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TMI Blog2013 (8) TMI 795X X X X Extracts X X X X X X X X Extracts X X X X ..... be assessed on the basis of prices at which goods were offered in the records seized. Whether demand can be issued without challenging the assessment was also settled in UOI v. Jain Shudh Vanaspati Ltd.[1996 (8) TMI 108 - SUPREME COURT OF INDIA ] - the allegation was regarding mis-declaration of value as was evidenced from correspondence sized from the assesse - Where there was such mis-declaration or suppression the extended period of five years specified in Section 28 of the Customs Act was applicable - amount worked out for short levy of duty could not be accepted - the matter was remitted back to the adjudicating authority for re-quantification of short-levy - The penalties also need to be decided afresh in view of the likely reduction in duty liability X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive of rate of conversion of foreign exchange and the rates of customs duty. Further there is no finding that Kemtech has billed any amount as customs duty though they might have given some worksheets indicating customs duty that may have to be paid. Indicating in a quotation, rate of exchange for currency and rate of customs duty that may be prevailing after 8 to 9 months after submitting the quotation, cannot attract the provisions of Section 28B of Customs Act. The provision of Section 28B of the Customs Act was invoked in the SCN but no amount is confirmed under this section in the impugned adjudication order. There is no appeal by Revenue against this part of the order. 5. In spite of the above position, this matter of loss caused to GAIL cannot be altogether ignored in this order because the differential duty demanded in the SCN and confirmed in the impugned order is worked out on the basis of loss caused to GAIL. It is seen from the annexure to the SCN that differential duty is worked out by taking the value quoted by EMSG to Kemtech and applying the duty rates indicated in the quotation by Kemtech to GAIL and arriving at the duty payable and deducting from such amount th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itor SM 26.1R 5 48850 13440 12. Speed Monitor SM 26.3R 2 38350 9056.4 13. Temp. Monitor TM 24.5R 2 38525 9056.4 14. Temp Monitor TM 24.11R 3 57525 13584.6 15. Power Supply Modul PS 10.0 2 21500 5353.8 8. Kemtech's main submissions to justify the variation in prices are as under : (a) No payment whatsoever in advance was to be made by M/s. GAIL to the supplier company whereas Kemtech had paid 50% of the price in advance; (b) Price settled with Kemtech by GAIL was in Indian rupees while the price quoted by foreign supplier was in dollars. The prices were frozen with Kemtech leaving the risk of currency fluctuations to the account of Kemtech. 9. Before recording the submissions of Kemtech it is necessary to record the contents of some of the letters seized from the premises of Kemtech. These are reproduced below. 9.1 Copy of letter dated 4th May, 2001 from Jay D. Chief International Sales, Export Management and Services Group; Representative for PECC 170/A-7, Changebridge, Road, Montville, NJ 07045 USA addressed to M/s. Kemtech International Ltd A-125, Shivalik, Malviya Nagar, New Delhi. "Sub : GAIL's enquiry # GAIL/C & P)/HBJ/BJP/00162/370/00-01 fir speed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l # FC 58-6R 8,27,500 11,129 2. Speed Monitor Model # SM 26-3R 7,26,500 9,770 However, the prices for all the other three analogue modules remains the same as per our offer Ref # KIL/PECC-MOD/EMSG/May 01/01 dated 8th May, 2001. EMSG's letter explaining above all is also enclosed herewith. We hope you would appreciate the one time special kind gesture extended by EMSG/PECC USA in doing the above and the efforts put by Kemtech to achieve the same. We may also clearly state that PECC/EMSG has offered this as a one time special discount and hence no 'repeat order will be acceptable by us or these two modules specifically as per these revised discount prices. Hence in case your plan to buy some additional quantities of these two particular modules later in this year itself, then we would request you kindly consider this as an one time quantity discount and place your order for additional quantities of these two modules along with this order itself. This offer should be treated as final and best possible from our end. We now hope of receiving your valuable order at the earliest possible so as to enable us to ensure delivers within this financial year. Assuring you the best of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of them were very comfortable with Analog system and were struggling to upgrade to the digital system, PECC undertook a detailed study to evaluate the efforts required to support the Analog systems further. As a result of this PECC made a strategy 'life time buys' of components that were obsolete or rapidly approaching obsolescence and the ones which go into the manufacturing of the Analog modules. 5. This was done in order to continue the support for Analog modules repair and replacement for years to come. 6. As a result of this exercise, PECC has invested considerable amount of funds in the manpower to do this, funds required to create such a big inventory and obviously the skylight costs paid for the components (in year 2001) taken into inventory for making this a success. Hence the present costs of the modules offered reflect a bit of all above as still this is a negligible costs compared to the costs involved to explore the other alternatives in case the Analogue systems would have been completely obsolete. But still considering GAIL's concerns/objections on the steep price rise, we can offer a one time special discount only for two particular modules and the below ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this year due to some cost reduction measures undertaken by PECC. Hence decent savings are now possible on account of FOB charges. Per Mr. Anurag's request to Annie Kinner the list of FCV orders received by us from GAIL in the past 5 years (I may have missed some orders as it's time consuming to dig all the files) : - ND/CP/HBJ/SPARES/614/96 dated 6-3-1996 - ND/CP/HBJ/SPARES/706/94-95/12-97 dated 2-20-1998 - GAIL/BJP/HBJ/C7P/I-9705/816 dated 5-26-1998 - GAIL/C&P/HBJ/C7P/I-0024/2000/130 dated 10-11-2000 We hope to have provided you with all the information requested for further submission of quote to GAIAL by Kemtech on behalf of PECC/EMSG." 10. We have heard the Counsel for the Appellants and gone through the Appeal Memorandum in each of the Appeals. The submissions of Kemtech are the following : (i) The notice is time-barred because it does not allege any collusion, fraud or connivance and in the absence of such elements extended period of five years cannot be invoked; (ii) After the goods have been assessed and cleared the Revenue could not have made in demand unless the assessment order was appealed against. (iii) The adjudicating authority has erred in relying on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... produced. In short he argues that the prices agreed to by PEEC for supply of goods to Kemtech as disclosed from the letters seized were the actual prices and not the prices declared in the Bill of Entry. 12. The arguments of the Appellants are examined below in view of the submissions of SDR and the available records. 12.1 This is a case where the allegation is regarding mis-declaration of value as is evidenced from correspondence sized from the Appellant. Where there is such mis-declaration or suppression the extended period of five years specified in Section 28 of the Customs Act is applicable. 12.2 The question whether demand can be issued without challenging the assessment is also settled by the Honourable Supreme Court in the case of UOI v. Jain Shudh Vanaspati Ltd.- 1996 (86) E.L.T. 460 (S.C.). 12.3 The prices taken are the prices quoted by the manufacturer to Kemtech and not just the list prices. No factor that would justify such abnormal discount when the Bill is raised by a third party is presented. Payment of 50% in advance cannot justify supply of goods at 1/4th the price. The prices quoted by Kemtech in Indian Rupees to GAIL give reasonable profit margin to Kemtech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mis-declaration of import value through the medium of Suntag USA and this argument is to be discarded. 12.7 In the matter of undervaluation of imported goods, proof of remittance of additional consideration is a sufficient proof. But it is not that if the Revenue is not able to unearth leads of this activity done stealthily the case has to necessarily fail. The decision of the Apex Court in the case of CC v. Shibani Engineering Systems - 1996 (86) E.L.T. 453 (S.C.) illustrates this point. 12.8 We note that the SCN in paras 15(i)(a), 15(i)(b), 15(i)(c), 15(i)(d), 15(i)(e) and 15(ii)(a) refers to a detailed note appended to letter C. No. GAIL/ND/VIG/218/03/175 dated 5-5-2005 issued by GAIL to Customs Department. Though the letter was supplied to Kemtech the note attached has not been disclosed to Kemtech. The impugned adjudication order also refers to this note in para 11. However the adjudicating authority observes in his findings that the case is not made on the basis of the said note and discards this evidence as per the second para in the "Discussion and Finding" part of the order in page 28 of the order. If this note was not relied upon it would have been desirable not to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62 which permits the raising of a presumption in respect of documents received from any place outside India in the course of investigation of any offence alleged to have been committed by any person under the Act. The majority points out that these documents, which are photocopies, do not bear the signature either of the exporter, the forwarding agent, the stevedore or the Customs Officer. In fact, they do not bear any signature whatsoever and, therefore, the authenticity of these documents is suspect and it is not possible to presume that the originals are duly signed. It is for this reason that the majority did not consider it safe to place reliance on photocopies of copies of the documents recovered by the Customs Officer not from the Customs Department in Japan but from the agencies which are stated to have exported the material in question. It is also found that one of these copies of the alleged declarations bears the seal of the Customs at Kobe and the name of the vessel is shown to be Raya Fortune' but the itinerary of that vessel collected at the instance of the Indian Customs shows that the said vessel had never touched Kobe which raises a serious doubt as to how far this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other fax of 18th August, 1995 offers goods at Yen 800 per metre. Fractional lengths are shown for such goods in lengths of metres, e.g. 273.3, 255.8 etc. This lends credence to the contention that the goods imported by the appellant were sold at a lower price because they were all odd lot." 13.3 CC v. South India Television (P) Ltd. - 2007 (214) E.L.T. 3 (S.C.). Extracts from paras 2 and 3 are reproduced to show that the facts of this case re different from the facts of the case at hand. "2. The facts giving rise to this civil appeal are as follows. The respondent had imported six consignments of ceramic capacitors and one consignment of diodes from Hong Kong during the above period. The goods were shipped from Hong Kong by M/s. Compo Export of Hong Kong and M/s. Pearl Industrial Company of Hong Kong. The price of ceramic capacitors was declared by the respondent in its Bill of Entry @ HK US $ 600 per 1000 pcs. whereas the price of diodes was declared @ HK US $ 29406 CIF as reflected in the invoices. On 27-4-1998 a show cause notice was issued by the Assistant Commissioner of Customs, Calcutta alleging inter alia that as per the overseas investigation report of the Hong Kong C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red for identical goods was the same as the price declared by the importer in the present case in its Bill of Entry. It was further submitted by the importer that it was not open for the Assistant Commissioner to adjudicate the value under Rule 8 without going sequentially from Rule 5 to Rule 6 and Rule 6 to Rule 7 onwards. The importer further contended that, in the present case, the value of the goods could have been determined in terms of Rule 5 and, therefore, there was no question of invoking Rule 8. In this connection reliance was placed on the judgment of this Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai reported in 2000 (122) E.L.T. 321. "3. -------------Further, according to the Tribunal, in the present case, the importer has relied upon instances of import of identical goods at identical rates by other importers from the same supplier (namely, M/s. Pearl Industrial Company, Hong Kong) during the aforesaid period. The Department had accepted those rates. This evidence led by the importer herein has not been rebutted. It had not been discussed by the adjudicating authority. In the circumstances, the Tribunal allowed the appeal filed by the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not only India but the world over, after exchange of numerous correspondences and personal discussions during visits of representatives of the seller and that this policy distinguished between following categories of buyers on logical commercial grounds :- (i) Replacement users who order small lots at infrequent intervals; (ii) Original Equipment Manufacturers (OEMs) who import for fitment in their manufactured products, and for this build up inventories with sizeable orders after securing favourable prices between various competitors and in view of their sizeable orders and the competition involved, the sales policy allowed up to 20% discounts (on quantity) upon the prices of the said price list; (iii) Canvassers and Skefko, who import in even greater bulk for the purposes of only trading, and may secure even lower price, particularly if they generated additional volumes of sales. This policy was aimed at a more aggressive marketing objective and envisaged discounts even over 20% (but on the approval of the sellers on a case-by-case basis, on reference to them). 13.5 Overseas International v. CCE - 2001 (127) E.L.T. 599 (Tri.-Chennai) Extracts from para 1 and para 7 are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Collector of Customs, Bombay v. Shibani Engineering Systems, Bombay reported in 1996 (86) E.L.T. 453 (S.C.) wherein the Apex Court held that such abnormally discounted prices cannot be accepted. Therefore, we agree with the finding in the impugned order that the prices declared in the Bill of Entry merits rejection and goods should be assessed on the basis of prices at which goods were offered by EMSG to Kemtech in the records seized. 15. However we are not in agreement with the amount worked out for short levy of duty for the reason explained in para 5 above. So the matter is being remitted back to the adjudicating authority for re-quantification of short-levy on the basis of prices quoted by EMSG to Kemtech in the manner indicated in para 5 above, The penalties also need to be decided afresh in view of the likely reduction in duty liability. Appeal No. Customs-479/2007 filed by Shri Anurag Mahajan 16. This Appellant was the Director of Kemtech 17. The Appeal Memorandum raises just the issues raised in the appeal filed by Kemtech and examined in the first part of the order. There are no specific submissions on the role played by the Appellant. Since we have already held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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