Custom, Excise & Service Tax Tribunal
Dev Anand Agarwal vs Cc, New Delhi on 24 February, 2016
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No.2, R. K. Puram, New Delhi, Court No. 1 Date of hearing/decision: 24.02.2016 For Approval and Signature: Honble Mr. Justice G. Raghuram, President Honble Mr. R. K. Singh, Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 26 of 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? Customs Appeal No. 163 of 2010 (Arising out of order-in-original No. 01/2010 dated 08.01.2010 passed by the Commissioner of Central Excise, New Delhi). Dev Anand Agarwal Appellant Vs. CC, New Delhi Respondent
Appearance:
None for the appellant.
Shri G. R. Singh, DR for the respondent - assessee Coram:
Honble Mr. Justice G. Raghuram, President Honble Mr. R. K. Singh, Member (Technical) Final Order No. 50892/ 2016 Per: R. K. Singh:
Appeal is filed against order original dated 08/01/2010 in terms of which the Commissioner of Customs passed the following order:
36. In view of the foregoing discussions and finding, I pass the following order:
i) I reject the total declared assessable value of Rs. 44,86,48.90 of the goods imported by M/s Rudra Enterprises, from the port of Inland Container Depot, Tughlakabad, New Delhi under Section 14 of the Customs Act, 1962 read with Rule 4 and 10A of the Customs Valuation (Determination of Prices of the imported Goods) Rules, 1988 and re-determine the same as Rs. 1,26,55,804/-, under Section 14 of the Act & Rule 8 of the Rules ibid.
ii) I confiscate the imported artificial flowers having actual re-determined CIF value of Rs. 1,26,55,804/- under Section 111(d) & (m) of Customs Act, 1962 and the same being not available for confiscation. I impose a redemption fine of Rs. 1,00,000/- in lieu of confiscation.
iii) I order to confirm the demand of Rs. 30,24,923/- under Section 28(2) of the Customs Act, 1962 by invoking the proviso to the Section 28(1) of the Customs Act, 1962 and order M/s Rudra Enterprises to pay the differential Customs duty amounting to Rs.30,24,923/-, under Section 28(2) of the Customs Act, 1962.
iv) I order appropriation of Rs. 12,187/- deposited by M/s Rudra Enterprises at the time of the provisional release of the seized goods against the amount as confirmed above under Section 28(2) of the Customs Act, 1962.
v) I order for recovery of interest from M/s Rudra Enterprises on the said differential Customs duty amounting to Rs. 30,24,923/- under Section 28(AB)(1) of the Customs Act, 1962 from the first day of the succeeding month in which the duty ought to have been paid till the payment of such duty.
vi) I also order to appropriate the bank guarantee No. 7339 dated 09.03.2007 for Rs. 36433/- executed by M/s Rudra Enterprises at the time of provisional release of seized goods towards payment of the duty confirmed under Section 28(2) of the Customs Act, 1962.
vii) I impose a penalty of Rs. 30,24,923/- under Section 114A of the Customs Act, 1962. Since, penalty is being imposed on the firm under 114A of the Customs Act, 1962, I refrain myself from imposing separate penalty on the firm under Section 112 of Section 1962 of the Act ibid.
38. I also order that:
i) I reject the total declared assessable value Rs.19,00,440/- of the goods imported by M/s Rudra Enterprises from Kolkata Customs House Port under Section 14 of the Customs Act, 1962 read with Rule 4 and 10A of the Customs Valuation (Determination of Prices of the Imported Goods) Rules, 1988 and re-determine the same as Rs. 51,63,000/- under Section 14 of the act & Rule 8 of the Rules ibid.
ii) I order to confiscate the imported artificial flowers having actual re-determined CIF value of Rs. 51,63,000/- under Section 111(d) & (m) of Customs Act, 1962 and the same being not available for confiscation, I impose a redemption fine of Rs. 5,00,000/- in lieu of confiscation.
iii) I order to confirm the demand of Rs. 18,54,113/- under Section 28(2) of the Customs Act, 1962 by invoking the proviso to the Section 28(1) of the Customs Act, 1962 and order M/s Rudra Enterprises to pay the differential Customs duty amounting to Rs. 18,54,113/- under Section 28(2) of the Customs Act, 1962.
iv) I order for recovery interest from M/s Rudra Enterprises on the said differential customs duty amounting to Rs. 18,54,113/- under Section 28 (AB) (1) of the Customs Act, 1962 from the first day of the succeeding month in which the duty ought to have been paid till the payment of such duty.
v) I impose a penalty of Rs. 18,54,113/- under Section 114A of the Customs Act, 1962, since penalty is being imposed on the firm under Section 114A of the Customs Act, 1962. I refrain myself from imposing separate penalty on the firm under Section 112 of Section 1962 of the Act ibid.
2. The fact of the case, in brief are as under
The appellant imported artificial flowers in 17 consignments out of which 5 consignments were imported at Kolkata Custom House during the period February 2003 to June 2006 and 12 consignments imported at ICD, Tukhlakabad during the period April 2004 to August 2006. The goods were suspected to be undervalued. The statement of the proprietor of the appellant was recorded who in his 1st statement denied any valuation but in his 2nd statement recorded several months later admitted that the goods were undervalued but said that the undervalution was only about 25%. The simultaneous investigations of similar nature had also been initiated by DRI into the import of artificial flowers by other Delhi based importers, namely M/s KDS Exports, M/s Gokul Overseas, M/s K. K. Enterprises and M/s Krish Enterprises. The investigations revealed that these four importing firms were found to be run jointly by three persons namely, Himanshu Gupta, Sudhanshu Gupta and Deepak Aggarwal. Investigations conducted in this regard had conclusively proved that the said four importers wee also grossly undervaluing their imports of artificial flowers from China i.e. similar goods being imported from same country of origin. All the said three persons admitted in their statements of having undervalued their imports upto 70% of the actual value. The original invoices of Chinese suppliers of artificial flowers, retrieved during the examination of the CPU resumed from the premises of above said four firms revealed that such imported artificial flowers actually carried much higher value as compared to the value of USD 1.46 /kgs. declared by them at the time of their import. The values reflected in those original invoices No. 26E119F dt. 12.08.06 issued by M/s Everglory (Asia) Trading Co. Ltd. No. 26E107F dt. 24.07.06 issued by M/s Ever Glory (Asia) Trading Co. Ltd. & Invoice No. 6-13th issued by M/s Guangdong Hangyang Flower Co. Ltd. China and No. KDS-Jun 06/005 issued by M/s Mikura Impex, Hongkong, China indicated average prices as USD 4.08/kg. USD 5.18/kg. USD 5.9/kg. USD 6.11/kg. respectively. Sudhanshu Gupta, the controller of this firm, when confronted with these invoices admitted that those invoices were the genuine one and that they had been under valuing all other imported consignments to the extent of 70%. Similarly, the other two partners also admitted to undervaluation in the imports of all the consignments of artificial flowers to the extent of 70% and also confirmed the genuineness of the invoices retrieved from the computers which indicated much higher value.
3. The primary adjudicating authority after considering the reply of the appellant came to the finding that the evidence collected in the simultaneous investigations against importers of similar goods was directly applicable in respect of imports of the appellant and based thereon enhanced the value and passed the order as above.
4. When the case was taken up today, there was no representation on behalf of the appellant nor was there any request for adjournment. Therefore we proceed to decide the case on merits.
5. In its appeal papers the appellant has essentially contended that:
(a) the show cause notice was issued by D.R.I. which was not the proper authority for issuing the show cause notice and therefore the impugned order is a nullity.
(b) comparison of the value of contemporaneous import was untenables because it was done without regard to the quality and quantity.
(c) the invoices used for comparing the value were of the period 2005 to 2006 whereas its imports were during the period 2003 to 2006.
(d) artificial flowers imported by it were out of stock lot and therefore the value could not be compared with the value of imports of artificial flowers by other importers. Further some of the suppliers were different.
(e) for the goods which are not available, no redemption fine can be imposed. It cited several judgements in support of the aforesaid contentions.
7. The Ld. Department representatives reiterated the arguments contained and impugned order.
8. We have considered the contentions of both sides.
9. As regards the contention of the appellant that DRI was not the proper authority to issue the show cause notice, it has been held by CESTAT in the case of Bhagwati Components Manufacturing Co. vs. Commissioner of Customs vide order No. MO/52995/2015 dated 04.09.2015 in Appeal No. C/422 of 2010 that the show cause notices issued by DRI are valid.
10. We find that the proprietor of the appellant in his statement conceded that the goods were undervalued (although it only conceded to the undervaluation to the extent of 25%). Therefore under the provisions of 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 the transaction value can be rejected as has been rightly done in the present case. Once the transaction value is not found to be acceptable, the value is to value can be determined in terms of Rules 4 or 5 of the said Rules. As regards the contention of the appellant that the goods not identical to the goods the value of which is used for comparison and enhancement, even if the impugned goods were not identical to those the value of which was used for comparison in terms of Rule 5, there can be hardly any doubt that the impugned goods were similar to the goods imported by the other importers mentioned earlier the value of which was used for comparison and valuation in as much as the similar goods are defined in rule 2 (f) of the said rules is under.
2(f) similar goods means imported goods -
(i) which although not alike in all respects, have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable with the goods being valued having regard to the quality, reputation and the existence of trade mark;
(ii) produced in the country in which the goods being valued were produced; and
(iii) produced by the same person who produced the goods being valued, or where no such goods are available, goods produced by a different person, but shall not include imported goods where engineering, development work, art work, design work, plan or sketch undertaken in India were completed directly or indirectly by the buyer on these imported goods free of charge or at a reduced cost for use in connection with the production and sale for export of these imported goods;
It is not in doubt that the impugned goods had like characteristics which enabled them to perform the same function as the goods with which the value is compared and were produced in the same country. It is clear from the definition of similar goods that for the goods to be similar, they need not necessarily be manufactured by the same manufacturer. None of the goods imported by the appellant or by other importers had any brand names/ trade names. There is nothing to show that the goods imported by other importers with which the comparison of value of the impugned goods has been made had any higher reputation or were any superior quality or that the goods imported by the appellant were out of the so-called stock lot. Further with regard to quality, it is seen that the value of the goods imported by others ranged from US dollar 4.08/kilogram to US$ 6.11/kilograms and for the purpose of valuing the impugned goods, the lowest value of that range has been adopted which implies that the adjudicating authority had assumed the impugned goods to be of the lowest quality of the goods imported by others. Regarding the contention that the invoices used for comparison were the period 2005 and 2006 while the imports of the appellant took place over the period of 2003 to 2006, it is pertinent to mention that the price of the goods in June 2005 as per the evidence recovered was US$6.11/kilogram, it came down to US$5.18/kilogram in July 2006 and then to US dollars 4.08/kilogram in August 2006. It shows that the price of the impugned goods has been showing an inexorable declining trend and therefore adopting the price of US dollar 4.08/kilogram which was the lowest and the latest available in a declining trend in no way could/ would cause prejudice to the appellant. As regards the contention that the comparison can be made only when the goods imported by others with whom the comparison was made were at the same commercial level, we find that the goods imported by others were at a much higher commercial level as has been mentioned by the appellant itself in its appeal and therefore comparison with the price of such imports cannot cause any prejudice to the appellant because it can be nobodys case that the price would be higher for imports of larger quantities of such goods.
11. There is however force in the contention of the appellant that the goods which had been cleared without any bond and were not available for confiscation, no redemption fine can be imposed. Thus only goods which were seized can be confiscated and redemption fine imposed thereon. As has been mentioned in the impugned order, the seized goods had an estimated market value of Rs. 145730/- and going by the fact that the redemption fine imposed by the primary adjudicating authority was around 10% of the value, redemption fine of Rs. 15,000 only would be sustainable. As no one appeared for personal hearing on behalf of the appellant, individual analysis of the case laws cited by the appellant is not being undertaken; suffice however to say that (1) case laws cited by the appellant have been perused, (2) they are regarding rejection of transaction value, enhancement of value on the basis of contemporaneous imports, need to keep in mind the quantity and quality of the goods while making comparisons etc, and the analysis above is not in disharmony with the ratios laid down in any of the case laws cited by the appellant.
12. In the light of the foregoing analysis, we do not find any such infirmity in the impugned order as to invite appellate intervention except that no redemption fine is sustainable in respect of the goods which had been cleared without any bond etc. and were not available for confiscation. Resultantly, the impugned order is upheld except that the total redemption fine is reduced to Rs. 15,000 only. The appeal is disposed of in the above terms.
(Justice G. Raghuram) President (R. K. Singh) Member (Technical)