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TMI Blog2016 (3) TMI 294X X X X Extracts X X X X X X X X Extracts X X X X ..... of demanded on account of change of classification and rate of duty is upheld. Valuation - Rejection of transaction value declared and enhanced the same - Redetermination under Rule 9 of CVR, 2007 - Held that:- the imported goods is specialized articles of glass and cannot be compared with high value imported watches. The Product Launch Proposal Form (PLPF) of watches of the supplier is only intended for how the pricing should be done in the subsequent retail sale through multi-level marketing pattern but in the absence of PLPF for Amezcua Chi Pendant , the PLPF of Quranos watches and Retrograde watches cannot be adopted for determining the value under Rule 9. By relying on the decision of Hon'ble Supreme Court in Eicher Tractors Ltd. Vs CC [2000 (11) TMI 139 - SUPREME COURT OF INDIA] and CC Vs Ferodo India Pvt. Ltd [2008 (2) TMI 12 - Supreme Court], it is not the case of inclusion of royalty and knowhow but the enhancement of value under Rule 9 of CVR and the L.A has loaded the price by adopting the PLPF cost sheets of Quranos watches and La Retrograde watches. Therefore, declared value is accepted as transaction value and should not be enhanced under Rule 9 ibid. Also dema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The name Amezcua relates to a brand. Subsequently, the goods were seized on 11.1.2013. After seizure, provisional release of goods was ordered on execution of bond of ₹ 15,42,86,221/- and cash deposit of ₹ 3.16 crores + Bank Guarantee for 50% of the differential duty i.e ₹ 1.58crores towards fine and penalty. However, appellants have not availed provisional release of the goods. After completing the investigation, show cause notice dt. 14.11.2015 was issued. Para-14 of the SCN is reproduced as under :- 14) a) In view of the above, the importer, M/s. Transview Enterprise India Ltd., New Delhi, with their branch office at Bangalore, is hereby called upon to show cause within 15 days of receipt of this notice, to the Commissioner of Customs (Seaport-Import), at Custom House, Chennai-1, as to why: i) The goods imported vide the Bill of entry no 8746111 dated 12/12/2012 namely Amezcua chi Pendant 1 declared in the bill of entry as Amezcua chi Pendant (Artificial Jewellery) under the CTH 71179090 should not be considered as Amezcua Chi Pendant classifiable under CTH 70189090 as an article made of glass as corroborated by the catalogue of the imported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Pvt.Ltd., M/s Vihaan Direct Selling India Pvt Ltd., Bangalore, under section I12(a) read with section 114AA of the Customs Act,1962, for rendering the goods liable for confiscation. viii) Penalty should not be imposed on Mr. Suresh Thimiri, the CEO, Director of the importing company under Section 112 (a) and Section 114AA of the Customs Act, 1962 for use rendering the good imported vide the said Bill of Entry no 8746111 dated 12/12/2012 ix) Penalty should not be imposed on Mr.SrinivasRaoVanka, the Director of M/s Vihaan Direct Selling India Pat Ltd., Bangalore, the sub Franchisee of the importing company, under Section 112 (a) and Section 114AA of the Customs Act, 1962 for rendering the goods it imported vide the said Bill of Entry no 8746111 dated 12/12/2012. b) The noticees are also directed to state whether they desire to be heard in person. Incase no reply is received in response to this Show Cause Notice or the noticee does not appear for personal hearing on the date and time mentioned above, it will be inferred as if they have nothing to state and the case will be decided ex-parte based on available facts and evidences on record. 3. The Commissioner in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only marketed through internet by way of multi-level marketing. He therefore submitted that the goods are rightly classifiable under heading Imitation Jewellery under Heading 71179090. He further submits that the goods cannot be classified under Chapter 70. He drew our attention to Chapter Note 1 (b) of Chapter 70 where this chapter 70 does not cover Articles of Chapter 71 viz. Imitation jewellery and submits that chapter heading 7018 covers only Glass beads, imitation pearls, imitation precious or semi-precious stones and similar glass smallwares, and articles thereof other than imitation jewellery, glass eyes other than prosthetic articles; statuettes and other ornaments of lamp-worked glass, other than imitation jewellery.By virtue of exclusion of Chapter 70, the Heading 7018 itself clearly excludes Imitation jewellery and therefore he submits that the goods are rightly classifiable under chapter heading 71179090 and there is no misdeclaration of goods. 4.2 Regarding the second issue of related persons, he submits that they have submitted all the copies of agreements entered into between M/s.QNET Hongkong and submits that appellant is a subsidiary of M/s.Transview, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by taking note of this PLPF for watches, the department have not questioned the landed cost which is not under dispute. Since PLPF is not available for the impugned goods, they have prepared a worksheet of PLPF which is annexed at page 373 of the paper book and the same was submitted to the adjudicating authority during investigation. Taking into account the purchase price, the selling price has been arrived and the same has not been considered by the adjudicating authority. He further submits that since the product is a pendant having special properties it has been sold through various multi-level chains through independent representatives. Therefore, transaction is at arm's length; sales commission is involved, therefore, retail selling price has been worked for ₹ 8522/-. He further submits that for determining the assessable value of imported goods, retail sale price was not correctly applied and submits that based on the PLPF of Quranos watches, the value has been enhanced from declared price of USD 79.61 to USD 274.61 per piece. In this regard, he referred to annexure to SCN at page 214. He submits that as per the worksheet annexed at page 214, the value has been arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t annexed to the SCN. He submits that appellant imported the same product cleared to Air Cargo Customs as Pharmaceutical product classifiable under 38220090. He submits that as per the copies of agreement, the supplier and the importer is related. Therefore, the invoice price is not the normal transaction value. He further submits that Bill of Entry was filed along with declaration. They have not only misdeclared to the department, the country of origin, but also not declared that they are related. He also submits that option for provisional release was not availed by the appellant. He refers to para-6 7 of OIO on this aspect. Appellant never submitted PLPF for the Chi pendant. Therefore, the adjudicating authority has rightly arrived at the value and enhanced the price based on PLPF for watches. 6. We have carefully considered the submissions of both sides and perused the records, literature and other relevant documents. The issue before us for consideration is whether the goods Amezcua Chi Pendant imported from M/s.QNET Ltd., Hong Kong is classifiable under Chapter Heading 71179090 as Imitation Jewellery as claimed by the appellant or classifiable under Chapter Heading 7018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er articles of heading 9606, or dress-combs, hair-slides or the like, or hairpins, of heading 9615), not incorporating natural or cultured pearls, precious or semi-precious stones (natural, synthetic or reconstructed) nor (except as plating or a minor constituents) precious metal or metal clad with precious metal. As seen from the above definition, as per Note 11, the definition of Imitation jewellery means Articles of Jewellery as defined in Note 9(a), but it does not include buttons, or other articles of Heading 9606, or dress-combs, hair slides, hair pins etc. As already discussed in the brief facts, the imported goods is a circular glass piece fitted with stainless steel bezel. From the literature and the original catalogue produced, we find, it is an advanced mineral-based round glass made from high temperature Nano-Engineered Glass and it has positive energy field. By wearing this, it makes it a person balanced and harmonized and it neutralizes the negative effects of Electrosmog which is the result of Electromagnetic fields created by cell phones, microwave ovens etc. From the above, it is evident that the item cannot be an artificial jewellery. An imitation jewellery/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pay royalty which is fixed as the percentage of the sales turnover of the franchisee i.e. appellant. We find that the adjudicating authority having held that the parties are related persons but not proposed for loading of any royalty on the value of the imported goods. We also find that there is no comparable price of identical or similar goods and also no contemporaneous price available on these goods. Therefore, the adjudicating authority proceeded to determine the value under Rule 9 of CVR under residual method. While determining the value under Rule 9, we find that the adjudicating authority has taken the cost sheet of sale of Quranos Watch and La Retrograde Watch which are imported and cleared by the appellants and sold in the retail market. By taking the value of watches as per PLPF cost sheet the adjudicating authority rejected the declared value of US$ 79.61/per price and enhanced to US$ 274.61/per piece. Whereas we find that the item imported in the present consignment is Amezcua Chi Pendant made of glass and the retail sale price of the watches cannot be compared in the imported goods. Further, the PLPF cost sheet of Quranos watches only relates to post-importation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, if the Consideration Clause indicates that the importer/buyer had adjusted the price of the imported goods in guise of enhanced royalty or if the Department finds that the buyer had misled the Department by such pricing adjustments then the adjudicating authority would be justified in adding the royalty/licence fees payment to the price of the imported goods. Therefore, it cannot be said that the Consideration Clause in TAA is not relevant. Ultimately, the test of close approximation of values require all circumstances to be taken into account. It is keeping in mind the Consideration Clause along with other surrounding circumstances that the Tribunal in the case of Matsushita Television (supra) had taken the view that royalty payment had to be added to the price of the imported goods. The ratio of the above case is squarely applicable to the instant case as even though there was an agreement of payment of royalty towards franchise agreements of various products imported from the supplier for sale through multi-level marketing. In the present case, it is not the case of inclusion of royalty and knowhow but the enhancement of value under Rule 9 of CVR and the L.A has loaded th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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