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TMI Blog2016 (3) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... e rejected - Held that:- in the absence of any authentic evidence from suppliers end i.e. either in the form of letter or a statement from them explaining the reason for maintenance of two sets of invoices in their system and also confirming receipt of flow back of excess amount, the department's reliance on unsigned computer generated invoices cannot be relied on, as sole evidence of undervaluation. Mere authentication of a document by U.S. Agent or officers of OCGI, USA does not automatically become a valid evidence to reject the declared price in the customs invoice and to redetermine value under Rule 8. Therefore, as the declared value is not rejected, there is no question of demand of differential duty is raised. Confiscation and penalty - Section 111(m), 114A and 112(a) of Customs Act, 1962 respectively - Held that:- the goods are not liable to be confiscated under Section 111(m) ibid nor penalty is leviable under Section 114A ibid. Since the main demand is set aside against the main appellants, the personal penalties is also not leviable under section 112(a) ibid. - Decided in favour of appellant with consequential relief - Appeal Nos. C/211-214/2006 - Final Order No.404 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant-importer and also imposed penalty of ₹ 10 lakhs on its partner Shri Ameerul Hussain under Section 112 (a) of the Customs Act. Hence the above two appeals. Appeal Nos. C/213/2006 C/214/2006 3. The issues are identical as involved in two appeals above. The appellants are importer of appeals from USA and other places. The appellants were functioning in the same premises of M/s. National Fruit Agency Ltd. and also imported the apples from three suppliers namely M/s. Fresh Connections, M/s. Cohen Produce Marketing and M/s. PAC Marketing Inc. The DRI carried out investigation and issued SCN dt. 20.11.2004 proposing to reject the transaction value and also proposed to re-determine value as ₹ 1,85,76,950/- on the identical goods as against the declared value of ₹ 1,16,71,056/- and also proposed to demand differential duty of ₹ 38,67,300/- and also proposed for appropriation of ₹ 2 lakhs and also proposed for confiscation of the goods and also imposition of equal penalty both the appellant M/s. Eden Fruits and personal penalty on its partner Shri Ameerul Hussian under Section 114A and 112 (a) respectively. The period of dispute in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared price was accepted and the goods were cleared and the adjudicating authority has not considered these evidences. 8. He drew our attention to Invoice No.21522 dt. 17.5.2001 annexed at page 828 Vol-III, alleged to be a second set of invoice and the parallel invoices recovered from the supplier annexed at page 829 shows the declared price of US$ 10.50 and the second invoice of same number and date the price is show as US$ 14.25. He submits that both the invoices were not signed by authorized persons of the supplier, but only authenticated by USA agent of Indian Consulate at USA. Whereas the customs import invoice of same number and date annexed at page 596 at Vol-II which is bank attested invoice and the declared price is US$ 10.50 is duly signed by the supplier. He therefore submits that parallel invoice submitted by the Indian Consulate at U.S.A is not a parallel invoice issued by the supplier to the appellant. They have only one invoice through the Bank and the remittances were made as per the said invoice price. 9. He submits that the adjudicating authority has not determined the value sequentially as per Valuation Rules and Rule 8 (2) (iii) of CVR has been applied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ai-2009 (233) ELT 248 (Tri.-Mumbai) (4) Eicher Tractors Ltd. Vs CC Mumbai-2000 (122) ELT 321 (SC) He submits that various High Courts and Tribunals have clearly held that Rule 8 cannot be adopted without exhausting or ruling out Rules 5 to 7 in sequential manner. Counsel also submits that in respect of appellant M/s.Eden Fruits all the submissions as above are applicable to that case. 11. The Ld. A.R filed detailed written submissions countering each of the grounds of appeal parawise. She reiterated the SCN and also findings of OIO and submits that though the appellants have imported apples from different suppliers they have adopted uniform price of US$ 10 to US$ 10.5. She drew our attention to statement dt. 28.3.2003 of Ameerul Hussian annexed from pages 720 to 725 of Vol-III and referred to question Nos.3, 6, 9 posed on Ameerul Hussian where he admitted under invoicing and flow back of payment. She submits that even though the statement was retracted the next day, it is not admissible evidence in view of detailed verification and recovery of second set of invoices from supplier and this supports the statement of appellant. Therefore, even if the statement was retract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned order therein held that the statement is a valid document. Whereas in the present case, there was no document and it was only a statement and on the very same date, it was retracted. Therefore, there is no corroboration or evidence to hold that retracted statement was valid. He also rebutted the case laws relied by A.R. on National Lamination Industries (supra) which is clearly distinguishable as in that case, the importer himself had imported two different goods and contemporaneous price of same goods was available. Therefore, the higher price was accepted. He also submits that the other two citations in the case of Radhey Syham Ratanlal and Lan Eseda Industries Ltd. relied by A.R. are also not applicable and distinguishable, wherein both the cases, the contemporaneous prices were available. 13. He submits that in their own case the contemporary price is the same and other contemporaneous prices were available but the same was not considered. He also drew our attention to documents at page 738 showing declared price at USA and shippers export declaration at Pages 740 to 741 of Vol-3 of paper book. He submits that nowhere the supplier has declared lesser price in their cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruits are one and the same, for the sake of recording our findings, we take the appeal of the 1st appellant viz. M/s. National Fruits Agency (C/211/2006). 16. On perusal of the impugned order, SCN and investigation proceedings, copies of relied upon documents, we find that the period involved in the impugned case relates to February 2001 to April 2003. The appellants imported 64 consignments of apples from various suppliers from U.S.A. which is annexed to the show cause notice. All the Bills of Entry were assessed as per the declared price and the goods were cleared and the investigations were initiated by D.R.I. only on 28.3.2003 as post clearance investigation. As such, we find that there is no seizure of live goods and the entire demand is confirmed by invoking Section 28(1) of Customs Act. It is pertinent to see that the investigating officers recorded the statements on 28.3.2003 from Shri M.S. Rahim and Shri Ameerul Hussian i.e. on the date of search of the appellants premises. It was also brought on record in para-7 of the impugned order that both the persons have retracted their statements vide their telegrams dt.29.3.2003, the very next day. The second statement was rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ft PNBP US 33, First Union National bank, Philadelphia P.A., U.S.A A/c # 2000090108622 Gettysburg, P.A., U.S.A. Therefore, the remittances made by the appellants as per the invoices through the bank is a valid evidence which is not disputed by the revenue. Coming back to the parallel invoice seized by US Agency annexed at pages 828 829, prima facie we find that the said invoices are computer generated documents which is neither signed nor authenticated by the supplier. The attestation stamp of US Agency only shows that Compared with Original and Certified to be a True Copy Thereof. If the said copy of parallel invoice is taken as a true copy of original, it can be presumed that the original copy is not signed or authenticated by the said supplier or his authorized person. Further there is no evidence to show that the said parallel invoices were issued to the importer, and there is no other corroborative evidence either in the form of statement or letter from the exporter confirming that they raised this parallel invoice and issued to the importer to realise the difference amount. As rightly contended by the appellant, except the statement of appellant, there is no authenticated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s decision is applicable to this case as the appellant retracted the statement on the very next day with medical reports and there is no corroborative evidence of any flow back nor any evidence recovered from importer appellant's premises. In the absence of any corroborative evidence in respect of retracted statement, the retracted statement cannot be considered as valid evidence for determining the value under Rule (8) and the adjudicating authority holding that the appellants admitted flow back in their statement, is not sufficient and in the absence of any supporting evidence the L.A's decision of undervaluation is not sustainable. The revenue relying on the apex Court's decisions in the case of CC Vs D. Bhoormull case and K.I. Pavunny Vs ACCE (supra) are clearly distinguishable and not applicable to the present case. 21. As regards the legal aspects of determination of value under Section 14 read with CVR, the L.A. in his findings at para 57 discussed the issue wherein it is stated that once the transaction value is rejected, the value should be determined by using Rule 5 to 8 in sequential manner. On the other hand, the L.A failed to give any findings on the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 482.08 8. 7.6.2001 Mumbai A.C. Trading Co. USA 705 10.10 476.72 9. 31.7.2001 Chennai SIMS International USA 1029 9.18 433.42 10. 30.4.2001 Chennai Sach Investments USA 1050 12.62 591.48 11. 28.2.2002 Chennai Empee Bee Internatinoal USA 32917 12.12 589.03 12. 28.2.2002 Chennai Empee Bee Internatinoal USA 8228 11.11 539.95 13. 28.2.2002 Chennai Prabath Kumar Bros USA 2030 12.26 595.66 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 489.23 27. March 2003 Chennai Prabath Kumar Bros. -do- 5146 10.21 489.23 28. March 2003 Suri Fruit Agency -do- 2082 10.10 483.79 29. March 2003 NGK Trading Co. -do- 1043 10.72 513.69 30. May 2003 Calcutta Md.Jahangir Co. -do- 3129 9.12 436.63 As evident from above list, there are more than 30 contemporary imports of apples from USA by different importers from major Custom Houses. The declared price of US$ 10.14 to US$ 12.63/carton has been accepted by the department and allowed clearance whereas the L.A has not considered these evidences and also failed to give any findings as to why the value of similar or identical goods are not accepta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was based solely upon the purported investigation report of Hong Kong Customs and Excise duty; that the said report was accompanied by xerox copies of the export declarations; that the xerox copies did not bear the seal or signature of the customs officials in Hong Kong; that the authenticity of the declaration was doubtful; that the declarations were not the correct reproduction of the original and that there were endorsements to the effect that the documents shall not be used against any third party or in any legal proceedings. In other words, the importer contended that the charge of under-valuation cannot be based on xerox copies of the declarations which were not even certified by the competent authority in Hong Kong. According to the importer, such declarations had no bearing upon the actual sale price of the goods in the hands of Hong Kong exporters. According to the importer, there was no allegation in the show cause notice that it had paid higher value to the supplier than that declared by it in the Bill of Entry. Before the Assistant Commissioner, the importer supported the declared price mentioned in the Bill of Entry by relying upon various contemporaneous imports ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One such letter is dated 19-9-1996. In the present case, the importer has alleged that the original declarations were with the Department. That certain portions of the originals were not shown to the importer despite the importer calling upon the adjudicating authority to do so. Further, by way of Interlocutory Application No. 4 in the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules. The apex Court rejected the value determined under Rule 8 based on price of Country of Exportation. The Hon'ble Supreme Court laid down the law and held that the value of imported goods shall be the value at the time of importation to India i.e. when the goods reaches Customs barriers; that before rejection of transaction value the department has to rule out whether there are any similar or identical goods imported at higher price. The apex Court in the above case rejected the price of Country of Exportation and rejected the verification report of Indian Hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication of Rules 7 and 8 shall be reversed. Rule 7 deals with Deductive value ; Rule 8 deals with computed value ; Rule 9 deals with residual method ; Rule 10 deals with cost and services . 13. Under Rule 11, the importer or his agent shall furnish a declaration disclosing full and accurate details relating to the value of imported goods; and any other statement, information or document including an invoice for determination of the value of imported goods by the Proper Officer and under Rule 12, when the Proper Officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, after seeking the explanation from the importer and if the explanation is not satisfactory, the Proper Officer can reject the declared value and at the request of an importer, the Proper Officer, shall intimate the importer in wring the grounds for doubting the truth or accuracy of the value declared in relation to goods imported. 14. Thus, a thorough procedure to determine the value of the goods has been contemplated by law under these Rules. The Act and the Rules also mandates the Proper Officer to pass a speaking order, giving the reasons as to how h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e laws. When even the non-payment of duty on such undervaluation can be recovered from the importer by issuing him with the notice under Section 28 of the Customs Act, 1962, we are unable to approve the action of the respondents in slapping the impugned order of detention on the detenu. 16. At this juncture, we feel it apt to quote a judgment of the Honble Apex Court in Commissioner of Customs, Calcutta v. South India Television (P) Ltd. [2007 (214) E.L.T. 3 (S.C.) = (2007) 6 SCC 373]. In this matter before the Honble Apex Court also, the issue was undervaluation of six consignments of ceramic capacitors and one consignment of diodes while importing them from Hong Kong by the detenu. In those circumstances, the Honourable Apex Court has held as follows : ... ... ... 17. The above judgment of the Honble Apex Court squarely applies to the case on hand since in the case on hand also, the Department has failed to prove as to how they have arrived at the conclusion that there is undervaluation since there is no material on record to show that the Department has followed the procedure contemplated under the Act and Rules to arrive a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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