Custom, Excise & Service Tax Tribunal
Shimnit Kiwalite Industries Ltd vs Acc, Mumbai on 28 September, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NO: C/616/2008 & C/963/2008 APPLICATION NO: C/MA(ORS)-1319/2010 (Arising out of Order-in-Original No: CC-NS/34/2008/Adj.ACC dated 31/03/2008 passed by the Commissioner of Customs (Import), ACC, Mumbai.) For approval and signature: Hon'ble Shri S.S. Kang, Vice President Hon'ble Shri S.K. Gaule, Member (Technical) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? : No 2. Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? : Yes 3. Whether Their Lordships wish to see the fair copy of the Order? : Seen 4. Whether Order is to be circulated to the Departmental authorities? : Yes APPEAL NO: C/616/2008 Shimnit Kiwalite Industries Ltd. ...Appellant Vs Commissioner of Customs (Imports) ACC, Mumbai ...Respondent
APPEAL NO: C/963/2008 Commissioner of Customs (Imports) ACC, Mumbai ...Appellant Vs Shimnit Kiwalite Industries Ltd.
Nitin G. Shah Snehal N. Shah Navin R. Shah R.S. Merchant ...Respondents Appearance:
Shri K.K. Anand, Advocate for the assessee-appellant/respondents Shri R.K. Mahajan, Authorised Representative (JCDR) for the Revenue CORAM:
Hon'ble Shri S.S. Kang, Vice President Hon'ble Shri S.K. Gaule, Member (Technical) Date of decision: 28/09/2010 ORDER NO: ____________________________ Per: S.S. Kang, Vice President Heard both sides. These appeals are being taken up in pursuance to the order dated 29/03/2010 passed by the Hon'ble Supreme Court. Hon'ble Supreme Court has held as under: "Since more than the amount of pre-deposit has been recovered by the Customs Department, we direct the Tribunal to hear and dispose of Appeal No. C/616/2008 on merits within six months from today. We express no opinion on the merits of the case." The appellant-importer as well as Revenue filed appeals against the same impugned order.
2. The appellant made import of goods declaring the same "Retro-Reflective Sheetings" during the period 2003 to 2005. The goods were assessed at the value declared by the importer and cleared. Thereafter, a show-cause notice was issued on 17/03/2007 by invoking the extended period of limitation on the ground of mis-declaration as the appellant was sole distributor of M/s. Kiwa Chemical Industry Co. (Exporter) and this relationship is not disclosed. As the Exporter and Importer are related to each other hence the assessable value declared by the importer is not acceptable. The Revenue on the basis of three invoices recovered from the importer's office showing the goods imported are being sold @ Rs. 63,000/- to Rs. 66,000/- per roll whereas the importer declared the CIF value of the goods at the time of import at Rs. 1,427/- per roll. The Revenue also taken in to consideration the imports made by M/s. Cosmic Manufacturing Services (India) Pvt. Ltd. whereby the importer has declared the CIF value at Rs. 77,600/- to Rs. 78,700/-. In view of this, after considering the reply filed by the appellant, the adjudicating authority rejected the value declared by the appellant and enhanced the value on the basis of the import made by M/s. Cosmic Manufacturing Services (India) Pvt. Ltd. and after taking into consideration the sale price of the importer, the adjudicating authority confirmed the demand of customs duty of Rs. 5,00,27,042/- and imposed penalty of equal amount on the importer-firm. The adjudicating authority has not imposed any penalty on the co-noticees i.e. Directors and Manager of importer-firm. The importer filed appeal against confiscation, demand and imposition of penalty on the firm whereas the Revenue filed appeal against the same impugned order for not imposing penalty on Directors and Manager of the importer-firm.
3. The appellant-importer also filed application for producing additional evidence by way of producing copies of some bills of entry in respect of the goods imported by M/s. Bansal Automobile Products and Rajhans Automobiles whereby similar products were imported. Three consignments imported by Rajhans Automobiles were from M/s. Kiwa Chemical Industrial Co. Ltd., Japan wherein the value of the goods declared is the same as declared by the appellant-importer. It is also submitted that M/s. Kiwa Chemical Industry Co. Ltd. was supplying goods to Rajhans Automobiles. Therefore, the agreement entered into with the appellant-importer cannot be considered as an exclusive distributorship agreement. The appellant-importer also submitted that the Revenue has relied upon three invoices recovered from the appellant-importer's premises whereby the goods imported are being sold at the price which is more than Rs. 60,000/- per roll. The contention is that this sale price is only in respect of 10% of the goods imported and 90% of the goods are sold at the price between Rs. 1800/- to Rs. 2400/- per roll. The appellant-importer has made a request to the Revenue vide letter dated 29/08/2005 for taking into consideration the other invoices. The contention is that as the was not considered by the adjudicating authority, therefore, the appellant-importer is now producing the copies of all such invoices whereby the imported goods were sold at a price ranging between Rs. 1,800/- to Rs. 2,400/-.
4. The contention of the importer-appellant is that the importer entered into an agreement with M/s. Kiwa Chemical Industry Co. Ltd., Japan on 01/05/2000 for three years whereby the importer were appointed as exclusive distributor of the goods in India. The contention is that the agreement dated 01/05/2000 is for three years as per Article 11 of the agreement. In the present case one import was made during the period of agreement whereas other imports are made after the expiry of the agreement. There is no evidence on record to show that the agreement was extended after the expiry of three years fro the date of execution. The importer-appellant also submitted that out of a total of 21 consignments in question, 5 consignments were imported from M/s. S.N. Corporation, Japan and there is no agreement with M/s. S.N. Corporation, Japan. The contention is that during the investigation enquiry was conducted from the customs authorities in Japan and as per the information received from the Japan Customs authorities four consignments supplied by S.N. Corporation, Japan were reported to be of same value as shown in the invoice. The contention is that in spite of this the value declared by the importer in respect of the import made from S.N. Corporation, Japan was also rejected and the same has been enhanced on the basis of agreement entered with M/s. Kiwa Chemical Industry Co. Ltd. which is not sustainable. It is also submitted that the report of enquiry conducted from the Japanese Customs authorities has not been supplied to the importer in spite of the fact that the same has been relied upon in the show-cause notice as well as in the adjudication order. The appellant specifically asked for the enquiry report. Therefore, the enquiry report, which was obtained at the back of the importer is in violation of principles of natural justice. The appellant-importer also requested for cross-examination of the officials who examined the goods when the goods were cleared accepting the declared value and that request for cross-examination was not taken into consideration.
5. The appellant-importer submitted, the aspect of 'related person' as per the Customs Valuation Rules, 1988 is that if the relationship is interpreted by the Hon'ble Supreme Court in the case of Commissioner of Customs, New Delhi vs. Prodelin India (P) Ltd. 2006 (202) ELT 13 (S.C.) wherein it has been held that even in cases of related persons their transaction value has to be accepted provided that the examination of the circumstances of sale of the imported goods indicate that the relationship did not influence the price and the importer demonstrates that the declared value of the goods being valued closely approximates to the value for identical goods or similar goods. The contention is that 90% of the imported goods are sold in the market at the price ranging between Rs. 1,800/- to Rs. 2,400/- and the declared value in the Bills of Entry is almost Rs. 2,200/- per roll. It is also submitted that the same goods are being imported from the same supplier by other importer at the similar value as declared by the appellant-importer. Therefore, the demand is not sustainable.
6. The contention of the Revenue in response to the arguments made by the appellant-importer is that the evidence now produced by the importer is not relevant to the facts of the present case. The contention is that the appellant now wants to produce certain evidence by way of airway bills, chartered accountant's certificate, and the Bills of Entry in respect of the goods imported by M/s. Rajhans Automobiles wherein the goods imported by M/s. Rajhans Automobiles is for the period 2000 to 2002 which is prior to the imports made by the appellant. In respect of the Chartered Accountant's certificate the appellant has not produced any bills regarding purchase of goods by M/s. Bansal Automobile Products. It is also submitted that during investigation numerous summons were issued by the department with a direction to the appellant-importer to produce evidence in respect of payments made to Bansal Automobile Products but the appellant failed to do so. During investigation appellant not produced the invoices regarding sale of goods. Therefore, the appellant is not entitled to produce such evidence which has not been produced by the appellant-import in spite of opportunities being granted.
7. On merits the contention of the Revenue is that there was an agreement between the supplier and the appellant-importer which was not disclosed to the Revenue at the time of import. Even at the time of import made during the period of agreement the appellant-importer specifically mentioned that the supplier-exporter is not a related person in the Bill of Entry. As per the agreement the appellant-importer are the sole distributors in India, therefore, is a 'related person' as per explanation (ii) to Rule 2 of the Valuation Rules. The Revenue relied upon the three invoices recovered from the premises of the importer, which shows that the importer were selling the goods at a price more than Rs. 60,000/- per roll whereas their declared value plus customs duty they are importing at a price of Rs. 2,200/- per roll. This clearly shows that the appellant-importer are undervaluing the goods to evade payment of customs duty. The Revenue also relied upon the findings of the adjudicating authority regarding the amounts paid by M/s. Bansal Automobile Products regarding which the appellant-importer has not given any explanation.
8. During the argument it is fairly admitted by the Revenue that the appellant-importer is the sole selling distributor of M/s. Kiwa Chemical Industrial Co. Ltd. only. However, imports made from M/s. S.N. Corporation, Japan is also treated at par with the imports made from M/s. Kiwa Chemical Industrial Co. Ltd., Japan in the adjudication order.
9. In respect of the appeal filed by the Revenue the contention of the Revenue is that the adjudicating authority in para 28 specifically held that the co-noticees i.e. Directors and Manager, in their individual capacity, knowingly suppressed the relationship with the supplier and their acts of commission and/or omission rendered the goods liable to confiscation under Section 111 of the Customs Act and, therefore, are liable for penal action under Section 112(a) of the Customs Act along with importing-firm. However, in the order portion, the adjudicating authority held that no penalty is imposed on NoticeeNo.2 to 5 in terms of proviso to Section 114A of the Customs Act. The contention is that the order portion is contrary to the findings and, therefore, the matter requires reconsideration with regard to imposition of penalty on the Directors and Manager of the importing-firm in view of the specific finding in para 28 of the adjudication order.
10. In reply to the Revenue's contention the contention of the assessee-appellant is that, as the demand is not sustainable in view of the issues raised by the appellant, therefore, the co-noticees are also not liable for penalty.
11. We find in this case the appellant-importer M/s. Shimnit Kiwalite Industries Ltd. has made import of 'Retro-Reflective Sheetings' and the goods were assessed at the value declared by the appellant-importer and cleared during the period 2003 to 2005. Subsequently, investigation was conducted and an show-cause notice was issued on 17/03/2007 on the ground that the appellant-importer suppressed the material fact by not disclosing the special relationship of the supplier and the declared value was rejected on the ground that importer and exporter are related person, and on the basis of three invoices recovered from the appellant-importer's premises showing the sale of the same goods at the price of Rs. 63,800/- to Rs. 66,000/- per roll which is 45 times higher than the price at which the goods are being imported. The Revenue also relied upon the Bills of Entry filed by M/s. Cosmic Manufacturing Services (India) Pvt. Ltd. whereby same goods were imported in the year 2005 wherein the value of the goods was declared at Rs. 77,600/- per roll.
12. We find during the arguments, it is admitted by the Revenue that the five consignments are in respect of the goods imported from M/s. S.N. Corporation, Japan and that the appellant-importer had no such agreement with M/s. S.N. Corporation, Japan as in the case of Kiwa Chemical Industry Co. Ltd. and the value of the goods imported from M/s. S.N. Corporation was also enhanced on the same ground.
13. The appellant-importer has now produced the copies of the invoices under which the goods are sold in India at prices ranging between Rs. 1,800/- to Rs. 2,400/-. The appellant-importer during investigation, vide letter dated 29/08/2005 requested the Revenue to take into consideration these invoices. We find that the value of the goods were enhanced after taking into consideration of only three invoices showing the higher value. The appellant-importer has also now produced copies of Bills of Entry under which the goods have been supplied by M/s. Kiwa Chemical Industry Co. Ltd. to M/s. Rajhans Automobiles declaring the same value at which appellant made import. We also find that during investigation certain enquiries were made from customs authorities of Japan and the enquiry report was relied upon in the show-cause notice as well as in the adjudication order. The appellant has asked for a copy of the enquiry report but the same has not been supplied to the appellant-importer. We, further, find that the request for cross-examination of the customs officials was also not taken into consideration. In the appeal filed by Revenue we find that the adjudicating authority in the impugned order held that Directors and Manager are liable for penalty but no penalty was imposed and Revenue is seeking remand in the appeal. Therefore, we find it appropriate that the whole matter be reconsidered by the adjudicating authority in respect of all aspects now raised by the appellant as well as by the Revenue in the present appeals.
14. The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication. The adjudicating authority will decide after taking into consideration the plea raised by the appellant as well as by the Revenue and after affording a reasonable opportunity of hearing to the appellants. The adjudicating authority shall also go into the relevancy of the evidence now produced by the appellant. The appeals are disposed of by way of remand. The Miscellaneous Application is also accordingly disposed of.
(Dictated in Court) (S.K. Gaule) Member (Technical) (S.S. Kang) Vice President */as 12 2