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TMI Blog2024 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance with sub-rule (1) of Rule 3 ibid. There is no scope or occasion for the department to reject the declared value for the purpose of consideration of some other transaction value inasmuch as the transaction value has already been determined and on the basis of such determination, the remaining 45 nos. of disputed B/Es were already assessed under sub-section (1) of Section 17 ibid, which had not been objected to by the department by taking recourse to sub-section (4) of Section 17 ibid, ordering for re-assessment of the same. The learned adjudicating authority has not analyzed the provisions contained in Section 14 ibid read with Rule 3(1) ibid in their proper prospective with regard to determination of the transaction value on the goods imported by the appellants into the territorial waters of India. There cannot be any reason to doubt the declared value in the B/Es as the transaction value, for the purpose of duty assessment. Rule 4 ibid deals with the situation of consideration of transaction value of identical goods. It has been provided that in applying the said rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rety. The appeal is allowed in favour of the appellants. - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) Shri Yusuf Iqbal, Shri Nevilla Majra a/w Shri Zubin Sheth, Advocates for the Appellant Shri Adeeb Pathan, Authorized Representative for the Respondent ORDER Brief facts of the case, leading to this appeal, are summarized herein below: 1.1 With regard to import of perfumes and deodorants, the Directorate of Revenue Intelligence (DRI), Mumbai Zonal Unit gathered intelligence that various importers, including the appellants herein were involved in evasion of Customs Duty by resorting to gross under-valuation in the said import. The intelligence further indicated that the importers were mis-declaring the Maximum Retail Price (MRP)/ Retail Sale Price (RSP) and also the transaction value to avoid appropriate duty assessment by the Customs department and thereby, evading both Basic Customs Duty (BCD) as well as Additional Duty of Customs (CVD). 1.2 On the basis of such intelligence, the officers of DRI searched the office premises of the appellants and seized certain import documents and files etc., under panchanama dated 03.05.2018. On scrutiny of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the provisions of Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14(1) ibid and Notification No. 49-C.E.(N.T.) dated 24.12.2008 as amended; re-determination of the assessable value and MRP under Rule 3(1) ibid read with Section 14 ibid; demand and recovery of differential duty amounting to Rs.12,41,95,860/- along with interest in terms of the provisions of Section 28(4) ibidand28AA ibid respectively; confiscation of 46 nos. of consignments under Section 111(m) ibid and imposition of penalties under Section 114A or 112(a) and/or 112(b), 114AA ibid. With regard to the remaining one consignment, the said SCN had made the similar proposal for rejection of declared value, re-determination of the same under Rule 3 ibid, demand and recovery of the differential duty amounting to Rs.10,97,959/-, confiscation and imposition of penalties on the appellants. 1.5 In support of the above proposals made in the SCN, the DRI investigation had provided the following grounds: (i) That a conspiracy was hatched by Shri Abdul Hafiz Reshamwala, Partner of M/s. Goodwill International with their overseas supplier M/s. Al Rasasi International for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import, based on the documents filed by them. He further submitted that the payments were made by the appellant as per the prices reflected in the invoices issued by the overseas supplier M/s. Al Rasasi International, Dubai and that the same were routed through the approved banking channel. In this context, learned Advocate has referred to the statement dated 18.10.2018 recorded by the DRI from Shri Abdul Hafiz Reshamwala, Partner of the appellants firm, confirming that the invoice value was remitted through their bank account. He further submitted that in the statements recorded by the department from other persons under summons also nowhere specified that the appellants had paid any additional amount to the overseas entity, over and above the price indicated in the invoices. Thus, it is contended that the value declared in the B/Es, which are based on the invoices issued by the overseas supplier, should be considered as the transaction value in terms of Section 14 ibid for payment of the Customs duty, which had been properly discharged by the appellants and also accepted by the proper officer at the time of assessment of the B/Es. 2.2 Learned Advocate has strenuously argued that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of the claim that the value declared in the 44 B/Es should be considered as the transaction value, learned Advocate has relied upon the following judgements delivered by the judicial forum: (i) Commissioner of Central Excise and Service Tax, Noida vs. M/s/ Sanjivani Non-Ferrous Trading Pvt. Ltd. [2019 (365) E.L.T. 3 (S.C.)] (ii) M/s Classic Marble Company Pvt. Ltd. vs. Commissioner of Customs, Nhava Sheva-II [Final Order No. A/85726/2020 dated 11.06.2020, passed in Customs Appeal No.87484 of 2018. 2.4 Learned Advocate further submitted that 45 consignments out of the subject 47 consignments had been admittedly imported by the appellants in wholesale packages, containing dozens of pieces of individual items. It is further stated by him that the appellants were not selling the said products in retail, but were selling the entire package in the condition, in which these were imported. Thus, he stated that the provisions of Drugs and Cosmetics Act, 1940 and the rules framed thereunder should be applicable to the goods imported by the appellants, and not the Legal Metrology (Packaged Commodities) Rules, 2011. 3. Shri Adeeb Pathan, learned Authorised Representative (AR) appearing for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf: . Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 Rule 3. (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted: Provided that - (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value. (2) Where the costs and charges referred to in sub-rule (2) of rule 10 of these rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport. (3) In applying this rule, if more than one transaction value of identical goods is found, the lowest such value shall be used to determine the value of imported goods. Rule 12. (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to be made on every wholesale package. Rule 24 . Every wholesale package shall bear thereon a legible, definite, plain and conspicuous declaration as to (a)The name and address of the manufacturer or importer or where the manufacturer or importer is not the packer, of the packer; (b) the identity of the commodity contained in the package; and (c) the total number of retail package contained in such wholesale package or the net quantity in terms of standard units of weight, measures or number of the commodity contained in wholesale package: Provided that nothing in this rule shall apply in relation to a wholesale package if a declaration similar to the declarations specified in this rule, is required to be made on such wholesale packages by or under any other law for the time being in force. Drugs and Cosmetics Rules, 1945. 129H. Labeling and Packing of Cosmetics.- No cosmetic shall be imported unless it is packed and labeled in conformity with the rules in Parts XV. Further the label of imported cosmetics shall bear registration certificate number of the product and the name and address of the registration certificate holder for marketing the said product in India. PARTXV LABEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the basis of such determination, the remaining 45 nos. of disputed B/Es were already assessed under sub-section (1) of Section 17 ibid, which had not been objected to by the department by taking recourse to sub-section (4) of Section 17 ibid, ordering for re-assessment of the same. We find that the learned adjudicating authority has revised the assessable value in respect of the disputed 44 B/Es on the basis of the MRP/RSP mentioned in the balance 3 nos. of B/Es (used by M/s Al Rasasi for their retail store), and not on the basis of transaction value as defined in Section 14 ibid. 7.3 We find that the learned adjudicating authority has not analyzed the provisions contained in Section 14 ibid read with Rule 3(1) ibid in their proper prospective with regard to determination of the transaction value on the goods imported by the appellants into the territorial waters of India. In context with determination of transaction value, the law is well settled by the Hon ble Supreme Court, in the case of Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai 2000 (122) E.L.T. 321 (S.C.) that if the transaction value cannot be determined under Rule 4(1) and does not fall under any of the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Central Excise and Service Tax, Noida Vs. Ms. Sanjivani Non-Ferrous Trading Pvt. Ltd. 2019 (365) E.L.T. 3 (S.C.), wherein it has inter alia, been held that the normal rule was that the assessable value has to be arrived at on the basis of the price which was actually paid, and that mentioned in the B/Es. Thus, in the present case, there was no basis for rejection of the transaction value. The learned adjudicating authority has distinguished the above judgments, holding that the RSP declared by the appellants in those disputed B/Es was 10-20 times less than the actual RSP declared in the two nos. of B/Es (supra). Such findings of the adjudicating authority, in our considered view, are not in conformity with the statutory provisions inasmuch as the RSP at which M/s. Rasasi Perfumers Pvt. Ltd., intended to sell the goods from their retail outlets cannot possibly be the actual RSP, at which the appellants intended to sell the goods (wholesale packages) from their premises. 8.1 In the case in hand, the department has only considered the prices indicated in the invoice nos. 388/13/CM dated 08.12.2013 and 428/14/CM dated 16.12.2014 issued by M/s Al Rasasi International, Dubai (corresp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /15/cbm 28/01/2015 43932 40332 84264 29 031/15/cbm 24/02/2015 121812 - 121812 30 035/15/cbm 03-01-2015 107724 2868 110592 31 043/15/cbm 16/03/2015 121800 - 121800 32 061/15/cbm 14/04/2015 128568 - 128568 33 071/15/cbm 26/04/2015 79872 26280 106152 34 081/15/cbm 05-12-2015 128508 - 128508 35 088/15/cbm 05-12-2015 125516 - 125516 36 112/15/cbm 16/06/2015 69660 30432 100092 37 136/15/cbm 07/08/2015 66156 29772 95928 38 155/15/cbm 26/07/2015 85296 15960 101256 39 198/15/cbm 09-10-2015 121836 - 121836 40 203/15/cbm 09-10-2015 121656 - 121656 41 211/15/cbm 28/09/2015 103788 8808 112596 42 900/15/cbm 18/10/2015 122856 - 122856 43 225/15/cbm 20-10-2015 54132 39144 93276 44 247/15/cbm 11-08-2015 112236 2760 114996 45 321/13/cbm 10-03-2013 116400 - Goods Imported For Al Rasasi for their Retail Business Sr No Invoice number Invoice date Deo Qty Perfum Qty Total Unit 1 428/14 cmb 16/12/2014 1650 3661 5311 2 388/13/cbm 12-08-2013 8578 14000 22578 27889 8.2 Rule 12 ibid provides the mechanism and procedure for rejection of the declared value. The said rule does not empower the proper officer to reject the transaction value, without establishing that such value was not genuine. In the case in han ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and Loss account of M/s Rasasi Perfumers Pvt. Ltd., prepared for the relevant period, showing the cumulative loss of Rs.2,45,90,606/- incurred by them. Thus, we are of the view that M/s Rasasi could not be able to sell the products in Indian market through their outlet(s), owing to the reason that the retail sale price was grossly inflated by them. 8.5 Apart from the invoice price referred to in the above two B/Es, the department had also relied upon the statements of other persons, in support of the assertion that the value declared in the disputed B/Es cannot be considered as the transaction value. We have gone through the statements recorded by the department from Shri Abdul Hafiz Reshamwala, Partner of the appellants firm and Shri Vidyadhar M. Thatte, country head of M/s Rasasi Perfumers Pvt. Ltd. The statement of the partner of the appellant s firm was exculpatory and he had mainly clarified that the transaction value and MRP declared in the B/Es dated 06.01.2014and 19.01.2015 were decided by M/s Al Rasasi International and that they were meant for sale in the outlet(s) owned by M/s Rasasi Pvt. Ltd. The said clarification cannot be made as the basis for alleging any underval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on the said goods. Therefore, no recommendation has been provided in the Customs statute for adopting the MRP as the basis for arriving at the transaction value of the imported goods. Even considering the fact that the transaction value can be arrived at on the basis of RSP, the wholesale dealers (appellants herein) are outside the scope and ambit of the Legal Metrology (Packaged Commodity)Rules, 2011. Rule 2(k) in the said rules has defined the phrase retail package to mean the packages which are intended for retail sale to the ultimate consumer for the purpose of consumption of the commodity contained therein. Similarly, the phrase wholesale package has been defined in Rule 2(r) ibid to mean a package containing a number of retail packages, where such first mentioned package is intended for sale, distribution or delivery to an intermediary and is not intended for sale directly to a single consumer. The provision regarding the declaration to be made on every package has been contained in Rule 6 ibid, and the said rule is meant for the retail package(s) and not to the wholesale package(s), for which separate provisions have been made in Rule 24 ibid. In the proviso clause append ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The department in the present case, has not specifically alleged that appellants had not complied with the requirements provided under the Act of 1940 and the Rules, 1945. Further, the authorities entrusted with the power for enforcement of the said statutory provisions have also not initiated any proceedings, alleging that the provisions of such statutes have been contravened by the appellants. Therefore, it can be concluded that as an importer and wholesaler of perfumes, the appellants had duly complied with the provisions of Drugs and Cosmetics statute. In view of the fact that the appellants as the importer/wholesaler of perfumes and deodorants are governed under the provisions of Drugs and Cosmetics statute, they are outside the purview of the Legal Metrology Act, 2009 and the rules framed there under. 10. In view of the foregoing discussions and analysis, we are of the considered opinion that in the present set of facts, rejection of transaction value, re-determination of the same, confiscation of the impugned goods, confirmation of the differential duty demand along with interest and imposition of penalties on the appellants shall not stand the judicial scrutiny. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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