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TMI Blog2025 (1) TMI 1451X X X X Extracts X X X X X X X X Extracts X X X X ..... lab (GAL). Indeed, it is acknowledged by the appellant Directorate itself in the appeal memo, that the price of the iron ore exported was raised by the appellants based on the certificate of Quality Services and Solutions, Goa, a government-accredited lab. Further, the detailed procedure for valuation has been explained in para- 61 of the order of the Ld. Commissioner of Customs. Once the prescribed procedure for independent certification by Govt. Lab and samples being drawn in the presence of Customs and being sent to Govt. lab for sample testing has been followed, do not see how the charge of manipulation of Fe content can be sustained unless the findings of the labs are challenged as perverse. In this regard, we have also taken note of the judgment of Reliance Cellulose Products Ltd. [1997 (7) TMI 652 - SUPREME COURT] cited by the appellants wherein it was held that unless a government lab report is challenged and demonstrated as being palpably wrong, the same cannot be brushed aside. Even from the Income-tax point of view, the variation in price at which export was made by the appellants and the arm's length price assessed was found to be within the tolerance range. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Section 42(1) of FEMA, 1999 to the extent of Rs.3,11,68,167/- (by Respondent no.1); Rs.20,00,96,301/- (by Respondent no.2); and Rs. 23,12,64,468/- (by Respondent no. 3), in all, amounting to a total Rs. 46,25,28,936/- 3. The investigation in this case was initiated based on the Show Cause Notice (SCN) bearing no. DRI/MZU/GRU/INV/01/2012 dated 18.08.2015 issued by Directorate of Revenue Intelligence (DRI), Mumbai to M/s Mine scape Minerals Pvt. Ltd and M/s Dinar Tar car Resources (India) Pvt Ltd, Goa (Respondents no. 1 & 2 herein), for evasion of Customs Duty in respect of the export of iron ore to their overseas buyers, viz, M/s Dragon Commodities Ltd, Hong Kong and M/s Orient Express Commodities Ltd, Singapore at undervalued prices. Enquires conducted by DRI revealed that M/s Mines cape Minerals Pvt Ltd and M/s Dinar Tar car Resources (India) Pvt Ltd, in all, had exported nine shipments of iron ore to their related overseas buyers, M/s Dragon Commodities (HK) Ltd, Hong Kong and M/s Orient Express Commodities Pvt. Ltd. Singapore. 4. In the said SCN, it was alleged that both the respondent companies had evaded Customs Duty by suppressing and mis-stating the actual transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, M/s Dinar Tarcar Resources (India) Pvt Ltd exported 46,644 DMT of iron ore fines by vessel MV Vinalines Brave to M/s Dragon Commodities (HK) Ltd and raised commercial invoice dated 19.05.2011 for an amount of US$ 6182605.28. Certificate of quality dated 18.05.2011 issued by Quality Services and Solutions, Goa certified that the iron fines exported in vessel MV Vinalines Brave was having Fe content of 55.90%. Accordingly, price of the iron ore exported was raised by US$ 2.12 and the price per DMT became US$ 132.12 CIF instead of US$ 130 PDMT CIF. 7. With respect to the aforesaid cargo exported by Respondent No. 2, M/s Dragon Commodities (HK) Ltd. entered into a contract bearing no. 1000/ZIRO/14001627/2012 dated 09.05.2011 with M/s Swiss Singapore Overseas Enterprises Pte Ltd, Singapore for supply of 50,000 WMT of iron ore fines having 56% Fe content at the price of US$ 136.50 per DMT CIF. The said contract also specified that the base price would be increased by USS 2.44 per DMT for each 1% Fe above 56%, fraction pro-rata. Accordingly, M/s Dragon Commodities (HK) Ltd raised a commercial invoice dated 20.05.2011 for supply of 46,904 DMT on M/s Swiss Singapore Overseas Enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 03.05.2011 whereas the contract between the overseas party and the ultimate buyer was entered on 09.05.2011, which was within a week of signing the first contract, thus showing there could not have been any significant difference in the price of the iron ore cargo exported by the Indian company. However, in this case, the difference was to the extent US$ 6.50 per DMT. This, coupled with the alleged misdeclaration in the Fe content of the iron ore cargo and the fact that the first contract was entered between two related parties, both controlled by Shri Dinar Tar car, were sufficient evidence according to the directorate to prove that the actual and full export value of the iron ore cargo exported by Respondent No. 2 (M/s Dinar Tar car Resources (India) Pvt Ltd) should have been US $ 64,74,628.16, instead of US $.61,62,605.28. 10. At Sl. No.2 of the aforesaid Table no. 1, iron ore was exported by Respondent no. 2 in a vessel named MV APJ Kais. In this instance, M/s Dinar Tar car Resources (India) Pvt Ltd had entered into a contract bearing no. DTRIPL/DRAGON/10- 11/05 dated 19.03.2011 with M/s Dragon Commodities (HK) Ltd for supply of 50,000 MT of iron ore fines having 55% of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 55% of Fe content whereas its related overseas company entered into contract for further sale of the same cargo but declaring the Fe content to be of 57%. The Directorate was of the view that this definitely presupposes knowledge on the part of the Respondent No. 2 and Respondent no. 3 that Fe content of the iron ore exported by the Respondent No. 2 was more than 55%. Therefore, stating Fe content to be of 55% was a deliberate mis-declaration by the Respondents Company no.2 in order to lower the actual and full value of the goods exported by them. Since, the ultimate buyer i.e. M/s Swiss Singapore Overseas Enterprises Pte Ltd, Singapore was issued the commercial invoice showing the Fe content of 56.67%, it was crystal clear acceding the appellant Directorate that the Indian Company, M/s Dinar Tar car Resources (India) Pvt Ltd, deliberately mis- declared the Fe content of the cargo to suppress the actual transaction value of the export proceeds. It may also be seen that in the contract dated 29.03.2011, it was very specifically stated at clause 4 that "The base price shall be decreased by US$2.19 per DMT as per clause 4 for each 1% Fe above 57% and up to 56%, fraction pro ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zos 5806655.50 6964898.24 1158242.74 5,13,10,153 5 MV Jin Bi 2814542.10 3517668.61 7033126.51 3,26,60,226 Total 44,60,545.5 20,00,96,301 15. Based on the above analysis, the Directorate concluded that M/s Dinar Tar car Resources (India) Pvt Ltd had not repatriated the amounts totalling US $ 44,60,545.50/- equivalent to Rs. 20,00,96,301/- till date. The Directorate was of the view that the said foreign exchange equivalent to 20,00,96,301/-, is part of the full value of the export of iron ore made by the Respondent no. 2. The Directorate noted that Regulation 3(1) of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 prescribes that exporter should furnish the declaration in Form GR/Form SDF/ Form SOFTEX/ Form PP in respect of the full export value of the goods. In respect of the 5 shipments detailed in the Table no. 1, the Respondent No. 2 did not furnish the true and correct export value of the iron ore exported by them. They furnished incorrect export value of the iron ore exported by them in violation of Regulation 3(1) of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. Further, Regulation 9 of Foreign Excha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any deals in export of iron ore from the state of Goa. Shri Dinar Purushottam Tar car and his wife Smt. Manisha Dinar Tar car were the two Directors of M/s Mine scape Minerals Pvt Ltd and Shri Dinar Tar car was the Director since the incorporation of the said company. M/s Mine scape Minerals Pvt Ltd exported two consignments of iron ore to its related overseas entities namely M/s Orient Express Commodities Pte Ltd and M/s Dragon Commodities Ltd, Hong Kong wherein they have not received the full and correct value of the goods exported. Details of the said export consignments are as given in the table below: Table No. 3 Sl. No. Invoice No. and Date Name of the Vessel Quantify of iron ore exported Fe Content Price (US $) 1 MMPL/EXP/10- 11/28/25 dated 21.02.2011 MV First Trader 48,330 DMT 55.21% 125.48 per DMT CIF 2 MMPL/EXP/10- 11/13 dated 25.08.2010 MV Star Masaya 36,783.90 DMT 55.12% 71.42 per DMT CIF 18. At Sl. No.1 of above-mentioned Table no. 3, iron ore was exported by Respondent no. 1 in vessel named MV First Trader. In this instance, M/s Mine scape Minerals Pvt Ltd had entered into a contract bearing no. MMPL/DRAGON/10-11/01 dated 01.02.2011 with M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the contract signed between Respondent's Company and overseas party the Fe content was shown to be 55% while the contract signed between the overseas entities showed the Fe content to be 56%. Moreover, the first contract between the related parties was entered on 01.02.2011 whereas the contract between the overseas party and the ultimate buyer was entered on 28.02.2011 which was within a month of signing the first contract, thus showing there could not have been any significant difference in the price of the iron ore cargo exported by the Indian company. However, in this case the difference was to the extent US$ 5 per DMT. This coupled with the fact that the first contract was entered between two related parties, both controlled by Shri Dinar Tar car and the contracts signed by the Indian party and the overseas party contain the different values of the Fe content provide sufficient evidence to prove that the actual and full export value of the iron ore cargo exported by M/s Dinar Tar car Resources (India) Pvt Ltd should have been US$ 61,94,380.56 instead of US$ 60,64,448.40. 21. At Sl. No.2 of above-mentioned Table no. 3, iron ore was exported by Respondent no. 1 in a ves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the pricing of the iron ore fines as well as Fe content of the cargo in the contracts signed by the Indian Party and its related overseas party. But the contracts contained different prices for the cargo as well as different percentage of Fe content of the cargo of iron ore fines exported by the Respondents Company. It was noted that in the contract signed between Respondent Company and overseas party, the Fe content was shown to be 55% while the contract signed between the overseas entities showed the Fe content to be 56%. It was noted that the first contract between the related parties was entered on 29.07.2010, whereas the contract between the overseas party and the ultimate buyer was entered on 27.08.2010, which was within a month of signing the first contract, thus showing there could not have been any significant difference in the price of the iron ore cargo exported by the Indian company. However, in this case the difference was to the extent US$ 18.15 per DMT. This coupled with the fact that the first contract was entered between two related parties, both controlled by Shri Dinar Tar car and the contracts signed by the Indian party and the overseas party contain different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, as detailed in Table No. 4, had not been repatriated by the Respondent No. 1, within the stipulated time period thus violating Regulation 9 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. Regulation 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 mandates that no person shall do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that proceeds of sale of the goods exported do not represent the full export value of the goods. It is seen that the Respondent No. 1 had not taken any steps to realize and repatriate the full export value of the consignments detailed in Table No. 3 and the invoices prepared by the Respondent No. 1 in respect of said shipments do not represent the full value of the goods exported. As such, the Respondent No. 1 had violated Regulation 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000. Section 8 mandates that where any amount of foreign exchange is due to any person resident in India, then such person shall take all reasonable steps to realize and repatriate to India such foreign exchange within such pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the learned adjudicating authority on behalf of Respondent No.1 & 3 and Respondent No. 2 & 3 wherein they gave detailed explanations regarding the business of export of iron ore cargo in huge quantities, the method of fixing the value/price of iron ore cargo etc. It was inter alia explained that the contracts in question were for sale of certain weight of ore in Metric Tons (MTs). The ore is naturally found in moist condition and is weighed in Wet Metric tons. This weight is the weight of ore in natural moist condition. The contract is, however, based on Dry Metric Ton (DMT) basis, which is determined by ascertaining the moisture content and treating it as an impurity. The contract amongst other specification provided the grade and the quantity (on DMT basis) of the iron ore to be supplied. This is sought to be achieved thereafter since iron ore does not have a consistent grade and there are several variables which affect the grade of iron ore. The certification of the grade is done by independent and government accredited laboratories by drawing random samples. The random locations from which the samples are drawn from each of the shipment at the load port in the presence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iron ore when analysed would be giving different grade analysis at different time due to iron ore due to the nature of the commodity being that the acceptable allowance between two times or different times of analysis is 0.5 and that normally the vessel which is 50000 tonnes in size is loaded by a contribution plan i.e. loading is done from different jetties in different barges at different times and the due to this nature of loading and random sampling, sometimes the grade i.e. Fe content vary. 34. Further, the notices submitted that it can be seen from the said contract bearing no. MMPL/DRAGON/10-11/01 initially stipulated the Fe content of the consignment as 55% and contemplated increase in the base price in the event the Fe content is found to be more after testing by the Government accredited and nominated laboratory. Accordingly, Quality Services and Solutions, Goa, which is in fact a government-accredited and nominated laboratory, issued a certificate of quality dated 18.05.2011 in which it has certified the Fe content of the consignment as 55.21%. Based on such increase in the Fe content, the price of the consignment was increased by 0.48 per DMT. This once again shows th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent grade analysis at different times due to the nature of the commodity being in bulk, that the acceptable allowance between two times or between different times of analysis is 0.5 and that normally the vessel which is 50,000 tonnes in size is loaded by a contribution plan i.e. loading is done from different jetties in different barges at different time. It was also submitted that the Notices (Respondents before us) had no role in ascertaining the Fe content in any of the shipments of iron ore, which lends credence to the submission that there is in fact no mis- declaration of Fe content as alleged in the notice. 37. Having considered the rival submissions, the Ld. Adjudicating Authority, after affording parties a personal hearing, passed the impugned order dated 30th December, 2019, dropping the charges against all the Respondents. 38. Aggrieved by the Order dated 30/12/2019 passed by the Ld. Additional Director of Enforcement, the Appellant has filed the present appeal under Section 19 of FEMA, 1999 against the impugned adjudication order dated 30.12.2019. Arguments on behalf of the Appellant 39. It is submitted on behalf of the appellant (ED) that the impugned order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave strongly opposed the arguments advanced on behalf of the appellant Directorate. It is submitted that the respondents exported iron ore to entities based in Hong Kong/Singapore. These entities further exported the said ore to the final buyers. The ED's case is that there is a discrepancy in the Fe grade/content and the prices declared by the Respondents while exporting from India, and that of their buyers when further exporting the said ore. This differential value, it contends, is liable to be repatriated, since it considers the Respondents and the first buyers as being one and the same. 41. In this regard, it is firstly contended that the Respondents and the third-parties to whom they exported their ore are distinct juristic entities. Both independently entered into separate agreements/ transactions. 42. It is reiterated before us that pricing is a factor over which the Respondents have little control as it is based on the Fe content of the export ore. Fe content, in turn, is determined and certified by a government-accredited lab (GAL), and which, prior to the actual export, is verified by the Customs officials on board the foreign-going vessel by drawing random samples ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeals are allowed. The impugned order dated 06.01.2014 for imposing penalty is accordingly set aside." It is submitted that in this appeal, the ED has conceded that its entire case rests on the DRI's case alone as is evident from para 2 of the appeal wherein it has stated that its investigation was initiated based on the show cause notice of the DRI, while also citing the enquiries made by the DRI. 45. Further, in the Grounds of appeal (oo), (vv), (xx), it has been contended that a dismissal of this appeal would impact the DRI proceedings. Since the Reply filed by the respondent contends that the DRI SCN has been discharged, the Appellant, in its Rejoinder, now seeks to contend that the said discharge can have no impact on this appeal. 46. It is submitted that the allegations made by the ED in its Complaint itself are predicated on its contention that the Respondents have made wrong declarations to the Customs [para (xxi) at Pg. 198 at 218 Appeal Vol. III], when, in fact, the Customs has not faulted the Respondents in this respect. This gains immense significance, since the obligation to make a truthful declaration in Regulation 3 of the Foreign Exchange Management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further sale, is lower than that which the Respondents had declared at the time of export. This also shows that Fe content is genuinely a factor of testing technology and its moisture content varying during voyage iv. Similarly, the price of iron ore is a factor of international market dynamics and also the certainties associated with a transaction involving entities that are physically proximate. This had been elaborately explained in the statement tendered by the Respondent No. 3 on 30.08.2017 before the ED and has been reproduced in the Rejoinder at para 15 (Pg. 10 of Rejoinder). 49. Secondly, the law does not permit onward sales to determine the transaction value on a conjoint reading of Sec. 2(41) and Sec. 14 of the Customs Act, 1962, Customs Tariff Act, 1975 (Chapter 26, Schedule II) read with the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. In terms thereof, the Respondents have duly furnished shipping bills and invoices and paid export duties as assessed at the time of export from India. It follows from the above statutory regime, that the determination of value is to be ascertained only based on the transaction which is the subject-matter of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be supplied. 51. It is also reiterated that certification of the grade is done by an independent GAL recognised under Sec. 7 of the Export (Quality Control and Inspection) Act, 1963 after drawing random samples from random locations from each of the shipments, as found appropriate by such third party certification agency. The Customs, having examined both the contract value of Fe content and the Fe content as determined by the GAL certificates, finalised the shipping bills since the variation between the two values was marginal, and within tolerable limits. 52. It is submitted that the respondents do not have any control on the sample used for testing, since the samples are drawn at random, by the third party certification agency (i.e., from any part of each shipment) at the time of loading of the barges at the load port, and importantly, these samples are drawn in the presence of Customs officials present on the vessel, who retain a portion of the sample for independent testing in its own laboratory, i.e., by the DYCC. These reports indicate the Fe content of the export consignment at the Load Port. 53. In the instant case, in accordance with the routine market practice, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duly reported their transactions as being between related parties, and the Transfer Pricing Officer of the Income-Tax Department did not find that there was any requirement for adjustment of prices in relation to these transactions in terms of the Transfer Pricing Rules. 58. Pertinently, under the Customs Act, the Union can only raise a demand alleging short- payment of duties in respect of transactions dating back 3 to 5 years of the demand. The allegations of the ED, though one of non-repatriation of foreign exchange, are made by contending that there was under-invoicing and mis-declaration by the Respondents before the Customs at the time of exporting. In this respect it is contended that the Customs have not found that the declarations made at the time of exports were incorrect; and if the Revenue can only make an allegation of false declaration of prices only for a period of 5 years preceding its demand, the ED cannot, 7 years after the impugned transaction, now contend, contrary to the findings of the customs, that the Respondents herein made false declarations. 59. The decision of the Hon'ble Supreme Court in Bhanu Kumar Jain v. Archana Kumar, (2005) 1 SCC 787 is relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case against the appellants under FEMA, 1999, are extracted below: "64.5 I find that both the exporters M/s MMPL and M/s DTRIPL have declared in the shipping documents that they are exporting iron ore to their related group companies M/s DCL and M/s OECPL. Export consignments sent to M/s M/s OECPL were sold to M/s DCL and finally M/s DCL had exported to ultimate overseas buyers. It has been alleged in the Show cause notice that the related overseas group companies, simply acted as layers for facilitating value and Fe content suppression. For the same reason exports made overseas group companies have been considered as not worth considering for custom valuation purposes and the transaction made by the overseas group companies with the ultimate overseas buyer has been proposed to be considered as actual transaction and therefore, taken for consideration of valuation and duty, thereof. Question is whether such action is permissible as per the provisions of the Customs Art 1962 and export valuation rules 2007. Also it has to be looked into whether Department's claim for "mis-declaration of Fe content and consequently evasion of duty is established in view of notices ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related 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: Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf: Provided further that the rules made in this behalf may provide for (i) the circumstances in which the buyer and the seller shall be deemed to be related, (u) th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed by them. These are relevant for assessment in India as per Section 14 of the Customs Act, 1962. Subsequently related purchasers sold the goods to some other foreign purchasers, wherein Fe content was found mentioned higher in the shipping documents and analysis report at the discharge port, but such documents are not relevant for assessment in India at the time of export. In this regard, I am fortified in my view by the following judicial pronouncements made by various courts The Hon'ble CESTAT, Mumbai in its decision in the case of Commissioner of Customs and Central Excise, Goa V. M/s Dream Logistics Company India Pvt. Ltd. held that issue is settled in the case of Hira Steel Limited-2016-TIOL-1692-CESTAT-MUM wherein it is held that in any transaction, the terms of the agreement need to be given precedence and the value at the time and place of export as entered between two has to be considered for the discharge of duty liability-Revenue appeal, therefore, allowed by holding that the impugned orders are liable to be set aside. The Hon'ble CESTAT, Mumbai in its decision in the case of Hira Steel Ltd. Vs. Commissioner of Central, Excise Goa, reported in 2016 (3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort goods shall be accepted even where buyer and seller are related, provided that the relationship did not influence the price of the goods. Where the relationship is found to influence the price, as determined by the proper officer on receipt of further information from the exporter, the value of the export goods shall be determined by proceeding sequentially through rules 4 to 6 of the said Valuation Rules. The persons who shall be deemed to be 'related have been specified in Rule 2(2) of the said Valuation Rules, and this provision has been adopted from the Custom Valuation (Determination of Value of Imported Goods) Rules, 2007. Thus transaction value is the primary basis for valuation of export goods and the method specified sander Rule 3 will be applicable in the vast majority of cases of export by acceptance of declared value. In cases where the transaction value is not accepted, the valuation of the export goods shall be done by application of Rules 4 to 6 sequentially. Acceptance of transaction value is, however, subject to the provisions of Rule B which provides for rejection of declared value for the export goods in certain exceptional cases. These are situations whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record any corroborative evidence which can help prove the allegations in the show cause notice and also find that show cause notice has been issued by an authority which has no jurisdiction hence in view of my discussions and findings as above I proceed to order as under-: ORDER (i) I drop the charges against M/s Mine scape Minerals Pvt. Ltd., M. G. Road, Panaji, Goa 403001. (ii) I drop the charges against Shri Dinar. P. Tarcar, the Managing Director of M/s Minescape Minerals Pvt. Ltd, Goa, residing at 'Manglsh', Near Chief Minister's Bungalow, Father Agnelo Road, Altinho, Panaji, Goa-403001. (iii) I drop the charges against M/s Dinar Tarcar Resources (India) Pvt. Ltd., Minescape M.G. Road, Panaji, Goa-403001. (iv) I drop the charges against M/s Dinar P. Tarcar, the Managing Director of Mis Dinar Tarcar Resources (India) Pvt. Ltd., Goa, residing at 'Mangesh', Near Chief Minister's Bungalow, Father Agnelo Road, Altinho, Panaji, Goa-403001. I also instruct the proper officer to finalize all the ponding assessment of Shipping Bills related to this case as per the legal provisions' 63. As can be seen from the above, the Ld. Commissioner of C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of natural justice. It is trite law that the rules of evidence are strictly speaking, not applicable in the adjudication proceedings under FEMA. The dropping of charge in this case is bad in law and may prove to be a further alibi for the respondent to claim innocence and twisting of facts in the proceedings against the respondents by the DRI." 65. I also find merit the respondent's reliance on the decisions in Khazana v. Special Director of Enforcement, 2018 SCC Online ATFEMA 22 and Suresh M. Jumani v. Special Director, Directorate of Enforcement, 2018 SCC Online ATFEMA 40 insofar it has been upheld in these cases that where the FEMA case was initiated on the basis of the case under the Customs Act, the outcome of the Customs Act would have a bearing and can be relied upon in the proceedings under FEMA, 1999. 66. Having considered the above factual and legal submissions and the perused the order of the Ld. Commissioner of Customs as well as the case laws referred to, I find force in the argument of the respondents that the allegations against the appellants in this case drew sustenance primarily from the allegations contained in the SCN issued by the DRI under the Customs A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port test report, the proper officer compares the two reports with the terms set out in the contract. If the contract contemplates test report at discharge port to be relevant, it is taken into account but when contract contemplates valuation as per test report at load port, it is taken into account Where variation in the two test reports are within tolerance limits provided in the contract and do not impinge upon the declared price, the proper officer proceed to finalize the provisionally assessed shipping bill in terms or the provisions of Section 14 of the Customs Act read with the Customs Valuation (Determination of Value or Export Goods) Rules, 2007. (d) In cases where the load port test report and discharge port test report show a variation, so as to impinge upon the price, the proper officer re-determines the value of the goods in terms of Customs Valuation (Determination of Value of Export Goods) Rules, 2007. (e) In cases where the transaction is being declared or is found to be between related Parties, same procedures are followed but the finalization or assessment is done by following instructions governing the investigation of such cases by the special valuation b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat their transaction was genuine." 70. From the above, it would appear that even from the Income-tax point of view, the variation in price at which export was made by the appellants and the arm's length price assessed was found to be within the tolerance range. 71. In view of the above findings, it is not considered necessary to go into other issues such as cherry picking of few transactions out of many (2 out of 7 in case of Appellant No.1 and 5 out of 42 in case of Respondent No.2); existence of instances where Fe content declared by the Indian companies was more than that declared by the foreign entity on further sale; day to day fluctuations in international iron ore prices, the difference arising out the transactions being expressed in wet or dry metric tons; difference in of method of drawal of samples, testing technology and methodology; the legal tenability of challenging the impugned order before this Appellate Tribunal when the customs's Case, which formed the sole basis of the case under FEMA stands quashed etc, are not gone into on the merits. ORDER 72. In light of the above discussions, I do not find any reason to interfere with the order of the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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