Custom, Excise & Service Tax Tribunal
Selmark Lingerie vs Tuticorin on 13 June, 2025
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL, CHENNAI
Customs Appeal No.41626 of 2013
(Arising out of Order-in-Appeal No. 36 & 37/2013 dated 9.5.2013 passed by the
Commissioner of Customs & Central Excise (Appeals), Trichy)
M/s. Selmark Lingerie Appellant
63-H-2 Desouza Compound
Safed Pool Kurla
Andheri Road, Andheri
Mumbai - 400 072.
Vs.
Commissioner of Customs Respondent
Custom House, New Harbour Estate Tuticorin - 628 004.
APPEARANCE:
Shri S. Murugappan, Advocate for the Appellant Shri Sanjay Kakkar, Authorised Representative for the Respondent CORAM Hon'ble Shri M. Ajit Kumar, Member (Technical) Hon'ble Shri Ajayan T.V. Member (Judicial) FINAL ORDER NO.40611/2025 Date of Hearing : 06.03.2025 Date of Decision: 13.06.2025 Per M. Ajit Kumar, This appeal arises out of Order in Appeal No. 36 & 37/2013 dated 9.5.2013 passed by the Commissioner of Customs and Central Excise (Appeals), Trichy.
2. Brief facts of the case are that the appellant filed three Bills of Entry (BoE)for import of polyester knitted fabric classifying under CTH 6005 3200 imported by them from China. Intelligence received by DRI alleged that the appellant had misdeclared the description and grossly under invoiced the goods to evade payment of appropriate customs duties. Detailed examination of the goods were conducted by the DRI 2 and it was found that rolls of dyed knitted fabrics packed in polythene covers were found placed inside the container. Each package contained different number of rolls of fabrics. On verification of weighment slip of the containers, the net weight of the cargo was found tallying with the weight shown in the BoE. Representative samples were drawn from the above-mentioned consignment for testing. The test report confirmed the misdeclaration of the description of the goods as polyester knitted fabrics instead of viscose knitted fabric and it appeared that the appellants had grossly undervalued the fabrics to evade customs duty. 48303.20 kgs of imported viscose knitted fabrics was seized on 18.2.2010 for taking further action under Customs Act, 1962. After due process of law, the Ld. Adjudicating Authority rejected the description, classification and declared value of the goods and reclassified the same as viscose knitted fabrics (6006 4100 / 6006 4200). He further redetermined the value of the said goods; demanded the differential duty of Rs.19,61,733/- and imposed a concurrent penalty of Rs.10,00,000/- on the appellant under sec. 114A read with Sec.114AA of the Customs Act, 1962. Aggrieved by the said order, the appellant preferred an appeal before Commissioner (Appeals). Department also preferred an appeal before the said authority aggrieved by the concurrent imposition of penalty. They prayed for a separate penalty under sec. 114A and under sec. 114AA of the Customs Act, 1962. Vide the impugned order, the Ld. Commissioner (Appeals) rejected the appeal of the appellant. The Ld. Commissioner (Appeals) allowed the appeal of the department and modified the order of the lower authority by imposing equal penalty under sec. 114A and also imposed a penalty 3 of Rs.5,00,000/- under sec. 114AA of the Customs Act, 1962. Hence the appellant is before this Tribunal.
3. Shri S. Murugappan, Ld. Counsel appeared for the appellant and Shri Sanjay Kakkar, Ld. Authorized Representative appeared for the respondent.
3.1 The Ld. Counsel Shri S. Murugappan for the appellant submitted that;
(i) It is not disputed that the actual fabrics found were not as per the declarations made in the BoE. However, there were no discrepancies in the quantities declared and the rate of duty for both type of fabrics is the same.
(ii) The allegation regarding under-valuation is made only based on NIDB data and a solitary BoE without supply of relevant invoices. Rejection of declared value on the above basis cannot be sustained. In this connection the following decisions are relied upon. a. Atlantis Trading Company Vs. Commissioner [2024 (388) ELT 526 (Tri-Ch)] b. Sai Exports Vs. Commissioner (2019(370)ELT 398(Tri-Ch)) c. The enhancement is made not based on comparable goods imported in comparable quality during the relevant period. d. Before the lower authority as well as the appellate authority copies of 13 BoE with invoices were submitted to show that different consignments were imported at the same price of USD 1.6 per kg. e. The order passed by the lower authorities has been passed mechanically , without considering the evidence provided by them and is against the principles of natural justice.
He prayed that the orders passed by the authorities below may be set aside with consequential relief and justice rendered. 4 3.2 The Ld. Authorized Representative for the respondent submitted that the uncontroverted fact is that the appellant-importer has mis- declared the description of the goods, which has been confirmed through test-reports and has been accepted by the importer (Shri Ram Bhagatram Gangwani, power of attorney holder of the proprietor who was his wife), in his statement dated 05.03.2010, under Section 108 of the Customs Act. Any manufacturer/supplier shipping almost 50 Tonnes of cannot be lacking internal controls to ship goods which was ordered by their customer and be totally unaware for as long as 2 weeks after any such major lapse was allegedly discovered. The averments are hence meaningless and lack bonafides. Further if the impugned goods were not as per the order placed by the importer, there has not been even a whisper for re-export. The importer has failed to furnish any evidence of having engaged in any correspondence with the foreign supplier to inform them about wrong goods shipped by them, and also for getting any reply claiming that the foreign supplier had intimated about wrong shipment of goods. The SCN issued is as per the mandate of Rule 12 of the Customs Valuation Rules. The value of the goods has been determined in the sequential manner under the next Rule 4 of the CVR with a clear observation that data of import relied upon for re-determination of value is for contemporaneous period and from the same country of origin. Initially, 37 imports data of contemporaneous imports was duly shared with the Appellants. Later as per their request, requisite copies of BoE relied upon for determination of value were also furnished. Being a case of accepted mis-declaration of goods with intent to evade duty, the 5 penalties merit to be sustained. He prayed that the appeal may be rejected.
4. The submissions of both the parties have been considered and the material on record has been perused. We find that the appellants imported goods declared as Polyester knitted fabrics under cover of the following three BoE during Jan-Feb 2010. The unit price declared was US $ 1.6 per kg. DRI investigated the matter and had the samples tested. As per the initial test the following result was reported.
(i) BoE 478439 - 96.8% Viscose and 3.2% polyurethane knitted fabrics.
(ii) BoE 478573 - 96.2% Viscose and 3.8% polyurethane knitted fabrics
(iii) BoE 478585 - 97.1% Viscose and 2.9% polyurethane knitted fabrics Since the importer disputed the sample results for BoE 478439, samples were again drawn from 25% of the packages of the said BOE and the test results showed the following;
A. 96.8% Viscose and 3.2% polyurethane knitted fabrics-4891.3 kgs. B. 54% Viscose 43% polyester; 3% polyurethane knitted fabrics- 3560.4 kgs C. 96.7% polyester and 3.3% polyurethane knitted fabrics-753.7 kgs. Hence it was found that out of a total imported quantity of 48303.2 Kgs only a quantity of 753.7 Kgs was Polyester Knitted Fabric, the balance quantity was found to be Viscose Knitted Fabric. It hence appeared that there was a misdeclaration of the description of the goods. Further the investigation brought out that price declared was US $ 1.6 per kg for the final product while the price of the raw material i.e. viscose yarn was USD 4.5 per KG and that of viscose knitted fabrics imported into India varied from USD 6.2 to USD 7.3 per KG CNF for 6 unbleached and dyed fabrics respectively. Hence the value also appeared to be mis-declared. The value declared in the BoE was hence sought to be rejected under rule 12 of the Customs Valuation Rules, 2007.
5. Based on imports of allegedly similar goods imported by Meridian apparels, Chennai and Shakti Knitting Ltd Tirupur, the declared values were sought to be in enhanced as follows.
a. 478573-US $ 6.2 per kg
b. 478585-US $ 6.2.per kg
c. 478439-US $ 7.3 per kg for 96.8% viscose fabrics, US $ 3 per
kg for 54% viscose fabrics
Declared value of US $ 1.6 per kg was accepted for 96.7% polyester fabrics (753.7 kgs).
6. The appellant has stated that they have filed the three BoE's on the basis of the documents received from the suppliers and they were not having prior knowledge that the goods imported are viscose knitted fabrics as against the polyester knitted fabrics ordered by them. Further on verification of weighment slip of the containers, the net weight of the cargo was found to be tallying with the weight shown in the BoE and the rate of duty for both types of fabrics was the same.
7. The belief, knowledge and intention of the parties involved are a part of evidence. Direct evidence is not the only mode envisaged in the Evidence Act, through which a fact can be proved. Once the Revenue has been able to disprove the description and value declared by the importer, based on facts and preponderance of probabilities respectively, the burden would then shift to the assessee to prove its claim. As stated by the Apex Court in Commissioner Of Income Tax, Madras vs Messrs. Best & Co [1966 SCR (2) 430 / AIR 1966 SUPREME COURT 1325] 7 "We may point out, as some argument was advanced on the question of burden of proof, that this Court did not lay down that the burden to establish that an income was taxable was on the Revenue was immutable in the sense that it never shifted to the assessee. The expression "in the first instance" clearly indicates that it did not say so. When sufficient evidence, either direct or circumstantial, in respect of its contention was disclosed by the Revenue, adverse inference could be drawn against the assessee if he failed to put before the Department material which was in his exclusive possession. The process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other. There is no reason why the said doctrine is not applicable to income-tax proceedings. While the Income-tax authorities have to gather the relevant material to establish that the compensation given for the loss of agency was a taxable income, adverse inference could be drawn against the assessee if he had suppressed documents and evidence, which were exclusively within his knowledge and keeping."
(emphasis added) Further as held in A. Raghavamma & Anr. Vs. Chenchamma & Anr. [AIR 1964 SC 136], there is an essential distinction between burden of proof and onus of proof. Burden of proof lies upon a person who has to prove the fact and which never shifts. Onus of proof shifts. Such a shifting of onus is a continuous process in the evaluation of evidence. [Also see, RVE Venkatachala Gounder vs. Arulmigu Viswesaraswami and VP Temple - (2003) 8 SCC 752]. The same principle of law would be applicable in this case also. 6.2 It is seen from the facts of the case that the description and value of the goods were prima facie mis-stated as per the test report and the contemporaneous imports cited in the SCN. As stated by the Ld. AR, if the impugned goods were not as per the order placed by the importer, they should have rejected the consignment and requested for re- export, which has not been done. Further the importer has failed to furnish any evidence of having engaged in any correspondence with the foreign supplier to inform them about wrong goods shipped by them, and also for getting any reply claiming that the foreign supplier had intimated about wrong shipment of goods. Once the Revue has 8 pointed to discrepancies in the declaration made in the BoE's, the burden of rebuttal that the mistake was a bonafide one, is on the assessee because the basic facts are within his special knowledge. Section 106 of the erstwhile Indian Evidence Act., 1872, as it stood during the relevant time, gives statutory recognition to this universally accepted rule of evidence. However, this alone would not suffice. 6.3 In the era of self-assessment the primary onus to declare the correct details/information, necessary for the assessment, is on the assessee-importer. Once the details are declared in the BoE by the importer, the burden of proving that the price declared is not correct is on revenue. In this case the information provided in the BoE was found to be incorrect as per the test reports and the preponderance of probability, based on the contemporaneous BE's relied upon by revenue. As stated by the Hon'ble apex Court in Collector of Customs, Madras & Ors. V. D. Bhoormull [1974] 3 S.C.R. 833], the broad effect of the application of the basic principles underlying section 106 of the Evidence Act would be that the onus is discharged if the prosecution adduces only so much evidence, circumstantial or direct, as is sufficient to raise a presumption in its favour with regard to the existence of facts sought to be proved. Revenue hence discharged the onus of proof and shifted it back to the appellant. 6.4 The appellant in his support has shifted the onus by stating to have submitted evidence in the form of 12 BoE's detailed in para 13 of their reply dated 17.09.2012, purportedly showing that similar / identical goods i.e. viscose knitted fabrics were allowed clearance by accepting the value of USD 1.6 per Kg, during the relevant period. They also submitted BoE's of M/s Siddhi Vinayaka Trading Co and M/s Guru 9 Synthetics Pvt. Ltd for clearance of viscose knitted fabrics at USD 1.6 per Kg. before the Ld. Commissioner Appeals. They have also contested the GSM of their goods and that of the BoE of M/s Meredian Apparels which is not similar. They have stated that even in the NIDB data relied upon by the department viscose knitted fabrics were released at a unit price of USD 2.2 Kg. The appellant's grievance is that this evidence was not considered by the lower authorities and hence the burden of proof has not been discharged by the revenue. 6.5 We find that it was the duty of the original authority to examine this evidence and to accept the same or make out a case contrary to what has been stated. He could not have concluded the existence of a fact contrary to evidence put forward by the appellant without specifically disproving the material before him. Merely stating that the importers reply is not acceptable in as much as they had mis- declared the description and undervalued the imported goods with an intention to evade duty which could not have been detected but for the detailed investigation carried out by DRI and the tests conducted at textile committee Chennai, would not suffice. While minor contradictions, inconsistencies or insignificant embellishments, like minor differences in weight, GSM, percentage of constituent material of the goods etc if any, in the evidence relied upon by revenue may not affect the case. That would come up for consideration only after refuting the evidence relied upon by the importer and then proceeding sequentially as per the Customs Valuation Rules, 2007. We find that the Ld. Commissioner (Appeals) has failed to take this plea of the appellant into consideration while deciding the appeal and grant appropriate relief. Hence the order is defective and merits to be set aside.
10
7. We find that the non-consideration of the evidence submitted by the appellant in the OIO is a curable defect and hence the matter merits to be remanded back to the original authority for examining all the evidences including that submitted by the appellant afresh before coming to a conclusion in the matter.
8. Having regard to the discussions above we set aside the impugned order and remand the matter back to the Original Authority for de novo adjudication. The lower authority shall follow the principles of natural justice and afford a reasonable and time bound opportunity to the appellant to state their case both orally and in writing if they so wish, before issuing a speaking order in the matter. The appellant should also co-operate with the adjudicating authority in completing the process expeditiously and in any case within ninety days of receipt of this order. The appellant is eligible for consequential relief, if any, as per law.
(Order pronounced in open court on 13.06.2025)
(AJAYAN T.V.) (M. AJIT KUMAR)
Member (Judicial) Member (Technical)
Rex