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TMI Blog2022 (3) TMI 640X X X X Extracts X X X X X X X X Extracts X X X X ..... and steel of varying length starting from 1 m length to 12.5 m. Due to the varying length, it establishes that the rails of different length are meant for remelting. It is well settled law that burden to classify the goods under particular heading is on the department. In the present case, the department has not discharged their burden to prove their alleged classification of goods by adducing cogent and tangible evidence - the impugned goods are rightly classifiable under Chapter Heading 7204 as USED RAIL HEAVY MELTING SCRAP. Valuation of goods - HELD THAT:- The value of goods has been rejected by the department by straight away applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. It is noted that it is well settled law that department has to first reject the transaction value under Section 14 of the Customs Act, 1962 with cogent evidence and thereafter the department has to apply the valuation rules sequentially. In the present case, the department has enhanced the value on the basis of one invoice no. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal has been filed by the appellant against the impugned Order-in-Appeal No. KDL-CUSTM-OOO-APP-439-14-15 dated 31.12.2014 passed by the learned Commissioner (Appeals) Ahmedabad. The brief facts of the case are that the appellant has entered into a contract dated 28.09.1995 with their supplier, namely, M/s Special Trading Co., USA for supply of scrap, which is in the form of used rails. Consequently, the appellant imported the scrap in the year 1996 and declared the value at a price of USD $ 110 PMT. However, the consignment has not been cleared yet inasmuch as there was intense litigation going on between the appellant and some foreign entities claiming right over the cargo and simultaneously investigation was also initiated by the Directorate of Revenue Intelligence (DRI) almost after 10 years after the arrival of the cargo i.e. in the year 2005 and cargo was detained since 2005 till date. The following are the important facts in brief highlighting the litigation happened between the parties and investigation conducted by the DRI. (a) Multiple litigation started in the year 1996 itself, firstly, at Mumbai by one M/s. 21st Century and secondly, at Civil Court Gandhidham by o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... volved in the present appeal, which are as follow: 2.1 Classification of goods : 2.1.1 He submits that the learned Adjudicating Authority erred in classifying the goods under CTH 7302 instead of CTH 7204 (FERROUS WASTE AND SCRAP; REMELTING SCRAP INGOTS OF IRON OR STEEL). It is submitted that the appellant has imported old and used rusty rails for melting and therefore the same was described as Heavy Melting Scrap, which can also be appreciated from the contract entered with the buyer and the certificate issued by M/s SGS India Limited at the load port. It is further submitted that, admittedly, the imported cargo/goods are nothing but used rail as heavy melting scrap that can be seen from the contract which described the item as Used Rail HMS . That there was an examination order to check the cargo and it classified the goods as rusted, re- rollable rails/rail of iron and steel of varying length starting from 1 m length to 12.5 m. He further submits that classification in the present case should be under CTH 7204 and not under chapter 73 as has been done in the impugned order. The appellant also relies on following documents to establish that the cargo is Used Rail as heavy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he value are concerned, both grounds do not have any substance inasmuch as DRI investigation is not conclusive. This is for the reason that no show-cause notice was issued based upon the investigation of the DRI till date. The DRI investigation was not concluded and only some observation has been made during the course of investigation. The investigation relied upon one invoice no. 4433 dated 26.04.1996 by one ALL-RAD VERTRIESS in which the price at the rate of USD 176.58 is indicated. The invoice itself is not reliable inasmuch as it is not related to the cargo in question and no investigation has been done by the DRI to link this invoice with the cargo in question. On numerous occasions, the appellant has explained that the aforesaid invoice has nothing to do with the cargo in question and as such it cannot be relied upon. It is therefore submitted that no reliance can be placed on the said investigation report of the DRI which is half baked and inconclusive. 2.2.3 He further submits that no evidence has been produced by the department for enhancing the goods of the cargo. It is further submitted that it is well settled law that value of the goods cannot be enhanced merely on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully submitted that, the burden to prove undervaluation was squarely upon the Department and that Department having failed to discharge the said onus without adducing any evidence, therefore value cannot be enhanced without any basis. It is further submitted that in the present case, the department has not made any suspicion on the invoice value submitted by the appellant. It is therefore submitted that value declared by the appellant be accepted. 2.3 Demand of Applicable Interest : 2.3.1 He submits that in the assessment order, interest has been asked as per sub clause 2(ii) of Section 61 of the Customs Act without realizing the fact that the goods were never warehoused and no order for clearance for home consumption in terms of Section 47 was issued. He submitted that the term warehoused goods is defined under Section 2 (44) of the Customs Act, 1962 as goods deposited in a warehouse . He further says that Section 61 further indicates that the warehoused goods have to remain in the warehouse beyond a period of ninety days, for the interest to be chargeable. The Sub-section 2 (ii) of Section 61 and the definition of the term warehoused goods indicates that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common sense and also flowing from the language of Section 61(2) of the Act. Payment of interest under section 61(2) is solely dependent upon the eligibility or factual liability to pay the principal amount of levied customs. Once the duty is found payable on such improperly cleared goods, then under section 72 read with section 61 of the Customs Act, the duty is recoverable with interest. If goods are not assessed by the department then one cannot be saddled with the liability to pay interest on a non-existing duty. Payment of interest under section 61(2) is solely dependent upon the eligibility or factual liability to pay the principal amount. Section 61(2) will only apply to the goods which are kept in warehouse beyond the period specified in section 61(1). In the present appeal the original assessment order was passed on 28-03-2014 for the assessment of the goods and in the assessment, the department has levied interest @ 15% for 3221 days from 27.12.2005 to 17.07.2013 which is not permissible. The department cannot and may not charge interest before the duration of return of bill of entry. He also relied upon the affidavit of the custom before the High Court of Gujarat at Ahme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation Vs Union of India, reported in, 2007 (217) ELT 167 (Mad.) which was appealed against by the revenue before the Hon ble Supreme Court wherein the Apex Court held that in the cases of classification of used rails the authority needs to decide the matter exercising their own independent mind. With this observation of the Hon ble Supreme Court, the board circular cannot be applied straightway without verifying the facts of each case. Therefore, the revenue decided the classification solely on the basis of circular dated 17.01.2006 is nor correct and legal. The relevant order of the Hon ble Supreme Court is re-produced below: 7 . Considering the facts and circumstances of the case and relying on the aforesaid decision of this Court, we hold that the Assessing Authorities as well as the Appellate and the Revisional Authorities are creatures of the Act and they perform the functions of the Quasi judicial Authorities and the orders passed by them are also Quasi judicial Orders. Therefore, such orders are required to be passed by exercising independent mind and without impartiality and while doing so, such Authorities are required to consider various evidences made available t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing therefore, that the Tribunal was right in rejecting the evidence that was produced on behalf of the appellants, the appeal should, nonetheless, have been allowed. ii. Parle Agro (P) Ltd. Vs Commr. Of Commercial Taxes, Trivandrum, 2017 (362) ELT 113 (SC) has held as under: 61 . It is further relevant to note that Revenue has not filed any material on the record either before the Clarification Authority or before the High Court in support of its view that product is covered under Section 6(1)(a) that is aerated branded soft drink . This Court in several cases has observed that onus to prove that particular goods fall in particular tariff item is on the Revenue. Therefore, relying on the above mentioned judgment we hold that the impugned goods are rightly classifiable under Chapter Heading 7204 as USED RAIL HEAVY MELTING SCRAP. 4.3 As regards to valuation of goods, we find that the value of goods has been rejected by the department by straight away applying Rule 10A of the Customs Valuation Rules and re-determined by applying Rule 3(i) read with Rule 4(i) of the Customs Valuation Rules, without first rejecting the value under Section 14 of the Customs Act, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds 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 to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) and Rule 4(1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor's price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commercially acceptable measure, which may be resorted to by a vendor for a variety of reasons including stock clearance. A price list is really no more than a general quotation. It does not preclude discounts on the listed price. In fact, a discount is calculated with reference to the price list. Admittedly in this case discount up to 30% was allowable in ordinary circumstances by the Indian agent itself. There was the additional factor that the stock in question was old and it was a one time sale of 5 year old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1). 4.6 Further as discussed in the case of Commissioner of Customs, Calcutta Vs. South India Television (P) Ltd. (supra) we find that onus is on th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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