TMI Blog2024 (5) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... decision, the impugned orders are not sustainable. Accordingly, the impugned orders are set aside. All the appeals are allowed with consequential relief. - HON'BLE MEMBER ( JUDICIAL ) , MR. RAMESH NAIR And HON'BLE MEMBER ( TECHNICAL ) , MR. RAJU Shri Amit Laddha, Advocate for the Appellant Shri R.K. Agarwal, Authorised Representative for the Respondent ORDER RAMESH NAIR This case involves common investigation by DRI on the basis of various documents recovered from persons, namely, Shri Rajendra Agarwal and Shri Avinash Jindal. On the basis of the documents recovered from them the DRI has made out a case that the appellant have undervalued the imported goods, namely, timber imported from various countries. Accordingly, after detailed investigation, show cause notices were issued to many parties including the present appellants wherein the value was proposed to be enhanced and consequential duty demand was proposed along with penalty and interest. The import were made at Kandla Port as well as Mundra Port however the Adjudication order was passed by a common adjudicating authority. The show cause notices were adjudicated and the undervaluation was confirmed and consequently ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mails retrieved from Shri Rajendra Agarwal and Shri Avinash Jindal and their statements as well as the statements of Shri Vineet Jha, Office Assistant of Shri Rajendra Agarwal. The goods were imported from Tanzania. In respect of demand of duty made against the Appellant under Annexure D-2, C-2 and D-3, we find that the valuation has been done under Rule 5 and Rule 9 of the Customs Valuation Rules. In case of demand made under Annexure D-2, the valuation has been made under Rule 5 on the basis of similar goods said to be of same quantity and country of origin other than Tanzanian timber. In case of demand made under Annexure C-2 and D-3, the valuation under Rule 9 has been resorted to on the basis of contemporaneous imports by others. The contemporaneous imports referred to in such annexure were said to have been found by the investigating authority from the premises of Shri Rajendra Agrawal and Shri Avinash Jindal at the time of search in respect of other importers. Also statement of Shri Deepak Maloo of Appellant concern has also been relied upon. 7.1. As far as documents seized from Shri Rajendra Agarwal and Shri Avinash Jindal are concerned, preliminary we find that the said pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant s end. 7.2. We find that in one of the bills of entry, the container number was matching with the documents seized from the office of Shri Rajendra Agarwal. However it ipso-facto cannot lead to conclusion that the Appellant had mis-declared the value and quantity of the imported goods. The said document, i.e. packing lists, was never shown to the Appellant and they were never questioned about the same. Thus, the said packing lists remain un-corroborated with an evidence. In case where the declared value is in doubt, the same has to be determined in terms of Section 14 read with provisions of Customs Valuation Rules. If the declared valued is to be discarded, the same has to be proved by tangible evidence. The statements of Shri Avinash Jindal and Shri Rajendra Agarwal and Shri Vineet Jha , Accounts Asst. of Shri Rajendra Agarwal are not corroborated by any evidence and thus cannot form the basis for alleging under-valuation as held in case of Akshay Exports Vs Commissioner 2003 (156) ELT 268 and Galaxy Funworld 2006 (206) ELT 800. Further the statement of Shri Vineet Jha cannot be relied upon as he was not cross examined. In case of KARAN TRADERS 2016 (339) E.L.T. 249 (Mad. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Rajendra Agarwal. Even if the number of containers and the rates mentioned of US$ 275 and US$ 405 from the said bills of entry matched with a few of the transactions listed in the documents, it does not conclusively show that the said material was actually imported by the Appellant or was undervalued. The container-wise numbers mentioned in the document are not matching with the import documents. Further the documents does not disclose the rate at which the materials were purchased. Even the Appellants were not shown these documents or questioned about the same during investigation. In case of Bill of Entry No. 144831 dt 12.07.2009, reliance has been placed by the Revenue on account statement named A/c Export Trading located in file path live data/01/Account 26.01.10 report located in file path live data/01/Accounts/Ambrish Bhai and import bill located in the file path live data/02/Agarwal-Teak 19.01.2010 found in hard disk recovered from Shri Rajendra Agarwal. It is alleged that the actual value of imported timber was found to be higher than the declared valued and relied upon the statement of Shri Rajendra Agarwal and Shri Deepak Maloo. 7.5. We find that the statement of Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hcoming that the value and quantity of goods mentioned in the invoices are final or agreed upon and they did not change subsequent to sending the invoice. Even the A/c Export Trading and the bill of entry No. 151367 dated 2004.2010, 155707 dated 02.07.2010, 2321538 dated 11.11.2010, 2534906 dated 23.11.2010, 2422349 dated 11.12.2010, 3245435 dated 19.04.2010, 3471154 dated 11.05.2011 the emails of Shri Avinash Jindal has been relied upon to allege that the values and quantities mentioned therein are actual. Reliance has also been placed upon statement of Shri Rajendra Agarwal and Shri Deepak Maloo. However we are of the view that the statements cannot be basis of alleging undervaluation. Further, statement of Shri Rajendra Agarwal stands retracted. The statement of proprietor of the Appellant concern Shri Deepak Maloo, who accepted under-valuation cannot be the basis to conclude that the goods were under-valued as it is not corroborated with any independent evidence. 7.7. It is also a fact that at the time of importation the goods were reassessed by the Customs Authorities after examination and the value was enhanced. In case of Bill of Entry No. 155709 dated 02.07.2010, reliance w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue ranging from US$ 700 to US$ 800 whereas the custom duty was paid on lesser value. It is alleged that the container number, quantity and number of pieces in the said e-mail match with the Appellant import documents. We find that Appellant was not a party to such correspondence nor is he concerned with the same. The Appellants were never shown such correspondence nor they were questioned at the time of investigation. The e-mails were between Shri Avinash Jindal and Shri Sunil Gupta with no involvement of the Appellant. There is no clear evidence to determine which figures in the e-mail corresponding to the actual rate at which the materials were purchased. The e-mails contained table having heading of Sl. No., container no., PIC, CBM, invoice, rate US$ and size. The remaining two columns do not have heading. For enhancing the value, figures mentioned in one of the un-named columns has been used without ascertaining as to what this figure actual meant. Shri Avinash Jindal was never questioned or was asked to clarify as to what the unnamed figures represent. It is also found that the goods at the time of importation was re-assessed and the value was enhanced from US$ 350 to US$ 375 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same is not corroborated by any evidence from the Appellant s side. Shri Avinash Jindal in respect of 2 pages of said file stated that it indicated payments made by various importers but neither his statement nor the subject document supports the allegation that the payments were of unofficial part of the transaction. The Proprietor of the appellant concern was not shown such papers nor was he questioned about the same in spite of the fact that these documents are the sole evidence for making the allegation that the appellant had made un-official payments in cash. Only by showing the name of the Appellant in the account statement and that too of a third party, it cannot be concluded that the payment was actually made to Shri Avinash Jindal or even if the payment was made, it was on what account . In absence of any confirmation from Shri Avinash jindal or from Shri Deepak Maloo about the authenticity of such papers, no allegation can be made against the Appellant. A hand-written page from the made-up file of Shri Avinash Jindal has been made as basis for alleging that the Appellant imported Tanzanian timber from Shri Avinash Jindal through one container of 1 material of 14.556 CB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are higher than those declared before the customs. The Appellant has refused the veracity of these documents. Only by matching the container numbers found in packing lists of the hard disk with the container number in the import documents under-valuation cannot be alleged. The packing list was never shown to the Appellant and the Appellant had already submitted the packing lists received from the overseas suppliers to the Customs at the time of filing of bill of entry, which dealt with the contents mentioned in the import documents. The Appellant has also stated that the packing lists relied upon by the Revenue are not related to the import by the Appellant. In spite of search of the premises of the Appellant, no incriminating document was found. 10. Similarly in case of packing lists of containers of Tanzanian timber found in the hard disk of Shri Rajendra Agarwal, on the basis of which the demand was made against the Appellant, we find that the Appellants were never shown the above records nor their statement was recorded. It has been alleged that the accounts statement found from the hard disk of Shri Rajendra Agarwal indicates the rates at which he purchased the material fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant has paid extra consideration for alleged under-declared value of the goods to the supplier. The sales price of the Appellant has not been disputed. There is no evidence that the Appellant sold the imported goods in domestic market by suppressing the price and any cash was generated which was used to pay to the foreign suppliers. Even during the cross examination, Shri Rajendra Agarwal and Shri Avinash Jindal have accepted that the Appellant is not concerned with the contents of the made-up files. It is emanating from the records that the Appellant imported Timber from various suppliers, who were well- recognized and there is no direct evidence that the Appellant had connivance with them so as to undervalue or mis-declare the imported goods. 12. Further, the Appellant have imported Timber even after the disputed period more or less at the same price at which the Appellant imported the goods in disputed period, as we find from the data submitted by the Appellant, there is no specific evidence that the prices were influenced by non-commercial consideration. In case of M/s Oswal Fats Oils - 2007 (220) ELT 795, the Tribunal has held that the price of the goods would not rem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. In case of M/s Truwoods Private Limited - 2006 (204) E.L.T. 288 (Tri. - Bang.), the tribunal while dealing with similar situation held:- 6. We have gone through the records of the case carefully. A similar issue of alleged undervaluation was examined in the case of M/s. Truwoods Pvt. Ltd. by CESTAT, Delhi and the appeal was allowed. The ratio of the above decision is squarely applicable to the facts of the present case. We also do not find any reason for rejection of the transaction value in terms of Rule 4(2) of the Customs Valuation Rules, 1988. The case-laws cited by the appellants are relevant. It is not the case of the Revenue that the appellants had paid more than what has been reflected in the invoices. Investigations have not brought out any evidence against the appellants in this manner. It is further seen that the insurance covers the value of the goods enhanced by 10% as per the international practice. Further, we find that reliance has been placed on photocopies without proper signa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Hon ble Apex Court in case of South India Television (P) Ltd. 2007 (214) E.L.T. 3 (S.C.) has also held that : 6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), value is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of deemed value . Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal. 8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs Valuation Rules refers to the transaction value. Utilization of the word the as definite article indicated that what should be accepted as the transaction value for the purpose of assessment under the Customs Act is the price actually paid by the importer for the particular transaction, unless it is unacceptable for the reasons set out in Rule 4(2). In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 2007 (215) ELT 304 (TRI) as the same and similar goods were also imported on same price and the allegation of undervaluation thus would not sustain. The records of contemporaneous imports and the data have not been considered by the adjudicating authority and in such cases, we find that there is no case of demand against the Appellant. 15. From the quantity of imports, we find that more than 60% of the imports were of rejected quality Timber. Also, we find that out of 161 bills of entry involved in this case, the value of 83 bills of entry declared by the Appellant was initially rejected by the Revenue and were enhanced in comparison with the contemporaneous imports after physical inspection and examination of the goods. In such case, there is no reason to doubt the declared value as the goods were permitted to be cleared after physical examination. The Appellant has made payments through letters of credit and there is no evidence of having made payments to Shri Rajendra Agarwal or Shri Avinash Jindal on behalf of the suppliers. In such case, the value cannot be discarded. The Appellant has also annexed the prices of imported goods in the domestic market and we do not find any m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department and not on the importer. 12. The department has applied the values of imports by the Water Base Ltd. from Pingtai as well as Zuelling for Vitamin pre-mixes to show that there are contemporaneous imports of comparable goods at much lesser prices, normally at U.S. Dollars 8,200/- per M.T. It is not in dispute that by its very nature Vitamin Mixes imported at different times from different sources are having different composition. Therefore, prices at which identical goods have been imported may not be available. It is also not disputed that in view of this what the department seeks to do is to apply the price of comparable or similar goods as per the Customs Valuation Rules. However, the dispute arises on the sole ground that the chemical composition of such comparable goods relied upon by the department as contemporaneous imports was so widely different from the chemical composition of the goods imported in these cases by the appellants that it would not be correct to hold the two sets of goods as comparable. We find that ld. Advocate has in detail submitted the chemical composition as per the Analysis Certificate on record which have not been disputed. Comparison of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roborated which was corroborated with their own record is not a tangible and cogent evidence and cannot form the basis of under-valuation in respect of value declared by the Appellant. 18. Thus in view of our above findings and the judgments, we hold that the demand and penalties imposed against Appellant are not sustainable. We, therefore, set aside the impugned order and allow the appeal with consequential reliefs. From the above decision of this Tribunal in the case of Beena Sales Corporation, it can be seen that all the documents and evidences are common which have been relied upon in the present cases also, therefore, the above decision in Beena Sales Corporation, is directly applicable in the present appeals also. Moreover, the decision of Beena Sales Corporation has been upheld by the Hon ble Supreme Court consisting the Bench of Hon ble Chief Justice, the said order is reproduced below : 5. Since the Hon ble Supreme Court has upheld the order of Beena Sales Corporation by dismissing the Civil Appeal of the Revenue, in the present case, following the Beena Sales Corporation decision, the impugned orders are not sustainable. Accordingly, the impugned orders are set aside. All ..... X X X X Extracts X X X X X X X X Extracts X X X X
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