Customs, Excise and Gold Tribunal - Delhi
Radhey Shyam Ratanlal And Shri Ratanlal ... vs Commissioner Of Customs on 8 March, 2006
Equivalent citations: 2006(104)ECC495, 2006(105)ECC495, 2006(106)ECC495, 2006(107)ECC495, 2006(108)ECC495, 2006ECR495(TRI.-DELHI), 2006(198)ELT74(TRI-DEL)
ORDER
R.K. Abichandani, J. (President)
1. These appeals are directed against the order of the Commissioner of Customs (Adjudication) made on 3.12.2003 rejecting the value declared by the appellant in respect of the goods in question (cloves), covered by various bills of entry, and assessing the value at US$ 5500 PMT (CIF) for the goods covered by bills of entry Nos. 171814 dated 23.2.2001, 171815 dated 23.2.2002, 165289 dated 9.1.2001 and 165287 dated 9.1.2001, and for bills of entry Nos. 171956 dated 24.2.2002, 171954 dated 24.2.2001, 171092 dated 19.2.2001, 171957 dated 24..2.2001, 171955 dated 24.2.2001 and 169069 dated 5.2.2001 at US$ 5600 PMT (CIF), and ordering the deposit of Rs. 88,95,393/-(Rupees Eighty Eight Lakhs Ninety Five Thousand Three Hundred and Ninety Three only) paid by the appellant M/s. Radhey Shyam Ratanlal to be adjusted against their customs duty liabilities, and further holding that the goods imported vide bills of entry Nos. 171956 dated 24.2.2001, 17184 dated 23.2.2001, 171954 dated 24.2.2001, 171092 dated 19.2.2001, 171815 dated 23.2.2001, 171957 dated 24.2.2001, 171955 dated 24.2.2001, 165289 dated 9.1.2001, 169069 dated 5.2.2001 and 165287 dated 9.1.2001 were liable for confiscation under Section 111(m) of the Customs Act, 1962 as these goods were mis-declared with reference to their value and also holding that the goods imported vide bills of entry Nos. 171954 dated 24.2.2001 and 171814 dated 23.2.1001, were also liable to confiscation under Section 111(m) of the said Act as these were mis-declared with respect to their quantity. Since the goods were not available for confiscation, as they were provisionally released to the importer, the Commissioner imposed a fine of Rs. 2 lacs (Rupees Two Lakhs only) in lieu of confiscation. Penalty of Rs. 10 lacs (Rupees Ten Lakhs only) was also imposed on the appellant firm of M/s. Radhey Shyam Ratanlal under Section 112(a) of the said Act.
2. The goods in question were cloves of Madagascar, Zanzibar, Indonesia and Cameroon origin. Documents received from Custom Houses during investigation into the import of cloves included, in all, ten bills of entry, as set out in paragraph 3 of the impugned order. The investigation revealed that, these goods were invoiced by M/s. Ketan Trading Co., Singapore at unit price of US$ 2600 PMT CIF, though the prevailing international price of cloves in the month of January/February 2001 was around US$ 5500 which reached to US$ 6500 PMT by the end of February/beginning of March 2001, and that the cloves were not traded at a price less than US$ 4200 PMT during the year 2000 except in the beginning of January 2000. Statements of various importers whose bills of entry were picked up for detailed investigation and who had stored their consignments in the cold storages after clearance of the same from Customs, indicated that they had sought clearance of the consignments of cloves similarly at lower prices while the actual price of consignment was much higher. The imports made by M/s. Spices Trading Corporation of India revealed that cloves of Indonesian and Comoros origin were shipped from Singapore at the rate of US$ 5500 PMT (CIF) to Nhava Sheva under bills of entry Nos. 676511 dated 10.5.2001 and 676128 dated 8.5.2001. The bulletin of Spices Market published by the trade information services of Spices Board of the Ministry of Commerce and Industry, Government of India, indicated that the prices of cloves were ranging from US$ 4490 to US$ 6010 between 17th November 2000 and 23rd February 2001. As per the Public Ledger, an international publication of repute, the CIF European Port prices of cloves were ranging from US$ 4400 to US$ 6300 between 6.11.2000 and 26.3.2001.
2.1 Mr. Dhanraj Golcha, proprietor of M/s. Balajee Overseas in his statement recorded under Section 108 of the said Act admitted that the cloves imported by them at the re-negotiated price of US$ 5400 PMT were declared by them to have been imported against the price of US$ 2900 PMT. He admitted his guilt and volunteered to pay the differential duty and cleared the consignments on payment of the differential duty. In the same way Mr. Deepak C. Sheth, partner of M/s. Sheth Mercantile Corporation also admitted that the cloves imported by them in March 2001 were at the re-negotiated price of US$ 5500 PMT, and they paid the differential amount of customs duty for clearing the two consignments provisionally. In the statement of Mr. Sanjeev Kumar Sharma, partner of M/s. R.S.K. Enterprises, it was admitted that they had imported consignment of cloves under bill of entry dated 7.3.2001 at the declared price of US$ 2900 PMT, though the actual price was US$ 5500 PMT . This firm also paid the differential duty in respect of these consignments. Mr. Balrajkumar Vinodkumar, proprietor of a concern, also admitted that the price declared by him in respect of the consignment of cloves imported under bill of entry dated 26.2.2001 was US$ 2900 PMT which was less than the actual price of US$ 5400 PMT. He also paid the differential duty and took provisional release of the goods. In the statement of Shri Mahendrakumar P. Parmar, Managing Director of M/s. Esjaypee Impex (P) Ltd., it was admitted that while submitting the documents for clearance of cloves under bill of entry dated 22.2.2001, he had declared the price of US$ 2900 PMT, but the actual price was US$ 5400. He admitted his mistake and agreed to pay the differential duty and got the consignment cleared by paying the amount. In the same way, Mr. Narendra Kumar Taneja, proprietor of a concern, also admitted that he had declared the price of cloves imported by him under bill of entry dated 26.2.2001 as US$ 2700 PMT while the actual price was US$ 5050 PMT. He also paid the differential duty for getting the goods cleared. One Mr. Dilip Poonamchand Mam, Manager of M/s. Poonam Trading Co. also stated in his stated that he had imported three consignments of cloves in March 2000 and February 2001. He admitted having declared an understated price to the Customs at the time of clearance by declaring the price of US$ 2400 as against US$ 4000 for the consignment of March 2000, and US$ 2900 for the two consignments of February 2001 as against their respective actual price of US$ 5250 and US$ 4850. He voluntarily paid the differential duty for the release of the goods pending further investigations. Mr. Biharilal G. Ghura, proprietor of a concern gave details of two firms admitting that in seven bills of entry mentioned by him the prices were under-declared as against the actual prices. He also voluntarily paid the differential duty. From the particulars given by him, it appears that as against the bill of entry dated 26.2,2001, M/s. Ghura Impex (P) Ltd. had declared the price at US$ 2900 against the actual price of US$ 5500 PMT. The said importer also paid the differential duty for getting the goods released. Mr. Ashok Goyal, power of attorney holder of M/s. Sachha Saudha Pedhi gave particulars of the transactions of the imports that took place in February and March 2001 and admitted in his statement that the goods were declared at a lower price ranging between US$ 2625 PMT and US$ 2750 PMT as against their actual price which ranged between US$ 4925 PMT and US$ 5200 PMT. The differential duty was paid and goods were cleared. In the same way in the statements of Mr. C.M. Jesram, partner of M/s. Mulji Gokuldas, Mr. Gharishyam Agarwal, partner of M/s. Vijay Trading Co. and Mr. Chetan Mehta, partner of M/s. Wagji Lakmidas and Co. admissions were made showing that the declared price was nearly one half of the actual price of the cloves imported by them.
2.2 The partner of the appellant, however, stated that he never heard about the publication "Public Ledger" in the forty eight years of his business carrier. He stated that he never negotiated with M/s. IJIMASIA for cloves, but a person of that concern had once contacted him requesting for business. According to him, the appellant had contracted with M/s. Ketan Trading Co. of Singapore for supply of cloves. Under that contract M/s. Ketan Trading Co. was to supply cloves at a unit price of US$ 2600 PMT. According to him, the original contract was with M/s. Ketan Trading Co. for supply of 300 MTs and it was signed in November 2000. He was having only a photocopy of the said contract. He stated that the international market price of cloves in the beginning of 2001 was only US$ 2900 to US$ 3000 and that in February, March-April the price went up to US$ 5000 depending upon the quality. As regards the invoice bearing No. 624/2K-01 dated 7.2.2001 issued M/s. IJIM ASIA in the name of M/s. Ketan Trading Co., Singapore, showing consignment of 24.538 MTs of cloves at the rate of US$ 5600, he stated that one consignment was imported by him under bill of entry No. 171954 dated 24.2.2001, which was the same consignment mentioned and shown against invoice No. 624/2K-01 dated 7.2.2001. While seeking clearance the quantity was declared as 23.488 MTs. However, on actual examination the consignment was found to be in excess by 1.05 MTs confirming the correctness of the quantity mentioned as per invoice No. 624/2K-01 dated 7.2.2001 i.e. 24.538 MTs. According to the Revenue, this was foolproof evidence to suggest undervaluation in the import of cloves by M/s. Radhey Shyam Ratanlal with intent to evade customs duty. Similarly, invoice No. IA/RR-IND/0702 dated 7.2.2001 issued by M/s. IJIMASIA, Singapore to M/a. Radhey Shyam Ratanlal (appellant) for supply of 20 MTs of clove stems indicated a value of US$ 650 PMT, whereas the declared value thereof in the bill of entry No. 175289 dated 9.1.2001, was US$ 500.
2.3 Investigations also revealed that Bhumish Shah appointed as indentor and agent of IJIMASIA was promised 1% commission which was given to him on the actual price of the cloves which were imported to India. He gave particulars of various imported consignments with a comparative chart showing that the actual price was much higher than the declared price of the goods imported by various parties with whom he was concerned.
3. On the basis of the material on record, the Commissioner held that the contract dated 23.1.1.2000 showing the price of cloves at US$ 2600 PMT could not be considered as a valid contract and that its veracity was doubtful. He held that the declared value of US$ 2600 PMT was totally unrealistic when the prices prevailed around that period were so high. He came to the conclusion that the price declared in respect of the imported cloves did not represent the transaction value. He also held that the appellant had failed to produce the invoices relating to procurement of cloves by their supplier in Singapore even though specifically asked for by the DRI, as required under Rule 10A of the Valuation Rules, 1988. It was held on the basis of the material on record that the correct value of the cloves of Indonesian origin shipped from Singapore which were imported by the appellants under the bills of entry Nos. 171814 and 171815 both dated 23.2.2001 and 165289 and 165287 both dated 9.1.2001 was US$ 5500 PMT in terms of Rule 5 of the Valuation Rules. As regards the cloves of Zanzibar origin imported by the appellant under bills of entry Nos. 171956, 171954, 171957, 171955 all dated 24.2.2001 and 171092 dated 19.2.2001 and 169069 dated 5.2.2001, the correct transaction value for the purpose of assessment was held to be US$ 5600 PMT, under Rule 5 of the Valuation Rules. It was further held that though initially the appellant had requested for cross-examination of all the importers referred in the show cause notice subsequently, by letter dated 13.8.2003, the advocates for the appellant had asked for cross-examination of five persons, namely, Mr. Bhumish Shah, Mr. Biharilal Ghura, Mr. Deepak C. Sheth, Mr. Balraj Kumar and Mr. Ashok Goyal. Notices were issued to all these for cross-examination. During the course of personal hearing Mr. Deepak C. Sheth and Mr. Ashok Goyal were cross-examined. Shri Bhumish Shah and Mr. Biharilal Ghura had sought some more time. However, on 12.11.2003, the advocate for the appellant pleaded that any further adjournment for personal hearing would amount to harassment and unnecessary delay in finalizing the case and requested that the case may be taken up for decision based on arguments and case law filed and excluding the statements of persons who had not appeared for cross-examination. In view of this stand taken up by the learned advocate for the appellant, personal hearing got curtailed. The learned Commissioner rejected the contention raised on behalf of the appellant that the statements and documents produced by Mr. Bhumish Shah could not be relied upon, as he was not cross-examined. It will, however, be noticed that the learned Commissioner took into account the statements of various importers who had admitted that the values were understated by them and the fact that they had voluntarily paid up the differential duty and none of them had retracted their confessional statements, as recorded in paragraph 68 of the impugned order. On appreciation of the totality of the material on record, the Commissioner passed the impugned order.
Arguments on behalf of the appellant:
4. The learned senior advocate appearing for the appellant raised the following contentions :
Cross-examination of a very material witness Mr. Bhumish Shah was not allowed during the proceedings and, therefore there was gross violation of principles of natural justice. No reliance could have been placed on the statement of Mr. Bhumish Shah, nor on any particulars been given by him. The journals known as 'Public Ledger" and the Bulletin of the Spices Market published by the Trade information services of the Spices Board of the Ministry of Commerce and Industry, Government of India, were inadmissible evidence and the particulars given thereunder could not have been taken to be true without being supported by any independent evidence. The transaction value, as reflected in the contract dated 23.11.2000 under which Ketan Trading Co. had agreed to supply 300 MTs of cloves to the appellant at the price of US$ 2600 PMT CIF Mumbai, should have been accepted as the correct transaction value and could not have been rejected in view of the decision of the Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs . The learned Counsel argued that the onus on the department to prove that there was a mis-declaration and this had not been discharged in the instant case because the contemporaneous imports purported to have been relied upon were not comparable and the statements of the importers became doubtful. He submitted that soon after the decision was rendered by the Commissioner, the advocate for the appellant had sent a communication on 19.1.2004 disputing the facts recorded in paragraphs, 63, 67 and 70 of the order on the ground that the recordings were not in accordance with the correspondence on record and that the advocates were being charged with dereliction of duty. It was stated in this communication, that the hearing was closed on 14.10.2003 as the department could not produce any witness. The learned senior advocate, therefore, argued that no reliance could have been placed on the statements of any of the three witnesses including Mr. Bhumish Shah out of five witnesses for whom request was made for cross-examination on behalf of the appellant.
4.1. In support of his contentions, the learned Counsel for the appellant placed reliance on the following decisions:
(a) The decision of the Supreme Court in Commissioner of Customs, Mumbai v. Bureau Veritas , was cited for the proposition that both Section 14(1) and Rule 4 provided that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularized in Rule 4(2).
(b) The decision of the Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai , was cited for the proposition that if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent rules.
(c) The decision of the Tribunal in Gupta Exports v. Commissioner of Customs, Chennai , was cited for the proposition that the burden of proof was on the department to show that the importers had misdeclared or undervalued the goods. It was submitted that the Supreme Court had dismissed the appeal filed by the Revenue against the above decision, as reported in 2003 (157) ELT A150.
(d) The decision of the Tribunal in Kanhaiyalal & CO. v. Commissioner of Customs, Pune, , was cited for the proposition that it was not open for the Customs authorities to rely on general quotations and mere production of price list to discharge the onus cast on them to prove the existence of circumstances indicated in Section 14(1) of the Customs Act and provisions in Rule 4(2) of the Valuation Rules, to resort to rejection of the transaction value and/or the provisions of Rule 10A. The Tribunal observed that when the Spice Market Weekly Bulletin and Public Ledger U.K. were not found to be inapplicable, there was no reason for the Commissioner to have resorted to Rule 10A and rejection of the transaction value in the facts of the case. As noted in paragraph 2(b) of the said judgment - "while accepting the clarification produced by the importer that 'Spice Market Weekly' is published by the Spices Board by obtaining international prices of poppy seeds and considering the e-mail reply produced from 'Public Ledger, U.K.', that they also quote the price of 'blue poppy seeds' as was done in Spice Market Weekly, he did not accept the reliance on the price in the two evidences i.e. 'Spice Market Weekly Bulletin' and 'Public Ledger U.K.' relied upon in the show cause notices to reject the transaction value and to re-determine the values thereafter".
(e) The decision of the Tribunal in Venus Insulation Products Manufacturing Co. v. Commissioner of Customs, Goa , was cited for the proposition that the provisions of Rule 10A are procedural and that Rule 10A is not a substantive provision governing determination of value in the sequential scheme laid down under the Valuation Rules. It was submitted that the Hon'ble the Supreme Court had dismissed the appeal preferred against the said order as .
(f) The decision of the Bombay High Court in Nagraj Walchand Jain v. G. Koruthu, Collector of Central Excise reported in 2000 (123) ELT 50(Bom.), was cited for the proposition that refusal to afford opportunity to cross-examine the witnesses relied on by the department violated the principles of natural justice.
(g) The decision of the Tribunal in P. Chandra Kumar v. Commissioner of Customs (P), Calcutta reported in 2000 (116) 101 (Tri.), was cited to point out that where cross-examination was denied without recording any reason, the Tribunal held that the cross-examination of various persons and officers asked for by the appellant ought to have been allowed In the facts and circumstances of the case, the Tribunal set aside the order and remanded the case. It was observed in paragraph 2 of the order that, "no doubt disallowing the cross-examination of witnesses or persons involved in seizure may not always be against the requirement of principles of natural justice, but it has to be considered by the adjudicating authority whether it is necessary to do so or not".
(h) The decision of the Tribunal in Ramana International v. Commissioner of Customs, Nhava Sheva , was cited to point out that, it was held therein that transaction value cannot be upset on quotations/proforma invoices.
Arguments on behalf of the Revenue:
5. It was contended by the learned authorized representative for the department that the transaction value was rejected by the Commissioner for cogent reasons. It was submitted that under Section 14, the value of the goods for the purpose of assessment shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation in the course of international trade, as contemplated by Section 14 of the Act. It was submitted that there was ample evidence on record to show that the value reflected in the so-called contract dated 23.11.2000 of US$ 2600 PMT, was not the price at which the goods were ordinarily sold or offered for sale at the time and place of importation. He submitted that there were fluctuations in price of cloves, which was an agricultural produce, depending upon the crop position. The goods could not have been offered for sale for upto a period of two years at nearly one half the price of the prevalent price. It was also submitted that the learned Counsel for the appellant who appeared for the Commissioner feeling harassed by the prolonged personal hearing, had opted for no further personal hearing at the stage when the Commissioner had offered all the five witnesses for cross-examination of whom two were cross-examined and two had sought further time for which they would have been called at a future date. Since the appellant put to an end to further personal hearing, they were not called at a future date for which the Commissioner cannot be blamed. It was submitted that the counsel appearing for the appellant had no right to dictate as to what evidence should be relied upon and it was open to the Commissioner to rely upon the relevant material adduced before him. It was also submitted that the demand for cross-examination was only for five persons and therefore, the statements of other persons whose cross-examination was not sought, could not be objected to. It was argued that the contemporaneous transactions reflected from the statements of various persons which have been considered by the Commissioner as well as the prices indicated in the reputed journals and the actual price reflected in the procurement invoice which connected the appellant were all cumulatively considered and the Commissioner had rightly rejected the contract on the ground that it was unreliable and adopted the value as reflected from the other transactions by following the provisions of Rule 5. It was submitted that there was clear reference to Rule 5 even in the show cause notice and it is not as if the Commissioner treated Rule 10A as a substantive provision for rejecting the transaction value put forth by the appellant. It was also argued that Mr. Bhumish Shah was only one of the various witnesses whose statements were recorded. Mr. Bhumish Shah was summoned by the Commissioner at the instance of the appellant. It was pointed out from the record of personal hearing at "Exhibit 10" to the memo of appeal that on 14.10.2003 when the learned advocate for the appellant had cross-examined Mr. Deepak Sheth, it was recorded that Mr. Ashok Goyal had asked for adjournment and that, "it is learned that Bhumish Shah had come to the Custom House at 3 P.M., but was not available when he was called for cross-examination." Thereafter, fresh notices were issued to the remaining witnesses. Mr. Bhumish Shah and Mr. Biharilal Ghura sought more time. However, in the meanwhile, during the course of personal hearing on 12.11.2003, the advocate for the appellant requested the case being taken up for decision on the ground that further personal hearing would amount to harassment and unnecessary delay in finalizing the case. It was, therefore, submitted that, it was because of the stand taken up by the learned advocate for the appellant that the matter was taken up for decision and not adjourned for further personal hearing during which Mr. Bhumish Shah would obviously have been called. It was also argued that no condition can be put as to what evidence should be considered, and it was open for the Commissioner to consider all the relevant material on record. The learned authorized representative for the department fully supported the reasoning and findings of the Commissioner.
5.1 In support of his contentions, the learned authorized representative for the department relied on the following decisions:
(a) The decision of the Supreme Court in Kanungo & CO. v. Collector of Customs, Calcutta and Ors. , was cited to point out that the Supreme Court held in paragraph 13 of the judgment that the High Court was right in holding that the burden of proof had shifted on to the appellant after Customs authorities had informed the appellant of the results of the enquiries and investigations. This decision was cited also for the proposition that the principles of natural justice did not require in any matters like this that the persons who had given information should be examined in the presence of the appellant or should be allowed to be cross-examined by them on the statements made before the Customs authorities.
(b) The decision of the Calcutta High Court in Kishanlal Agarwalla v. Collector, Land Customs, reported in AIR 1967(Vol.54) Cal.80, was cited for the proposition that so long as the party charged has a fair and reasonable opportunity to see, comment and criticize the evidence, statement or record on which the charge is being made against him, the demands and the test of natural justice are satisfied.
(c) The decision of the Calcutta High Court in Tapan Kumar Biswas v. Union of India and Ors. reported in 1996 (63) ECR 546 (Calcutta), which was rendered in the context of the provisions of Section 124 of the said Act, was cited for the proposition that a noticee under Section 124 of the Customs Act had no right to cross-examine witnesses. The High Court relied upon the decision of the Supreme court in Kanungo & Co. v. Commissioner of Customs and Ors. (supra) and the earlier decision of the Calcutta High Court in Kishanlal Agarwalla (supra), for this proposition.
(d) The decision of the Supreme Court in Surjeet Singh Chhabra v. Union of India , was cited for the proposition that the Customs officers are not police officers and the confession though retracted is admissible and binds the petitioner who had confessed and therefore, there was no need to call punch witnesses for examination and cross-examination by the petitioner.
(e) The decision of this Tribunal in Jagdish Shanker Trivedi, and Ors. v. Commissioner of Customs, Kanpur (Final Order Nos. 763-767/05-CUS dated 27.7.2005) reported in 2005-TIOL-851-CESTAT-DEL, was cited to point out that following the decision of the Supreme Court in Kanungo's case (supra) and the two decisions of the Calcutta High Court and the decision in Ashutosh Ghosh and Anr. v. Union of India and Ors. (1977 Criminal Law Journal N.O.C. 67), it was held that a noticee cannot claim a right to cross-examine under Section 124 of the said Act.
Reasons:
6. The case of the appellant that under the contract dated 23.11.2000 their suppliers M/s. Ketan Trading Co. had agreed to supply 300 MTs of cloves at the rate of US$ 2600 PMT for a period of two years, is required to be examined first.
6.1 It will be noticed from the contract No. RR/KTC/2000/88 dated 23.11.2000 that it is in form of a writing by which the supplier M/s. Ketan Trading Company confirmed "having sold" to the appellant the goods mentioned therein, as per "terms and conditions". The goods were described as "cloves-Zanzibar/Indonesia", meaning thereby, cloves of Zanzibar/Indonesian origin. The quantity indicated was about 300 MTs. Price was shown as US$ 2600 PMT CIF Mumbai. The insurance was to be covered by the seller, and the shipment was to be made until December 2002. The contract indicated, against the remarks item, that it was by "telephone confirmation". At the end, the seller M/s Ketan Trading Co. expressed thanks to the appellant, "for the above order", assuring best services at all times. There were no other terms and conditions indicated in the contract which are usual in a written contract of sale of such magnitude. There was no indication as to what will be the effect of the price variation. The contract indicated as if the quantity of cloves was already sold to the appellant, which was in fact not the case because, as submitted by the learned Counsel for the appellant, the goods were incorrectly described as "sold", and they were required to be sold under the contract at the rate mentioned therein over a period of two years.
6.2. As regards the said contract, on which heavy reliance is placed on behalf of the appellant for accepting the price shown therein as the transaction value, the learned Commissioner came to a finding that the value of US$ 2600 PMT stated therein was totally unrealistic and was not consistent with the provisions of Section 14(1) of the said Act, as was evident from the international market price prevailing at the time of the contract as well as at the time of physical import and also from the contemporaneous imports. It was held that the veracity of the contract was doubtful. It was also noted that the party had failed to produce the invoices relating to procurement of cloves by their supplier M/s Ketan Trading Co. in Singapore even though specifically asked for by the DRI, as required under Rule 10A of the Valuation Rules, 1988. The Commissioner held that the value of US$ 2600 PMT declared by the party could not be accepted as the value for the purpose of assessment in terms of the provisions of Section 14(1) of the said Act read with Rules 4 and 10A of the Valuation Rules.
7. Section 14 of the said Act relates to valuation of goods for the purposes of assessment and, inter alia, provides that the value of any goods chargeable to duty of customs shall be deemed to be the price at which such or like 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 buyer have no interest in the business of each other, or one of them has no interest in the business of the other, and the price is the sole consideration for the sale or offer for sale. By Sub-section (1A) of Section 14, which was inserted w.e.f. 16.8.1998, it is provided that subject to the provisions of Sub-section (1), the price referred to in that sub-section in respect of imported goods, shall be determined in accordance with the rules made in this behalf. The opening words "Subject to the provisions of Sub-section (1)", occurring in Sub-section (1A) of Section 14, make it clear that the provisions of Sub-section (1) of Section 14, to the effect that the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation, would prevail when the transaction value required to be determined under Rule 4 does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. In other words, the "deemed value" contemplated in Section 14(1) shall prevail, when the price declared does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. Under Rule 4 of the Valuation Rules, the transaction value of Rules, the transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9, and such transaction value is required to be accepted subject to the proviso to Sub-rule (2). It is, however, clear that the requirement that the transaction value of imported goods shall be accepted, as provided by Sub-rule (2) of Rule 4 is subject to the provisions of Sub-section (1) of Section 14 in view of the opening words of Sub-section (1A) of Section 14. Therefore, where the transaction value is lower than the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation, the value of such goods shall be deemed to be the price at which they are ordinarily sold or offered for sale and not the transaction value.
8. Since the value of the goods, as per the provisions of Section 14(1), shall be deemed to be the price of such goods at the time and place of importation, the price agreed at an earlier point of time which may have no nexus with the time of importation, cannot be deemed to be the value of such goods. Therefore, even assuming for the sake of argument that a contract was entered into by the appellant with M/s. Ketan Trading Co. on 23.11.2000 for supply of cloves of Zanzibar/Indonesian origin at the rate of US$ 2600 PMT CIF Mumbai for a quantity of 300 MTs until December 2002, the value of such goods shall nonetheless be deemed to be the price at which they are ordinarily sold or offered for sale for delivery at the time and place of importation in the course of international trade and the price quoted in the contract will not be conclusive and the value of such goods which shall be deemed to be the price at which they are ordinarily sold at the time and place of importation, will govern the field for the purpose of imposition of Customs duty chargeable on such goods. As noted above, the price in respect of the imported goods shall be determined in accordance with the rules, subject to the provisions of Sub-section (1) of Section 14. This is why it has been provided under Rule 3(ii) that if the value cannot be determined under Clause (i) to be the transaction value, it shall be determined by proceeding sequentially under Rules 5 to 8. Thus, when the transaction value sought to be relied upon by the appellant on the basis of the order dated 23.11.2000, was not found to be acceptable, it was open for the learned Commissioner to resort to Rule 5, of the said rules, as rightly done by him. Under Rule 5, it is inter alia, provided that the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued, subject to the provisions of Rule 3. It is also provided therein that in applying the rule, the transaction value of identical goods and sale at the same commercial level and in substantially the same quantity as the goods being valued, shall be used to determine the value of imported goods.
9. Admittedly, the original contract was never produced by the appellant though asked to produce the same. Even the invoices relating to procurement of cloves supplied to the appellant under the ten bills of entry in question were not produced by the appellant though specifically asked for. The so-called contract dated 23.11.2000, copy of which was produced, was for 300 MTs at the price of US$ 2600 and it recorded confirmation of having "sold" the goods. Admittedly the goods were not sold at that time and they were yet to be shipped over a period of next two years, to the appellant. The contract related to supply of an agricultural product, which admittedly had wide price fluctuations that depended upon the availability of crops. Therefore, in the facts of the case, it is difficult to accept that M/s. Ketan Trading Co. would have agreed to supply cloves at such a low price for over a period of two years.
9.1 The evidence has clearly disclosed that the price of cloves, prevalent around November 2000 was more than US$ 4760 and it went on increasing so much so that in February 2001, it crossed US$ 6000 PMT for Zanzibar cloves. The Weekly Bulletin of Spices Market published by the Trade Information Services of the Spices Board of Ministry of Commerce and Industry, Government of India, indicated that the price of Indonesian cloves on 24.11.2000 was US$ 4765 PMT and that of Zanzibar cloves was US$ 4650 PMT. By 23.12.2001 the price of Zanzibar cloves had reached Rs. 6100/- PMT. From the Public Ledger, which is an international publication of repute indicating price of cloves in the international market, it appeared that the price of cloves on 27.11.2000 was US$ 4600 PMT which reached US$ 6300 on 26.3.2001. When the prices of cloves of Zanzibar and Indonesian origin were soaring high between US$ 4765 PMT to more than Rs. 6000/- PMT during the relevant period in which the imports were made by the appellant, it does not stand to reason why M/s Ketan Trading Co. should have agreed to supply cloves at the rate of US$ 2600 PMT for two years from November 2000. Therefore, the Commissioner was justified in not relying upon such a copy of the contract which did not inspire confidence.
9.2 It is also evident that the Commissioner had not simply relied upon the figures in the Public Ledger or in the Weekly Bulletin of the Spice Market published by the Ministry of Commerce and Industry. There was plethora of other evidence on record which indicated that the prices of cloves of Indonesian and Zanzibar origin were much higher and as per the figures which reflected in the aforesaid international publication, Public Ledger as well as the Weekly Bulletin of Spices Market.
10. It was contended that the quantity imported by the appellant was large and therefore, the prices at which cloves were imported by other parties should not be compared with the imports made by the appellant under the said ten bills of entry. This contention is misconceived because it will be noticed from the imports done under the ten bills of entry by the appellant were of lower and comparable quantity. This is evident from the following table of the imports made by the appellant under the bills of entry in question:
_________________________________________________________________________ Sr.No. B.E.NO. & IGM Country Declared Date of Date No. & of Quantity shipment Date Origin _________________________________________________________________________
1. 171956 8681 Zanzibar 11.750 17.2.2001 24.2.02.01 22.2.2001
2. 171814 8630 Indonesia 23.448 3.2.2001 23.02.01 16.02.2001
3. 171954 8619 Zanzibar 23.388 7.2.2001 24.02.01 14.02.2001
4. 171092 8639 Zanzibar 11.550 11.2.2001 19.02.01 16.02.2001
5. 171815 8630 Indonesia 4.889 3.2.2001 23.02.01 16.02.2001
6. 171957 8639 Zanzibar 9.625 11.2.2001 24.02.01 16.02.2001
7. 171955 8639 Zanzibar 9.300 11.2.2001 24.02.2001 16.02.2001
8. 165289 8402 Indonesia 23.370 18.12.2001 9.1.01 5.1.2001
9. 169069 8525 Zanzibar 24.290 21.1.2001 5.02.01 27.1.2001
10. 165287 8353 Indonesia 11.400 015.12.2000 9.1.01 4.1.2001 _________________________________________________________________________ 10.1 It has come in evidence that 9.5648 MTs of cloves of Indonesian origin shipped from Singapore imported by M/s. Spices Trading Corporation under bill of entry No. 6761228 dated 8.5.2001 were bought at the rate of US$ 5500 and this was contemporaneous import of cloves. The said consignment was shipped on 25.2.2001 as per the bill of lading. One more consignment of 9.300 MTs of cloves of Comoros origin was also imported by M/s Spices Trading Corporation at the same unit price.
10.2. It has also come in evidence that M/s. Sacha Sauda Pedhi had imported 24.69 MTs of cloves of Indonesian origin, the shipment of which was done on 14.2.2001 under bill of entry No. 171980 dated 24.2.2001 at the price of US$ 5200. It has come on record that M/s. Golcha International had imported 10.338 MTs of cloves of Indonesian origin under Bill of Entry No. 171953 dated 24.2.2001 at the price of US$ 5400. Though the declared price of these goods was low, in the confessional statements the real price had come out.
10.3 The appellant's counsel had asked for cross-examination of only five persons whose statements were recorded and had not asked for cross-examination of the other persons, contents of whose statements which were reproduced in the show cause notice, clearly showed the real price of cloves imported by the respective importers, ranged between US$ 4450 to US$ 5500 between September 2000 and February 2001. Therefore, apart from the statement of Bhumish Shah on whom the focus was placed all throughout for arguing that he was not allowed to be cross-examined, there is other plethora of evidence to indicate that the real price at which the cloves were imported under the contemporaneous transactions, was around more than double the price US$ 2600 shown by the appellant on the strength of the purported contract dated 23.11.2000, said to have been entered into between the appellant and M/s Ketan Trading Co.
11. It is evident from the material on record that the adjudicating authority had given full opportunity of being heard to the appellant during the proceedings. The five persons who were required to be cross-examined were duly summoned by the adjudicating authority and two of them were cross-examined. Mr. Bhumish Shah and Biharilal Ghura had sought some more time and further personal hearing was to be done for the purpose. However, the advocate for the appellant on 12.11.2003 pleaded that further adjournment for personal hearing would amount to harassment and unnecessary delay in finalizing the case and requested the case for being taken up for decision as on evidence, arguments and the cases cited and excluding the statements of persons who had not appeared for cross-examination. Obviously, therefore, it was at the instance of the advocate for the appellant that further personal hearing did not take place. Otherwise, it is evident that Mr. Bhumish Shah who was already summoned and had only sought time, would have been summoned again but for the move of the appellant's learned advocate requesting the Commissioner to take up the matter for decision on the ground that any further adjournment would cause harassment and unnecessary delay. When it was stated on behalf of the appellants that adjournment for further personal hearing would cause harassment, it obviously meant that further personal hearing was given up. When it was so declared that no further personal hearing was required, as it would cause harassment, further personal hearing could not have been thrust upon the appellant. Having adopted such course, it is now not open for the appellant to contend that Bhumish Shah should have been allowed to be cross-examined. If at all he was not cross-examined, it was entirely because the learned advocate for the appellant made such a move of opposing adjournment for further personal hearing to the appellant, on the ground of harassment and unnecessary delay and requesting the authority to take up the case for decision. How the matter should be decided and what evidence was relevant and to be taken into consideration could not have been dictated by the learned advocate on behalf of the appellant by stating whose statements should be excluded. The advocate for the appellant had not asked for cross-examination of several persons whose statements were also relevant and had restricted the request only to five persons. Therefore, the learned Commissioner was perfectly justified in relying upon their statements by observing in paragraph 68 of the impugned order that so many importers had admitted that the values were understated by them and they had voluntarily paid the differential duty and that none of them had retracted their confessional statements. All these statements were specifically set out in the show cause notice and have been also referred to in detail in the impugned order. Even Deepak Sheth and Ashok Goyal who were cross-examined and tried to support the appellant at such a late stage, had never retracted their confessional statements for nearly a period of two years.
12. Mr. Bhumish Shah had responded to the show cause notice issued for his cross-examination and had sought some more time, as noted above. He could not be cross-examined because the advocate for the appellant himself pleaded that any further personal hearing would amount to harassment and unnecessary delay and that the matter should be taken up for decision. All the particulars that Bhumish Shah had given in his statements were made known to the appellant in the show cause notice and the documents which were served. The appellants had failed to counter the documents submitted by Mr. Bhumish Shah which were brought to their notice. When the appellants were clearly informed about the allegations made by Bhumish Shah and had full opportunity to deal with them, including by cross-examining Bhumish Shah which they did not avail, there was no prejudice caused to the appellants when due to their own conduct no further personal hearing was held upon the move of the learned advocate for the appellant opposing adjournment for personal hearing, on the ground of harassment to the appellant and unnecessary delay. It is, however, quite clear from the record that, even apart from the statement of Bhumish Shah, there was satisfactory material on record which clearly indicated that the prices of the cloves imported under the contemporaneous and comparable transactions was more than double the price of US$ 2600 declared by the appellant.
12.1 It has come on record that cloves were imported by the appellants from IJIMASIA Pvt. Ltd. through M/s Ketan Trading Co. at the price of US$ 5600 PMT. These were imported by the bill of entry No. 171954 dated 7.2.2001. In the invoice which came on record in respect of the said consignment under which M/s Ketan Trading Co. had procured the cloves from IJIMASIA Pvt. Ltd. for being directly shipped to the . appellant (invoice No. 624/2K01 dated 7.2.2001 issued by INJIMASIA Pvt. Ltd. in the name of M/s Ketan Trading Co.), the value of Zanzibar cloves was shown as US$ 5600 PMT. On comparison of the said invoice of procurement of cloves by M/s Ketan Trading Co. for the appellant with the bill of entry No. 171954 dated 7.2.2001 which was produced by the appellant, it is clear that the bill of entry related to the same consignment of cloves. The container No. PCIU 9689164 has been mentioned in both these documents.
12.2. The invoice No. 624/2K/01 dated 7.2.2001 was in respect of Zanzibar cloves which were to be shipped CIF Mumbai from the loading port of Singapore. Invoice was prepared by IJIMASIA Pvt. Ltd. of Singapore and the name of M/s Ketan Trading Co. and its address of Singapore were clearly mentioned in the invoice and there is reference to description of the goods as Zanzibar cloves and also to the container No. PCIU 9689164 in which they were shipped. The quantity mentioned was 24.538 MTs and the unit price indicated was of US$ 5600 PMT. The total amount of the invoice was shown as US$ 137412.80. In this context, the bill of entry produced by the appellants bearing No. 171954 shows shipment of Zanzibar cloves of the gross weight of 25.790 MTs under the same container No. PCIU 9689164 and the date is indicated 7.2.2001. The invoice number of the invoice prepared by M/s. Ketan Trading Co. of the same date i.e. 7.2.2001 is mentioned. It can hardly be disputed that the goods covered by the bill of entry No. 171954 filed by the appellants were Zanzibar cloves which were shipped on 7.2.2001 in the container No. PCIU 9689164. The bill of entry indicates gross weight of 25.790 MTs, while the invoice prepared by IJIMASIA showed the quantity as 24.538 MTs and not the gross weight of 25.790 MTs. The price of these goods was admittedly shown as US$ 2600 PMT by the appellant on the basis of the order dated 23.11.2000. The contention that the invoice of IJIMASIA Pvt. Ltd. showing procurement of the same goods by M/s Ketan Trading Co. at the price of US$ 5600 was a concoction made by Bhumish Shah, can hardly be accepted in view of the intrinsic evidence showing that the goods were sent in the same container, the number of which is appearing in both the documents, namely, the invoice prepared by IJIMASIA Pvt. Ltd. as well as the bill of entry produced by the appellant. It can hardly be disputed that the appellant had purchased Zanzibar cloves from IJIMASIA through M/s Ketan Trading Co. The copy of bill of lading produced by the appellant along with the bill of entry No. 171954 dated 24.2.2001 indicated that the goods were actually shipped by M/s. IJIMASIA Pvt. Ltd., Singapore in the said container to the appellant. There is, therefore, no scope that the invoice No. 624/2K/01 dated 7.2.2001 issued by IJIMASIA to M/s. Ketan Trading Co. for the cloves shipped to the appellants in the said container number, was concocted. Intrinsic evidence in the bill of entry and the bill of lading negatives the desperate theory put forth on behalf of the appellant that the invoice prepared by IJIMASIA was concocted by Bhumish Shah due to business rivalry with the appellant. We are satisfied that the correct transaction value at which these goods were sold for export to India by IJIMASIA was US$ 5600 PMT CIF Mumbai and not US$ 2600 PMT, as declared by the appellant. It is significant to note that though the declared quantity in the bill of entry No. 171954 dated 24.2.2001 filed by the appellant for the same goods was indicated as 23.388 MTs, in the lower portion of the bill of entry where container details are written, the quantity of these goods on examination by the customs officers was found to be 24.538 MTs which tallied with the quantity of the said goods mentioned in the invoice prepared by IJIMASIA. These aspects were clearly brought to the notice of the appellant even in the show cause notice and no satisfactory explanation is given by the appellant to show that the goods which were shipped as per the invoice prepared by IJIMASIA under invoice No. 624/2K/01 dated 7.2.2001 at the instance of M/s Ketan Trading Co., were not the same goods covered under the bill of entry No. 171954 filed by the appellants. The theory that the invoice of IJIMASIA was concocted, is not acceptable because of all this intrinsic evidence which proves the identity of the goods. There was no reason for IJIMASIA to prepare any false invoice to assist Bhumish Shah in his business rivalry. Bhumish Shah was only an agent appointed by IJIMASIA for collection of its dues in India. That also explains why copy of the invoice was with Bhumish Shah in respect of the goods supplied by IJIMASIA to the appellant through Ketan Trading Co. The fact that IJIMASIA was having relations with Bhumish Shah in view of his appointment as consultant as well as indenter for various products exported by IJIMASIA to the Indian market and that in line with such appointment Bhumish Shah had to give feed back on information of the local market and book orders on behalf of IJIMASIA, is reflected from the appointment letter dated 30.5.2000. Therefore, there was nothing strange if Bhumish Shah produced the said invoice along with other documentary evidence before the authorities showing the transaction of Zanzibar cloves shipped by IJIMASIA directly to the appellant at the instance of Ketan Trading Co. through whom the appellant admittedly purchased the cloves. Despite being asked, the appellant never produced the procurement invoices to show the real price at the time of importation. Even in respect of the said transaction reflected in the invoice of IJIMASIA showing shipment of goods under the said container in which the appellant had received them, the appellant has never produced any contrary evidence to show that these were not the goods procured through Ketan Trading Co. from IJIMASIA.
13. We, therefore, agree with the finding of the Commissioner that the correct transaction value for the purpose of assessment of the goods imported by the appellant under bill of entry No. 171954 dated 24.2.2001 was US$ 5600 PMT, and that the correct value for the purpose of assessment of the goods which were also cloves of Zanzibar origin imported by the appellant in and around the same period under the bill of entry Nos. 171955, 17956 and 171957 all dated 24.2.2001, the bill of entry No. 171092 dated 19.2.2001 and bill of entry No. 169069 dated 5.2.2001 was also US$ 5600 PMT in terms of Rule 5 of the said rules.
14. From the record we are satisfied that the focus has been unnecessarily put on Bhumish Shah not being cross-examined when there was ample reliable evidence, to show that the correct price of the said goods was not declared by the appellants in respect of all the bills of entry in question and that the declared price of US$ 2600 PMT was false. Even as regards Bhumish Shah, we find that the Commissioner has not committed any error in placing reliance on his statements, because, it was due to the stand taken up by the learned advocate for the appellant stating that any further hearing will cause harassment to the appellants and undue delay and requesting that the matter may be taken up for decision, that Bhumish Shah, who had responded to the summons, but had sought more time, was not called again. In any event, the appellant was fully aware and was made known about all the material placed by Bhumish Shah before the authority and the appellant had full opportunity to deal with the documents submitted by Bhumish Shah. We fully agree with the reasoning adopted by the Commissioner for making the impugned order, and find no substance in any of the contentions raised on behalf of the appellants. There is also absolutely no valid reason to interfere with the fine of Rs. 20 lacs (Rupees Twenty lacs only) in lieu of confiscation or the penalty of Rs. 10 lacs (Rupees ten lacs only) imposed on the appellant firm, and Rs. 5 lacs (Rupees five lacs only) imposed on Shri Ratanlal under the provisions of Section 112(a) of the said Act.
Final Order:
15. For the foregoing reasons, we dismiss both the appeals.
(Pronounced on 8-3-2006)