Custom, Excise & Service Tax Tribunal
Quantum Hi Tech Merchandising Pvt Ltd vs Commissioner, Customs-New Delhi on 14 November, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH - COURT NO. - IV
Customs Appeal No. 50542 of 2022 [DB]
[Arising out of Order-in-Appeal No. D-II/Prev./NCH/1148/2021-22 dated
13.09.2021 passed by the Commissioner of Customs (Appeals), New Delhi]
M/s. Quantum Hi-Tech Merchandising
Pvt. Ltd. ...Appellant
H-67, Ashok Vihar,
Phase - I, Delhi - 110052
VERSUS
Commissioner of Customs, New Delhi ...Respondent
New Customs House, Near IGI Airport, New Delhi - 110037 APPEARANCE:
Shri Rajesh Rawal, Advocate for the Appellant Shri M.K. Shukla, Authorized Representative for the Respondent CORAM:
HON'BLE DR. RACHNA GUPTA, MEMBER (JUDICIAL) HON'BLE MRS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) DATE OF HEARING: 15.07.2024 DATE OF DECISION: 14.11.2024 FINAL ORDER No. 59438/2024 DR. RACHNA GUPTA Present is an appeal filed to assail Order-in-Appeal No. 1148/2021-22 dated 13.09.2021. The facts in brief which have culminated into the said order are as follows: 1.1 M/s. Quantum Hi-Tech Merchandising Pvt. Ltd., the appellant herein, is engaged in importing computer accessories such as "Key Board USB, Mouse, TF Card Reader etc". The importer-appellant filed Bill of Entry No. 9676716 dated 13.05.2017 at ICD Tughlakabad, New Delhi, however, the consignment was put on hold vide letter dated 17.05.2017 for detailed examination by the 2 Customs Appeal No. 50542 of 2022 [DB] officers of Customs (Preventive) Commissionerate, New Delhi. The goods of the aforesaid Bill of Entry were examined in the presence of Shri AniL Kumar, the representative of appellant's CHA M/s. Sea Pride Logistics and two independent Panchas on 18.05.2017. The quantity of imported goods during examination was found to be same as was declared in the Bill of Entry. The stickers containing details like manufacturer's name and address, month and year of manufacturing, importer details, quantity, item description, MRP, month of import etc. were also found affixed on the outer side of master carton box as well as on retail packs. A mark of "Quantum"
was also found marked on the master box and retail packs. However, the representative samples of goods were drawn from the consignment and sealed for the further investigation. A market survey in respect of items imported by the importer-appellant was conducted. For this purpose, sample items were purchased from the retailer shops of importer-appellant i.e. M/s. Bajaj Sales Corportation, Shakarpur and M/s. Sky Solutions, Laxmi Nagar, Delhi. On verification of the samples so collected, the MRP mentioned on the sample purchased from these retailers was found to be different (much higher) than the MRP declared by the importer in the respective Bill of Entry for three of the items as follows:
Sl.No. Name of the MRP declared by the MRP found Item importer in mentioned on respective Bill of the sample Entry (in Rs.) purchased from open market 1. 222B QHMPL 3D 54 140 Optical Mouse USB 3 Customs Appeal No. 50542 of 2022 [DB] 2. 7403 W QHMPL 160 280 Keyboard USB 3. 7307 QHMPL 190 350 Multimedia Mini keyboard USB 1.2 After conducting further investigation and recording the statements of all concerned, a Show Cause Notice No. 08 dated 17.11.2017 was served upon the appellant-importer proposing rejection of the assessable value of seized. Later goods imported vide Bill of Entry No.9676716 dated 13.05.2017 were provisionally released. However, confiscation of those goods valued at Rs.29,18,907/- was also proposed. Differential customs duty of total amount of Rs.5,37,600/- in respect of the seized goods, on which altered MRP stickers were found, was proposed to be recovered from the appellant along with the proportionate interest and the appropriate penalty. This proposal was confirmed vide Order-in-Original No. 158/2018 dated 13.09.2018. The assessable value of Rs.17,85,788/- has been rejected and the value as proposed in the show cause notice along with proposed differential customs duty and the proposed amount of penalty has been confirmed. The appeal against the said order has been rejected by the Commissioner (Appeals) vide order under challenge. Being aggrieved, the appellant is before this tribunal.
2. Learned counsel for the appellant has mentioned that all the allegations of the show cause notice were rebutted by the appellant vide their reply dated 26.12.2017. It was specifically mentioned that the appellant has not altered the MRP speakers as has been alleged. The Declaration at the time of examination of stuffing of 4 Customs Appeal No. 50542 of 2022 [DB] goods of the appellant revealed that the declaration made by the appellant were correct. The imported goods, after clearance were sold to the appellant's distributors. Next in the chain is the dealer and then comes the retailer. The appellant directly deals with the distributors only and has no connect with the retailers whose count in Delhi sector alone is impressed upon to be in thousands. It is impressed upon that any lacunae noticed at the end of retailer has wrongly been attributed to the appellant-importer. Learned counsel further submitted that there was no need of any market survey after the quantity and the MRP along with all requisite details were found to be true and correct declarations. Above all the market survey was done without any notice to the appellant. There is nothing on record to show as to how and when the alleged samples were purchased from the market nor there is any evidence to prove that the alleged alteration of MRP on those samples was done by the appellant. The allegations about the correspondence to have been back dated are also categorically denied. It is submitted that the correspondences made in the form of emails to Flipkart, Amazon and Snapdeal were made between 29.05.2017 and 26.07.2017. The emails referred were of the year 2016. The department has read the date of printouts of the said email which are of the year 2017. The copies of the emails are impressed upon to be on record.
3. Learned counsel further submitted that during cross examination of M/s. Moon Enterprises, the allegations of revenue stands falsified. It is submitted that the proprietor of the distributor, M/s. Moon Enterprises, namely Ms. Anju Rastogi was 5 Customs Appeal No. 50542 of 2022 [DB] not allowed to be cross examined. With these submissions it is impressed upon that the demand of differential customs duty along with interest and penalty and the rejection of declared value has been ordered without any evidence of proving the alleged guilt on the appellant. Order is accordingly prayed to be set aside and appeal is played to be allowed.
4. While rebutting these submissions, learned Departmental Representative has mentioned that the importer-appellant allegedly imported goods by misrepresenting their value through practices like altering, Maximum Retail Price (MRP) Stickers. Based whereupon the goods of the appellant were initially detained/seized and later have been ordered to be fully confiscated. During the examination the stickers on imported goods revealed discrepancies in MRP compared to those goods found in the market. Appellant's representative claimed that dealers and retailers were responsible for altering the MRP stickers but the evidence suggested otherwise. Investigation also revealed that some correspondences purportedly forwarding MRP alteration were backdated raising doubts about the company's credibility.
4.1 Learned Departmental Representative further impressed upon that the importer's attempt to justify the mis-declaration by citing the requirement to pay CVD based on the declared RSP is untenable. As per the Standards of Weights and Measures Act, 1976 the responsibility lies squarely with the importer to accurately declare the prevailing RSP at the time of importation. Also in view of the statement of witnesses corroborating that dealers did not alter the MRP stickers independently, the findings arrived at in the 6 Customs Appeal No. 50542 of 2022 [DB] order under challenge are mentioned to have no infirmity. The appeal is accordingly prayed to be dismissed.
5. Having heard both the parties and perusing the entire records, We observe following to be the admitted fact:
(i) At the time of examination of goods in the import shed itself, the quantity declared was found correct.
(ii) The stickers containing all requisite particulars vis-à-vis the imported goods were duly found affixed on the outer side of the master cartoon box as well as on the retail packs
(iii) Representative samples of goods were drawn from the consignments and sealed.
(iv) Goods were detained vide Panchnama dated 18.05.2017 however were later released provisionally pursuant to letter dated 21.06.2017 after the bank guarantee and the bonds were furnished by the appellant.
(v) The differential MRP was found on the stickers affixed on the items as were collected from the retailers of the appellant during a market survey.
(vi) Appellant was neither informed about the said market survey nor was called upon during the said survey.
6. we further observe that based on these admitted facts following three allegations were raised in the impugned show cause notice:
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Customs Appeal No. 50542 of 2022 [DB]
(i) Since font size and style of stickers found on the cartoons of the goods imported vide Bill of Entry No.9676716 were found almost identical with both the MRP stickers on the goods purchased from two different shops of open market, the origin of both the type of MRP stickers is alleged to be same i.e. belonging to the manufacturer/the appellant.
(ii) The appellant is the direct beneficiary of the act of alteration of MRP which is why the appellant has enhanced the MRP on three best selling products to get the undue benefit.
(iii) The correspondences made by the appellant with the dealers and retailers and correspondence made by him with Flipkart, Amazon and Snapdeal in the forms of emails are alleged to be back dated.
These allegations have been levelled based upon the statements recorded by the investigating agency during the investigation.
7. We further observe that the officers who conducted the investigation, the proprietor of M/s. Sky Solution namely Vinod Khurana and proprietor of M/s. Bajaj Sales Corporation namely Shri Eshan Bajaj (the son of proprietor) were being cross examined by the appellant. It is apparent that during cross-examination the investigation officers have admitted about not drawing any sample from M/s. Moon Enterprises. It is important at this stage to take note of the fact that M/s. Moon Enterprises is the distributor of the appellant with whom appellant admittedly communicates/interacts. The officers also admitted that there was no adverse admission in 8 Customs Appeal No. 50542 of 2022 [DB] the statement of the Director of appellant about the alleged mis- declaration and about altering of MRP stickers by the appellant. Emails written by appellant to FlipKart, Amazon, Snapdeal are also acknowledged to be of no relevance. This acknowledgment in the cross examination of investigation officers falsify the entire show cause notice served upon the appellant.
8. The proprietors of the retailers while being cross examined are observed to have admitted that the alleged samples drawn from the goods imported by the appellant were not shown to them. It has also been their admission that if 5 or 6 such samples would have been shown to them, they would not be able to identify the samples bought from them during market survey. It has also come as a relevant fact that the invoice of the sample stated to have been purchased from them is dated 09.07.2017 i.e. it was issued after implementation of GST whereafter CVD has lost itself significance. With respect to alteration in MRP stickers, the retailers admitted that they used to sell the goods of the appellant as received from the distributor of appellant i.e. M/s. Moon Enterprise. But apparently no investigation has been conducted vis-à-vis said distributor M/s. Moon Enterprises nor any sample was drawn/purchased from the goods with the distributor, despite the fact that distributor was the most proximate and only connect with the appellant in the chain with retailers at the end.
9. The another apparent deposition that got revealed during cross examination of these proprietors is that there was no flow back of money from their account to the account of the appellant. This testimony of the proprietors from whom the samples were 9 Customs Appeal No. 50542 of 2022 [DB] purchased by the department, it is clear that the appellant was not directly selling his goods to these retailers. The goods were sold to distributors M/s. Moon Enterprise with proprietor Ms. Anju Rastogi. Her statement has vehemently been denied by the appellant still his request to cross examine her has been wrongly denied. The authority has hurried to decide the matter that too without any evidence to support the allegations of the show cause notice as observed above. In such circumstances the statement of Ms. Anju Rastogi even if it is recorded under section 108 of the Customs Act, 1962 but can not be relied upon to confirm the allegations and the demand based thereupon against the appellant as the she has not been cross-examined. Section 138 C of the Customs Act prohibits the admissibility of such statements. We draw our support from the decision of Hon'ble Supreme Court in the case of Andaman Timber Industries Vs. Commissioner of C. Ex., Kolkata - II reported as 2015 (324) ELT 641 (SC) and also on the decision of Arya Abhushan Bhandar Vs. Union of India reported as 2002 (143) ELT 25 (SC).
10. Rule 5 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008 has been relied upon by the department while confirming the impugned demand. We observe that the said rule is vis-a-vis a manufacturer who alters or tempers the retail sale price declared on the package of the goods after their removal from the place of manufacture resulting in increase of price and in such situation the said increase price shall be taken as retail sale price of the goods removed. However, since the appellant herein is the importer as different from the manufacturer the said 10 Customs Appeal No. 50542 of 2022 [DB] rule is held to has wrongly been invoked. The apparent and admitted fact on record remains is that the MRP sticker found present on the product examined at import shed was true as per the declaration in the import documents. The alteration was found at a later stage when the goods were already reached the domestic market to the retailers through the distributor of the appellant. The only basis that origin of both types of MRP stickers i.e. from two different retailers is same has wrongly be held to be an evidence against appellant to have altered those stickers. Thus, we hold that there is no evidence whatsoever on record that the alleged alteration in the MRP was done by the appellant or with the consent and/or knowledge of the appellant. As already brought to notice that there is no evidence for any flow back of money to the appellant. The onus was upon the department to prove that any money has come back to the appellant. On the contrary, the proprietors of the retailers have denied sending any money back to the appellant. We hold that demand has been confirmed on the basis of presumptions and surmises. We rely upon decision of this Tribunal in the case of Videocon International Ltd. Vs. Commissioner of C. Ex. Aurangabad reported as 2004 (167) ELT 33 (Tri.-Mumbai).
11. Finally keeping in view that the two samples withdrawn for verifying the value from the open market, one invoice in that regard is post GST regime so is invalid and cannot be applied to the instant case and it is not clear that the same piece was sold under invoice produced as evidence by the department. Secondly department has failed to produce any evidence that the goods purchased on 11 Customs Appeal No. 50542 of 2022 [DB] those two invoices are same as have been imported by the appellant. The similarity of font size is nothing more than the presumption and assumption on part of department. In light of these observations, we are not in agreement with the findings in the order under challenge. Hence we hold that the goods in the present case are not liable for being confiscated in terms of Section 111 (m) of the Customs Act, 1962. There is no circumstance apparent which warrants the imposition of penalty. Consequently, the order under challenge is hereby set aside and the appeal is hereby allowed.
[Order pronounced in the open court on 14.11.2024] (DR. RACHNA GUPTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) HK