Custom, Excise & Service Tax Tribunal
) M/S. S.S. Impex vs Commr. Of Customs (Port), Kolkata on 27 March, 2012
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EAST REGIONAL BENCH : KOLKATA
Stay Petition No.-382,384 & 385/2010
AND
Customs Appeal No.C-89,106,108,109,144,145,146 & 147/2010
(Arising out of the Order in original KOL/CUS/PORT/07/2010 dated 25.2.2010 passed by the Commissioner of Customs (Port), Kolkata)
SRI S.K. GAULE, HONBLE TECHNICAL MEMBER
DR.D.M. MISRA, HONBLE JUDICIAL MEMBER
===========================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982 ?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not ?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
Authorities ?
1) M/s. S.S. Impex
2) M/s. Gee Pee International (CHA)
3) Sri Prabhat Manna
4) Sri Gautam Adhikary
APPELLANT(S) VERSUS
Commr. of Customs (Port), Kolkata
RESPONDENT(S)
AND
Commr. of Customs (Port), Kolkata
APPELLANT(S)
Vs.
1) Shri N.C. Chowdhury
2)) Shri S.C. Saha
3) Shri Shyamal Mondal
4) Shri M. Meena RESPONDENT (S)
APPEARANCE
1) Dr. Samir Chakraborty, Advocate
2) Sri Hasmukh Kundalia, advocate
3) Sri Abhijit Biswas, Advocate FOR THE APPELLANT
4) Sri V.N. Drivedi, Advocate
Sri M.K. Sil, Spl. Counsel for Department
FOR THE REVENUE
CORAM:
SRI S.K. GAULE, HONBLE TECHNICAL MEMBER
DR.D.M. MISRA, HONBLE JUDICIAL MEMBER
DATE OF HEARING: 27.3.2012 Date of Pronouncement :
ORDER NO.
Per SRI S.K. GAULE
Heard both sides.
2. These appeals (including the appeals filed by Revenue) are directed against order No. KOL/CUS/PORT/07/2010 dated 25.2.2010 passed by Commissioner.The issue involved in these appeals is common therefore they are taken up together for disposal.
3.1 M/s. S.S. Impex for which M/s. Gee Pee International was Customs House agent filed the Bill of Entry No. 422853 dated 29/07/2008 for 540 bales of old and used garments imported from M/s. American Used Cloth Inc. The Customs authorities assessed the duty enhancing the declared value of USD 0.45 per kg. to USD 0.6 per kg. The goods were warehoused under Section 49 of C.A., 1962. The goods were examined by the Examination Committee. The break-up of various articles of the consignment found during examination, was as under:
Sl.No. Articles Quantity Declared net weight Ascertained net weight Article-wisenet weight
1. Sweater 365 bales 24,494 Kgs.
25,160 Kgs.
17006 Kgs.
2. Trousers 60 bales 2796 Kgs.
3. T. Shirt (W/N) 8 bales 17269 Kgs.
4. Misc.
107 bales 3354 Kgs.
Total 540 bales 25,160 kgs.
3.2 The import of worn clothing' is restricted in terms of Foreign Trade Policy provisions, the subject consignment was pending adjudication by the Additional/ Joint Commissioner of Customs, Custom House, Kolkata, in terms of Boards Circular No. 36/2000-Cus dtd. 8th May, 2000 while importing old and used garments under CTH 63.09,the imposition of fine and penalty for violation of EXIM policy. The wholesale market price (WSMP) was required accordingly of various worn clothing was ascertained by Customs House, Kolkata. The said WSMP for some of the items was (a) Rs.90/- for Jacket and White Shirt, (b) Rs.86/- for Shirts, (c) Rs.43/- for Trousers (d) Rs.42/- for Miscellaneous items.
3.3. The DRI working on information came to the conclusion that S.S. Impex should have declared the details of individual article of the consignment instead of giving a broad description of the goods of old and used garments. The said re-examination revealed the following:
i) All the 540 bales of the consignment bear some code word /phrase on its cover;
ii) Bales having same code word/ phrase are containing the same articles; for example, the bales having code of L.C.P (New)' were found to be containing 'Ladies Cotton Pant' only;
iii) The break-up of articles found in the consignment was as under:
Code word/ No. as found mentioned on the face of the bales Description of goods found No. of bales found Mens Ski Jacket Jacket 18 Mens Dark Tropical Jacket Coat 24 Ladies Blouse Ladies Top 19 Nylon Jogging Jacket Track Suit 19 Atheletic T Shirt Jersey 2 Mens White Shirt, Mens Cordruoy Shirt, Mens Shirt Mens Cotton Shirt 65 Boys T Shirt, White Printed T Shirt T-Shirt 21 Ladies Poly Pant (new), L.C..P. (New), Ladies Elastic Jeans, Ladies Rayon Printed Pant Ladies Pant 138 Mens Cotton Pant Mens Cotton Pant 110 Rain Coat Raincoat 1 Original Short & Swim Short, Knit Short Half Pant 24 Children clothing (Rummage Light), Children Sweat, Baby Sweat Pant/Shirt Children Apparel 67 Bed Sheet Bed Sheet 7 Ladies Night gown Nighty 1 Ladies Shirts Ladies Skirts 12 Ladies Dress Total Ladies Mix Apparel 12 540 Most of the above items were found to have no sign of appreciable wear.
3.4 Thus, as many as 83 bales out of the 540 bales of the consignment were found to contain jackets and shirts only. Moreover, Most of the articles of the consignment having no sign of appreciable wear, as found during the said re-examination by DRI, do not appear to qualify for the description of worn clothing as per requirement of Note 3 to the Chapter 63 of Customs Tariff along with the corresponding HSN Explanatory Notes discussed above. Thus, the goods of the subject consignment appear to have been mis-declared reinforcing the doubt, already raised supra, about the genuineness of the corresponding invoice submitted by S.S. Impex before the Customs Authority. This doubt appears to be further corroborated by the fact that although the bales of the impugned consignment bore readable code phrase/words, indicating a particular type of articles, as revealed during the re-examination by DRI, the same was not declared either in the invoice or the packing. The articles of the subject consignment, therefore, appear to be covered, not in CTH 6309 as claimed but with the corresponding new articles under the respective CTH.
3.5 The Wholesale Market price of the jackets and shirts, as per findings in the Custom House F. No. S60 (Misc.)-208/95A (Gr.III) Pt. as discussed supra, being much higher than sweater/miscellaneous items it appears that the Fine and Penalty imposable, in terms of Boards Circular No. 36/2000-Cus dtd. 8th May, 2000, discussed supra, would be several times higher than those imposable in case of the consignment containing only sweater, miscellaneous items and trousers, as reported earlier in the Custom House Examination report.
3.6 Thereby statement of Shri Prabhat Manna, one of the Partners of M/s. Gee Pee International, the Custom House Agent for the subject consignment in his statement dt. 12.09.2008 stated that the majority of the import consignments handled by them is that of old and used worn clothing. The details of the concerned firms are not readily available with him. However, all the said worn clothing consignments were under control of the following persons who interacted and provided the clearance jobs to them (M/s. Gee Pee International). Statement of Mohd. Umar Khan (3/2/09), Proprietor of S.S. Impex and Shri Deepak Das (dated 20/2/11), one of the partners of said M/s. Ma Vabatarini Enterprise were also recorded. In his statement dated 15/09/2008, he reiterated his earlier statement dated 12/09/2008. Summons were issued to record statement of Md. Shakir Mohammed & Md. Umar Khan, proprietor of M/s. S.S. Impex. However, he did not respond to the said summons on 17/2/2009. Mr. Umar Khan, proprietor of M/s. S.S. Impex appeared to the DRI in response to the summons issued to him on export of worn clothing vide Bill of entry No. 422853 dated 29.07.2008 and in his statement recorded on 17/02/2009 and 18/02/2009 that he was related to the firm M/s. S.S. Impex as its Proprietor, Mohammed Shakir Mohammed Umar Khan was his elder son. He further stated that he was fully aware that bale code was written on each bale. On that basis he came to know what items were imported. His customers were aware of the bale code No. They also knew what items were there inside a bale against any particular bale code No. He added that each item had different price depending on its quality.
3.7 With a view to ascertain the price at which the subject imported items of article worn cloth on wholesale basis, the premises of one M/s. Ma Vabatarini Enterprises, a wholesale trading firm of worn clothing was visited by the officers of DRI. The said office-cum-godown was stacked up with about 540 bales of worn clothing. Similarly, the clothing was re-examined by DRI.
3.8 Thereby statement of Shri Deepak Das was recorded under Section 108 on 22/11/2008 in which he gave details of placing orders, taking delivery of goods, making payment etc. and recording Code Nos. etc. In his statement Shri Das also explained about the various entries in the Register maintained at the godown and a list of entries. It was found that about 2.1 lakh kgs. of clothing in 100 kgs./80 kgs. bales and 1.15 lakh kgs. of clothing in 45 kgs./500 kgs. bales had been purchased by the said firm for a total amount of Rs.1.75 crores and 0.62 crore respectively. The said purchases were mainly for the period between April, 2008 to August,2008. The Register maintained at the godown of M/s. Ma Vabatarini had range of purchase price pertaining to 45 Kgs./500 Kgs. bales were also revealed and 100 kgs./80 kgs. bales were revealed. The DRI came to the conclusion that purchase price of M/s. Maa Vabatarini Enterprise is wholesale market price in article of worn clothing in as much as the same were sold in the form of bales basis to them and there was a huge duty on the subject consignment and its declared value of USD 0.45 per kg. (=Rs.17.97 per kg.) which was subsequently enhanced to USD 0.60 per kg.(Rs.25.86 per kg.).
3.9 Accordingly proceedings were initiated for mis-declaration and under valuation and accordingly a show cause notice was issued against M/s. S.S.Impex, Gee Pee International, Prabhat Manna, Gautam Adhikary, Shri N.C. Roy Chowdhury, Shri Shyamal Mondal, Shri S.C. Saha & Shri M. Meena.
3.10 Vide impugned order No. KOL/CUS/PORT/07/2010 dated 25.2.2010 ordered confiscation of goods covered under Bill of Entry No. 422853 dt. 29/7/2008 of M/s. S.S. Impex.
(ii) Gave option to S.S. Impex to redeem the goods on payment of fine of Rs.4,25,000/- and also imposed a penalty of Rs.1,70,000/- upon M/s. S.S. Impex through its proprietor Md. Umar Khan under Section 112 (a) and 112 (b) of CEA, 1962.
(iii) Ld. Commr. also imposed penalty of Rs.15,000/- against M/s. Gee Pee International (CHA) and penalty of Rs.25,000/- upon Shri Prabhat Manna , Partner of M/s. Gee Pee under Section 112 (a) 112 (b) of Customs Act, 96 and penalty of Rs.25,000/- on Shri Goutam Adhikary, Partner of M/s. Gee Pee International, CHA under Section 112 (a) and 112 (b) of CEA, 1962.
(iv) Ld.Commr. dropped the proceedings against Shri N.C. Chowdhury, Assistant Commr. (since retired) , Shyamal Mondal, Appraiser, Customs House, Kolkata, Shri S.C. Saha, Appraiser and Manish Kr. Meena, Commr, Customs House, Kolkata. Aggrieved by the same the Revenue is in appeal.
4.1.1 Ld. Advocate appearing for the S.S. Impex led the arguments. The contention of the advocate is that the DRI officers re-examined the goods. The contention of the applicant is that they imported 540 bales of used garments from M/s. American used cloth, INC. and filed Bill of Entry declaring the goods according to description given by the foreign supplier in their invoice. The Department assessed the duty on the said goods by enhancing the value from USD 0.45 to USD 0.60 per kg. Thereafter the goods were examined by Examination Committee. The Examination Committee in their report stated that the goods are lying with the DRI. The allegation of the DRI had been that most of the items were found to have little or no sign of appreciable therefore, does not merit classification under the Heading No. 6309. The contention is that Chapter Heading 6309 is for worn clothing and there is no Sub-Heading under this Heading of worn clothing under the same category. The DRI attempt to classify the goods under different Chapter Heading is contrary to their own stand since nowhere they have stated about imported goods are new articles. The contention is that the American used Cloth Inc. deals with old and used worn cloths which is also confirmed by Examination Committee and even the Panchnama drawn by DRI officers themselves. The parameter adopted by DRI is that expert opinion when DRI has valued the goods on the basis of alleged market prices of worn cloth which had been held to be the similar to the impugned goods.
4.1.2 The contention is that the declared value of the goods as USD 0.45 per Kg. reflected the correct transaction value since there is no evidence to show that there is some flow back of funds, but the Customs authorities assessed the bill of entry enhancing the value to USD 0.60 per kg. and the duty so assessed has already been paid. The enhancement of value based on extraneous considerations like the purchase register and the statement of M/s. Ma Vabatarini Enterprises without subjecting them to the testimony of cross-examination has no evidentiary value and cannot be made sustainable and the same in no way shall be basis for re-determination of value under rule 9 of CVR 2007 that too, skipping preceding rules of CVR, 2007 particularly when value under Rule 4 and 5 were available to the DRI at the click of a button which has been deliberately suppressed. If the values of contemporary imports were brought on record then the declared value would be proved to be fair and there would be no need to resort to the subsequent Rules.
4.1.3 The contention is that Ld. Commr. has rejected the contention of the DRI that the goods are not classifiable under Chapter 6309 and the Ld. Commr. has confirmed the duty liability of Rs.2,49,874/- out of which Rs.94,338/- already paid subsequent to the assessment of the impugned consignment as against the duty liability of Rs.66,56,223/- brought out in the show cause notice. However, Ld. Commr. has erred in holding that itemwise break up of goods were suppressed especially when Commissioner has himself accepted the declared classification from which it can be clear that the goods were old used garments and there is no mis-declaration. The contention is that as per the provisions contained in Chapter Note 3 to Chapter 63 and in the HSN Explanatory Notes, if the goods are imported in bales, the question of describing the goods with item-wise break-up is not a statutory requirement and the appellant has described the goods according to the description in the invoice of the Foreign supplier. The contention is that it is a settled principle of law that if the description is given in the Bill of Entry according to the export document of the Foreign Supplier, no mis-declaration of the goods can be attributed. This legal position has been upheld in the following judgments:
7. Kriti Sales corporation -VsCommissioner 2008(232) ELT 01 51 (Tri.Del) 7: All Seas Marine Contracts SAVsCommissioner 201 1(2 72)ELT 61 9(Tri.) 7 Vinayaka allies Pvt.Ltd.VsCommissioner- 2009(246) ELT 540(Tri) 4.1.4 The contention is that the Commr. has accepted the classification and the Department could not provide any evidence that the invoice of foreign supplier was available and there was no evidence of flow back of fund. Therefore mis-declaration of amount of classification and valuation against them is not sustainable. The contention is that the Redemption Fine of Rs.4,25,000/- has been worked out as 25% of Rs.16,98,440.51 arbitrarily enhanced by the Commr. since the value determined on the basis of order of Customs House of $0.60 for the re-determination of goods of Rs.6,41,233.32 instead of declared value of Rs.4,76,163.36. Therefore, the Redemption fine should be based on margin of profit by taking into consideration the aforesaid value. The contention of the appellant is that Honble Tribunal consistently imposed and fixed Redemption fine @ 10% and penalty of 5% of the value of the imported goods and placed reliance on the following decisions:
(a) Rex Printing Press, 2005 (184) ELT 73 (Tri. - Bang.) (b) Navpad Enterprises, 2009 (235) ELT 376 (Tri. - Bang.) ; (c) Shankar Trading Co., 1999 (106) ELT 456 (Tri.) (d) Photo Fax System & Ors., 2010 (174) ECR 288 (Tri. - Kol.)
4.2.1 Common contention of Sri Prabhat Manna, partner of G.P. International (CHA) and Gautam Adhikary is that the findings against them are mere presumption and assumption basis on extraneous and irrelevant materials. The Ld. Commr. himself has admitted that the goods covered under Bill of Entry No. 422853 dt. 29.07.2008 for old and used garments. On re-examination by DRI, the same number of bales as declared were found which was earlier found by the Examination Committee. In these circumstances, there can be no allegation against CHA or its partners of mis-declaration or description of quantity. The contention is that there is no allegation in the SCN nor finding that price of said goods being negotiated by appellant or its partners including Ma Vabatarini Enterprise. Even according to SCN, the appellant only carried out delivery of earlier consignments of similar goods and received payment for the same on behalf of the owner of the importers. The contention is that there is no allegation nor finding that the appellants imported the goods earlier and Ma Vabatarini sold as new goods. In the SCN as well as in the order in original it is a fact that Ma Vabatarini is a purchaser and dealer of old and used goods. In the SCN itself the value of the imported goods has been arrived on the basis of alleged highest purchase price of M/s. Ma Vabatarini i.e. the highest purchase price of the old and used goods. The contention is that the conclusion arrived by the Ld. Commr. is that the immigration certificate showed with the goods were old and used. In these circumstances in no manner whatsoever the appellant could be said to have been aware that the goods imported was nothing but old and used garments. The contention is that the CHA was aware of the contention of appellants. Hence the wholesale price on which the same was sold to the Kolkata based traders actually identified all the goods as well as its wholesale market price. No single piece of evidence has been brought out. Similarly no evidence has been brought out regarding the allegedly 30% of bales on the basis of consignments said to be delivered by the appellant to M/s. Ma Vabatarini Enterprise nor any person has been identified for such consignment. The contention is that it is not obligatory on the part of Customs House Agent under any Provision of the Rules and regulations framed therein to keep the Customs Authorities informed about the wholesale prices of the goods produced in the domestic Indian market. The obligation has been cast upon the importer to ensure correct/genuineness of the nature and the value of the goods invoice/documents before handing over for the preparation of the bill of entry and seeking clearance thereof on behalf of the importer and to find out the correctness of the above aspect of whatsoever officer of the Customs Department is concerned in this manner. The contention is that the alleged involvement in clearance of old and used garments cannot be justifiable fact in the present case. The contention is that Penalty under Section 112 has to be arrived at after determining the fact that the said goods in the present case were liable for confiscation for mis-declaration and mis-description thereof and its value. The contention is that the Commissioner has erred in holding that appellants responsibility for all transactions in relation to the said goods since the goods are very old and used and no transaction had taken place. The Department could not bring out any ingredients against the appellant on abetting or omission of such goods and satisfied on imposition of penalty under Section 112 of Customs Act, 1962. In support of their submission they have placed reliance on:
(a) Rex Printing Press, 2005 (184) ELT 73 (Tri. - Bang.) (b) Navpad Enterprises, 2009 (235) ELT 376 (Tri. - Bang.) ; (c) Shankar Trading Co., 1999 (106) ELT 456 (Tri.) (d) Photo Fax System & Ors., 2010 (174) ECR 288 (Tri. - Kol.)
5.1.1 The Department has not challenged the finding of Ld. Commr. regarding old and used garments. The Department filed appeal against the order of Ld. Commissioner whereby the proceedings against the departmental officers were dropped.
5.2.1 The contentions of Shri M.K. Sil, Spl. Counsel appearing for the Department are as under:
5.2.2 All the 540 Bales of the consignment had some code word/phrase on the outer transparent covers (packing materials) which could be seen on visual inspection without even strip opening the same.
5.2.3 Bales having Code "LCP (New)" were found to contain only Ladies Cotton Pant & not any other item. It is submitted that DRI during re-examination first inspected the bales and found the code word/phrase written on each bale. Thereafter, on burst opening a few bales having same code word/phrase the items were found same as those marked on the bales. Accordingly, about 10% of the bales were burst opened & rest were strip opened since the items contained therein were the same as that marked on outside the bales.
5.2.4 The question of burst opening all the bales during re-examination by DRI had not been contemplated in view of the fact that by burst opening a few bales and strip opening all the bales it could be satisfactorily established the content of each of the bales as the bales have respective code word/phrase. It may be pointed out that the entire consignment is still in the warehouse under the control of Customs, pending clearance.
5.2.5 As regards the appreciable wears, it is submitted that apart from the reasonable belief of the seizing officers which has been held by the adjudicating officer being justified, nothing more could be placed before the Hon'ble Bench. It may kindly be appreciated that the goods falling under Chapter 63.09 are only "Worn clothing and other worn articles ".
5.2.6 Further during examination it was found that each bale was marked with a specific code number and each code number signified a specific item. For example bales having code of L. C. P (new) were found to be containing 'ladies cotton pant only'. Md. Umar Khan, father of the proprietor of the importing firm, in his statement dt. 17.02.2009 and 18.02.2009 recorded under Section 108 of the Customs Act, admitted that he was fully aware of the fact that code number was written on each bale and that his customers also know about the bale code number and what such code denotes and which item is inside the bale having the specific code. He also admitted that each item has different price depending on its quality. Thus it is quite obvious that no mark no. and code no. was mentioned in the invoices and packing list deliberately to suppress the true identity of the imported goods. It further appeared that the price declared in the invoices is not reflecting the true value of the individual items imported. 5.2.7 The officers of the Customs Examination Committee were also found to have not examined the goods properly as is evident from their findings dt. 05.09.08 vis a vis finding of DRI on re-examination dt. 10.02.09, 11.02.09 & 12.02.09. Most of the imported goods were shown in their report as sweaters and misc. items to reduce the quantum of imposable fine and penalty as those items has the lowest margin of profit as per WSMP calculated by Custom House itself & which practice was followed by the adjudicating authorities for the purpose of imposition of Redemption Fine and Personal Penalty while allowing release of such consignments in the past. It was claimed that the information available to DRI was not available with them and hence there was error in their report. The contention is that all the bales were distinctly marked with specific code word from which content of the bales are easily recognizable. The contention is that there has been mark on the bales which identifies the type of material/item inside the respective bales which could be ascertained even without strip opening or burst opening, simply visible on the outer packaging of the bales. In support they produced certain photographs. For example LCP (new) denotes bale containing Ladies Cotton Pant. Even if one can go by the code word on the bales only, such type of error could not have happened.
5.2.8 The contention is that it was pointed out that Commissioner, the adjudicating authority cannot invoke the provisions of Section 111(d) of the Customs Act as the same was not mentioned in the show cause notice. In the show cause notice charges were made that the imported worn clothing have little or no sign of appreciable wear to merit classification under CTH 6309 and as such the imported goods were classified under CTH other than 6309. As imported clothing under CTH other than 6309 was not restricted item, provisions of Section Ill(d) was not invoked. But Ld. Commissioner in his order rejected the charge that the imported goods have little or no sign of appreciable wear in absence of sufficient evidence. As such he held that the imported goods are classifiable under CTH 6309 and hence restricted item for import. That's why Ld. Commissioner had invoked the provisions of Section 111(d). In this connection it may be mentioned with the fact that the subject import consignment is a restricted item, was known to the importer all along. That is why the consignment was pending adjudication before Addl. Commissioner. As the importer is already aware of the violation made, they cannot challenge consequences for such violation even if the relevant section is not mentioned in the show cause notice as held by Hon'ble High Court of Delhi in AVI Steel Traders - vs - Commissioner of Central Excise [2010(260)ELT 43.DEL] .
5.2.9 As regards valuation, the contention is that the investigation was carried out with one Ma Vabatarini Enterprise, the wholesale trader for such imported goods. It was found that that Mr. Umar Khan of Ma Vabatarini Enterprise repeatedly violated exim policy hence the penalty imposed. From the Register of Ma Vabatarini Enterprise, the wholesale price of goods were ascertained and the redemption fine and penalty imposed were accordingly determined. The contention is that most of the NIDB data provided by the importer at the time of adjudication belongs to clearance through Kolkata Port only and the import value also varied widely from Rs.10/-Kg. to Rs.137/Kg. which also proved that without knowing the exact composition of each consignment, value cannot be compared with each other. Ld. Adjudicating authority also discussed in detail why he had accepted the valuation Rule 9. The statement given by Shri Deepak Das of Ma Vabatarini Enterprise regarding the record produced by him were challenged due to his non appearance for cross examination. The contention is that Shri Das did not appear in spite of issuance of circular to him for cross examination. The contention is that summon cannot be issued for his appearance before the adjudicating authority as summon is meant for the purpose of inquiry only. The contention is that Md. Umar Kahn, the importer and the CHA, Gee Pee International admitted to have dealt with Sri Dipak Das of Maa Vabatarini. In fact, entry of goods earlier sold by Md. Umar Khan can also be seen in the said register. Thus there appears to be no doubt about the existence of Sri Dipak Das and Ma Vabatarini Enterprise and the transaction between the importer and the said firm. In support, they placed reliance on this Tribunals decision in the case of Joitkumar B Jain - vs - Commissioner of Customs (P), Mumbai [2005(191)ELT 218.
5.2.10 All the officers of DRI who participated in the re-examination of goods and the CHA who were present during re-examination were present before the adjudicating authority as requested by importer for cross examination. But surprisingly they were not cross examined which goes to show that the importer did not question the findings of the re-examination and the importer has created an issue of non-appearance of Shri Deepak Das. The contention is that CHA was found to be involved not only in the attempted mis-declaration of description and value of the goods, they were also found to be a beneficiary of such mis-declaration in as much as they used to deliver 30% bales of the past imported consignments to Ma Vabatarini Enterprises and collecting the sale proceeds thereof as disclosed by the purchaser.
6. The contentions of Respondent Shri N.C. Chowdhury, S.C. Saha, Shyamal Mondal & Sri M. Meena in common are that they were part of Examination Committee constituted by the Department and they have examined the consignment of old and used garments as per the existing practice and they have examined the consignment by strip opening without bursting the bales. The contention is that methodology that no sign of appreciable wear has been put to use for the first time in the instant batch of cases. The contention is that earlier also the officer of DRI were participating in the examination of such consignments and no such sign were found in the examination carried out earlier. In case the Department or DRI wanted to revise old practice. The Examination Committee ought to have been put on to notice. They placed reliance on Honble High Court of Kolkatas decision in the case of Mercantile Express Co. Ltd. Vs. Assistant Collector of Customs and in the case of Sandip Agarwal Vs. Collector of Customs- 1997 (62) ELT 528. The contention is that they are also protected under Section 155 of Customs Act, 1962, they have placed reliance on Honble Supreme Courts decision in the case of Fernandes-Vs.State-1996 (82) ELT 433 (SC).
7.1 We have carefully considered the submissions and perused the records. We find that the entire case is built on the premise that the impugned goods are other than claimed to be old and used garments classifiable under Chapter 6309. Undisputedly the consignment was initially examined by the Customs Examination Committee as per existing practice by strip opening without burst opening the bales and on examination found that:
Bond CWC, Maheshtalla B/E No. 422853 dated-29.07.2008 Subsequently, the DRI carried out re-examination of 83 bales out of 540 bales after burst opening the bales and came to the conclusion that the goods are other than old and used goods claimed to be classifiable under Chapter 6309 of CTA , 1975 and are undervalued. Accordingly the proceedings were initiated against noticees.
7.2 So far as the classification is concerned, the Ld. Commissioner found as under:
a) The panchanamas drawn on reexamination of goods by DRI, Kolkata did not support the allegation made in the show cause notice that the goods were having 'no signs of appreciable wear'. Therefore, I am inclined to accept the contention of the importer that goods were 'old and used garments' classifiable under CTH 63.09 of the Customs Tariff Act, 1975-------.
b) From the above it is clear that Ld. Commissioner has decided the classification of the goods as old and used garments classifiable under CTH 6309 of the Customs Tariff Act, 1975 as claimed by the importer. Undisputedly, no one has challenged the same therefore the same has reached finality.
7.3 So far as valuation is concerned, value was initially enhanced by the Customs Authorities from 0.45 per kg. to USD 0.60 initially. DRI sought to enhance the value of the articles treating them other than old and used article. As regards valuation, Ld. Commissioner has found as under:
On the contention that sale price of goods in Indian market could not be taken as the basis for determining the assessable value of the goods and DRI authorities did not bother to consider any On norm, I find that valuation of the subject goods had been done based on the actual market prices of imported 'worn clothing'. Valuation of the articles having 'no signs of appreciable wear' had been done taking higher range of purchase price as the 'whole sale market price of the goods as found the 'Purchase Register' of M/s. Ma Vabatarini Enterprises, who was dealing in identical/similar imported goods. The valuation was not done on the basis of any transaction of any indigenous goods.
The notices did not give break-up of the articles of the consignment which had a bearing on its valuation in terms of explanation (iii) to Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Noticee's contention that the Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had no application or rule 4/5 was applicable here, is not convincing at all as the subject goods were not of any uniform standard. Accordingly, said rules 4 and 5 did not have any application and said rule 9 of the Valuation Rules, 2007 supra, (corresponding to Rule 8 of the Customs Valuation Rules, 1988) had been followed in the instant case for valuation of the goods. Interpretative Note to said Rule 9 allowed reasonable flexibility in respect of the identical/similar nature of the goods. Reliance in this regard was placed on the judgement of the Hon'ble CESTAT-in the case of B.K. Spinning Mills (P) Ltd.-vs Collector of Customs, Cochin [2000(117) ELT 604 (Tr.)] wherein it was held that the (erstwhile) Rule 8 of the Customs Valuation Rules was correctly applicable in case of subject goods for which there was no uniform standard. The investigating authority accordingly, was justified in taking the said value for re-determination of the assessable value of the present consignment. This was also as per the provisions of Customs Valuation (Determination of Value of imported Goods) Rules, 2007.I am inclined to accept the basis of valuation adopted by DRI under rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Consequently, l hold that the assessable value of the subject consignment is Rs.16,98,440.51 as re-determined in Table XIV supra. Undisputedly the value was initially enhanced from USD 0.45 per kg. to USD 0.60 per kg. based on the NIDB data available to the assessing officer and the bill of entry was assessed.
7.4 We find that the value already enhanced was sought to be rejected by resorting to Rule 12 of Customs Valuation Rule and valuation have been done in terms of Rule 9 of Customs Valuation Rules, 2007.
Rule 12 of CVR provides that:
Rejection of declared value. - (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule (1) of Rule 3.
(2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1).
Explanation: - (1) For the removal of doubts, it is hereby declared that:
(i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with Rules 4 to 9.
(ii) The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after the said enquiry in consultation with the Importers.
(iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include
(a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed;
(b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price, (c) the sale involves special discounts limited to exclusive agents;
(d) the mis-declaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production;
(e) the non-declaration of parameters such as brand, grade, specifications that have relevance to value;
(f) the fraudulent or manipulated documents 7.5 We find that Rule 12 itself does not provide a method for determination of value. From the Explanation (I)(i) to Rule 12, supra, it is clear that this Rule by itself does not provide a method for determination of value; it provides a mechanism and procedure for rejection of declared value in case where there is a reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with Rules 4 to 9. Thus the Rule 12 of the CVR. 2007 does not empower the proper officer to reject the transaction value without establishing that the transaction value was not genuine.
7.6 We find that the Hon'ble Supreme Court in the case of Eicher Tractors Limited, reported in 9000 (122) E.L.T. 321, wherein it has been held that if the transaction value cannot be determined under Rule 4(1) [now Rule 3(1)] and does not fall under any of the exceptions in Rule 4(2) [now rule 3(2)], there is no question of determining the value under the subsequent rules.
7.7 We also find that in CC, Mumbai V.J D. Orgochem Ltd. reported in 2008 (226) ELT 9 (S.C.), the Apex Court relied on its decision in Eicher Tractors Ltd.. v. CC, Mumbai- 2000 (122) ELT 321 (S.C.)] which is extracted hereunder:
''14. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely 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."
It was observed :
"In the case before us, it is not alleged that the appellant has mis-declared the price actually paid nor was there a mis-description of the goods imported as was the case in Portia Sales Corporation. It is also not the respondent's case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. The Apex Court in CC, Calcutta v. South India Television Pvt. Ltd. [2007 (214) E.L.T. 3 (S.C.)] endorsed the same views.
"Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such 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 the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e. at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price, the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Undervaluation has to be proved. If the charge of undervaluation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege undervaluation, it must make detailed inquiries, collect material and also adequate evidence."
7.8 We find that value was sought to be enhanced by treating the impugned goods as other than old and used garments and by comparing the sale price of earlier imported old and used garments. the classification of the goods have been decided by Ld. Commissioner as old and used garments classifiable under 6309 as claimed by the importer by rejecting the claim of the DRI. Once the goods are held to be old and used, their value cannot be enhanced by treating the goods as other than old and used goods. There is no findings that the invoices issued by the overseas suppliers are fake or fabricated and that the importer had paid any amount more than that mentioned in invoices either in kind or any other manner. Thus, the Ld. Commissioners order on valuation is not sustainable in law. In these circumstances the Ld. Commissioners order is set aside and appeal of importer and other noticees allowed to that extent. The appeal of Revenue is dismissed. S.P. disposed off. It is made clear that this order shall not interfere in any manner in any other proceeding initiated for the import of old and used articles and enhancement of the value from US$0,45 per kg. to US$0.60 per kg. in the case.
(Pronounced in the Court on 9/8/2012)
Sd/ 9/8/2012 Sd/- 9/8/2012
(D.M. MISRA) (S.K. GAULE)
JUDICIAL MEMBER TECHNICAL MEMBER
k.b/-
Customs Appeal No.-89/2010
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