Custom, Excise & Service Tax Tribunal
Date Of Hearing: 6.11.08 vs Unknown on 6 November, 2008
Date of Hearing: 6.11.08 Order No. ________________________/2008 Per M. Veeraiyan:
This is an appeal by the present appellant against the order-in-original No 53/2005 dated 29.6.2005 passed by the Commissioner. There are other parties to the order of the Commissioner and it is submitted that they have not filed appeals against the said order.
2. Heard both sides.
3. Relevant facts, in brief, are as follows:-
(a) The appellant company filed Bills of Entry dated 27.6.2002 and 4.10.2002 declaring the goods as 2-keto guluconic acid from China and the value as 1.83 US$ per kg. On testing the goods were found to be Ascorbic acid. In his statement dated 8.1.2003, the Managing Director of the appellant company admitted the mis-declaration of description and admitted the import of Ascorbic acid and claimed its value as 3 US$ per kg. and, in his further statement dated 20.6.2003 he claimed the value as 7.75 US$ per kg. on the ground that the potency of the imported consignment is only 40% and requires downward adjustment of quantity of goods imported to correspond to 100% of the potency.
They filed Bill of Entry date d15.11.2002 for a consignment declaring the goods as Formic acid weighing 10 M.T. and the value at 0.4 US$ per kg. However, on investigation it was found that the imported goods consisted of altogether two different goods i.e. 3 M.T. of Trimethoprim and 7 M.T. of Metronidazole. In his statement dated 8-1-2003 the Managing Director of the appellant company admitted to importing goods different from what has been declared and claimed the value of Trimethoprim acid as US$ 9 per kg. and in his later statement dated 20.6.2003 he claimed the price as US$ 12.5 per kg. Similarly, in his statement dated 8.1.2003 he claimed the price of Metronidazole at US$ 4.5 per kg. and in his later statement dated 20.6.2003 he claimed the price as US$ 7.8 per kg.
(b) The Commissioner vide his impugned order adopted the value disclosed by the Managing Director in his first statement; in choosing the same he has relied upon NIDB data for similar product imported and confirmed the demand of duty amounting to Rs. 2,49,53,157/-; he also confiscated the goods, allowed the same to be redeemed on payment of fine, and he also imposed penalties.
4. Learned advocate made the following submissions:-
(a) The adoption of the prices given by the Managing Director of the appellant company in his statement dated 8.1.2003 disregarding the prices given in subsequent statement dated 20.6.2003 is not proper. As per NIDB data in respect of Trimethoprim the prices noticed are 12.47 US$ and 13.84 per US$ and, therefore, the price declared in the second statement namely, 12.5 US$ per kg. which is closer to NIDB prices should be adopted. Similarly in respect of Metronidazole the contemporaneous prices noticed are 4.6 US$ and 5.29 US$ which are different from the price declared in his first statement as US$ 4.5 per kg. and, therefore, the price given in his second statement as 7.5 US$ should be adopted. Similarly, in respect of absorbic acid the prevailing contemporaneous price is 3.5 kg. Since there is no indication about the potency of the goods imported, the same having been imported from the same country as that of impugned goods should be treated as 40% potency; downward adjustment of quantity of goods imported by them to correspond to 100% of the potency should be done and their import price should be calculated/adjusted for 100% potency which should be 7.75 US$ and accordingly the price declared by the Managing Director in his subsequent statement should be adopted. The demand relating to anti-dumping duty should be reduced by adopting the higher prices.
(b) The Commissioner in Para 53 (iii) confiscated the entire goods covered by 3 Bills of Entry and allowed redemption of impugned available goods on payment of fine Rs. 9 lakh .(In the same para he also confirmed duty on the entire imported goods amounting to Rs 2,49,53,157/- along with interest.) In para 53(vi), he ordered confiscation of 575 kgs. Valued at Rs. 1,72,500/- from the appellants premises and allowed redemption on payment of fine of Rs. 15,000/- and on payment of applicable duty and interest. Similarly, in para 53(vii), he ordered confiscation of 1275 kgs. of Vitamin C valued at Rs. 4,46,250/- and allowed redemption on payment of Rs. 40,000/- and on payment of applicable duty and interest. As the goods which were available for confiscation were the ones confiscated by orders in paras 53(vi) and 53(vii), the order in para 53(iii) amounts to confiscating the goods already confiscated. He seeks that the order of confiscation and consequent redemption fine in para 53(iii) should be set aside. The demand of duty have been confirmed against the importer for the entire quantity; there are also demands of duty on goods confiscated from the appellants premises and from the premises of Lachem India. Thus there is duplication of demand and, therefore, the original demand should be reduced accordingly.
(c) Therefore, he prays that the value declared by the Managing Director in his second statement should be adopted for the purpose of demand of duty. As there is duplication of demand by demanding duty on confiscated goods, the original demand should be reduced accordingly. He also seeks setting aside of lump sum fine of Rs. 9 lakhs and limiting the redemption fine to Rs. 15 thousands in respect of goods seized from the appellants premises. He also seeks reduction in penalties proportionately.
5. Learned D.R. made the following submissions:-
(a) The appellants imported the goods which attracted Anti-dumping duty but deliberately and fraudulently gave wrong description and declared nominal value to claim the benefit of lower custom duty. The appellant having adopted fraudulent means, the Commissioner choosing the value of the goods as declared in first statement of the Managing Director cannot be held un-reasonable. The value declared in the statement are close up NIDB data relied upon by the department. Therefore, the second statement given is clearly an afterthought and does not deserve to be accepted.
b) The Commercial invoices dated 28.5.2002, 2.9.2002 and 15.10.2002 produced along with reply dated 18.2.2005 are documents submitted much belatedly and the same have not been attested by the bank and no evidence that imports have taken place at the price mentioned therein produced. Therefore, value adopted in the first statement of the Managing Director should be upheld.
6.1. We have carefully considered the submissions from both sides and also perused the records. The appellant has imported on three occasions actually consignments of Ascorbic acid, Trimethoprim and Metronidazole, all of which carried anti-dumping duties. On every occasion they have, deliberately and fraudulently, given different description of goods which did not attract anti-dumping duties. They produced invoices with nominal value to claim the benefit of lower custom duty and the said amounts were remitted through banking channel. The above mis-declaration and intention to evade anti-dumping duties stand admitted. Therefore, the legality of demand of differential duty, liability to confiscation of the offending goods and liability to imposition of penalty are not in dispute. The dispute relates the value to be adopted and consequently the quantum of duty, redemption fine and penalty.
6.2. On the valuation, both sides are relying on the NIDB data to support the values sought to be adopted by them. In the facts of the present case, the relevance of NIDB data is limited as corroborative evidence only. It is not a case where the prices of the imported goods are determined by adopting the contemporaneous prices of imports as found in NIDB data. The Commercial invoices dated 28.5.2002, 2.9.2002 and 15.10.2002 said to be from the supplier was produced belatedly along with reply dated 18.2.2005. The same supplier has earlier given documents to suit the convenience of the appellant facilitating mis-declaration of description and value. These are apparently solicited documents and have not been attested by the bank.
6.3. The Department has preferred to rely on the prices indicated by the Managing Director of the appellant company in his first statement dated 8-1-2003 and claims that the prices indicated by the Managing Director of the appellant company in his second statement dated 20-6-2003 are after thought. Both the statements have been given under Section 108 of the Customs Act before the empowered officer and, therefore, should be entitled to equal treatment in the eyes of law. The second statement can not treated like an ordinary retraction letter sent by the deponent after giving his first statement. The price disclosed in one of these statements has to be chosen for each of product imported by them.
6.4. It is noticed that in respect of ascorbic acid the prevailing contemporaneous price is 3.5 kg. The potency of the goods imported is found to be 40%. The actual quantity imported is 23 MT. There is a request to consider the quantity of goods imported by them as 9.2 MT so as to correspond to 100% of the potency and consequently their import price should be taken as 7.75 US$ and accordingly the price declared by the Managing Director in his subsequent statement should be adopted. In fact, the subsequent invoice produced is for a quantity of 9.2 MT only. The request for downward revision of quantity based on the potency is rather strange one and not supported any evidence of commercial practice nor acceptable legally. The total amount mentioned in the invoice produced in this regard has to be considered as applicable to the total quantity of 23 MT of ascorbic acid. The price calculated on such basis is close the price of $ 3 per Kg disclosed by the Managing Director in his first statement and therefore, the same should be adopted.
6.5. The situations in respect of other two products are slightly different. It was claimed that as per NIDB data in respect of Trimethoprim the prices noticed are 12.47 US$ and 13.84 per US$ and, therefore, the price declared in the second statement namely, 12.5 US$ per kg. which is closer to NIDB prices and supported by the invoice of the supplier should be adopted. Similarly in respect of Metronidazole the contemporaneous prices noticed are 4.6 US$ and 5.29 US$ which are different from the price declared in his first statement as US$ 4.5 per kg. and, therefore, the price given in his second statement as 7.5 US$ and supported by the invoice of the supplier should be adopted. This claim merits acceptance. For these two commodities, the demand relating to both basic customs duty and anti-dumping duty should be calculated by adopting the higher prices mentioned in the second statement.
7.1. The Commissioner in Para 53 (iii) confirmed duty on the entire imported goods amounting to Rs 2,49,53,157/- along with interest.
There is prayer to the effect that as there is duplication of demand by demanding duty on confiscated goods, the original demand should be reduced accordingly. There is no justification to reduce the demand of duty on the importer with reference to the irregular imports made by them. The request waiver of demand on the confiscated goods on the ground that the entire demand of duty stands confirmed from the importer is justified. The order of demand of duty and interest on 575 kgs. valued at Rs. 1,72,500/- from the appellants premises being duplication, the same is set aside.
7.2. Regarding the prayer for setting aside of lump sum fine of Rs. 9 lakhs and limiting the redemption fine to Rs. 15 thousands in respect of goods seized from the appellants premises, the same merits acceptance. 7.3. Regarding the prayer for reduction in penalties, considering the reduction in demand there is justification for reduction in penalty.
8. In view of the above, the appeal is disposed off as follows:
a) The value of $ 3 per Kg adopted for ascorbic acid is upheld and the value of $ 12.5 per Kg shall be adopted for Trimethoprim instead of US $ 9 per Kg and $7.8 per Kg instead of US $ 4.5 per Kg shall be adopted for Metonidazole and the duty liability shall be revised accordingly both in respect of Basic Customs Duty and Anti dumping duty.
b) The redemption fine of Rs 9 lakhs is set aside.
c) The order of demand of duty and interest again on 575 kgs. valued at Rs. 1,72,500/- is set aside.
d) The penalty imposed on the appellant is reduced from Rs. 20 lakhs to Rs. 5 lakhs.
(Order pronounced on __________________ ) (M. VEERAIYAN) MEMBER (TECHNICAL) (P.K. DAS) MEMBER (JUDICIAL) RK