Custom, Excise & Service Tax Tribunal
Enterprise International Ltd. vs Kolkata-Port on 9 May, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Customs Appeal No. 75764 of 2023
(Arising out of Order-in-Original No. KOL/CUS/COMMISSIONER/PORT/ADJN/07/2023
dated 18.08.2023 (issued on 21.08.2023) passed by the Commissioner of Customs
(Port), Custom House, 15/1, Strand Road, Kolkata - 700 001)
M/s. Enterprise International Limited : Appellant
2nd Floor, Unit No. 2A(S),
3, Woodburn Park,
Kolkata - 700 020
VERSUS
Commissioner of Customs (Port) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
WITH
Customs Appeal No. 75765 of 2023
(Arising out of Order-in-Original No. KOL/CUS/COMMISSIONER/PORT/ADJN/07/2023
dated 18.08.2023 (issued on 21.08.2023) passed by the Commissioner of Customs
(Port), Custom House, 15/1, Strand Road, Kolkata - 700 001)
M/s. Aahana Commerce Private Limited : Appellant
2 Floor, Unit No. 2A(S),
nd
3, Woodburn Park, Malaylay,
Kolkata - 700 020
VERSUS
Commissioner of Customs (Port) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
WITH
Customs Appeal No. 75766 of 2023
(Arising out of Order-in-Original No. KOL/CUS/COMMISSIONER/PORT/ADJN/07/2023
dated 18.08.2023 (issued on 21.08.2023) passed by the Commissioner of Customs
(Port), Custom House, 15/1, Strand Road, Kolkata - 700 001)
M/s. Chemsilk Commerce Private Limited : Appellant
1B, Mayfair Road,
Kolkata - 700 019
VERSUS
Commissioner of Customs (Port) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
Page 2 of 34
Appeal No(s).: C/75764-75767/2023-DB
AND
Customs Appeal No. 75767 of 2023
(Arising out of Order-in-Original No. KOL/CUS/COMMISSIONER/PORT/ADJN/07/2023
dated 18.08.2023 (issued on 21.08.2023) passed by the Commissioner of Customs
(Port), Custom House, 15/1, Strand Road, Kolkata - 700 001)
Aditya Sarda : Appellant
2nd Floor, Unit No. 2A(S),
3, Woodburn Park,
Kolkata - 700 020
VERSUS
Commissioner of Customs (Port) : Respondent
Custom House, 15/1, Strand Road,
Kolkata - 700 001
APPEARANCE:
Shri Sudhir Mehta, Advocate for the Appellant(s)
Assisted by Shri Anurag Bagaria, Advocate
Shri Subrata Debnath, Authorized Representative for the Respondent
CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL)
HON'BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)
FINAL ORDER NOs. 75878-75881 / 2024
DATE OF HEARING: 01.05.2024
DATE OF DECISION: 09.05.2024
ORDER:[PER SHRI K. ANPAZHAKAN] M/s. Enterprise International Ltd., M/s. Aahana Commerce Pvt. Ltd. and M/s. Chemsilk Commerce Pvt. Ltd., are closely held companies of Mr. Aditya Sarda and all the three appellants are sister companies. The appellants carries on the business of import of various types of textile yarns. In usual course of business the appellants import Flax yarn of various types from the foreign sellers namely viz. Tung Ga Linen & Cotton (Changzhou) Co. Ltd. of China and Zhejiang Jinyuan Flax Co. Ltd., Grand Dignity Page 3 of 34 Appeal No(s).: C/75764-75767/2023-DB Industrial Co limited, Star Enterprises (H.K.) Limited, Zhejiang Jiaxin Silk Corpn. Limited and others through its indenting agents.
2. Flax yarn attracts Anti-Dumping Duty by a Notification No. 53/2018 dated 18th October 2018 which have different rates of Anti-Dumping Duty on the basis of the manufacturer and supplier mentioned therein.
3. The goods supplied by Tung Ga Linen & Cotton Changzhou Co. Ltd . attracts antidumping duty of 0.50 US$ per M.T. and goods supplied by Zhejiang Jainyon Flax Co. Ltd. attracts Anti-Dumping Duty of 2.42 US $ per M.T. and for all others rate of Anti-Dumping Duty is 4.883 US$ per M.T.
4. Directorate of Revenue Intelligence, Pune initiated an investigation against all the three appellants on the basis of the intelligence that the appellants have undervalued the Flax yarn imported by them and not paid appropriate Anti-Dumping Duty. On the basis the investigation, a Show Cause Notice dated 22.11.2021 under Section 28(4) of the Customs Act, 1962 was issued to all the appellants demanding Anti-Dumping Duty and Customs duty aggregating to Rs. 2.65 Crores along with interest and penalty.
5. The subject Show Cause Notice altogether covers 26 bills of entry out of which 8 bills of entry relate to M/s. Aahana Commerce Pvt. Ltd., 9 bills of entry relate to Enterprise International Ltd. and 9 bills of entry relate to M/s. Chemsilk Commerce Pvt. Ltd. In respect of all the 26 Bills of Entry, the assessable values declared by the appellants were rejected and the values were re-determined as per the values of Page 4 of 34 Appeal No(s).: C/75764-75767/2023-DB 'similar goods' available in NIDB data and differential duty has been demanded. In respect of 7 Bills of Entry it was alleged that the appellant has not paid appropriate Anti-Dumping Duty and differential Anti- Dumping Duty was also demanded. The details of Bills of Entry and the re-determined values and the differential Anti-Dumping duty demanded in the Notice is summarized and tabulated below:
AAHANA COMMERCE PVT. LTD.
SL BE NO. & REDETERMINED DISPUTED
NO DATE ASSESSABLE ADD AMOUNT
VALUE (RS.) (RS.)
1 8953712 dt 6421716.00 2274289.00
22.11.2018
2 2362528 dt 5658345.00 944698.00
11.03.2019
3 2746388 dt 4673749.00 915673.00
08.04.2019
4 6819238 dt 4797388.00 N.A
15.06.2018
5 8250636 dt 5310953.00 N.A
29.09.2018
6 2985516 dt 10649549.00 N.A
25.04.2019
7 8193993 dt 5581197.00 N.A
25.09.2018
8 8379859 dt 5550911.00 N.A
09.10.2018
Page 5 of 34
Appeal No(s).: C/75764-75767/2023-DB CHEMSILK COMMERCE PVT. LTD.
SL BE NO. & REDETERMINED DISPUTED
NO DATE ASSESSABLE ADD AMOUNT
VALUE (RS.) (RS.)
1 9015071 dt 5689791.00 2277354.00
27.11.2018
2 9254180 dt 7273728.00 2460566.00
14.12.2018
3 9694435 dt 7309210.00 2472569.00
18.01.2018
4 9977942 dt 4714487.00 2160183.00
08.02.2019
5 8193684 dt 4754093.00 N.A
25.09.2018
6 7218951 dt 6197724.00 N.A
16.07.2018
7 7273172 dt 5784542.00 N.A
30.07.2018
8 6820243 dt 5977721.00 N.A
15.06.2018
9 7416309 dt 5260637.00 N.A
30.07.2018
ENTERPRISE INTERNATIONAL LTD.
SL BE NO. & REDETERMINED DISPUTED
NO DATE ASSESSABLE ADD AMOUNT
VALUE (RS.) (RS.)
1 5777918 dt 5971350.00 N.A
29.03.2018
2 5936793 dt 9567494.00 N.A
11.04.2018
3 6819239 dt 6179778.00 N.A
15.06.2018
4 6040467 dt 5136074.00 N.A
19.04.2018
Page 6 of 34
Appeal No(s).: C/75764-75767/2023-DB 5 6403030 dt 5078295.00 N.A 16.05.2018
6 6490509 dt 5052822.00 N.A 23.05.2018 7 6870732 dt 4854797.00 N.A 20.06.2018 8 6969562 dt 4984264.00 N.A 27.06.2018 9 8331416 dt 5874750.00 N.A 05.10.2018
6. The Notice was adjudicated by the Ld. Commissioner of Customs (Port) vide the impugned order dated 18.08.2023, wherein he has confirmed differential ADD and differential customs duty on account of undervaluation totally amounting to Rs. 2.65 Crores along with interest and penalty on the Appellant importers. Penalty of Rs.10,00,000/- under Section 112(a) and Rs.5,00,000/- under Section 114AA has been imposed on the common Director Shri Aditya Sarda. Aggrieved against the confirmation of the above demands and imposition of penalties, all the four appellants have filed these appeals.
7. At the outset, the appellant submits that in the Show cause Notice e-mails were relied upon without being certified under Section 65 of the Indian Evidence Act and Information Technology Act, 2000, which mandatorily required certification of documents. Similar provisions are also embodied under Section 138C of the Customs Act, 1962.
7.1. The appellant also raised another preliminary objection that the Notice was not decided within the time-period prescribed in Section 28(9) of the Page 7 of 34 Appeal No(s).: C/75764-75767/2023-DB Customs Act and there was no extension granted by any Officer senior in rank to the Proper Officer as mandated in Section 28(9) of the Customs Act. Accordingly, he submits that the impugned order is not maintainable and liable to be set aside on this ground alone.
8. The Appellants submits that differential Anti- Dumping Duty (hereinafter referred to as 'ADD') has been demanded in respect of 7 Bills of Entry out of which 4 Bills of Entry were filed by M/s. Chemsilk Commerce Pvt. Ltd. and 3 Bills of Entry were filed by Aahana Commerce Pvt. Ltd. As per Notification 53/2018 -Customs (ADD) dated 18.10.2018, Anti- Dumping duty is payable on flax yarn of below 70 Lea, when originating in or exported from China. As per the above said notification ADD @ USD 0.50/kg is payable when imported from the manufacturer Tung Ga Linen & Cotton (Changzhou) Co. Ltd (hereinafter referred as 'Tung Ga'). ADD @ 2.42 USD/Kg is payable when the flax yarn below 70 Lea is imported from the manufacturer Zhejiang Jinyuan Flax Co. Ltd. (hereinafter referred as 'Zhejiang'). It is submitted that ADD @ 4.83 USD/kg. is payable when the flax yarn below 70 Lea is not imported from the manufacturer directly.
8.1. The appellants submits that the Department initiated investigation against them on the basis of a letter dated 29.03.2019 written by Tung Ga to DRI, Pune, informing that that they have not made any export of flax yarn of below 70 Lea, to India after the imposition of ADD vide the Notification No. 53/2018 dated 18.10.2018. In the letter written by Tung Ga, Page 8 of 34 Appeal No(s).: C/75764-75767/2023-DB it has been alleged that certain importers from India have filed Bills of Entry claiming to have imported from Tung Ga by filing deceptively similar invoices issued by Tung Ga after 18.10.2018 and claimed the benefit of ADD @ 0.50 USD. The letter further claimed that Tung Ga have not made any export of flax yarn of below 70 Lea to India after 18.10.2018. Accordingly, ADD has been demanded in respect of all the 7 Bills of Entry and differential ADD has been confirmed in the impugned order.
8.2. In this regard, the appellants submit that they have imported the flax yarn below 70 Lea through their indenting agents, who submitted the Manufacturer's Invoice issued by Tung Ga along with the export consignments. Thus, they contended that there is no truth in the allegation of fabricated invoices submitted by them to avail lower ADD @0.50 US$ per Kg. The contents of the letter are contrary to the statutory documents such as bills of lading and the country of origin certificates submitted them. These documents are presumed to be true under Commercial Document Evidence Act, 1939. The appellants made payment to Tung Ga which were used for discharge of Bills of Lading. The shipping Company would deliver the goods on the instructions of Tung Ga, who was the consignor. Without release order of Tung Ga, delivery order could not have been issued. There is no evidence from the shipping company that delivery instructions were not given by Tung Ga. These are factual situations from which inescapable conclusion can be drawn that alleged complaint by Tung Ga was not actually issued by Tung Ga. The appellants have placed this suspicion before the adjudicating authority, but he did not contradict Page 9 of 34 Appeal No(s).: C/75764-75767/2023-DB their submissions which amounts to admission by the adjudicating authority. It is a settled principal of law that facts pleaded but not denied amounts to admission. The presumption under the Commercial Document Evidence Act, 1939 could not be rebutted by non-admissible and hearsay evidences of e-mail, etc. which were neither true nor authenticated. The Bills of Lading are certified by the competent authority wherein it has been categorically stated that the goods were of Chinese origin manufactured by Tung Ga. They have filed the Invoices issued by Tung Ga along with the Bills of Entry and paid appropriate ADD @0.50 USD/Kg.
8.3 The appellants submit that they questioned the veracity of the letter said to have been written by the manufacturer Tung Ga. During the course of personal hearing, they had pointed out to the ld. adjudicating authority that the emails relied upon are suspicious documents and there is no certification so as to make it admissible and there are glaring indications that emails are fabricated. They pointed out certain discrepancies in the contents of the letter and claimed that the letter is fake and it cannot be relied upon to demand ADD at the higher rate. However, the adjudicating authority but he failed to take cognizance of their submissions and went ahead to confirm the differential ADD. Since the letter dated 29.03.2019 itself is fake, the documents such as Invoices said to have been attached with that letter also has no relevance. Accordingly, they submit that differential ADD cannot be confirmed on the basis of the invoices said to have been attached along with the letter.
Page 10 of 34Appeal No(s).: C/75764-75767/2023-DB
9. Regarding the allegation of undervaluation, the appellant submits that they have imported these goods in usual course of their business where the price was the sole consideration for sale and there was no relationship of any nature whatsoever between the respective appellants and the foreign seller. The transaction value declared by them was the correct value under Section 14 of the Customs Act, 1962. All the three appellants together filed 26 bills of entry for home consumption for clearance of goods which were assessed to duty and the appellants paid the duty assessed and the assessment order became final and binding. The Department has not given any valid ground for rejection of the assessable values declared by them in the Bills of Entry. The valuation dispute was raised by the department on the basis of certain e-mails and related documents which were sent by its trade rival viz. M/s. Texventure LLP. The documents sent by Texventure LLP. were fabricated. The truncated emails were used without certification. However, the ld. adjudicating authority has accepted those documents and treated them as representing the transaction value. Thus, the appellants argued that the rejection of transaction value is bad in law.
9.2. It is further submitted that the valuation dispute has been raised not on the basis of any comparable contemporaneous imports but on the basis of selectively picked up data which is not permissible for challenging the transaction value; the goods are not comparable without histograms of yarn which were part of the import documents which show the strength and quality of the product. Only size is not a marker. It is submitted that the ld. adjudicating authority has accepted the markers such as breaking force, Page 11 of 34 Appeal No(s).: C/75764-75767/2023-DB elongation, speed, tensil test, etc., required for comparing the goods and he fairly conceded that he has no data except "description of goods" (paragraph 29 of the order); the description of the goods alone would not be sufficient for comparison; without any contemporaneous import of similar goods the transaction value cannot be rejected.
9.3. The appellants further submits that they had submitted import data where the imports have been made by other importers at the same and near rate; the ld. adjudicating authority rejected those data by holding that supplier's name is not mentioned therein but the learned adjudicating authority has applied the value wherein only the description matches. Thus, the ld. adjudicating authority has erred in not applying the same yardstick which he applied for confirming the demands, which makes the adjudication order perverse.
9.4. The appellants submit that the documents filed by them such as Bill of Lading and certificate of origin which came from Tung Ga were not disputed in spite of various correspondence made by the DRI in this connection; the ledger of Tung Ga was seized at the appellants' office premises and there is no dispute on such ledger; the indenter has sent e-mail certifying that the goods had been received from Tung Ga; the mail which is being relied upon by DRI, has been disowned by the Company; it was perverse on the part of the ld. adjudicating authority to hold that the goods did not come from Tung Ga. Accordingly, the appellants submit that the demands of duty confirmed on the ground of 'undervaluation' is not sustainable.
Page 12 of 34Appeal No(s).: C/75764-75767/2023-DB
10. The Ld. Authorized Representative appearing for the Revenue reiterated the findings in the impugned order. He relied on the e-mail and submitted that its contents are true. The demands have been confirmed on the basis of documents enclosed along with the e-mail. Thus, he supported the demands confirmed in the impugned order.
11. Heard the parties and perused the appeal documents.
12. At the outset, the appellants raised a preliminary objection regarding maintainability of the impugned order. It was submitted that as per Section 28(9) of the Customs Act, 1962, the Proper Officer has to decide the case within a period of six months or one year from the date of issue of the Notice and in case the same is not decided within the period specified in Section 28(9) of the Act, any Officer senior in rank to the Proper Officer should give extension for a further period of six months or one year.
12.1. The Ld. Counsel appearing on behalf of the appellants submits that in the present case, the Show Cause Notice was issued on 22.11.2021 and the ld. adjudicating authority has passed the adjudication order on 21.08.2023, which is beyond the period of one year from the date of issue of the Notice. He submits that the Notice was not decided within the time-period prescribed in Section 28(9) of the Customs Act; there was no extension granted by any Officer senior in rank to the Proper Officer as mandated in Section 28(9) of the Customs Act. Accordingly, he submits that the impugned order is Page 13 of 34 Appeal No(s).: C/75764-75767/2023-DB not maintainable and liable to be set aside on this ground alone.
12.2. The contention of the appellants is that the Notice has not been decided within the time-period prescribed in Section 28(9) of the Customs Act. For the sake of ready reference, the said Section 28(9) of the Customs Act, 1962 is reproduced below: -
"SECTION 28. Recovery of duties not levied or not paid or short-levied or short-paid or erroneously refunded. --
.
.
.
(9) The proper officer shall determine the amount of duty or interest under sub-section (8), --
(a) within six months from the date of notice, in respect of cases falling under clause
(a) of sub-section (1);
(b) within one year from the date of notice, in respect of cases falling under sub-section (4).
Provided that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year :
Provided further that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued."Page 14 of 34
Appeal No(s).: C/75764-75767/2023-DB 12.3. From the above, we observe that with effect from 29.03.2018, a proviso to Section 28(9) has been inserted mandating that the Proper Officer is required to get an extension from the Officer superior to him in rank if the Show Cause Notice could not be adjudicated within the period stipulated in the said Section. Admittedly, in this case, the Show Cause Notice was issued on 22.11.2021 and the said Notice was not adjudicated within the time-limit specified in Section 28(9) of the Customs Act. We also find that no extension has been granted by any officer senior in rank to the proper officer as provided in the proviso to Section 28(9) of the Act.
12.4. The Ld. Authorized Representative for the respondent has submitted that the impugned Notice has been adjudicated by the Ld. Commissioner whereas the Ld. Assistant Commissioner is the Proper Officer for assessing the Bills-of-Entry; that since the Ld. Commissioner has adjudicated the case, it is deemed that extension has been granted by an Officer senior to the Proper Officer.
12.5 We do not agree with the submission of the Ld. Departmental Representative that adjudication of the case by an officer senior to proper officer would amount to granting of deemed extension. We observe that the proviso to Section 28(9) clearly stipulates that in case the adjudication is not done within the time limit stipulated, then the Officer senior in rank to the Proper Officer must grant extension in such cases.
Even if an Officer senior to the Proper Officer adjudicates the case, a formal extension must be Page 15 of 34 Appeal No(s).: C/75764-75767/2023-DB obtained as mandated in Section 28(9) of the Act, which has not been done in the instant case.
12.6. Accordingly, we find merit in the contention of the appellants that the impugned order is liable to be set aside on this ground alone.
13. Regarding the merits of the case, we observe that the following issues arise for consideration in these appeals: -
(1) Whether the appellants are liable to pay differential Anti-Dumping Duty in respect of the 7 Bills-of-Entry or not.
(2) Whether the values declared by the appellants in all the 26 Bills-of-Entry is liable to be rejected and the values re-determined by the ld. adjudicating authority in the impugned order based on the price available of similar goods in the NIDB data is acceptable in the facts and circumstances of the case or not.
(3) Whether or not the penalty imposed on the appellants is sustainable.
Issue (1): Whether the appellants are liable to pay differential Anti-Dumping Duty in respect of the 7 Bills-of-Entry or not.
14. Regarding the demand of ADD in the impugned order, we observe that ADD has been demanded vide Notification No. 53/2018-Cus.(ADD) dated 18.10.2018. This Notification fixed different rates of Page 16 of 34 Appeal No(s).: C/75764-75767/2023-DB ADD on the basis of manufacturers and suppliers from China. Out of the 26 Bills-of-Entry filed by the appellants, ADD has been demanded in respect of 7 Bills-of-Entry. We observe that out of these 7 Bills-of- Entry, the appellants claimed that they imported Flax Yarn from Tung Ga in respect of 5 Bills-of-Entry and in respect of the other 2 Bills-of-Entry, they imported Flax Yarn from Zhejiang.
15. The Department has demanded ADD at the rate of 4.83 USD per kg. in respect of the 5 Bills-of-Entry filed where the goods have been claimed to be imported from Tung Ga, on the allegation that the letter dated 29.03.2019 was written by the manufacturers to DRI, Pune informing that they have not made any exports to India after imposition of ADD vide the Notification No. 53/2018. The said letter further alleged that some importers have used deceptively similar invoices issued by Tung Ga and claimed ADD at 0.50 USD per kg. On the basis of this letter, the ld. adjudicating authority has confirmed the differential ADD in respect of the 5 Bills-of-Entry where the appellants claimed that the goods had been imported from Tung Ga.
15.1. In this regard, the appellants submission is that the letter dated 29.03.2019 is not genuine and thus the documents said to have been attached to the said letter cannot be relied upon to demand differential ADD. For the sake of ready reference, the relevant pages of the said letter dated 29.03.2019 are reproduced below:-
Page 17 of 34Appeal No(s).: C/75764-75767/2023-DB ........Page 18 of 34
Appeal No(s).: C/75764-75767/2023-DB 15.2. From the above, we observe that the manufacturer viz. Tung Ga has apparently written the letter on 29.03.2019, which was received by the office of DRI, Pune on 05.04.2019. The veracity of the letter has been questioned by the appellant on the basis of the contents available in para 5 of the letter.
Paragraph 5 of the above letter contains the following information:
"...On a reading of the invoice it appears that the invoices are dated 28th September 2019, 30th September 2019 and 15th November 2019 and the shipment of goods against these invoice were on 28th September, 2019, 9thNovember, 2019 and 21st November, 2019 respectively.."
15.3. The appellant contended that the letter said to have been written by Tung Ga, on 29.03.2019, contains details about invoices issued in the months of September, 2019 and November, 2019, which is not possible.
15.4. We find that the letter written on 29th March, 2019 contains details of invoices issued in the months of September and November, 2019, which dates are subsequent to the date of issue of the letter itself. If this letter is actually written on 29th March 2019, then it cannot contain any information subsequent to that date. Since the letter dated 29.03.2019 contains information on invoices issued in the months of September 2019 and November 2019, we agree with the contention raised by the appellants that there is suspicion about the genuineness and veracity of the said letter.
Page 19 of 34Appeal No(s).: C/75764-75767/2023-DB 15.5. Accordingly, we hold that the demand cannot be raised on the basis of the letter dated 29.03.2019 or the documents said to have been attached along with the said letter.
15.6. The appellant submitted that after October 2018, there were many importers who filed Bills-of- Entry claiming that the goods have been imported from Tung Ga. They have submitted these details before the ld. adjudicating authority but the same were not taken into consideration by the ld. adjudicating authority while passing the impugned order.
15.7. Regarding the genuineness of the invoices submitted by them, they stated that they have enclosed the manufacturer's invoice sent to them by the indenting agents; they have enclosed the Bill-of- Lading certifying the country of origin and the manufacturer as "Tung Ga Linen & Cotton Changzhou Co. Ltd.". They made payments to Tung Ga, which were used for discharge of Bills-of-Lading. Their shipping company would deliver the goods on the instruction of Tung Ga and without the release order from Tung Ga, delivery order of the goods could not have been issued. It was contended that there is no evidence from the shipping company that delivery instructions were not given by Tung Ga in this regard; the ld. adjudicating authority has not given any finding regarding the above said submissions made by them. We also find that the manufacturer's invoice submitted by the appellants have not been proved to be fake.
Page 20 of 34Appeal No(s).: C/75764-75767/2023-DB 15.8. The appellants have cited another instance of discrepancy to establish that the mail relied upon in the impugned order was fake and the invoice issued to them was genuine.
15.9. They referred to a email dated 05.07.2019 sent by the DRI to Shri Siddharth Mehta, Partner of Texventures LLP., who is the authorized representative of Tung Ga in India. The said email is reproduced below: -
Page 21 of 34Appeal No(s).: C/75764-75767/2023-DB 15.10. In reply to the said letter, Mr. Siddharth Mehta has given a reply vide his email dated 08.07.2019 in which the company has affirmed that the invoices submitted by the appellants are genuine.
The said reply email is extracted below: -
15.11. When there is a confirmation about the genuineness of invoices from the representative of the manufacturer, there is no reason to reject the same.Page 22 of 34
Appeal No(s).: C/75764-75767/2023-DB Accordingly, we hold that the invoices filed by the appellant along with the 5 Bills-of-Entry are genuine. Hence, the ADD paid by them in respect of the 5 Bills- of-Entry at the rate of 0.50 USD per kg. is in order.
15.12. Thus, we hold that the differential ADD confirmed in respect of the 5 Bills-of-Entry in the impugned order is not sustainable.
16. In respect of the remaining 2 Bills-of-Entry, we observe that the appellants have filed these Bills-of- Entry claiming that the goods have been imported from Zhejiang. However, at the time of assessment, the Assessing Officer has charged ADD at the rate of 0.50 USD per kg as against the ADD payable at the rate of 2.42 USD per kg in respect of the imports made from Zhejiang.
16.1. In respect of these two Bills-of-Entry, we observe that the appellants have not made any mis- declaration while filing the Bills of Entry. They have declared the name of the supplier/exporter correctly as Zhejiang in the said Bills-of-Entry. It is the responsibility of the Department to charge appropriate ADD as per the declaration made by an importer. However, in the instant case, the Assessing Officer has collected ADD at the rate of 0.50 USD per kg. by mistake. The differential duty short paid by the appellant can be collected within the normal period, as there is no mis-declaration or suppression fact involved.
Page 23 of 34Appeal No(s).: C/75764-75767/2023-DB 16.2. For ready reference, the said Bills-of-Entry are reproduced hereinbelow: -
These Bills-of-Entry were filed by the appellants on 31.01.2019 and 09.03.2019.
16.3. The demand, if any, for the short-paid ADD could have been issued within a period of one year from the date of payment of ADD. However, in this case, the Notice has been issued on 22.11.2021 which is much beyond the normal period of limitation. As no suppression of fact with intent to evade payment of duty exists in this case, we hold that the demand of ADD by invoking the extended period of limitation is not sustainable.Page 24 of 34
Appeal No(s).: C/75764-75767/2023-DB 16.4. Accordingly, we hold that the ADD demanded in respect of the 2 Bills-of-Entry is also not sustainable, on the ground of limitation.
17. In view of the above, we hold that the differential ADD confirmed in the impugned order in respect of all the 7 Bills of Entry are not sustainable and accordingly, we set aside the same. Since the demand of differential ADD is not sustainable, the question of demanding interest and imposing penalty on the same does not arise.
Issue (2): Whether the values declared by the appellants in all the 26 Bills-of-Entry is liable to be rejected and the values re-determined by the ld. adjudicating authority in the impugned order based on the price available of similar goods in the NIDB data is acceptable in the facts and circumstances of the case or not.
18. Regarding the allegation of undervaluation in the impugned order, we observe that the undervaluation has been alleged in respect of all the 26 Bills-of-Entry filed by the appellants. The appellants imported Flax Yarn and filed the shipping bills for home consumption. The Bills-of-Entry were assessed to duty and the appellants discharged the duty as per the assessment order. There were no objections raised about the value declared by the appellants at the time of assessment of the said Bills- of-Entry. The Department has not rejected the assessable value declared by them in the Bills-of- Entry.
Page 25 of 34Appeal No(s).: C/75764-75767/2023-DB 18.1. We observe that the value declared by the appellants in respect of some of the Bills-of-Entry were questioned during investigation on the basis of certain emails sent by M/s. Texventures LLP. In this regard, the appellants have contended that the documents sent by M/s. Texventures LLP. are fabricated and the emails were not certified; the contents available in the said email are suspicious. Accordingly, they questioned the veracity of the email and the documents attached thereto. For the sake of ready reference, the said email dated 20.05.2019 is reproduced below: -
Page 26 of 34Appeal No(s).: C/75764-75767/2023-DB 18.2. From the above, we observe that the said email is dated 20th May, 2019 and the details of the two invoices pertain to the dates 26th July and 27th September, 2019 are furnished therein. This clearly establish that the e-mail was not sent on 20th May.
The appellants submit that they asked for the IP address from where the e-mail has been sent, but it was not furnished. Thus, we observe that there is merit in the contention of the appellants that the emails are fabricated. Accordingly, we hold that the attachments therein cannot be relied upon to reject the value declared by the appellants in the Bills-of- Entry.
18.3. Accordingly, we hold that the allegation of undervaluation in respect of all the 26 Bills of Entry are not established. Hence, the demand of differential customs duty confirmed in the impugned order on account of undervaluation is not sustainable and hence we set aside the same.
18.4. We observe that the value declared by the appellant has been rejected on the basis of the documents submitted by a third-party. The evidences submitted by the Department alleging that the documents submitted by the appellants were forged are not supported by any evidence. The evidence in the form of email dated 08.07.2019 submitted by the Department has suspicious contents and thus the same cannot be relied upon to reject the invoice value as declared.
18.5. Thus, we observe that the values declared by the appellants in the Bills of Entry were rejected without any cogent material; there was no document to show that there was a contemporaneous import of Page 27 of 34 Appeal No(s).: C/75764-75767/2023-DB identical or similar goods; without comparison of histogram of the yarn it was not possible to say whether goods are identical or similar.
18.6. There is no evidence available on the record to reject the genuineness of the invoices submitted by the appellants. The value declared by the importers in other Bills-of-Entry are not comparable as the quantity of goods or quality of goods imported cannot be ascertained to conclude as to whether the comparable import qualifies as identical goods or not.
18.7. Accordingly, we hold that the transaction value declared by other importers cannot be treated as the correct transaction value in respect of the goods imported by the appellants herein .The transaction value declared by the appellants cannot be rejected on the basis of a mere allegation by a third-party on the ground that the format of the invoice is not similar to theirs or other invoices issued by the manufacturer. Hence, we hold that the transaction value declared by the appellants in respect of the 26 Bills-of-Entry cannot be rejected and the assessable value re- determined by the Department in the impugned order is not based on any documentary evidence.
19. This view has been held by the Tribunal in the case of Commissioner of Customs, Chennai v. Sree Rajendra Textiles [2023 (386) E.L.T. 597 (Tri. - Chennai)], wherein it was observed as under: -
"17. On perusal of the order of the lower adjudicating authority, it is clear that reliance is placed on the values of imports effected in certain Bills of Entry during the relevant time mainly depending upon general description of the goods and the country of origin. Crucial commercial details of these consignments on which reliance is placed to determine contemporaneous prices as to the type, quality, quantity imported whether under any contract or Page 28 of 34 Appeal No(s).: C/75764-75767/2023-DB whether any advance paid or whether the supply from the manufacturer or trader or whether the import is from any stock lot, etc., are not ascertainable. There was no discussion by the original adjudicating authority as to how the values of contemporaneous imports of identical/similar goods have been arrived at. Further, the respondent has intimated the clearances of same commodity by other importers nearly at or around the same price during the relevant period during the adjudication proceedings. (Paragraph 11 supra)
18. We find there was no allegation that the importer has mis-declared the description of goods or whether any excess quantity found or whether there is any other mis- declaration as to any other aspect in relation to imported goods. All the silk was imported in terms of the contracts entered with various suppliers as agreed upon with the contracting parties. There is no allegation that any amount over and above the contracted price was paid by the importer to the supplier. Further, there is no allegation that the importer is related to the suppliers other than being a contracted party or the price paid was influenced by any other consideration.
.
.
.
22. The impugned goods in all these appeals are imported in terms of various contracts entered into with the suppliers abroad. If any condition of the contract is contravened, it is for the contracting parties to settle among themselves and raising a doubt about the validity of the contract is not proper in the absence of any evidence that such a contract is entered into with any ulterior motive affecting the price. Further, revenue has discredited the contract prices as the respondent has not reportedly imported the entire contracted quantities. From the Show Cause Notice, the Order-in-Original and records, contract numbers and the quantity contracted for import are only mentioned as detailed in Paragraph 10(b) supra. Actual total quantity imported and how much is the shortfall and how it is to affect the transaction prices declared is not forthcoming.
....
25. The Ld. Authorised Representative and Ld. Advocate have referred to many judicial decisions as detailed in the above paragraphs. But, the facts obtaining in these appeals are clearly distinguishable. There is nothing illegal or improper in suspecting the declared values of imported silk by the appellant. But, under valuation has not been conclusively proved by the Revenue. We agree Page 29 of 34 Appeal No(s).: C/75764-75767/2023-DB with the decision of the lower appellate authority that there was no clinching evidence for rejecting the transaction values declared. In these appeals the assessing authority has enhanced the declared values of the impugned goods on the basis of contemporaneous imports pertaining to some other importers of identical/similar goods during the relevant period. At the same time, the importer also has given the details of various Bills of Entry evidencing imports by other importers like Mahalakshmi Silk Trading, Kaveri Silk & Jute P. Ltd., at around the similar prices which were accepted and cleared by the Department. In the absence of giving all the details relating to contemporaneous imports of goods in respect of quantity, quality, type, country of origin whether of contract or not etc., which are having a bearing on the price placing reliance on only certain imports is not in accordance with the scheme of valuation envisaged under the provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007."
20. We also note that in the case of Andhra Sugars Ltd. v. Commissioner of Customs, Vishakhapatnam [2006 (193) E.L.T. 68 (Tri. - Bang.)],the Tribunal has held that: -
"12. After giving careful consideration to the submissions made before me, I find it difficult to persuade myself to endorse the stand taken by the Revenue on the facts of this case. The valuation of the subject goods is governed by the Customs Valuation Rules, 1988. These very rules had fallen for examination by the Apex Court in the case of Eicher Tractors (supra). The Apex Court rejected the Revenue's contention that Rule 4(1) allowed the ordinary international value of the goods to be ascertained on the basis of data other than the price actually paid for the goods. Their lordships, further, held that, in terms of Section 14(1) and Rule 4, the price paid by an importer to the vendor in the ordinary course of trade shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularized under Rule 4(2). The special circumstances particularized under Rule 4(2) were also reproduced in the Apex Court's judgment and the same are asunder :-
"(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which -Page 30 of 34
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(i) are imposed or required by law or by the public authorities in India; or
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;
(b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued;
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and
(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3)"
On going through the impugned order of the Commissioner (Appeals), I have not come across any clear finding as to which of the above circumstances existed in relation to the goods imported by the appellants. Though the impugned order says that the subject import falls within the exception contained in clause (b) above, there is no discussion on the point. In other words, ld. Commissioner (Appeals) has not established that any of the aforesaid exceptions/special circumstances did exist in relation to the subject import. Consequently, one has got to fall back on the transaction value of the imported goods. This, I think, will be in keeping with Rule 4 read with Section 14(1) as interpreted by the Apex Court in the case of Eicher Tractors (supra). There is no dispute of the fact that the subject goods were supplied to the appellants at a price agreed between them and their supplier. Again, the Revenue has no case that anything in excess of the agreed price was paid or payable by the appellants to their supplier under the contract, nor is it the case of the Revenue that the said price was influenced by any consideration other than commercial. In such circumstances, there is no justification for rejecting the transaction value of the goods. Yet another pertinent point, which is discernible from the facts of the case, is that the unit price of US $ 485 gathered by the department from contemporaneous import was in respect of a total quantity of 500 MTs of crude sunflower oil (Edible grade), whereas the subject matter of the present valuation dispute is a total quantity of 1000 MTs of Page 31 of 34 Appeal No(s).: C/75764-75767/2023-DB identical goods. Obviously, the department did not take into account this quantity difference while adopting the unit price of US $ 485 as standard for the purpose of assessment of the subject goods.
13. As rightly pointed out by ld. counsel, the case of Rajkumar Knitting Mills (supra) is distinguishable inasmuch as, in that case, the question which had arisen before the Apex Court was in relation to the relevant date for determination of value for assessment of Customs duty and it was held that the date of importation, and not the date of contract, was the relevant date for the such purpose. In that case, the price of goods covered by a contemporaneous import was accepted as the basis for determining the assessable value of the goods imported by the assessee. This, however, had nothing to do with the Customs Valuation Rules, 1988 as rightly noted by learned Member (Technical) of the regular bench. There is no parallel between the instant case and the case of Rajkumar Knitting Mills (supra) insofar as the valuation issue is concerned. Hence, in my considered view, the Apex Court's decision in Rajkumar Knitting Mills (supra) is of no aid to the Revenue in the present case. As regards the Supreme Court's judgment in Punjab Processors (supra) cited by ld. SDR, I note their lordships' observation that, while the Customs authorities, in assessing the value of import, are not bound by the figure mentioned in the invoice, they can rely on contemporaneous evidence to show that the invoice price is not the correct value. In the instant case, it was not the invoice alone but also the contract between the appellants and their supplier that provided the transaction value of the subject goods and the Customs authorities had no reason whatsoever to reject this value. Thus the Revenue cannot claim effective support from Punjab Processors (supra).
14. For the reasons already noted, I hold that the transaction value of the subject goods requires to be accepted, in this case, for the purpose of assessment to Customs duty. Accordingly, the appeal is allowed."
21. In view of the discussions above and by relying on the decisions cited above, we hold that the assessable values declared by the appellants in the 26 Bills of Entry cannot be rejected. Accordingly, we hold that the differential duty confirmed on the basis of the re-determined assessable value is not sustainable.
Page 32 of 34Appeal No(s).: C/75764-75767/2023-DB Issue (3): Whether or not the penalty imposed on the appellants is sustainable.
22. We observe that penalties have been imposed on the appellant companies on the ground that they have not paid appropriate ADD and short paid the customs duty on account of undervaluation. In view of the discussions above, it has been held that the demand of differential ADD and the demand of deferential customs duty on account of undervaluation is not sustainable. Since the demand of ADD and Differential customs duty is not sustainable, the question of demanding interest or imposing penalty on the appellant importers does not arise.
22.1. Regarding imposition of penalty on the common Director Mr. Aditya Sarda, we observe that his involvement in the alleged offence was established on the basis of the statement given by him on 9th July, 2019. We observe that he has retracted his statement dated 9th July by letter dated 10th July 2019 which was not responded to by the authorities concerned. As the department has not responded to the retraction made by Mr. Aditya Sarda on 10th July 2019 addressed to the Director General of DRI, Delhi, the purported statement dated 9th July 2019 cannot be relied upon to penalize him. Further, as discussed in the preceding paragraphs, the alleged offence of short payment of ADD and short payment of customs duty on account of undervaluation has not been established. Accordingly, we hold that the penalty imposed on the Director Shri. Aditya Sarda is not sustainable.
Page 33 of 34Appeal No(s).: C/75764-75767/2023-DB
23. In view of the above discussions, we summarize the findings as below:
(i) As per Section 28(9) of the Customs Act, 1962, the Proper Officer has not decide the case within the time period stipulated therein. No extension has been obtained from an officer higher in rank than the proper officer. Accordingly, the impugned order is not sustainable for violation of conditions stipulated in Section 28(9) of the Customs Act, 1962.
(ii) Out of the 7 Bills of Entry where differential ADD has been confirmed in the impugned order, the differential ADD confirmed in respect of the 5 Bills-of-Entry in the impugned order is not sustainable, as there is no evidence available to substantiate the allegation. The differential ADD confirmed in respect of the remaining 2 Bills-of-Entry in the impugned order, is not sustainable on the ground of limitation. Accordingly, the ADD confirmed in the impugned order is set aside.
(iii) The demand of differential customs duty confirmed in the impugned order on account of undervaluation is not sustainable and hence we set aside the same.
(iv) Penalties imposed on all the four appellants is set aside.Page 34 of 34
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24. In the result, the appeals filed by all the four appellants are allowed, with consequential relief, if any, as per law.
(Order pronounced in the open court on 09.05.2024) Sd/-
(ASHOK JINDAL) MEMBER (JUDICIAL) Sd/-
(K. ANPAZHAKAN) MEMBER (TECHNICAL) Sdd