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TMI Blog2020 (4) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... e, Delhi Zonal Unit (hereinafter referred to as DRI) conducted searches at the office/ business premises of Shri Satish Luthra, MD of M/S Ramakrishna Electro Components Pvt. Ltd., (RECPL in short) and some of the other importers, namely, M/s Communication Trade Links, M/s Unique Trade Links, M/s Radhe International, M/s Oberoi Import Export, M/s Sanjay Enterprises, M/s Universal Electronics, M/s Simran Exports and M/s Shiv Enterprises; Statements of various persons of RECPL and other importers were recorded by the officials of DRI. DRI issued Show Cause Notice, F. No. DRI/23/14/2005/DZU-Pt/1334 to 1353 dated 31.3.2006, to various importers and persons, alleging that the importers have undervalued their imports; Shri Satish Luthraimported in the name of other companies and arranged to pay the differential amounts to foreign buyers through Hawala. The SCN sought to redetermine the value of imported goods and to impose penalties on various persons individually and severally. 2. The show cause notice has been adjudicated upon by Commissioner of Customs (Import), Air Cargo Complex, Sahar Mumbai-400099 vide Order in-Original No. CC/MJ/14/2010/ADJ/ACC dated 13.08.2010 wherein he rejected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessable values under Rule 5 of the CVR, 1988 read with Section 14; confiscated seized goods under Section 111 (m) and 119; has given an option to redeem the goods on payment of fine of Rs. 20 Lakhs; confirmed differential duty under Section 28 (2), along with the interest under Section 28AB; appropriated the amounts deposited by the appellants/respondents and imposed Penalties under Section 114A and 112(a) of the Customs Act,1962. However, fine of Rs. 20 Lakhs imposed was not quantified relating to any Bills of Entry or to any of the Importers. 3.2.Shri C.M. Sharma further submits that whereas the SCN raised the demand under Section 28 (1) of the Act, impugned order neither raised nor confirmed by invoking proviso clause to the Section 28 (1) of the SCN; while the bills of entry are of February - September, 2004 / October-November, 2004 / July-August, 2003, the SCN is dated 3103-2006; there is no case for attracting extended period of time and proviso clause is not invoked; consequently, interest under Section 28AB and penalty under Section 114A is also not attracted; just because the declared values are re-determined, it does not amount to misstatement or suppression of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Entry of the identical goods are not disclosed in the SCN or cited in the impugned order and Rule 2 (c) provisions are not considered; Rejection of transaction value under Rule 3 of CVR is not concluded in the impugned order; Essential ingredient of Rule 5 has not been shown as applicable basis of re-determined values; It is not shown as the test values were "at or about the same time as the goods being valued; Contemporaneous import are not shown to be within a period of 90 days from the respective imports of which values are being re-determined. He relies upon the following. * Vintel Distributors Pvt Ltd Vs CC (Sea), Chennai 2002 (149) ELT 145 (Tri. - Chennai) and 2003 (153) ELT A101 (S.C.) (It was held that goods should be identical and not just similar, corresponding in nature identically in terms of quality, quantity, place of origin and time of origin) * CC, Chennai Vs Forte Garments 2002 (150) ELT 622 (Tri. -Chennai)( it was held that Proof of contemporaneous imports of same goods, country, time, quantity and quality as that of impugned goods is required to be produced by Revenue). * Navin Chandra & Co. V/S Cc Mumbai 2003 (162) ELT 287 * Varsha Poly Products Pvt Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner has erred in travelling beyond the scope of show cause notice; he has relied upon an area of EDP where he is said to have seen the brand names declared by the actual importers; as per impugned order, such area is not visible on the hard copy and can be seen only on the soft copy of EDP; there is no mention of such an area in the show cause notice; Even DRI has not seen anywhere the declaration of such brand names; It is a settled principle of law that orders travelling beyond show cause notice are non-est in view of Commissioner Vs Carborundum Universal Ltd 2007 (211) ELT 105 (Tri. Chennai) and (affirmed by SC 2008 (223) ELT A94 (S.C.)) and Asha Celluloid Vs CCE, Surat - 1998 (98) E.L.T. 769 (T); adjudication authority is not to assume upon itself the role of investigating agency and go on to investigate something which has not been alleged in the SCN; Ld Commissioner should have shown soft copy of EDP to the appellants also. Not showing the relied upon area in the EDP to the appellant tantamount to denial of natural justice and non-supply of relied upon documents; such orders are non-est; Reliance is placed on the following. (i). Silicon Graphics System (India) Private Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes not arise. It is submitted that all the Assessment Orders, passed by Assistant Commissioner on the respective bills of entry, have attained finality because no appeal has been preferred against any such order by department. He relies upon. * Mohan Meakin Ltd Vs CCE, Kochi 2000 (115) E.L.T. 3 (S.C.) * CC (Imports), Mumbai Vs Lord Shiva Overseas- 2005 (181) E.L.T. 213 (Tri - Mumbai) 4.4. Counsel submits that the Appellants completely deny all the charges and categorically state that the Appellants are independent importers; the goods have been bought from the foreign suppliers on principal to principal basis; DRI has wrongly alleged under invoicing by alleging that Mr. Satish Luthra approached the foreign supplier namely, M/s Ascend International Hong Kong and M/s Stride Promotion Pte. Ltd., Singapore; the transactions between the present appellants and the supplier of the goods were on principle to principle basis and at arm's length; Mr. Satish Luthra had nothing to do with the import business of the appellants; all the bills of entry were filed by the Appellants and goods were cleared after following due process of clearance; however, sometimes the Appellants took assista ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the aforesaid Rule has been contravened by the importer; there is no misdeclaration vis-à-vis the alleged import by RECPL. there is no evidence on record regarding the misdeclaration of the goods imported by the appellant; in the absence of higher prices declared for imports of the same kind and quality at about the same time, cannot be enhanced; Price of electronic components depends upon the manufacturer's brand, country of origin, timing of imports, quantity imported and other factors as laid down in Customs Valuation Rules, 1988 inthe absence of any such allegation, the transaction value declared by the appellants must be accepted as held in the following. Reliance is placed on the following case (i). Eicher Tractors Vs CC - 2000 (122) ELT 321 (SC) (ii). CC Vs Jindal Strips Ltd 2003 (156) ELT A385 (SC) (iii). Navin Chandra & Co Vs CC Mumbai 2003 (162) ELT 287 (Tri-Mumbai) (iv). CC New Delhi Vs Grover Imports 2003 (162) ELT 992. (vi). In the present case, DRI has not even examined the prices of contemporaneous imports of the unbranded goods being imported into India; application of Rule 5 and 6 thus has been completely ignored; Law not only requires that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist, they cannot per say be an evidence as held in (i). Eicher Tractors Vs CC - 2000 (122) ELT 321 (SC) (ii). Mirah Exports Pvt Ltd Vs CC 1998 (98) ELT 3 (SC) (iii). CC Vs Venus Insulation Products Mfg. Co - 2003 (153) ELT A172 (SC) (iv). Aryan Electronics Vs CC, New Delhi-IV 2004 (177) ELT 908 (Tri-Del) (v). Vintel Distributors Pvt Ltd 2002 (149) ELT 145 (Tri-Chennai) (ix). Learned Counsel submits that there is no case for application of extended period of limitation as held in Dr. Reddy's Laboratories Ltd Vs CC Hyderabad 2004 (175) ELT 565 (Tri-Bang); there is no case of confiscation and levy of penalty as there was no suppression as held in Kohli PrintographicsVs CC, New Delhi 2003 (159) ELT 1178 (Tri-Del); It is a settled principle of law that the amount deposited during investigation is not liable to be appropriated when the demand of duty itself is not sustainable; no penalty is imposable when the demand of duty itself is not sustainable as held in CC Vs M.M.K. Jewellers - 2008 (225) ELT 3 (SC)and Collector v/s H.M.M. LTD - 1995 (76) ELT 497 (SC); no interest is demandable when the demand of duty itself is not sustainable. (x). Learned Commissioner erred in impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y through the appellant; He relies upon to state that in case of retracted statements the burden is on the department to prove. (i). UOI Vs Balmukund 2009 2 JCC Narcotics 76 (ii). Mohtesham Mohd Ismail Vs Special Director, Enforcement, & another 2008 (1) JCC 240 (iii). Vinod Solanki Vs UOI 2009 (223) ELT 157 SC. 5.1.Learned Counsel submits that Adjudicating Authority framed issues but left them unanswered; he raised the issue as to whether Shri Sushil Goel and Shri Vinod Baid have any role in remitting any differential value of the goods imported but relies solely on the statements given by Shri Satish Luthra on 07.03.2006, which refers to one "Arjun" who remitted the differential amount through Hawala route; investigations by DRI showed that it was alias for Shri Sushil Goel; it has been admitted by Shri Sushil Goel in his statement dated 23.03.2006 that he was known as "Arjun" in Hawala Market. Learned Counsel submits that the appellant was not implicated by any importer or by Shri Satish Luthra; there was no material to summon Shri Sushil Goel to the DRI office; Shri Aswin Sharma of DRI, when cross examined, stated that he does not remember any facts relevant to the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3) ELT 396 (Bom) affirmed 2006 (197) ELT A121 (SC); the word "Jointly and severally" has no legal sanctity under the eye of law; the impugned order confirms duty and penalty only against the importers; there is no authority for the same devolving on the appellant; commissioner has not cited any authority; Section 28 (4) of the Customs Act is very categorical about the duty being demanded only against the importer; it was held in following decisions that Customs authorities must make their mind as to who is the noticee for the payment of the alleged short levy of duty. (i). Vision Inc Arun Kumar (ii). Rimjhim Ispat Vs CCE Kanpur 2013 (293) ELT 124. (iii). JK Pharma Vs CC (Import), Mumbai - 2004 (166) ELT 407 (Tri. - Mumbai) (iv). Sree Aravindh Steels Ltd Vs CCE2007 (216) ELT 332 (Tri-Chennai) (v). Famous Textile Vs CCE, Rajkot 2005 (190) ELT 361 (Tri-Mumbai) 6.4. Shri Prabhat Kumar also submits that confiscations not proper as it was held (Para 60.6) that there is no link between the seized goods and the imported goods; penalty imposed on other concerns cannot be demanded from Satish Luthra; there is no provision in law to demand the same; no penalty is imposable in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown as the address; they did not have any sales tax registration some addresses were bogus. Further evidence is as follows. * The proprietors, of these 9 firms, categorically stated that they were only namesake owners; real owner of the firms was Satish Luthra; they had never contacted foreign supplier, the CHA or the transporter. * Parveen Mahajan, Sales Advisor of RECPL stated, on 31.1.2015, that Satish Luthra used to negotiate with the foreign suppliers viz., M/s ST Micro Electronic (Thompson Group), Singapore, and M/s Phillips Semiconductors, Hong Kong and used to sell goods imported by M/s Communication Trade Links, M/s Air Sea Trade Links and M/s Unique Trade Links. * Kuljeet Singh, anemployee of RECPL, stated on 31.1.2005 that he used to sell the electronic components imported by Satish Luthra through the firms controlled by him. * various CHAs stated that Satish Luthra had approached them to render their services in respect of Customs Clearance of the goods imported by him in the name of RECPL and the other nine firms; he handed over the copies of IECs & authority letters of the nine firms; used to make payments and arrange for transportation; they did not know t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anesh Overseas Vs CC, Ahmedabad 2002(150) ELT 145 (Tri-Del). 8.3.Learned AR submits on the argument /claim of Retraction, of statement of Shri Satish Luthra, that the counsel for Satish Luthra could not produce any copy of retraction; all the statements, recorded at various intervals, are written by himself in Hindi; such statements running into pages cannot be written under any force or threat. It was held that retraction should be addressed to the authority who had recorded the statement; any other retraction would not be valid and that even if a statement is retracted it is still admissible, in the following cases. (i). Surjeet Singh Chhabra Vs Union of India 1997 (89) ELT 646 (SC) (ii). ACC, Madras -I Vs Govindasamy Ragupathy 1998 (98) ELT 50 (Mad). (iii). K.I. Pavunny Vs ACC (HQ), C.Ex Collectorate, Cochin 1997 (90) ELT 241 (SC) (iv). ZakiIshrati Vs CCE, Kanpur 2013 (291) ELT 161 (All.) (vi). Sidhharth Shankar Roy Vs CC, Mumbai 2013 (291) ELT 244 (Tri-Mumbai) (vii). D.M.Mehta & Bros Vs CC(General),Mumbai 2017 (346) ELT 477(Tri-Mumbai) 8.4.Learned AR submits, on the argument that second time enhancement of value is invalid, that Counsels did not produce any eviden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. Learned AR submits that valuation was correctly arrived after rejecting the declared price on the basis of contemporaneous Import (Para 24, 25 and 26); price lists available corroborated the correctness of the value of the imported ICs and Transistors, as declared by RECPL; actual prices were declared on goods imported in the name of RECPL but under-invoiced when imported in the name of 9 dummy firms; this fact was admitted by Shri Satish Luthra in his voluntary statements; Price List in question is from the original Manufactures, whereas the invoices produced by dummy firms are from traders like M/s Stride Promotion Pte Ltd. in Singapore, owned by the Ranjan Shukla (a friend of Satish Luthra) and M/s Ascend International in Hong Kong (owned by Jawahar Lal Luthra brother of Satish Luthra); the following judgements hold that manufacturer's Price list or quotations can be relied for arriving at the transaction value. (i). Mytri Enterprises Vs CC, Mumbai 2004 (174) ELT 389(Tri-Mumbai) affirmed by Supreme Court 2015 (323) ELT A71 (SC). (ii). Pan Asia Enterprises Vs CC 1995 (79) ELT 322 (T) affirmed by SC as 1997 (94) ELT A59 (SC). (iii). Hind Industries Vs Commissioner 1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants, S/Shri Sushil Goel, Vijay Chand Baid, Kanchan Kumar Kora (M/s Radhe International), Jagveer Singh (Universal Electronics), Vinod Kumar Sharma(Air Sea Trade Links), Narendra Singh,KimtiLal (M/s Communication Trade Links) and D.K. Chopra (M/s Shiv Enterprises) are liable to pay penalty? (iv). whether the respondent, Shri Harish Luthra is liable to pay penalty. 10. The SCN makes a case against Shri Satish Luthra that he controls M/s RECPL engaged in import and sale of branded electronic goods; in order to evade customs duty, he set up nine other firms with proxy owners controlled by him and imported electronic goods in the names of nine firms by under declaring the value and remitting the difference between declared value and actual value through Hawala route. Learned Commissioner has concluded that all the nine firms are proxy for the reasons that import documents pertaining to the all importing firms were found in the premises of RECPL controlled by Sh. Satish Luthra; three firms were found to be non-existent at their given addresses; letters written to the nine firms were returned by Postal authorities; they do not have Sales Tax Registration; the addresses of so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncludes any person holding himself out to be the importer. However, it is important to note that such a person holding himself out to be the importer would be considered an importer any time between the importation of the goods and the clearance of the same for home consumption. In the instant case, it is not in dispute that the entire case is about the goods which have been imported and cleared for home consumption after due assessment. It is evident that Shri Satish Luthra has not been held to be an importer before the clearance of goods for home consumption and as such he cannot be held to be an importer after the clearance of the goods for home consumption. Learned Counsel submits that though an amendment, in Section 2 (26) of the Customs Act, including "the beneficial owner" to be an importer has been incorporated only in the budget of 2017, the same is after the impugned imports have taken place. We find merit in the contention of the Learned Counsel for the appellants. We also find that post 2017 amendment also, the time period wherein any person can be deemed to be an importer has not been changed. Therefore, it cannot be construed that Shri Satish Luthra is the importer in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e role of investigating agency and go on to investigate something which has not been alleged in the SCN; Learned Commissioner should have shown soft copy of EDP to the appellants also. Not showing the relied upon area in the EDP to the appellant tantamount to denial of natural justice and non-supply of relied upon documents. 14. We find that in the instant case Commissioner has, on the one hand, found that there is no co-relation between the impugned seized goods and the Bills of Entry. He has set out a new ground of some of the goods being branded by looking into the portion of the Bills of Entry which is normally not visible on the printed copy. He has not supplied the copies of Bills of Entry showing that the goods are branded. In doing so, Learned Commissioner has not only travelled beyond the scope of the SCN but also has contravened the principles of natural justice. Moreover, it is pertinent to note that the counsel's submission that none of the examination reports have indicated to be branded in nature. Officers on cross-examination have submitted that if the examination reports indicated the goods to be unbranded, the goods are unbranded. The evidence that commissioner se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the SCN or cited in the impugned order; rejection of transaction value under Rule 3 of CVR is not substantiated; it was not even displayed that essential ingredients of Rule 5, as to test values were at or about the same time as the goods being valued, are not complied; it is also not made known whether the contemporaneous imports shown are within a period of 90 days from the respective impugned imports. Moreover, even though, the SCN and the impugned order alleged that the differential between the actual price and declared price of the imported goods has been sent through Hawala route using the services of Shri Sushil Goel aka Arjun, no evidence whatsoever, even for a single transaction has been produced to establish the fact. 16. The assessing/examine officers have stated during the cross-examination that the goods were not branded goods. The SCN does not provide any proof as to how some of the goods could be treated as branded goods. The SCN neither discusses nor alleges if there was any connivance/collusion on the part of the assessing/examining officers. Learned Commissioner observes that: "Actually, while filing Bill of Entry there is a separate field for "Brand Name". T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that while the bills of entry pertain to the period July-August, 2003; February - September, 2004 and October November, 2004, the SCN is dated 31-03-2006. We find that proviso for extending the limitation for demanding duty has not been invoked in the how Cause Notice and there is no mention as regards invocation or finding as regards justification for the same, in the impugned order. Admitted fact of the case is that the goods have been duly cleared by the Customs for home consumption after examination and assessment. No suppression of facts etc has been either alleged or substantiated. On the contrary, learned commissioner goes beyond the SCN and says that some of the goods are declared as branded goods. Therefore, we find that no case is made out invoking extended period of time. Thus, we find that the notice is barred by limitation. 19. We find that the entire case of the Department is built upon the statements of different persons involved and most of the statements have been retracted. Once, the statements have been retracted, the onus lies on the Department to prove that the statements are correct. We find that the same has not been discharged. We further find that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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