Customs, Excise and Gold Tribunal - Tamil Nadu
Umesh Murali Satwani vs Commissioner Of Cus. And C. Ex. on 22 October, 1998
Equivalent citations: 1999(106)ELT415(TRI-CHENNAI)
ORDER V.K. Ashtana, Member (T)
1. This is an appeal against Order-in-Original No. 4/93, dated 15-3-1993 passed by Collector of Customs and Central Excise wherein duty demand of Rs. 53,719/- has been confirmed and penalty of Rs. 15,000/- imposed on the appellants. A further penalty of Rs. 25,000/- is imposed on one Shri Dwarakadas Kanjani, who is not an appellant before us.
2. Heard ld. Consultant Shri M.S. Kumaraswami for the appellants and ld. JDR Shri Sankaravadivelu for the department.
3. Briefly the issue involves loading of invoice value contained in Invoice No. 481/90 submitted along with Bill of Entry No. 1037, dated 23-5-1990 for import of electronic watch modules for gents and ladies. The re-valuation of the consignment after a lapse of considerable period during which time the consignment was provisionally assessed to duty and released. This is sought to be done on the basis of the following evidence led in the show cause notice :-
(a) A document read as Annexure-C (or Annexure-III) to the show cause notice which was found by the Customs officials during search of the premises of one Shri Dwarakadas Kanjani and
(b) the statement of Kanjani dated 10-4-1991 and 11-4-1991.
4. The net effect of these two evidences, holds Revenue, in the order impugned is that the said Kanjani has confirmed in his statement noted above that the actual price of the modules as intimated to him by one Shri Bharath of Hongkong is higher than that declared in the Bill of Entry. And this statement is corroborated by the said Annexure-C (Annexure-III) to the show cause notice wherein a similar figure as corresponding to the invoice number is noted on the top of said sheet of paper though the date differs by one day. It is held in the order impugned the said Kanjani was associated with the importers. Therefore, the undervaluation is held to be proved.
5. Heard ld. Consultant who strenuously argued that under Section 14 of the Customs Act, the transaction value cannot be discarded on mere suspicion. As per Rule 4 of the Customs Valuation Rules, a transaction value can only be discarded under specified circumstances. These include (a) that there is any evidence that the said transaction value as represented in the invoice was fraudulent as certain remittances were clandestinely paid and (b) that there are contemporaneous imports at higher values.
6. Ld. Consultant submits that there is not even a single piece of evidence led to substantiate either of these condition and therefore, their transaction value was genuine and cannot be rejected on the basis of a scrap of paper found in the premises of some 3rd party and a statement recorded thereon, probably and possibly under duress. Even the statement of the said Kanjani does not specifically show that whatever is contained in that piece of paper (Annexure-C) to the show cause notice relates to the consignment in question as all that Shri Kanjani deposed is that the said Shri Bharath of Hongkong told him that a number of consignments imported in Hyderabad in the recent times were of lower values as specified in the statement. Ld. Consultant therefore submitted that there is no clear link between this evidence and the consignment. He further submitted that if the department chooses to challenge the transaction value declared, then as per Section 14, the onus of burden of proof lies on the department, which has not been discharged at all in this case. He further submitted that the said Shri Kanjani was associated with them only for a short period and was not in any way concerned with the valuation of the goods or the fixation of the invoice value.
7. Heard ld. JDR Shri Sankaravadivelu who recounted the history of the case. He submits that it is not correct to say that the Annexure-C to the show cause notice has no link with the consignment in view of the fact that the invoice number is clearly noted on the top of the said paper. He further submitted that there was sufficient time gap between recovery of this evidence after search of Shri Kanjani's premises, the recording of the statement of Shri Kanjani and the issue of show cause notice. Therefore, if Shri Kanjani had felt that the statement was recorded under duress and ample time was there to reflect and thereafter to retract from his statement, which he has not chosen to do so at all. Therefore, the statement of Shri Kanjani cannot be said to be recorded under duress and is a good evidence. With respect to the burden of showing that extra remittances were involved, ld. JDR cited the case law of McNeill Magor Ltd. v. Collector as reported in 1987 (28) E.L.T. 318 wherein it has been held that it is not necessary to prove such remittances for rejection of transaction value which is otherwise found to be wrong. He, therefore, said that there was no infirmity in the order impugned.
8. We have carefully considered the arguments on both sides as well as the records of the case. We find that under Section 14, the valuation to be adopted (where import duty is on the basis of ad valorem ) is in accordance with the transaction value as contained in Rule 4 of the Customs Valuation Rules. The said rule clearly lays down that the transaction value shall normally be adopted unless it is found to be fraudulent and not entered into in the normal course of business. We find that the only evidence which is led by the department in the order impugned is a piece of paper which was recovered not from the appellant's premises, but from the premises of one his associates who has been claimed by the appellants to be more of an adviser and not a business partner or agent. Since there is no evidence available on record to contradict, this averments of appellants therefore we cannot say that this person namely Shri Kanjani was actively engaged as an agent or in the import of these consignments. Therefore, we find that any piece of paper recovered from his premises has to be viewed in this light. We also find that the statements recorded of Shri Kanjani do not directly implicate the consignment. What is contained therein is simply a deposition that not only this consignment but other consignments also of similar goods cleared through Hyderabad Customs had adopted a lower valuation for these items as against the values ruling in the market at Kong Kong (sic) being higher as specified therein. If this evidence is to be taken to its logical conclusion, then the department should have further investigated with respect to other imports also cleared through Hyderabad Customs and found different evidence of contemporaneous import for higher prices or otherwise. There is nothing on record to show any contemporaneous import at higher price or otherwise than those declared in this Bill of Entry. We further find that if it is the case of the department that those rules of Customs valuation rules which provides for setting aside all the transaction value on the basis of higher value contemporaneous imports are not applicable, then this very evidence is logically inconsistent to that value because in the deposition of Shri Kanjani, it has been clearly stated that there have been contemporaneous imports. Therefore, the department cannot say that there were no contemporaneous imports during this period. Taking all the facts and circumstances of the case, we find that when a transaction value is to be discarded, it has to be proved to the extent of establishing a preponderence of probability that the declared value is bogus. In view of the weaknesses in the evidence analysed above, we are of the conclusion that such a preponderence of probability has not been achieved in this respect in this case. We therefore, give the benefit of doubt to the importer and find that the order impugned challenging the said transaction value is liable to be set aside in its entirety. Ordered accordingly.