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TMI Blog2023 (6) TMI 1015X X X X Extracts X X X X X X X X Extracts X X X X ..... obal crusade against conflict diamonds but such a peremptory direction which deprives an adjudicating authority of inherent latitude in exercising powers conferred statutorily is certainly poor, even if wellintentioned, execution of such intent. After all, statutory exercise of power, in adjudication process, is also an acknowledged check on policy formulation that transcends legislative intent which should have been reasonably overcome, in overriding circumstances for conformity with the comity of nations, only by amendments in statute - A circular of an attached office of the Central Government to its subordinate formations is not to be presumed as articulation even of policy intent let alone legislative intent when it circumscribes statutory conferment. In the light of failure to contest the easing of restrictions on re-export, the argument of Learned Authorized Representative for absolute confiscation is unacceptable. It is quite possible that purposeful misdeclaration of value by importers of articles, such as rough diamonds , may warrant recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but the peculiarities of a trade upon w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of re-export, the goods shall be released to them within a period of one month. The appeal of Revenue, devoid of merit and substance, is dismissed. - HON BLE MR C J MATHEW, MEMBER (TECHNICAL) And HON BLE MR AJAY SHARMA, MEMBER (JUDICIAL) Shri Sujay Kantawala, Advocate for the appellants Shri Sydney D Silva, Additional Commissioner (AR) for the respondent Shri Sydney D Silva, Additional Commissioner (AR) for the appellant Shri Sujay Kantawala, Advocate for the respondent Ms Lakshmi Menon, Advocate with Shri Akshay Deokule, Advocate for the appellants Shri Sydney D Silva, Additional Commissioner (AR) for the respondent ORDER PER : C J MATHEW The order impugned before us is significantly humungous. But then so is the order-in-original that is the fount of the grievance of M/s Kiran Gems P Ltd, S/Shri Vallabhai Patel, Mavjibhai S Patel, Raviraj Anil Kumar Vakani and Kushal Kamlesh Patel, as well as that of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai, all of whom are disappointed by the outcome of proceedings before Commissioner of Customs (Appeals) [ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such authority in section 125 of Customs Act, 1962. In addition, penalty of ₹ 4,00,00,000 on M/s Kiran Gems P Ltd, of ₹ 1,00,00,000 each on S/Shri Mavjibhai S Patel and Vallabbhai S Patel, Managing Director and Chairman Director of M/s Kiran Gems P Ltd, and ₹ 50,00,000 and ₹ 25,00,000 respectively on S/Shri Kushal Kamlesh Patel and Raviraj Anilkumar Vakani, owner of M/s Unifacet Diam Dubai and General Manager of M/s Unifacet Diam Dubai, under section 112(a) of Customs Act, 1962 were left untouched by the first appellate authority as were penalties of ₹ 50,00,000 each on S/Shri Mavjibhai S Patel and Vallabbhai S Patel, Managing Director and Chairman Director of M/s Kiran Gems P Ltd, and ₹ 25,00,000 and ₹ 15,00,000 respectively on S/Shri Kushal Kamlesh Patel and Raviraj Anilkumar Vakani, owner of M/s Unifacet Diam Dubai and General Manager of M/s Unifacet Diam Dubai, under section 114AA of Customs Act, 1962. 3. Appeal of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai against discarding of proposal for confiscation under section 111(d) of Customs Act, 1962, and conse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sked with authority to do so. 5. On scrutiny of the grounds of appeal filed by Revenue, and ignoring the cavil about the findings of the original authority which, admittedly, were not considered on merit by the first appellate authority, it would appear to be limited to coverage of nullfication of time between 15th March 2020 and 28th February 2022 by the Hon ble Supreme Court in Re: Cognizance for Extension of Limitation [suo moto writ petition (c) no. 3of 2020 others] in order dated 10th January 2022 that, according to jurisdictional Committee of Commissioners, encompassed anything to do with appeals, and adjudication, before judicial and quasi-judicial authorities. There is no justification offered therein for the Tribunal to entertain pleas for relief that goes beyond the bounds of the order of the first appellate authority who had no jurisdiction, after rejection of appeal of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), to consider imposition of detriment on the importer and appellantindividuals that the adjudicating authority had not. We are, therefore, constrained to limit our consideration to subjectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treat these as two distinct contingencies; hence the claim of the jurisdictional Committee that all of that is the time facilitated for appeal and, thereby, within the ambit of the order of the Hon ble Supreme Court does not resonate with us. The first appellate authority has concluded that the nullification would apply to the time taken between conclusion of review and action thereafter for implementing the outcome of review but not to modify the time allowed for review. 8. It has been noted by the first appellate authority that the Hon ble High Court of Bombay, in re Vinka Industries, had held review to be an administrative mechanism. We find no reason to disagree with that conclusion and, more so, as the decision of a Larger Bench of Hon ble High Court of Delhi in re Japan Airline International Co Ltd, cited by Revenue in support of correctives made to decisions in review, has arrived at much the same conclusion. Therefore, the administrative character of the review procedure laid down in law is not a stand that Revenue can now seek to dispute. The order of the Hon ble Supreme Court, as the apex judicial authority, is limited to its remit of supervision over appellate and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellants from the first appellate authority but even that has passed by for not having been disputed in the appeal before us. 10. The cavil against rejection of the plea for bringing in additional grounds before first appellate authority is, with reiteration of correctness of the order of dismissal of appeal of Commissioner of Customs, now academic. In any case, the decisions relied upon by the jurisdictional Committee of Commissioners have approved of the proposition that review process does not ever attain finality but not forever by allowing the limitation in section 129D to be stretched by or for accommodating such correctives before the first appellate authority vested with very limited power to condone delays in filing appeals or applications. This proceeding is, thus, restricted to the pleas of the importer and the appellant-individuals. 11. All that remains for resolution in the dispute is that of valuation of impugned goods. Value, at the best of times, is difficult to ascertain for, ultimately, it remains a buyer-seller transaction and their mutual agreement on the price to be paid. More so, in a commodity such as rough diamonds which is surrendered to Man by Mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority for rejection of the first report, i.e., disclosure of identity of importer, which the first appellate authority found to be bemusing as the mandated presence of representative of importer in such proceedings itself assures revelation. The first appellate authority, referring to paragraph 14 of the said instructions, also pointed out that it is only in certain specified contingencies that customs authorities could discard report of GJEPC-approved panel of experts for undertaking further ascertainment. It would also appear to us that this micro-management of assessment was caused by unfortunate events of July 2018 whatever those be to accord credibility to this sub rosa , as it were, process. 13. The first appellate authority appears to be proficient in dialectics which, as seen from the disposal of two issues raised by appellants - limited cross-examination permitted and serial resort to valuers in breach of instructions on examination procedure before her, is not to be faulted but suitability for deployment in determination of legal and proper is in question. It was concluded that a representative of each of the institutions concerned with examination ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng lesser RF and they will not be aggrieved with the lesser RF imposed on them on the basis of the 3rd report relied upon by the department. Thus by saying so, I find myself in agreement with the AA as far as Order part is concerned. (emphasis supplied) is not only in breach of mandate devolving on appellate authority but is also fatal to the consequent detriments. 14. Repelling the allegation that the some prior arrangement, arising out of personal relationship between the owners of the importer and supplier entities, Mr Sujay Kantawala, Learned Counsel for importer, denied any connections and, submitting that such relationship even if evidenced would not have sufficed for discarding value unless in accordance with rule 3(2) and rule 3(3) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, he also drew attention to the findings in the impugned order which, with reference to economics of the purported transaction, cast doubts on round tripping as the motive for the alleged overvaluation. Furthermore, he contended that, with the stringent procedures of public notice no. 30/2018 dated 19th December 2018, any attempt at misdeclaration would be f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned order has taken note of (iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include (a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed; (b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price; (c) the sale involves special discounts limited to exclusive agents; (d) the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production; (e) the non-declaration of parameters such as brand, grade, specifications that have relevance to value; (f) the fraudulent or manipulated document (emphasis supplied in impugned order) in Explanation (1) below rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as enabling recourse to rule 12, thereby, with notice, as intended therein, having been communicated in the show cause notice leading to adjudication and culminating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld unravel the truth or lack in the contention of the investigators that representative of the importer was present during the proceedings. We were also taken through several portions of the order of the original authority that, according to him, manifested motivated action against the importer borne by unwarranted presumption of wrong-doing. 19. Reliance was placed on the decision of the Tribunal in ST Enterprises and M/s Ayush Business Overseas v. Commissioner of Customs (Chennai VII) [2021 (378) ELT 514 (Tri-Chennai)] to sustain the contention that classification incorporated in documents of foreign supplier are not binding on the importer, in Sirthai Superware India Ltd v. Commissioner of Customs, Nhava Sheva-III [2020 (371) ELT 324 (Tri-Mum)] to contend that claim for a particular classification would not absolve the assessing officer of primary responsibility to ascertain the appropriate classification and in Advanced Spectra Tek Private Limited v. Commissioner of Customs (ACC I), Mumbai [2019 (369) ELT 871 (Tri. Mumbai)] on the limitations of section 111 of Customs Act, 1962. 20. Ms Lakshmi Menon, Learned Counsel for the appellants from outside India, pointed out to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds to be more appropriate that, even admittedly without duty liability, would, nevertheless, be reason enough to discard the declared value. According to him, immediately after India contracted with other participating States for policing of rough diamonds , circular no. 53/2003-Cus dated 23rd June 2003, issued by Central Board of Excise and Customs (CBEC), imposed stipulations to align customs procedures for clearance of rough diamonds with paragraph 2.2 of the Export Import Policy (EXIM) prevailing then and he drew attention to paragraph no. 3, 6 and 7 therein to emphasize that absolute confiscation must follow in such circumstances. Learned Authorized Representative highlighted the inconsistency in documents in support of his proposition that goods should have been absolutely confiscated. He also pointed out that it was insistence on the part of the importer that the diamonds were of gem quality which necessitated the panchanama that is now sought to be discredited. It was argued by him that due weightage should be accorded to the format of certificate issued by the Gem and Jewelery Export Promotion Council (GJEPC) before adjudging the acceptability of certificate prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be irrefutably in conformity with stipulations supra. From the reports of the expert valuers, we are unable to ascertain that conformity; indeed, we note that in crossexamination at the adjudication stage, Mr Surajratan Agrawal was disinclined to disclose the manner in which the suggested value could be justified lest it compromise his professional and commercial interest. The lack of credibility of such reports cannot be overstated ever. 24. It is quite possible that purposeful misdeclaration of value by importers of articles, such as rough diamonds , may warrant recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but the peculiarities of a trade upon which customs officials may be entirely dependent for expertise and whose activities may, even validly, be veiled under layers of secrecy may not be found by assessing officers to be of concern but the law cannot be ignored. That supervisory level of customs officialdom may have found it necessary to bypass impediments to proper resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 does not make up for that want of credibility. It is the remit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1962. Nor is it the case of the lower authorities that duty was to be collected or was short-collected on clearance for invoking section 28 of Customs Act, 1962. There is, thus, no scope for barring clearance for home consumption. The sole bar, as we can garner, is the finding that the goods were subjected to re-determination of value, arising from rejection of declared value under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, even if for no purpose other than as a puzzle to be solved for it has been held that no duty liability arises either. To postulate that empowerment to confiscate, under section 111(m) of Customs Act, 1962, on the ground that misdeclaration of value empowers resort to valuation provisions of the statute, intended for specific purpose, is to put the cart before the horse and effect before cause. 27. The process that commenced with filing of bill of entry, under section 46 of Customs Act, 1962, acknowledges the importer in relation to the imported goods for further action thereto and requires section 17 of Customs Act, 1962, as the mechanism, to enable closure under section 47 of Customs Act, 1962. The determination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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