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TMI Blog2016 (1) TMI 551X X X X Extracts X X X X X X X X Extracts X X X X ..... , Slim-N-Lift (Female Shorts), Magic Bullet (Food Processors), Sauna Belt (Fat Reduce Belt), Tool Kits' and selling the same to M/s. Telebrands India Pvt. Ltd who is engaged in Business of selling of the goods through telemarketing. The investigation was conducted by the Preventive officer, during which various statements of various persons namely Shri Narendra Mehta, Shri Prakash Chandra Pandya, Shri Nanda Govindswamy Naidu (aka Gopi Naidu), Shri Hitesh Israni and various other persons were recorded. In the investigation the various documents were recovered from the appellants' premises. Officers also obtained report from Custom Department, Hong Kong. In one of the statement undervaluation was admitted by Shri Narendra Mehta, proprietor of importer firm. However, the said statement was retracted. Undervaluation was further supported by the difference in the value declared to the Custom, sale price of importer to M/s. Telebrand and sale price of the Telebrand to their ultimate customers, the difference thereof was also considered for alleging the undervaluation. During the investigation whatsoever goods were lying with buyer of the imported goods, M/s. Telebrand and M/s. Te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d abut unit price of USD 33.50 for Air Sofa, Shri Hitesh Israni stated that the actual price may be USD 33.50 while selling the said product to M/s. Telebrand. Shri Narendra Mehta has raised the sales invoice of Rs. 1800 per unit which comes to USD 45 approximately and that may be actual cost of USD 33.50 per unit plus custom duty and marginal profit might to be covered in the said value of USD 45. As per the statement dated 1/5/2006 Shri Hitesh Israni stated that goods supplied by M/s GNG and M/s Shreenath Enterprises and M/s. Rico Gems Corporation the quality of the goods namely 5-in-1 sofa bed, AB King Pro, Magic Bullet, Took Kit etc. are identical and that the purchase price of both the companies are same; that in the statement dated 8/3/2010 Shri Hitesh Israni stated that in his earlier statement, he mentioned consignment of Air-O-Space bed was of bad quality whereas now clarified that was stated inadvertently and fact is that all the goods imported by M/s Rico Gems and received by them are of standard quality goods which identical to the goods imported by M/s. GNG and M/s. Shreenath; that in the statement dated 20/1/2010 on being asked about the differential value between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a price which is about four and half time that of their purchase price was the price at which Rico has shown as import price for Custom are not factually correct; that Shri Hitesh in his statement dated 18/3/2010 stated that he would make sure that Shri Narendra Mehta of Rico Gems pays the differential duty. As Shri Hitesh was aware of the negotiated price of the product imported by M/s. Rico and have aided and abated in undervaluation being done by M/s. Rico; that Shri Narendra Mehta in his statement accepted the fact that product imported by Rico are identical to that imported by M/s. GNG and M/s. Shreenath. Valu of the product liable to be redetermined under the provision of Rule 5 of the Customs Valuation (determination of value of imported goods) Rules, 1988. As regard the cross examination, Ld. Commissioner given his observations that the statements of Shri Prakash Pandya and Shri Naidu were recorded wherein they have admitted undervaluation. The retraction was made during the cross examination however no retraction earlier to the cross examination was made and therefore the same is after thought. As regard the appellants' submission that the price of goods imported by M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was no admission of any undervaluation or of any payment/remittance over and above the Invoice price. (d) There is a purported Statement dated 18-3-2010 of the Appellant's Proprietor which is not signed by any Gazetted Officer and which was recorded under coercion as set out in the Affidavit dated 19-3-2010 affirmed by the Appellant's proprietor. (e) In the Show Cause Notice dated 31-8-2010 the values of the goods imported by the Appellant were proposed to be loaded based on the prices found on the said Pages 124 and 125 of the documents seized from GNG & Co in respect of the goods namely - AB King Pro, Slim & Fit, S-Belt, Tool Kit, Magic Bullet, Drill M/C & Diamond Blades. In respect of the goods Inflatable Sofa Bed, the Notice proposed to enhance the value based on a Report dated 14 th May 2007 of the Hong Kong Excise Department. There are several other items of import such as Sauna Solution, Inflatable Chair, Salon Shaper, Twist & shape, Air-O-Space, Juice Extractor, etc which are neither covered by the said Pages 124 and 125 of the documents seized from GNG & Co nor by the Report dated 14 th May, 2007 of the Hong Kong Excise Department and for which no basis is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 20-1-2010 and 10-3-2010 that the Appellant had remitted only the Appellant's proprietor has categorically stated in his statements dated 20-1-2010 and 10-3-2010 that the Appellant had remitted only the Invoice price through legal banking channels and there is no admission or evidence of any payment / remittance over and above the Invoice price. Thus the Invoice price was the price actually paid for the imported goods and was therefore the transaction value. (j) Without prejudice to the aforesaid submission, assuming while denying that the transaction value is liable to be rejected because the price was negotiated by Hitesh Israni, even so by virtue of Rules 5 and 6, the lowest value of contemporary imports accepted by the department has to be adopted and accepted and such contemporary price had already been applied at the time of import itself. (k) Without prejudice to the aforesaid documents, no reliance can be placed on the alleged actual prices of imports of GNG & Co and Shreenath Enterprises for the imports made by the Appellant during the period April 2006 to November 2008 since the imports of GNG & Co and Shreenath Enterprises were only up to March 2006. For the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present proceeding. Secondly, no authenticated copies of the alleged invoices of Creative Nations International Limited, Philippines have been forwarded with the said letter /report of Hong Kong Trade Investigation Bureau. In the absence of such authenticated copies being supplied, no reliance can be placed on the said report. Reliance is placed in this behalf on the decision of the Supreme Court in the case of CC v South India Television P. Ltd - 2007 (214) ELT 3 (SC) in which case the Supreme Court held that mere Investigation Report of the Hong Kong Excise and Customs (which had a similar caveat as in the present case as would appear from the Tribunal's decision reported in [2001 (136) ELT 243)] without authenticated copies of the foreign documents relied upon, the report being furnished cannot be relied upon for enhancement of value. Thirdly, the imports in the present case were made by the Appellants from CNI - Creative International (HK) Ltd., Hong Kong and even payments were made to the said Hong Kong company and not to the Philippines company are irrelevant. The Commissioner erred in not dealing with any of the aforesaid submissions made before him. He seriously erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce he was informed that Mr. Ahir was not available. The Appellants' Proprietor was asked to wait for Mr. Ahir in his office. In Mr. Ahir's office a person who claimed to be an officer subordinate to Mr. Ahir met the Appellants' Proprietor and told him that he had been asked by Mr. Ahir to record his statement. The said officer, who did not disclose his identity, insisted that the Appellants' Proprietor should record statement stating that the imports made by the firm were undervalued and that it he did so no harm would be caused to him. The said officer commenced recording the statement of the Appellants' Proprietor at 9:00 PM on 18.03.2010 when he once again insisted that the statement ought to be recorded as asked by him earlier. On the Appellants' Proprietor refusing to do so the officer was furious and threatened to arrest him. It is under such circumstances that the said involuntary statement came to be recorded. Only after the said illegal and involuntary statement was recorded that the Appellants' Proprietor was allowed to go home at 2:00 AM on 19.03.2010. (s) The Commissioner should have held that the said statement dated 18-3-2010 was involunt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iculars without prejudice to the submission that the value determined in the case of GNG & Co and Shreenath Enterprises cannot be made basis for enhancing the value of the appellants' imports. It is submitted that in any event the goods imported by the said two importers were "AB King Pro," "Slim and Fit" "S Belt" "Magic Bullet" "Tool Kit Drill M/C. and Diamond blades. As regards the rest of the goods imported by the appellants, such as Suana Soluation, inflatable Chair, Salon Shaper, Twist & Shape, Air o Space, juice extractor. Etc there is no material whatsoever in the notice issued to the appellants for enhancement of the value of the said goods. The notice does not indicate any material or basis or evidence for arriving at the proposed enhanced value indicated in the Annexures to the Notice. The Commissioner erred in not dealing with this submission. (w) Without prejudice to the aforesaid submissions, it is submitted that the Notice is barred by time. The goods were imported during the period 2005-06 to 2008 whereas the Notice is issued on 31-8-2010 which is well beyond the normal period of limitation of six months prescribed under Section 28(1) of the Customs Act, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the description of the goods. Secondly as submitted above, it is an admitted position that the Appellants had made payment of only of the prices mentioned in the Invoices of the foreign suppliers which were negotiated by Hitesh Israni of Telebrands to whom the Appellants sold the goods and no amount over above such invoice price has been paid by the Appellants. Assuming while denying that the prices as negotiated by Hitesh Israni and mentioned in the foreign suppliers' invoices had been undervalued, there is nothing to show that the Appellants were aware of the same. It cannot be therefore be said that the Appellants had willfully mis-declared the values. (x) Without prejudice to the aforesaid submissions, in any event the Commissioner erred in simultaneously imposing penalty on the Appellants under Section 114 A of the Customs Act 1962 and on the Appellants' proprietor under Section 112(a) of the said Act. The Commissioner erred in not appreciating that it is settled law that a proprietary firm and its proprietor are one and the same entity/person in law and therefore imposition of penalty on the firm under Section 114A and on the proprietor under Section 112(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m, therefore the E-mail was forwarded by them to Rico Gem. (v) On being shown statement issued by Hong Kong Customs as referred above where invoice value has been shown as US$ 67948 for air sofa bed and mention that payment has been received from M/s Rico Gem Corporation, where as in the invoice value declared to Indian Custom value is very low, Shri Isarani stated that as per statement there is difference in the invoice value and that the statement also mentions the Indian customer as M/s Telebrand and payment made by M/s Rico Gem and that unit price of the air sofa looks like US$ 33.5 approx; that actual price may be the said US$ 33.50, but the negotiation of the price was purely done by Shri Mehta. Shri Israni further stated that they have purchased the goods @ Rs. 1800/ per unit which comes to around US$ 45 approx. and that may be the actual cost was of US$ 33.5 per unit plus purchased the goods @ Rs. 1800/ per unit which comes to around US$ 45 approx. and that may be the actual cost was of US$ 33.5 per unit plus customs duty and marginal profit might be covered in the said value of US$45.00. (vi) In case of export vide shipping bill no. 5863859 dated 31.12.05, 120 sets o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that it is admitted fact that summon was issued by the superintendent of Customs and in response to the summon Shri Mehta presented himself and gave his summon which is in his own handwriting. In this statement Shri Mehta has admitted about the mis declaration in value of the goods imported. That as per records on 19.03.2010 Shri Mehta affirmed an affidavit inter alia stating he was forced and coerced into giving the said statement dated 18.03.2010 against his wishes and under threat of arrest. It may be mentioned that in the same affidavit Shri Mehta has stated that his earlier statement was correct. and in his statement dated 30.05.2006/20.01.2006 he has accepted that value of slim and fit declared as us$4 a piece (as against value of us$1 shown at the time of import) is the correct value. The aforesaid affidavit also shows that a statement was given by Shri Mehta on 18.03.2010 and this can be considered as a communication from Shri Mehta to the officer. Further this affidavit was not sent to Department and it was submitted only at the time of filing of reply / hearing. Therefore the statement dated 18.03.2010 can be considered as an evidence. (xi) As regards submission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was identical to the imported by M/s. GNG & Co & M/s Shreenath Enterprises and also that the purchase price in respect of purchases from both these importers was mostly the same. Thus, the value in respect of M/s. Rico Gems Corporation has been correctly re-determined under the provisions of Rule 5, rule 6 read with Rule 8(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 [now Rule 4 & 5 read with Rule 9(1) of the Customs Valuation Rules, 2007)]. (xii) As regards the report received from Hong Kong Customs, it is submitted that in the matter of Best & Co vs Commissioner of Customs 2009 (39) ELT 294 (Tri-Del) it has been held that documents obtained through Gov Agencies of other countries in pursuance of mutual agreement for assistance in investigation through diplomatic channel, admissible as evidence although comprise of unsigned and unattested photocopies. In this I also rely on decision of CESTAT in the matter of Winstar Electronics vs Commissioner of customs 2006 (201) ELT 76 (TRI-Del)]. (xiii) As this is case where appellant has given incorrect declaration regarding correctness of the value of goods. The value subsequently found to have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (xvi) I also reiterate the findings of Adjudicating authority. (xvii) In view of the aforesaid submissions, the adjudicating Authority has correctly confirmed demand of duty and had imposed fines and penalties on the persons responsible for evasion of duty. It is therefore prayed that the Hon'ble CESTAT be pleased to reject the above appeals. 5. Ld. Counsel, against the arguments/submissions of the special counsel, made the following rejoinder:- (a) The learned Special Consultant for the department relied upon the decision of the Tribunal in the case of AG Incorporation v CC - 2013 (287) ELT 357. It is submitted that the said decision is distinguishable and is not applicable to the facts of the present case for the following reasons: (i) The premise on which the said decision is based is to be found in Para 17.2 thereof where it is observed that if a substantially low price is declared in the Bill of Entry and the importer somehow gets the custom officer to load the value a bit, such single action of an appraising officer cannot give immunity from further proceedings regarding mis-declaration of value. It is submitted that the present case is not one where the Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) The Learned Special Consultant for the Revenue relied upon the decision in 2009 (239) ELT 294 - Best & Co v CC in which in Para 6.5 the Tribunal has observed that Documents obtained through Govt Agencies of other countries in pursuance of mutual agreements for assistance in investigation, can be taken into consideration along with other evidence. It is submitted that no reliance can be placed on this decision for the following reasons: (i) Firstly, in the present case the Hong Kong Customs report has not provided any documents under Mutual Legal Assistance Agreement/ordinance but has only provided some information exercising informally extra-territorial jurisdiction. This clear from the letter of the Consulate General, Hong Kong. (ii) Secondly, the observations in the said decision of the Tribunal have not taken into account the decisions of the Supreme Court in the case of CC v South India Television P. Ltd. - 2007 (214) ELT 3 (SC) and Collector v East Punjab Traders - 1997 (89) ELT 11 (SC) which require that authenticated copies of the foreign documents should be produced by customs and (iii) Thirdly, the report in the present case is not being relied upon along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e. Telebrand India has been negotiating the price of the goods imported by Rico Gems. (iii) In the statement dated 18.03.2010 Shri Narendra Mehta has admitted the undervaluation. (iv) There is substantial difference in price declared to the custom, price at which goods sold to M/s Telebrand and the price at which the imported goods sold by M/s Telebrand to the ultimate customers. (v) As per the report dated 14.05.2007 of Hongkong Customs the price shown in the report is much higher than the price declared before the Indian Customs. (vi) Though the value was once enhanced at the time of assessment and clearance of the goods, further enhancement can made for the reason that there is suppression of actual value on the basis of evidences and statements of various persons. 8.1 In the impugned order heavy reliance was placed on the investigation carried out against M/s. Shreenath and M/s. GNG & Co. for enhancement of the value taking price of M/s. Shreenath and M/s. GNG & Co. in respect of similar goods. We find that the there is no evidence for linking and adopting the price of similar goods imported by M/s. Shreenath and M/s. GNG & Co. In the independent investigation agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the contemporaneous value no further enhancement is permissible. This legal position has been settled in the various judgments as cited by the Ld. Counsel, the some of the judgments are referred below: (a) Commissioner of Customs (Prev.), Mumbai Vs. Paras Electronics [2009 (246) ELT 231 (Tri. Mumbai)] (b) Vittessee Export Import Vs. Commissioner of Customs (EP), Mumbai [2008 (224) ELT 241 (Tri. Mumbai)] (c) Malhotra Impex Vs. Commissioner of Customs, Ahemdabad [2006 (203) ELT 561 (Tri. Del.)] In view of the above judgments, it is clear that once the value of imported goods has been enhanced the further enhancement is not permissible. In the present case the enhancement was admittedly on the basis of contemporaneous value of similar goods, therefore enhancement is not correct and the above judgments squarely applicable in the facts of the present case. It is pertinent to note that the Show cause notice do not even allege that G.N.G. & Co. and Shreenath Enterprises had imported Sauna Solution, Inflatable Chair, Salon Shaper, Twist & shape, Air-O-Space, Juice Extractor, etc. There is absolutely no cogent material whatsoever in the Notice issue to the Appellants for proposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price negotiation by a person, other than importer, with the foreign supplier alone is not an act of offence or it does not establish the undervaluation of the goods. We observed that neither in any of the statement of the witnesses nor in documentary evidences show that due to negotiation the either M/s. Telebrand or importer M/s. Rico gems have made any payment to the foreign supplier over and above the price declared in the invoices submitted to the Customs Department. For this reason also negotiation of the price between M/s. Telebrand and foreign supplier has no effect on the value negotiated, invoiced by foreign supplier and declared by the importer to the Customs. We therefore found that this evidence relied upon by the Adjudicating Authority for supporting the Revenue's case of undervaluation has no legs to stand. 8.3 The Adjudicating Authority relied upon the statement dated 18/3/2010 of Shri Narendra Mehta, the proprietor of the M/s. Rico Gems wherein Shri Mehta has admitted the undervaluation. We find that Shri Mehta has filed an affidavit dated 19/3/2010 wherein he explained under what circumstances the statement was recorded and he stated that statement was recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed at the rate of USD 1 per pc was exported at USD 4 per pc and export value of USD 4 was held to be the actual value of the goods. It is seen from the statement of proprietor of the M/s. Rico Gems who has stated that USD 1 per pc is the import price which is actual import price and USD 4 per pc is the actual export price. Therefore proprietor has not accepted that USD 4 per pc is the import price. We find that obviously the export price will be much higher than import price of the goods and due to this reason it is not correct to hold that USD 4 per pc is the actual import price, particularly in the absence of any evidence of price over and above USD 1 per pc. 8.5 In respect of one item i.e. inflatable Sofa bed Ld. Adjudicating authority referred report dated 14/5/2007 of Hong Kong, Customs and Excise Department wherein the price of the said item were shown much higher i.e. USD 33.50. Firstly, from the said report, it is noticed that it neither indicates description, quantity and unit price of the goods nor any dates of such alleged Invoices indicated. The invoice numbers mentioned on the same for comparison are not even tallying. Secondly, in the said letter, there is caveat to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agistrate under sub-section (1C) of section 110 ]. In terms of clear provisions of above Section 139, the documents provided from outside India can be admitted as evidence only when it is not proved contrary. In the present case, firstly the documents attached with the letter has not been signed. Secondly, attested copies of invoices were not submitted. In the annexure to the letter invoice number, description of the goods are wrongly mentioned therefore it is proved contrary to the actual details of the imported goods, therefore the same cannot be admitted as evidence in terms of Section 139. The Ld. Commissioner has not appreciated that no authenticated copies of the invoices of Creative Nations International Limited, Philippines referred to in the letter of 14 th May 2007 of Deputy Head, Trade Investigation, Hong Kong have been received and hence Section 139 is not applicable. As held by the Supreme Court in the case of Collector v East Punjab Traders 1997 (89) ELT 11 (SC), for the presumption under Section 139 to apply, authenticated copies of the invoices referred to in the report ought to have been obtained from the Hong Kong Customs. The judgment of this tribunal in Best & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re subject matter of the instant appeal are after recording of these statements and recovery of the said documents by the department, and yet the assessments were finalized on the basis of contemporaneous value. The basis on which the value of the Appellants imports is sought to be again enhanced by the present Show Cause Notice was already available with the department at the time of assessment of duty made by relying on contemporaneous value. It is admitted fact that the value was sought to be enhanced by the department on the basis of contemporaneous value of Shreenath and GNG and not on any admissible evidence, therefore on the part of the Appellant, no willful mis-statement or suppression of facts or intention of evading duty exist. The larger period of limitation therefore is not applicable. In the identical facts this Tribunal in the case of Milton Plastics Ltd. (supra) held as under: 13. We find that the plea of limitation raised by the appellant is also a valid plea in the present proceedings. The sole basis for demanding duty in the Notice is based on the imports of similar goods by others. In the present case, at the time of assessment, a major part of the consignment, ..... 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