of production. Value-addition takes place at every stage in the production-supply chain. The value-addition in the instant case, taking Department s cost of production, is only about 20-25% in the case of steel balls of 3.17 mm dia. and about 50% in the case of 6.35mm dia., which are not unduly high. Further, the Department has mainly relied upon the cost-data of M/s. Kwality Bills Company, which was for the quality grade of AISI 304, whereas the appellant-firm has procured and supplied steel balls of higher quality of AISI 316 grade and the data relied upon by the Department, is not comparable at all. 14. The PMV, in our view, cannot be challenged by going into the cost of manufacture. Market enquiry into the prices of the steel balls of size 6.3 mm and 3.17 conforming to AISI 316 grade should have been ascertained from the market which has not been done. The burden to prove that PMV is inflated one is on the Department which has not been discharged. It is mentioned in the show cause notice itself that the local suppliers had supplied the exported goods at price ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... market value compares favourably with that declared by the appellant-firm. In the light of the factual findings which are available on record and some of which have been brought forth by the appellant-firm (even at the time of adjudication by the Adjudicating Authority and which has been completely ignored by the Adjudicating Authority) and which has not been rebutted by the Department in any manner whatsoever, we have to come to the conclusion that the FOB values and the PMV declared by the appellant-firm in the shipping bills under which they had undertaken the export, are correct and valid in law, and accordingly, the DEPB credit claimed @22% of the FOB value by the appellant-firm, is rightly entitled to them. Accordingly, we set aside the Order No. 43/2001, dated 22nd June, 2001 passed by the Commissioner of Customs, Kolkata and allow the Appeal filed by the appellant-firm, M/s. Peerless Consultancy Services Private Limited with consequential reliefs, if any. 16. As we have set aside the Order of the Commissioner, it automatically follows that the penalties imposed on the other two Appellants, S/Shri Parasmal Lodha and Nawaratan Bachhawat, are liable to be set aside. We orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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