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TMI Blog2020 (9) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... the said pen drive and hard disc are not traceable for the purpose of adjudication. The Dy. Commissioner of Customs, SIIB (I), JNCH, in his communication dated 4.11.2016 has categorically stated that the original file of seized documents, hard disc and pen drive seized under Panchnama are not traceable. We further find that the appellant was not noticed before opening of the hard disc/pen drive by the Department. One hard disc and pen drive was opened in the presence of Shri Sanjay A. Chothani, employee of the CHA firm and at the time of opening of another hard disc on the other date, nobody was present in absence of notice to the appellant to witness the retrieval of data. Thus, the whole exercise of the retrieval of data is vitiated rendering it unreliable - Further, as required by Section 138 C of the Customs Act, Revenue failed to bring on record the details of the computer or machine, on which the data was prepared or compiled. Further, it is found that there is no specific correlation with the bills of entry under dispute with the alleged evidence of wire transfer. Further, there is no investigation or confirmation from the persons, whose names have appeared from the email f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of entry for import of VRLA batteries, holding the same being value suppressed and mis-declared and accordingly, the value was re-determined and differential customs duty of ₹ 30,17,330/- was demanded along with interest and equal amount of penalty under Section 114 A of the Customs Act. Further, penalties have been imposed on Shri Kapil Garg, Director amounting to ₹ 3,00,000/- under Section 112(a) and ₹ 2,00,000/- under Section 114 AA of the Customs Act. 3. The brief facts are that M/s Kuber Impex Limited, Indore is an importer. They had imported a consignment of 10,000 pieces of voltage Regulated Lead Acid Batteries (VRLA) 12V 7.2 Ampere Hours, through JNCH, Nhava Sheva, vide Bill of Entry No. 803525 dated 25.08.2010, by declaring the unit value @ US$ 1.17 (₹ 55.97) per piece. The total declared value of goods was ₹ 5,59,721/- and in US$ 22700 (C&F). The supplier had raised Invoice No. LHI1010290002 dated 10.08.2010 for these VLRA batteries. The above said Bill of Entry was facilitated through 'Risk Management System' under no assessment, no examination procedure. The importer deposited Customs duty amounting to ₹ 1,50,278/- on the above dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... battery mentioned in the invoice was @ US$5.75 (FOB) and the total FOB value of the invoice was shown as US$ 57500 and the freight costs was shown as US$1200 and the total C & F value was shown as US$ 58700. Further scrutiny of the records revealed that the importer had got cleared a consignment against invoice No. LHI1010290001 dated 27.07.2010 vide bill of entry No. 785027 dated 10.08.2010 and had submitted a fake, false, manipulated, fabricated and parallel invoice having the same No. LHI1010290001 dated 27.07.2010 showing unit value @ US$ 1.17 per piece, to customs, and thereby it appeared that the importer had suppressed the true and correct value of the goods. Two other consignments of VLRA batteries imported under bill of entry No. 803525 dated 25.08.2010 and 827979 dated 25.08.2010 were also cleared by declaring unit value as US$ 1.17 per piece. Therefore on reasonable belief that the import of goods had been cleared by misdeclaring the value in contravention of the provisions of the customs Act, 1962 and hence were liable for confiscation. Detention of VRLA batteries was converted into seizure. The seized goods were provisionally released on the request of the importer aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide Bill of Entry No. 785027 dated 10.08.2010, but had submitted a fake, false, manipulated, fabricated and parallel invoice having the same No. . LHI1010290001 dated 27.07.2010, showing unit value @ US$1.17 per piece to Customs, and thereby it appeared that the importer had suppressed the true and correct value of the goods. The importer had declared total value for the consignment as US$ 11170 (C & F) only against the actual value of US$ 58700. Both the invoices, one which was fake, false, manipulated, fabricated and parallel invoice and the second one which is the original invoice, were compared as below for clarity in matter:- False / fabricated Actual invoice Supplier Shenzhen Leoch battery Technology Co. Ltd., Shenzhen Leoch battery Technology Co. Ltd., Invoice No. LHI1010290001 LHI1010290001 Date July 27, 2010 July 27, 2010 Contract No. LHA10125 LHA10125 Description VRLA Battery DJW12-8.0 VRLA Battery DJW12-8.0 Quantity 10000 pieces 10000 pieces Unit price USD 1.17/CFR USD 5.75/FOB Freight -- US$1200 FOB Value -- US$57500/FOB Total Amount C & F US$11700 US$58700 Assessable value ₹ 5,59,898.52 S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent available in the Forensic Laboratory. Out of three hard discs, two hard discs could not be read by the equipment of Forensic Lab., and data contained in one hard disc Sl. No. WXZ 07774085 and one USB drive bearing Sl. No. CEFC - MIC D - 33193 were created and copied in another portable hard disc under Panchnama drawn. Subsequently, vide panchnama proceedings dated 6.12.2010, the officer visited once again for making attempt to create mirror image of another seized hard disc having no.B2RSTURE was created, and images were copied to another portable hard disc. 13. The statement of Shri Sanjay A. Chothani, employee of the CHA of the importer company was recorded on 24.11.2010, wherein he inter alia, stated that he is satisfied with the market survey done at Lamington road & Ghatkoper and the same has been done in fair manner. He further stated that he has got no idea of the value of the VRLA Batteries. Further, he stated that he was present on 16.11.2010 in the Forensic Laboratory, at the time of data retrieval. 14. Further, statement of Shri Kapil Garg, Director was recorded on 23.11.2010, wherein he, inter alia, stated that he visited China to meet the battery manufacturers in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (on resale in India), by issuing lower sale price invoices to justify their mis-declared import price. Thus, they were evading not only the customs duty but also other taxes like sales tax and income tax. The Revenue, on comparison of the actual price with the price declared and mentioned in false/ fabricated/manipulated invoices, found as under:- S. No. Model Declared Unit Price CFR Nhava Sheva in False Proforma Invoice Actual Unit Price (FOB) 1. 6V4.2AH USD0.35 $1.65 2. 6V4.5AH USD0.35 $1.79 3. 6V5.0AH USD0.35 $1.90 4. 12V7.2A USD1.17 $5.23 5. 12V7.6A USD0.17 $5.50 6. 12V8.0A USD0.17 $5.75 16. Statement of Shri M. Rajendra Mangal (Aggarwal), Accountant of the appellant company was recorded on 3.12.2010, who, inter alia, stated, that he was looking after the work of the appellant as part time Accountant for the last two years at a salary of ₹ 3,000/- per month. There was another Accountant, Shri Mahesh Aggarwal, who mainly attended the appellant company. In respect to the data contained in the seized pen drive and the printouts taken therefrom, he stated that the data was prepared and fed by him on the computer, and DSR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- C &F. He further accepted that the invoice showing the unit rate USD 1.17 CNF/piece is a fabricated invoice submitted to customs. He also admitted that he has submitted the manipulated/fabricated invoice in respect of both the live consignment being Bill of Entry No.803525 and 827979. He further submitted that invoice of BE NO.803525, the actual unit value of 12V/7.2 AH is USD 5.23/piece FOB and in case of BE No.827979, the actual unit value is USD 5.5/FOB/piece. He further admitted that in some instances of earlier import, he might have manipulated the declared value, the bills of which are in the Hard disc/USB drive, seized by the Department. On being confronted with by the Department - ''Import Format" retrieved from the seized Hard disc/Pen drive showing the actual value of the batteries imported or to be imported , he explained that this sheet showed the invoice, supplier's name, modal, U/P, quantity, etc. as well as actual unit rate, along with amount actually remitted to the supplier. Shri Garg further confirmed the modal-wise actual import price from M/s. Shenzhen Leoch Battery Technology Co. Ltd., China as below:- 1. 12V/8AH @ US$ 5.75/pc FOB 2. 12V/7.2 AH @U ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On being confronted with TT for US$ 38700 sent by Shri Jitendra Kumar Vyas to M/s. Power ROC Co. Ltd., China. Shri Garg stated that he will provide detailed comments on this, after verifying the data. 24. On being confronted with correspondence with Lauren @leaoch.com and false Proforma Invoice no.LHA08090004 dated 11.09.2008, totalling value US$20,015 and the actual Proforma Invoice, having same reference showing higher unit value totalling US$ 1,31,080, the details as per Bill of Entry No.700711 and 700713 both dated 01.12.2008, he admitted the correct invoice value in case of these two bills of entry was US$ 1,31,080, but the declared value was mis-declared at US$20,015/-. 25. Investigation revealed that the appellant - importer has imported several consignments during the last 5 years adopting the similar modus of mis-declaration of value to evade customs duty. Out of 68 consignments, 62 were imported and cleared through JNCH, Nava Sheva and rest 6 consignments, which were imported and cleared through ICD, Pithampur, Indore. For the consignments imported through JNCH, Nava Sheva, a separate show cause notice had been issued demanding differential duty of ₹ 3,46,78,022 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39 or 1.34 per piece. 28. Investigation revealed that the importer apart from the regular payment through their legal banking channel, had made the following payments (at the material time, or above three imports) through other sources based in Canada & Dubai, Sri Lanka to their supplier, M/s. Power ROC:- "(a) Wire Transfer dated 27.12.2006 through Mr. Anil Kingrani of US$25000 (b) Wire Transfer dated 15.01.2007 through A1 Fardan Exchange of US$23262. (c) Wire Transfer dated 29.12.2006 through HSBC, Indonesia of US$ 15000. (d) Wire Transfer dated 16.10.2006 through Mr. Anil Kingrani of US$50618. (e) Shri Kapil Garg's E-Mail dated 21.12.2006 to Mr. Anil Kingrani asking him to transfer $ 60747 to Power ROC Co.Ltd. (f) Ms. Kitty (supplier) vide E-Mail dated 4.1.2007 informed Shri Kapil Garg that they had received $ 14980 & $ 25000 by the end of last month. (g) Mr. Kapil Garg's E-Mail dated 22.12.2006 to supplier that today they have planned to remit US$ 75747 to them. This corroborates the balance payment of three containers imported at ICD Pithampur." 29. From Shri Kapil Garg's E-Mail dated 29.01.2007 to supplier, it was found that their supplier had received an E-mai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to arrange pending payment of ₹ 684925/-, out of which invoice amount was ₹ 193125 & balance of INR 491800/- had to be remitted by cash. (v) Shri Kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 12.10.2007 quoting price of 6v/4.5 A/h battery @ 126 +CST + Freight. (vi) Shri Kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 09.10.2007 mentioned that they charged @ ₹ 280/pc for 12V4.5Ah battery. (vii) Shri Kapil Garg's E-Mail to Shri Koppula Laxman Murthy dated 13.08.2007 to settle their total outstanding of ₹ 6,64,174/- & out of which ₹ 3,46,742/- to pay in cash. (viii) Shri Kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 29.10.2007 vide which informed that for new order of 5000 pieces total outstanding amount is ₹ 638750 & out of which the cheque amount will be ₹ 154500 & ₹ 231750= ₹ 3,86,250/- & the balance amount is ₹ 252500. It was further mentioned in the E-mail that INR 349650 by cash. (ix) Shri kapil Garg's E-mail to Shri Koppula Laxman Murthy dated 07.10.2007 that they have sent 650 pcs. Of 12v4.5 batteries @ ₹ 280/- piece. (x) Shri B. Chhitrapal vide E-mail 25.09.2007 placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase order No. PON-002725 dated 5.9.2008 given by M/s Ammini Energy System Pvt. Ltd. to the importer for 100 pieces of batteries of 6V4.5 Model @ ₹ 150/-. (xvii) The importer themselves purchased these batteries locally at price showing 4-5 times higher (than the false price declared by them) as per their Local Purchase Invoices. (a) Purchase of I2V7.2 Battery 890 pieces from M/s Empire Batteries @ ₹ 402/- under Tax Invoice No. 1355/09-10 dated 31.12.2009. (b) Purchase of I2V7.2 AH Battery 1100 pieces from M/s Empire Batteries @ ₹ 410/- under Tax Invoice No. 1341/09-10 dated 29.12.2009. (c) Purchase of 6V4.5 AH Battery 5000 pieces from M/s Empire Batteries @ ₹ 110/- under Tax Invoice No. X-799 dated 25.2.2010. (III)(a) During investigation, one document named as 'IMPORT COST SHEET' 350-419 was recovered from the importer's records. It was showing the total expenditure like duty, detention, freight, local taxes etc. incurred by the importer after the importation of the goods. Thus on the basis of their actual local sale price, the value of the goods imported under particular import can be re-determined by allowing the deduction on account of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be ₹ 8.26 per piece on account of duty, freight, tax etc. Therefore, the CIF value of battery model 6V4.2 arrived at ₹ 75.37 or US$ 1.64 on actual local sale price of ₹ 101/- and similarly in case model 6V5AH battery, the same was arrived at ₹ 93.02 or US$ 2.00/ piece on the actual local price of ₹ 121/ piece. The unit price so arrived is more or less found to be same with the actual price of the batteries imported from M/s Shenzhen Leoch Battery Technology co. Ltd., China." 32. The Revenue, on scrutiny of NIDB data of 12 V 7.2 AH batteries, it was revealed that some other importers, who were importing the identical goods of 'Suquian brand' China, in a much higher volume than this importer, the declared prices were 4 to 5 times in the range of 250.47 to ₹ 257.65. It further appeared to Revenue that there is no significant difference between the contemporaneous import price of identical goods found as per NIDB data and the price arrived at after applying the deductive method or the actual price retrieved from the seized USB drive. 33. The Revenue also considered that the price of VRLA batteries depends on the cost of lead content and the price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd one container of 12 V /7.5 AH (9000 x USD 5.5) = US$49,500/-, Mr. Garg in his vague reply submitted that these are just series of the email correspondence with the supplier in the course of bargaining. They have not executed any purchase order as the prices were higher. 36. Thus, from the statement and replies given by Shri Kapil Garg, on being confronted with the documents retrieved from the Hard disc drive/pen drive and correspondence, etc evidently Mr. Garg could not give proper replies and gave vague replies. Mr. Kapil Garg also contended that the higher values revealed in the parallel invoices, etc. was not the actual value, as the same were meant for the supplier, who were claiming higher duty draw back in China. Whereas the actual values being lower were declared. 37. The said contention was found to be not believable in view of the other evidences brought on record. 38. The appellant contested the show cause notice particularly mentioning that neither relied upon documents have been served upon them, nor the non-relied upon, in spite of there being a list of documents relied upon as per the show cause notice. The appellants submitted an interim reply requesting for re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of entry nos.101168/69/67, all dated 24.11.2007, the same were assessed provisionally and the finalisation is still pending. Thus, in respect of these three bills of entries, the show cause notice is bad for invoking Section 28 (4) of the Customs Act. As Section 28 can be invoked/applied only in case, where the assessment has been finalised and there is a case of duty short levy or not levied. He relied upon the ruling in the case of International Computers Indian Manufacturer Ltd. - 1981 (8) ELT 62 (Delhi), wherein it has been held that the demand under Section 28 of the Customs Act would follow only when provisional assessment is finalised. Ld. Counsel further urges that the Revenue placed reliance on the email and wire transfers found from the seized hard disc and pen drive and alleged that the declared transaction value pertaining to these three bills of entries are liable to be rejected. He submitted that reliance on email and wire transfer is not sustainable as the same are merely assumptions / presumptions. There is no correlation made out by the Revenue with the said emails with respect to the particular bills of entries or the bills of entries under consideration. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculation in order to arrive at the desired assessable value, further erred in relying upon the cost sheet. The said cost sheet reflects the invoice value, which has been remitted through normal banking channel and all other expenses. Had it been a case of suppression of value, the same would have been reflected in the cost sheet, which is not the case. The ld. Counsel further urges that comparison or/reference made to NIDB data is bad and erroneous as the batteries in question are 6 V batteries, whereas the NIDB data is in respect to 12 V 7.2 AH. 45. Further, it is urged that the show cause notice refers to cost of lead in the International Market to allege that the declared value cannot be less than the cost of main raw material - Lead. The cost of lead in the International Market cannot be made the basis for rejection of transaction value and its re-determination. The international price of any product /metal is only indicative and does not reflect true and correct market price on the date of purchase of any product. 46. It is further urged that sofar as the market survey is concerned, the same has not been conducted in proper manner. Firstly, the importer was not a party to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the survey against the declared price of ₹ 55.97 per battery retail price in the market was found to be from ₹ 550 to ₹ 650/- per battery. Admittedly, the evidence came on record from the hard disc and pen drive seized from the premises of the appellant and also from the email account of the Director, Shri Kapil Garg. 50. In the course of investigation, an invoice dated 27.07.2010 was recovered issued by M/s. Shenzhen Leoch Battery Technology Co. Ltd., China for 1000 pieces of 12 V 8.08 AH VL wire battery @ of US 5.75 FOB per battery. Whereas the appellant had declared the value of USD 1.17 per piece, in their bill of entry no.785027. Thus, the appellant declared the about 20% of the actual value as per invoice of the manufacturer/supplier by mis-declaring the transaction value. It is further urged that the Representative of the CHA is good enough for the purpose at the time of market survey. It is further urged that Director of the appellant, Shri Kapil Garg in his statement dated 29.11.2010 had admitted that in order to sustain in the market, he had adopted modus operandi of mis-declaration of transaction value. Further, it is stated that Shri Rajendra Mangal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is not reliable in view of the admission/confession made in the subsequent statements. Further, the statement is supported by other corroborative evidences, as mentioned hereinabove. Accordingly, ld. Authorised Representative prays for dismissal of the appeals. 54. Having considered the rival contentions and on perusal of the records and the written submissions, we find that so far as the batteries imported from M/s Power ROC Company Ltd. vide three bills of entries dated 24.1.2007 is concerned, the bill of entries were assessed provisionally and were pending finalisation. Accordingly, we hold that the impugned order is bad under Section 28 of the Customs Act, as the provisional assessment is still not finalised. Accordingly, the demand in respect of three bills of entry nos. 101168, 101169 and 101167 is set aside. 55. We further find that in the present case, the appellant has imported VRLA batteries 6-V/4.5 GLA/4.2 AH/4.5 A.H. We also find that the show cause notice was issued by relying upon the data from seized hard disc and pen drive. However, the appellant was informed later on that the said pen drive and hard disc are not traceable for the purpose of adjudication. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts. Hence, they must have suppressed the value in respect of these bills of entries also. 56. We find that none of the aforementioned aspects has been addressed by the court below. We further find that the documents /data retrieved from the hard disc/pen drive, in absence of the authorised person of the appellant, as admittedly no notice was issued to them, cannot be relied upon. We further find that there has been mis-carriage of justice by neither examining the persons, whose statements have been relied upon in the course of adjudication proceedings, nor they have been offered for cross examination by the appellant. 57. Thus, we are of the view that the issue as regards the transaction value of batteries imported from M/s.Shenzhen Leoch Battery Technology, China, requires re-consideration by the Court Below, keeping in view our aforementioned observations. Accordingly, we remand the matter as regards the three bills of entries for the batteries imported from M/s.Suqian Yongda Import & Export Co. Ltd. China, and set aside the demand of differential duty and penalty with respect to the import from Power ROC Co. Ltd. We also set aside the penalty in respect of the appeal of the D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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