Customs, Excise and Gold Tribunal - Tamil Nadu
Gupta Exports vs Commissioner Of Customs on 8 August, 2002
Equivalent citations: 2002(84)ECC408, 2002ECR924(TRI.-CHENNAI), 2002(146)ELT361(TRI-CHENNAI)
ORDER Jeet Ram Kait, Member (T)
1. In this case the Commissioner of Customs has passed the following order :
(i) I order enhancement of value of 128.55 MT split, grade betel-nuts to US $ 780/MT and that of 127.10 MT whole grade betel-nuts to US $ 1100/MT covered under Bills of Entry viz. Nos. 257597, 257598, 259724, 259725 and 257792/2000 under Section 28 of the Customs (Valuation) Rules, 1988 (sic) [Customs Act, 1962].
(ii) I order enhancement of total value of betel-nuts from Rs. 45,31,765/- to Rs. 1,05,96,367/- and I demand the differential duty amount of Rs. 24,25,841/- under Section 28 of the Customs Act, 1962.
(iii) I order confiscation of goods totally valued at Rs. 1,05,96,367/-covered under subject Bills of Entry under Section 111(m) of the Customs Act, 1962. However, I allow them to be redeemed as payment of fine of Rs.10,00,000/- (Rupees ten lakhs only) under Section 125 of the Customs Act, 1962.
(iv) I impose a penalty of Rs. 2,00,000/- (Rupees two lakhs only) on M/s. Gupta Exports, Chennai under Section 112(a) of the Customs Act, 1962.
(v) I order that an amount of Rs. 16,15,990/- paid by M/s. Gupta Exports, Chennai should be adjusted towards the differential duty.
(vi) I order that the Bond and Bank Guarantee executed by M/s. Gupta Exports, Chennai be enforced to recover the balance duty, fine and penalty.
It is seen from the impugned order that the value of transaction has been enhanced to US $ 1100/MT in respect of betel-nuts whole grade and US $ 780/MT for split grade, by comparing the contemporaneous imports made by M/s. Diamond Traders, Chennai, M/s. Gandhi Exports Inc., Mumbai and M/s. J.M. Sons, Delhi.
2. For better appreciation of the facts of the case, it is necessary to give the details among other things, the quantity of the goods imported, date of importation, value declared by the importers and the value sought to be enhanced by the department.
Quantity imported (MT) Value declared Enhanced Value Dt. Import Split Whole PMT Split whole US$ US$ US$ 128.55 127.10 400 780 1100 Jan., Feb., 2000 Proceedings were initiated against the appellants for misdeclaration and attempt to evade payment of customs duty by issue of show cause notice, and after considering the replies to the show cause notice the Commissioner has passed speaking order whereby he has enhanced the value of the impugned goods, viz. betelnuts, ordered confiscation of the goods imported and allowed the same to be redeemed on payment of fine besides imposition of penalty as under :
Value declared by the importers Rs.
Enhancement of value Rs.
Differential Duty Rs.
R.F. Rs.
Penalty Rs.
45,31,765/-
1,05,96,367/-
24,25,841/-
10,00,000/-
2,00,000/-
In this case, Commissioner has resorted to Rule 5 of the Valuation Rules, 1988 and rejected the invoice value. While enhancing the value, the department has compared the contemporaneous imports made by M/s. Gandhi Exports, Mumbai some time in 10/1999 wherein only a quantity of 49.90 MTs. of whole grade betel-nuts were imported through Mumbai Port at a value of US $ 1100 PMT. The department has also relied upon import made by another Importer M/s. Diamond Traders, Chennai wherein second grade betel-nuts were imported through Chennai Port at a value of US $ 780 PMT sometime in January, 2000.
3. Ld. Counsel Shri R. Sudhakar appeared for the appellants and pleaded that the goods are agricultural products which get deteriorated due to long storage and the prices depend upon the crop yield and other factors and the quality can be assessed only on test and the item being put to use. He further contended that transaction value cannot be ignored unless it is shown that there had been clandestine remittance of value in excess of the invoice value and mutuality of interest between the sellers and buyers is to be established before resorting to rejection of the invoice value. He further contended that no evidence has been let in by the department that there was any remittance of money in excess of the invoice value. They have also contended that the two contemporaneous imports at higher prices relied upon by the department is not correct as they are not comparable for the reason that it is for the department to discharge the burden that there was undervaluation or misdeclaration which burden has not been discharged by the department. They have also taken the ground that for the purpose of adopting the price of contemporaneous import under Rule 5, the import should have taken place at or about the same time and the identical goods should be the same in all respect including physical characteristics, quality, commercial level and the country of origin should be the same. They also contended that the contem-
poraneous imports cited in the case of M/s. Gandhi Exports, Mumbai was some time in October 99 whereas their imports were in January/February, 2000 and hence it cannot be considered as contemporaneous imports. Further, in the case of M/s. Diamond Traders relied upon by the department, the quantity involved was only 14 tonnes whereas in the present case, the quantity is 255.65 MTs which is much higher and hence it is not comparable. Similarly the quantity imported by M/s. Diamond Trading Company was only 30 MTs and cannot be compared to the quantity imported by them which is more than 250 MTs. Ld. Counsel also relied on the various judgments including the decision of this Tribunal in the case of Spice Trading Corporation v. CC reported in 1998 (104) E.L.T. 665 wherein it was held that stray instances of import at higher value is not to be adopted totally ignoring the other attending circumstances and that the transaction value is to be adopted unless the department can produce the objective reasons and strong evidence to show that the said declared value was not bona fide and correct and the burden is on the department to discharge the same. The above judgment has been followed again in the matter of Saudagar Exports, J.M. Sons and Archana Associates v. CC, Chennai vide Final Order Nos. 698-700/2002, dt. 11-6-2002 [2002 (145) E.L.T. 543 (Tribunal)] which was clearly an identical case and the goods also were compared of the same importers namely Diamond Traders, Chennai, and Gandhi Exports, Bombay. Ld. Counsel, therefore, further submitted that "Foreign Bill Transaction advice" dt. 19-4-2000 from M/s. Global Trust Bank was submitted to the Commissioner as a proof of payment covering the subject consignment. Ld. Counsel submits that the evidence of payment of invoice value through the "Foreign Bill Transaction Advice" dt. 19-4-2000 does prove beyond doubt the truth and accuracy of the declared value.
4. Shri Sree Kumar Menon, ld. SDR defended the impugned order and reiterated the findings of the ld. Commissioner. He drew our attention to para 14 of the findings contained in the impugned order in which the Commissioner has relied on the judgment rendered in the case of CC v. Sunsip Ltd. reported in 2001 (127) E.L.T. 203 (T), Vipin Enterprises v. CC, Kandla reported in 1999 (111) E.L.T. 211 (T). In counter, the ld. Counsel submits that the Commissioner in para 14 gave findings that goods are comparable and the reason has not been given by the ld. Commissioner. Therefore, he submits that the order of the Commissioner enhancing the value should be set aside and the transaction value mentioned in the Bills of Entry by them has to be accepted. The ld. Counsel submitted that the transaction value can be discarded only in case the goods are covered within the mischief of Rule 4(2) of the Customs Valuation Rules, 1988 and in that situation alone, Rule 5 could be resorted to by the ld. Commissioner and not otherwise.
5. We have considered the submissions made by both sides. We find that the importation of these goods are from Indonesia and the period of importation in these goods are between January, 2000 and February, 2000. The whole findings and various judgments on this issue have been analysed by us in para 6 of our Final Order Nos. 698 to 700/2002, dt. 11-6-2002 [2002 (145) E.L.T. 543 (Tribunal)] which are extracted below.
"6. We have considered the submissions made by both the sides. We find that the importations in these cases are from Indonesia and the period of importation in all these cases is 1/2000. According to the Revenue, the Commissioner has taken into consideration various contemporaneous imports particularly the imports made by M/s. Gandhi Exports, Mumbai and that of M/s. Diamond Traders, Chennai. We find from the records that the importation made by M/s. Gandhi Export was some time in October 99 when they imported 49.90 MTs of Betel-nuts whole at a price of US $ 1100 PMT. M/s. Diamond Traders made import of 14 Tonnes of Betel nuts, split grade some time in February 2000 at a declared value of US $ 780 PMT. While the import by M/s. Gandhi Exports was from Singapore, the imports in the case of M/s. Diamond Traders and by the present importers were from Indonesia. Therefore, we are of the considered opinion that the import made in the case of M/s. Gandhi Exports, Mumbai cannot be considered as contemporaneous import. Likewise the importation made by M/s. Diamond Traders cannot also be considered as contemporaneous import for the reason that the quantity involved was only 14 Tonnes, whereas the quantities involved in the present cases were much more as indicted in the table on para 2 above. Further we find that in the case of Spices Trading Corporation v. CC, Madras (supra), it was held that stray incidence of import at higher value is not to be adopted totally ignoring other attending circumstances and that higher quantity imported is to get credence. It was also held therein that transaction value has to be adopted unless the department can produce the objective reasons and strong evidence that declared value was not bona fide and the burden is on the department that the declared price was not bona fide and there was under valuation or misdeclaration. We also find that the Tribunal in the case Honesty Traders v. CC reported in 1991 (55) E.L.T. 102 has held that comparison of value of the goods should be same in respect of physical characteristics, quality, reputation, country of origin and timing of importation. The appellants have also relied upon the judgment of the Hon'ble Apex Court in'the case of Eicher Tractors Ltd. v. CC, Mumbai reported in 2000 (122) E.L.T. 321 (S.C.) wherein the Hon'ble Apex Court has laid down the principles to be adopted for rejection of transaction value. The Department on the other hand relied upon the judgment of the Hon'ble Supreme Court in the case of CC, Mumbai v. Shibani Engineering Systems reported in 1996 (86) E.L.T, 453 (S.C.) wherein the Hon'ble Apex Court has held that when transaction value of goods is ridiculously low and totally unrealistic, goods can be assessed on the basis of contemporaneous imports (emphasis supplied by us). The judgment of the Hon'ble Apex Court in the case of Etcher Tractors (supra) is latest on the subject and both the judgments of the Apex Court lay down the principles that contemporaneous imports have to be taken into consideration where the transaction value is sought to be rejected. In the present case the adjudicating authority after rejecting the transaction value has proceeded to determine the value under Rule 5 of the CVR, 1988 by relying upon two importations viz. M/s. Diamond Traders and that of M/s. Gandhi Traders. We have already held that the importations made by these two parties cannot be considered as contemporaneous. It is also not the case of the department that there was clandestine remittance of value in excess of the invoice value and mutuality of interest existed between the two parties. In view of the above discussion and in the facts and circumstances of the case, we are therefore of the considered opinion that the department has not discharged the burden cast on them that the importers have misdeclared or under-valued the goods. We therefore, set aside the impugned orders and allow the appeals, with consequential relief, in accordance with the law."
6. In view of the well settled law laid by the Apex Court and followed by this Tribunal in the cases cited supra, we are of the considered opinion that the department has not discharged the burden cast on them that the importers have misdeclared or under-valued the goods. We, therefore, set aside the impugned order and allow the appeal with consequential relief if any in accordance with law.