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TMI Blog2020 (2) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ed consignments for home consumption. It is not the case of Revenue that over and above the contractual amount, the appellant had paid any other amount either to the overseas supplier or any other person in context with importation of the subject goods. Further, Revenue has also not alleged that the appellant had any interest in the business of the overseas suppliers and vice-versa. The assessment has to be made under Section 14 ibid read with Rule 4(1) of the Customs Valuation Rules, 1988 and the provisions of Rule 3(ii) ibid should not be applicable for re-determination of the declared value. In this context, the Hon ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [ 2000 (11) TMI 139 - SUPREME COURT] have held that when the transaction value under Rule 4 is rejected, then under Rule 3(ii), the value shall be determined by proceeding sequentially through Rule 5 to 8 of the Rules; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), then there is no question of determining the value under the subsequent rules - the department has not made any valid case for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in favor of appellant. - C/86782, 86783, 86784, 86785, 86846, 86889, 87311/2013 - FINAL ORDER NO. A/85177-85183/2020 - Dated:- 10-2-2020 - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. P. ANJANI KUMAR, MEMBER (TECHNICAL) Smt. Nisha Bineesh, Shri J.C. Patel, Shri Kumar Vikram and Shri A.K. Prabhakar, Advocates for the Appellant Shri K.K. Srivastava, Authorized Representative for the Respondent ORDER Briefly stated, the facts of the case are that M/s Sunland Alloys, one of the appellants herein, are a partnership firm engaged, inter alia, in the manufacture of metal ingots of Aluminium, Zinc, Copper, etc., located at Silvasa. During the period between April 2004 and May 2006, M/s Sunland Alloys had imported Zinc and Aluminium scrap, for use in or in relation to manufacture of the said final products, through the ports of Nhava Sheva, Mundra, Kandla, ICD Tughlakabad and Mumbai. In context with import of Zinc and Aluminium scrap, the Customs department received specific information that various metal scrap importers including M/s Sunland Alloys have manipulated the actual value of the consignments in collusion with overseas suppliers and indenters inasmuch as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 112(a) of the Customs Act, 1962 on the ground that they have facilitated and abetted knowingly in suppression of actual transaction value and accordingly, the goods are liable for confiscation under Section 111 ibid. 4. As the show-cause notices were issued answerable to different adjudicating authorities, the CBEC has appointed Commissioner of Customs (Export), JNCH, as common adjudicating authority vide Notification No. 126/2007-Cus. (NT) dated 27/12/2007. Accordingly, learned Commissioner has passed the impugned order No. 51/2013 dated 24/01/2013, which came to be issued on 04/02/2013. Learned Commissioner confirmed the differential duty demanded against M/s Sunland Alloys; confiscated the seized goods and allowed to be redeemed on payment of fine; imposed penalty equal to the duty demanded on M/s Sunland Alloys and imposed penalties on various persons involved in the case under Section 112(a) of the Customs Act, 1962. In addition to the evidence mentioned above, learned Commissioner has relied upon parameters prescribed by the Directorate General of Valuation in its Alert Circular dated 16.12.2005, holding that the actual price of the aluminium and zinc scrap is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prospectively; the circular only provides for average price difference between the price of prime metal and different grades of scrap as determined on the basis of study of difference in prices of scrap and prime metal; the circular only requires the department staff to check possible undervaluation after ensuring all relevant specifications; it cannot override the provisions of Valuation Rules; application of the circular in re-determination of the value of goods has been held bad by various decisions of the Tribunal. 5.3. She further submits that re-determination of the value in terms of Rule 8 of Customs Valuation Rules 1988, without proceeding sequentially through Rules 5 to 7 of Customs Valuation Rules, 1988 is incorrect; a clear mandate has been cast on the revenue authorities to accept the price actually paid or payable for the goods, in respect of the goods under assessment, as the transaction value if no exception is available as specified in 4(2) of the Rule; respondents have ignored the fact of contemporary import of identical goods; moreover, there is no evidence of higher price also; even then, respondent wrongly re-determined the value under Rule 8, instead of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Respondent in the Show Cause Notice. ISRI is only a trade organization and it does not prescribe any discount band as claimed by the department. ISRI gives specification for different scraps and thereby assists the members in buying and selling of their materials and products viz., Nonferrous scarp, Ferrous Scrap, Glass Cullet, Paper Stock, Plastic Scrap, Electronic Scrap. On a specific query made to ISRI to explain how Aluminium scrap prices are determined, ISRI by letter dated 29th October 2008 replied that ISRI, as a trade association, does not become involved in scrap pricing . 5.6. Learned Counsel for the appellants further submits that The E-mails and letter of U.K. Consulate relied upon by the Respondent cannot be considered as valid documents to confirm the allegation of under valuation against the Appellant; the e-mails relied upon by the department are inadmissible as the Laptop belongs to Tarun Zingon has been seized by the DRI officers without complying with the mandatory provisions and conditions of Sectrion138C of Customs Act and Section 110 Customs Act, as held in the following cases. i) Tele Brands (India)Pvt Ltd Vs Commissioner of Cus. (Import), Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not relevant as the goods were purchased by SA from Ala vide invoice dated 5.7.2005 @USD1090 PMT which was the price for export to India. The value has been re-determined @USD1240 on the basis of SID Invoice; as per B/E scrap was of grade TALK; as per the LME minus discount the price should be LME price minus 6% discount; on this basis price should have been more or less USD 1557.9 PMT as determined at sr.no.11 of Annexure E in respect of Talk; it proves that the prices in the international market are not based on LME minus discount as alleged in SCN; further two consignments are alleged to have been cleared under B/E 814268 dated 31.06.2006; the B/E was assessed on the value on the basis of LME minus discount; such Determination of value has been rejected by CESTAT in their own case; however, no duty has been demanded in the SCN in respect of this B/E; hence, no reliance can be placed on it. 5.9. Learned counsel further submits that the department cannot hold the Appellants liable for undervaluation solely on the basis of the statements made on different dates by the Appellants in the absence of any tangible or cogent evidence of undervaluation; there is no tangible evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y CESTAT, Ahmedabad; imposition of Penalty under Sections 112 114A is bad in law; imposition of Penalty on Sushil Kumar Agarwal and partners under Section 112(a) is bad in law being beyond SCN. 6. Learned Advocates/Counsels Shri J.C. Patel, Shri A.K. Pravakar and Shri Kumar Vikram appeared on behalf of the other appellants namely, Shri Mihir Bhatt, Shri Tarun Jhingon and Shri Ehsan A. Gadawala, on whom penalties were imposed under Section 112(a) ibid in the impugned order; they adopted the arguments placed on behalf of the main appellant M/s Sunland Alloys to state that under the circumstances of the case, imposition of penalty is uncalled for; they relied upon the decisions of Tribunal in the case of Agarvanshi Aluminium Ltd Vs CC (I), Nhava Sheva - 2014 (299) E.L.T. 83 (Tri. - Mumbai) and Pushpak Metal Corporation Vs CC, Kandla 2014 (312) E.L.T. 381 (Tri. - Ahmd.) to state that the adjudged demands cannot be sustained inasmuch as the department has not brought on any credible evidence to reject the declared value; department did not produce any convincing reason, justifying invocation of the said penal provision. 7. Per Contra, Shri K.K. Srivastava, the learned Authoris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by the importer-appellant for the purpose of assessment was rejected and re-determined under Rule 8 of the Customs Valuation Rules, 1988. The basic contention of department for re-determination of the value of scrap items was based on the fact that the import price of the said items were much lower than the prevailing prices contained in the bulletin published by the London Metal Exchange (LME). According to the department, the transaction of metallic scrap is dependent upon prevailing prices of prime metal declared in the LME and are arrived at after deducting certain percentage of discount for the impurities found in the scrap. In this case, the department has considered the Scrap specification circulars issued by the Institute of Scrap Recycling Industries Inc. (ISRI) and parameters of valuation of Aluminium Scrap fixed by the Director General of Valuation in the Alert Circular No. 14/2005 dated 16.12.2005 for arriving at the discount band for the disputed scrap items. Further, the department has also relied upon the e-mails and letters issued by the High Commission of U.K. to conclude that the appellant M/s Sunland Alloys had suppressed the actual transaction value by resor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Rule 3(ii), the value shall be determined by proceeding sequentially through Rule 5 to 8 of the Rules; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), then there is no question of determining the value under the subsequent rules. Further, considering the valuation provisions contained in Section 14(1) and 14(1A) read with the Valuation Rules, 1988, the Hon ble Apex Court in the case of Sanjivani Non-Ferrous Trading Pvt Ltd. (supra) have held as under:- 10 . The law, thus, is clear. As per Sections 14(1) and 14(1A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of deemed value of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the adjudicating authority for recording a finding of clandestine manufacture and clearance of excisable goods. It was found by the Tribunal that printouts were neither authenticated nor recovered under Mahazar. It was also found that the assessee in that case had disowned the printout and was not even confronted. The Tribunal rejected the printouts and the Revenue s finding of clandestine manufacture and clearance. Thereafter it was found that there is strong parallel between the instant case and the case cited. Nothing contained in the printout generated by the PC can be admitted as evidence for non-fulfilment of the statutory condition. In this case also, we find that the parallel situation as to the decision of Premier Instruments Controls (supra). Therefore, the printout generated from the PC seized cannot be admitted into evidence for non-fulfillment of statutory condition of Section 138C of the Customs Act, 1962. 9.1. We find that the impugned order refers to the email correspondences retrieved from the laptop of Shri Tarun Jhingon. On the basis of such alleged incriminating documents, the department has concluded that the goods imported by the appellant M/s Sunlan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal Recycling Industries a sister concern of the appellants i.e. M/s. Sunland Alloys on the basis of the printouts taken from the Laptop of Shri Jhingon. The case travelled up to the Tribunal and the co-ordinate Bench of the Tribunal at Ahmedabad has not appreciated the evidence and set aside the duties confirmed therein vide Final Order No. A/11871-11874/2019 dated 01/10/2019. The Bench observed that There is no evidence found at the end of the Appellant and the documents relied upon to support the allegation were of third party. Hence in such circumstances, we are of the view that the charges of misdeclaration and undervaluation does not sustain. We find that no order either overturning or staying the above decision is placed on record. Therefore, we find that judicial discipline requires that we follow the decision. Evidence which is not accepted as proof enough by one coordinate bench in one case cannot be held to be acceptable in another case by a different Bench. 10. Coming to the reports of Second Secretary (Trade) of Indian High Commission, U.K, we find that the report dated 10/01/2007 mentioned the supplier to be M/s. Sunberg Ltd., who supplied aluminium scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undervaluation of goods in the present case cannot be sustained. Further, the department has referred to the Report dated 17.04.2007 of High Commission of India in U.K. to allege that three consignments were imported vide Bill of Entry No. 446022 dated 24.08.2005 at a lesser value. The said report reveals that the consignments were purchased by Ala International from SID Metal, Greece at USD 1240 PMT as per invoice dated 10.06.2005. The price as per the said invoice is not relevant as the goods were purchased by M/s Sunland Alloys from Ala vide invoice dated 05.07.2005 @ USD 1,090 PMT, which was the price for export to India. 10.2. Learned Counsel for the appellants submitted that the High Commission report dated 10.01.2017 not admissible; the report is not relevant as it pertains to M/s. Sunland Metal Recycling Industries; not even a single consignment mentioned in the report pertains to the Appellants; further, this document was relied upon document in Show Cause Notice dated 07.05.2007, issued to M/s Sunland Metal Recycling Industries (where the Appellants in Appeal Nos. C/86782/2013 and C/867684/2013 are partners); CESTAT Ahmedabad in final Order No 11871 to 11874 dated 01.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined through negotiations between buyers and sellers based upon then current market information derived from a variety of sources, including trade press such as the American Metal Market and the Metal Bulletin, as well as futures markets. These information sources are utilized as a general market trend basis for the negotiation. It should be noted that scrap metal is not traded directly on the futures exchanges rather it is alloy ingots derived from scrap metal that are traded on some of the exchanges such as the London Metal Exchange (LME). 11.1. On perusal of the relevant contents of the certificate dated 29.10.2008, it transpires that ISRI has not prescribed any specific discount band on the price fixed by the LME for consideration of transaction value of the scrap items in question. Further, the impugned order has also relied upon the Alert Circular No. 14/2005 dated 16.12.2005 issued by Director General of Valuation for re-determination and enhancing the declared value. The said circular only provides for average price difference between the price of prime metal and different grades of scrap as determined on the basis of study of difference in prices of scrap and prime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be the defensible ground for rejecting the declared value and for re-determination of the same, by taking recourse to the Valuation Rules, 1988. 11.3. We find that Revenue has concluded on the basis of stray third party evidences as above have alleged undervaluation on the basis of the statements of the concerned persons alone, which are not corroborated by any documentary evidence and therefore, their reliability, is not free from doubt. Revenue has relied heavily on the statement of Shri Sushil Agarwal that the negotiations for purchase of aluminium/zinc scrap was always based on the price of metal as declared by London Metal Exchange (LME) checked against the discount band. The discount band vis- -vis the scrap is taken as follows: Sl.No. Description of Aluminium Zinc scrap/Dross % of LME 1 Score (Srap) 65 to 70% 2 Score (Srap) 70% 3 Scull (Scrap) 60% 4 Saves (Scrap) 60% 5 Zinc sk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng and hedging of pressure die casting alloys. In the scenario of scrap pricing, the actual price discount to the LME Aluminum alloy market depends on the grade of scrap and what the client is producing. Once again it must be emphasised that such discounts are all established in the actual physical market. These are neither reported nor ratified by the London Metal Exchange. It has also been observed in the market that primary aluminium has also been used for pricing scrap and for pricing aluminium and aluminium alloy in the whole aluminium supply chain. In this respect, the LME price is a leading indicator and provides a valuable service to the industry. The LME has not completed (as an exchange) any formal public study on the linkage of aluminium or zinc metal, LME quotes with that of their respective scrap pricing. As reported earlier, if such linkage exists, it is done on a case to case basis between the buyer-seller based on mutual understanding. Other price references used to price scrap in the market in addition to the LME include metal bulletin, plats MW transaction premium, Japan Metal Bulletin (Asia) and DGV, WVM, GDM (Germany). 11.5. Further learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d thereof. We find that Shri Ehsan Haji Ameen Gadawala in his statement dated 17/01/2007 was categorical that he could not identify the parties by apparently seeing the statements but on comparison of the value with the prevailing LME at the material time and by considering the aluminium metal content (in terms of ISRI specifications) in the aluminium scrap traded/imported by the Indian buyers the aspect of under-invoicing can be worked out. As we found earlier this version is also a bit of generalization and does not deal with specifics. Moreover, we find that learned Commissioner has recorded in the OIO that Shri Sushil Kumar Agarwal has pleaded that Commissioner of Customs (Export) was appointed as common adjudicating authority for M/s. Sunland Alloys but not for all other noticees. Shri Pravin Ranka and Shri Sanjiv Kumar Agarwal have challenged the validity of the show-cause vide Petition No. 140/2011 before the Supreme Court. Shri Gadawala vide his letter dated 12/11/2012 stated inter alia that there was no corroboration of the allegation and there was no evidence against him; the commission received from M/s. Ala International was towards providing business opportunity in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eports, by the statements of various partners and indenters. For the reasons cited above, neither the documentary nor the oral evidence in the instant case supports the allegations even to the extent that is required for the cases of tax evasion, if not criminal prosecution. 13. In addition to the above, we find that the impugned order does not discuss the evidence available so as to lead to the conclusions arrived at. The impugned order consists of 91 pages out of which the first 73 pages covers the brief facts of the case and submissions of the appellants. Actual findings, of the learned Commissioner on the evidence for undervaluation, have been given very briefly to the extent of being cryptic, there too giving reference to the evidence collected by the agency in para No. 116. None of the evidences relied upon are analysed and discussed by the learned Commissioner in detail giving out the reasons for relying upon the same and the conclusions drawn there upon. The analysis of documentary evidence is confined to three small paras (consisting of about 40 lines) without discussing anything in detail and without giving any substantial reasoning for the conclusions. There too Lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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