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TMI Blog2022 (7) TMI 1556X X X X Extracts X X X X X X X X Extracts X X X X ..... rejection of transaction value would not meet the mandate of section 14 of the Customs Act and Rules as elucidated in M/s Sanjivani Non-Ferrous Trading Pvt Ltd [ 2018 (12) TMI 738 - SUPREME COURT] . In view of the above judgments, it is clear that the rejection and re-determination of transaction value are not based on any contemporaneous imports and therefore the findings of the Adjudicating Authority are illegal and incorrect. In absence of quality test report, it is not possible to compare the price of the goods involved in the case of M/s Integral Traders and M/s Rajeswari Match Works. Moreover, in the impugned order it is stated that those cases are under investigation. Revenue has not submitted any evidence before us to prove the outcome of investigation. In such circumstances, comparison of goods imported by M/s Integral Traders and M/s Rajeswari Match Works cannot be justified. In the absence of any quality assessment of the goods, evidences of contemporaneous imports on higher transaction value of identical/similar goods at or about the same time and in the absence of any evidence leading to the payment of any amount directly or indirectly, over and above the invoice valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hold that the impugned order, passed by the Adjudicating Authority, is not a well-considered order. Since this matter is under lis for the past more than 10 years and since this matter is in its third round before this Tribunal, we are not inclined to remand this case again. Commissioner of Customs, Cochin, has ordered confiscation of goods under section 111(m) of the Customs Act, 1962 with an offer to redeem the goods on payment of redemption fine besides imposing penalty under section 112(a) of the Customs Act, 1962. We have already found that Revenue has failed in establishing undervaluation on the part of the Appellant and no evidences are brought before us to establish remittance, in excess to the invoice value submitted before the Customs. Therefore, we are of the view that, order of confiscation of goods under section 111(m) is not sustainable and consequentially redemption also fails. Penalty under section 112(a) of the Customs Act being a confiscation related penalty, the same is also held to be unsustainable. Since there is no violation of EXIM Policy, nothing survives more. Demand of differential duty, interest, redemption fine and penalty cannot be sustained. Resultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Hon ble Supreme Court and as per order in Civil Appeal No.8383-8386 of 2012, the Hon ble Apex Court held that since the Tribunal has remanded the matter for de novo consideration before the Adjudicating Authority, even the issue as to whether the First Secretary (Commerce) is a competent authority to furnish authentic trade information from ASEAN countries could have been kept open, so that parties could have agitated this issue as well. 1.4 In the meantime, the First Secretary (Commerce), High Commission of India, Singapore, was appointed as the Commissioner of Customs, Cochin and based on the orders of the Hon ble Supreme Court as well as this Tribunal, the Commissioner of Customs initiated next round of adjudication proceedings, after providing documents requested by the Appellant. In the adjudication proceedings, the Appellant sought cross examination of the First Secretary (Commerce), High Commission of India, Singapore, and requested the Commissioner to recuse himself from adjudication. Vide Order-in-Original No. 07-10/ 2012, the Adjudicating Authority, rejected the request and contentions of the Appellant and the said order was challenged before this Tribunal. As pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luation done by the Original Authority, relying upon some documents recovered from another importer namely M/s. Integral Traders, having different quality and quantity is illegal, especially when such document never formed part of the proceedings or was confronted by the Appellant. f) That the order of the Adjudicating Authority, relying upon the findings in the previous Order-in-Original passed by another officer, which was set aside in Appellate Proceedings is illegal. There was no independent application of mind on the part of the Adjudicating Authority. g) That the Adjudicating Authority, while passing the impugned order, didn t consider the arguments and contentions of this Noticee, especially with regard to the quality and nature of Betel nut, which was of low quality, without undergoing processing in the country of export; that there was no allegation or evidence about fabrication of invoice; that revenue neither established nor alleged any payment of amount in excess to invoice value; that no quality test was conducted; that since the goods imported by M/s. Integral Traders and M/s. Nageswari Match Works didn t relate to import of same goods, in comparable quantity, during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are contemporaneous imports. Once the Adjudicating Authority finds that there are no contemporaneous imports of similar or identical goods, the very foundation of the allegations in the SCN disappears and then the only option is to accept the transaction value under Rule 3 of CVR 2007. This was not done. l) That the Apex Court has further explained the scope of various Rules under CVR 2007 in Century Metal Recycling (P) Ltd case (MANU/SC/0781/2019. After rejecting the allegations in the SCN, the Adjudicating Authority ought to have accepted the declared value as there was no evidence before him of any import of similar goods or identical goods or any reason to doubt the correctness of the declared value which was only based on the alleged contemporaneous imports. It is held that a doubt to justify detailed enquiry under the proviso to Section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere prediction on grounds and material in the form of certain reasons and not mere ipse dixit. Subjecting imports to enquiry on mere suspicion because one is distrustful and unsure, without reasonable and certain reasons, would be contrary to the scheme a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veeyem Company Supariwala .v. Commissioner of Customs Annexure (2006(194) ELT 447) and in Keeveeyem Company .v. Commissioner of Customs (MANU/CB/0010/2008). The ratio of the above orders have been followed in Global Industries Case (Annexure 7). This Hon ble Tribunal had followed the ratio of Global Industries case in subsequent order passed in KSE Ltd case (KSE Ltd .v. Commissioner of Customs MANU/CB/0151/2016 Annexure 12) r) That the Invoice and packing list generally indicate the quality of Nuts forming the largest percentage of the consignment. Over some years, Indonesian traders have started to refer to the mixed variety of Nuts as Indonesian Quality. Unless the imported Nuts were tested, and found to be non-conforming to the declared quality, the Revenue could not have rejected the value. Description in the invoice prepared by different exporters may differ in the absence of standard specifications. The real test as to the quality of the imported goods ought to have been done through testing. In this case, no testing was done of any of the several imports done. s) That the price of betel nut also varies depending on the size, quality, age etc. Therefore, to rely on unrelated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Indonesia approved the authority of the First Secretary (Commerce), High Commission of India, Singapore for coordinating with Indonesian Customs and for collecting information regarding anti-smuggling activities. Therefore, the Ld.AR vehemently argued that the First Secretary (Commerce) is a competent authority to procure data and that the decision was unbiased. It was further submitted that the Appellant has no case that the Adjudicating Authority has personal interest in the matter. d) That all contentions of the Appellant were considered by the Adjudicating Authority and there is no error in comparing the price of betel nuts in Sri Lanka as the same was done to ascertain the international price fluctuations. It was submitted that even though there was fluctuations in the international market, the price at Indonesia, as declared by the Appellant, remained stable. e) That the Commissioner of Customs rightly formed sufficient grounds to reject the assessable value under Rule 12(1) CVR, 2007, on account of the stability in the fluctuation value for imports from Indonesia when there are high fluctuations in the international market. The Ld. AR submitted that existence of higher tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by both sides and perused the records. The main issues involved in this case are:- (i) rejection of transaction value and its re-determination and its collateral issues are (ii) acceptability of the report of the First Secretary (Commerce), High Commission of India, Singapore for rejecting the transaction value, (iii) competency of the Commissioner of Customs, who was formerly First Secretary (Commerce), High Commission of India, Singapore, to adjudicate the impugned case, when his report was relied upon among various documents for adjudication and (iv) Rejection of request for cross examination. 4.1 We find that the Adjudicating Authority, as per the impugned order under challenge, rejected the transaction value under Rule 12 (1) of the Custom (Determination of Value of Imported Goods) Rules 2007 and re-determined the same under Rule 9, after discussing non-adoptability of sequential valuation under Rule 4 to 8 of the Customs Valuation Rules 2007. 4.2 The word value , as defined under Section 2 (41) of Customs Act, 1962, in relation to any goods, to mean the value determined in accordance with provisions of Section 14(1). The value to be declared in bill of entry is the valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lue 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 which the Assessing Officer arrives at his own assessable value . In the case of Commissioner of Customs V. Prabhu Dayal Prem Chand (2010) 13 SCC 535, Hon ble S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods 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 cogen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion . The Principal Bench of this Tribunal at Delhi, in the case of H.S. Chadha V. Commissioner of Customs (Preventive) [2021 (378) ELT 193 (Tri.Delhi) held as follows:- We find that it is trite law that since the goods were assessed by proper officer based on transaction value, onus lies on the Revenue to prove undervaluation, which it has failed miserably to do so since it did not show any contemporaneous import data of identical or similar items or NIDB data to indicate undervaluation and therefore the invoice value is required be accepted and the transaction value itself and hence could not have been discarded, as held by various judgements of the Hon'ble Supreme Court like CCE Vs Sanjivani Non-Ferrous Trading Pvt. Ltd. MANU/SC/1456/2018 : (2019) 2 SCC 378 and CC Vs South India Television Pvt. Ltd. MANU/SC/2966/2007 : (2007) 6 SCC 373. We find that there is no allegation or finding that the buyer and seller being related or of any extra payment to the supplier beyond the normal authorized banking channels and thus undervaluat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot to apply provisions of Rule 4 to 8 of Customs Valuation Rules, 2007. The Adjudicating Authority, while accepting the transaction value of goods imported from Thailand, finds that products from different countries are not comparable. Adjudicating Authority held that betel nuts of Indonesia and Sri Lankan origin are different in nature, quality and price. We find that the aforesaid reasoning for rejection of transaction value would not meet the mandate of section 14 of the Customs Act and Rules as elucidated in M/s Sanjivani Non-Ferrous Trading Pvt Ltd (supra). In view of the above judgments, it is clear that the rejection and re-determination of transaction value are not based on any contemporaneous imports and therefore the findings of the Adjudicating Authority are illegal and incorrect. 4.7 Learned Counsel for the Appellant submitted that no test was conducted to ascertain the size, quality and age of the betel nuts, which are vital to ascertain and determine price. Revenue has not placed any test report or records before us to prove that they have drawn samples and conducted quality assessment. In the absence of quality test report, it is not possible to compare the price of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter of the First Secretary dated 16.4.2008, there is nothing to suggest that the information has been gathered from local or from market sources. Based on these findings, the learned counsel for the Appellant argued that the report of the First Secretary (Commerce) cannot be relied upon for the purpose of value assessment. 4.11 Learned Authorised Representative on the other hand, argued that the reference for enquiries in Indonesia was sent by Cochin Customs to Directorate of Revenue Intelligence and they have forwarded it to First Secretary (Commerce), High Commission of India, Singapore. DRI, working under aegis of Central Board of Excise and Customs, interacts and liaises with customs administration of foreign countries on anti-smuggling matters. Based on the reference from the Commissioner of Customs, Cochin as well as DRI, the First Secretary (Commerce) sought report from Customs Administration in Indonesia. Therefore, it is submitted that there is no infirmity in collecting data by the customs formation in India from the First Secretary (Commerce), High Commission of India, Singapore, and that the data provided are authentic. 4.12 We have considered the Letter of the Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and Customs vide Letter F.No. S66/7/2013 CCU (Pt) dated 09.10.2013 to consider appointing a different adjudicating authority but vide communication in F.No.450/106/2014 Cus IV dated 07.11.2014, Board declined to change the adjudicating authority. From records, it is clear that the Appellants have not challenged the said decision of the Board before any forum and therefore the said issue is no more res integra. We therefore reject the argument of the Appellant with regard to the competency of the Adjudicating Authority to adjudicate this case. 4.14 The next issue is about rejection of request for cross examination of the First Secretary (Commerce) in the High Commission of India, Singapore. As rightly pointed out by the Ld. A.R the request was made only in the second round of adjudication and no such requests were placed before passing Order-in-Original No. 5/2010 dated 17.5.2010. Ld. Counsel for the Appellant had not pointed put any circumstances, which prevented them from making such request in the first round of adjudication. As submitted by the Learned A.R, show cause notice in this case was issued on 09.02.2010 and Order was passed on 17.5.2010. Even when the First Secretary ..... X X X X Extracts X X X X X X X X Extracts X X X X
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