Custom, Excise & Service Tax Tribunal
M/S Aarti Impex vs Cce, Ghaziabad on 21 February, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Appeal No. : C/609/2011-CU [DB]
[Arising out of Order-In-Appeal No. 166-CUS/APPL/GZB/2011 dated 17.08.2011 passed by CCE,Ghaziabad]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
Hon'ble Mr. Mathew John, Technical Member
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 the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
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
M/s Aarti Impex Appellant
Vs.
CCE, Ghaziabad Respondents
Coram: Honble Ms. Archana Wadhwa, Judicial Member Hon'ble Mrs. Mathew John, Technical Member Appearance:
Sh. Rajesh Chibbar,Adv for the Appellants Sh. V.P. Batra, DR for the Respondent Date of Hearing: 09.10.2012 Date of Decision: 21.02.2013 Interim ORDER NO . 129/2013_ FO 57381/2013 Per Ms. Archana Wadhwa The brief facts of the case are that the appellants filed a Bill of Entry No. 2780 dated 21.04.11 in respect of clearance of their import of 9335 pairs of Ladies footwear, 1368 pairs of Gents footwear, 10100 Dozen of Socks, 125933.31 Dozen of Watch Battery & 4000 pieces of Baby Optical Frame, falling under RITC No. 64059000, 64041910, 61159990, 85068010 & 90031900 respectively. The Country of origin of the cargo was declared as The Peoples Republic of China. The goods were imported under Bill of Lading No. APLU053624527 Dt. 31.01.2011 and invoice No. HF 110127 dtd. 31.01.2011. Total assessable value of import was declared at Rs. 9,92,573/-. Exemption of Additional Duty of Customs was claimed on Ladies footwear & Gents footwear on the basis of embossed MRP on the footwear as Rs. 150/- respectively.
2. The cargo was examined under 1st check in the presence of representative of the importer, team of SIIB officers and Customs officers on 28.04.2011. During examination of the footwear, it was observed that the same were branded; that no MRP was found on 300 pairs of unbranded Ladies slippers; and that no MRP was foundon most of the Gents footwear. Further, examination of the socks revealed that the same were of Sport brand, while examination of the Batteries revealed the same were of Maxell / Sony etc., brand and most of them were made in Japan as against the claim of the importer of being China origin.
3. It was also found that the value of the above said goods declared by the importer was grossly undervalued as compared to NIDB data. The importer had not declared the brand, make, model and country of origin of the goods. The importer sought waiver of show cause notice vide their letter dated 11.05.11 and sought personal hearing before the adjudicating authority. The adjudicating authority after giving the personal hearing, passed the impugned order rejecting the value of above said goods declared by the appellant under Rule 12 of the Customs Valuation (Determination of value of imported goods) Rules 2007 (hereinafter referred to the Valuation Rules) and re-determined under Rule 9 i.e. residual method after following Rule 4 to 9 sequentially of the said Valuation Rules. The value of the goods was reassessed on the basis of NIDB data and total value has been re-worked out to Rs. 68,59,210/- instead of Rs. 9,92573/- as declared by the importer as per Annexrue-I to the impugned order. The adjudicating authority further ordered for confiscation of the said goods under Section 111(d) & 111(m) of the Customs Act, 1962 with an option to redeem the said goods on payment of redemption fine of Rs. 13,72,000/- in lieu of confiscation under Section 125 of the Customs Act, 1962 and also imposed penalty of Rs. 6,86,000/- upon the importer under Section 112, ibid.
4. The appellants have filed the present appeal before Commissioner (Appeals) on following ground:-
a. That the batteries involved in the instant case were purchased on stock lot basis and there was no material difference between the price of such type of batteries imported from China of Japan. Further, the manner in which the NIDB Data was applied is sufficient to show that the department had made up its mind to enhance the value 7 times irrespective of the fact that the goods imported were of different types. They were altogether different from each other in all respects. For example, ladies belly, baby optical and watch batteries were some of the goods imported. Therefore, the department has enhanced the price in mechanical manner. A perusal of examination report show that there was no mention of country of origin against sl. no. 10,11,12,13,14,15,16,22,24 & 27 and against sl. no. 24 & 25 the country of origin was mention as China, whereas the department still enhanced the value of 7 times in respect of batteries mentioned at such serial numbers. That the average market price of similar goods is around Rs. 0.50 to 3.50 only in the Indian market.
b. That the Hon'ble Tribunal in the case of Sellers Men vs. CC, reported in 2009(248) ELT338 held that stock lot price cannot be compared with price of similar goods in Indian market. Further, the CESTAT in the case of Crystal Dot Scan P. Ltd. reported in 2001(263)E.L.T401 held that if the department wants to reject the value of imported goods, it should establish details of contemporaneous imports of such or similar goods. That Hon'ble Tribunal also in the case of Jai Industries vs. CC, reported in 2006(193)ELT218 held that if the country of origin is different but rate of duty is same, confiscation was not warranted. In the instant case also, the lower authority has not given any finding that there was some difference in rate of duty between the goods having country or origin as China or as Japan.
c. That it was only on the basis of NIDB Data that the lower authority had come to the conclusion that the imported goods were undervalued and value of all the goods were enhanced to almost 7 times without any concrete evidence. Hon'ble Tribunal in the case of cc vs. Sita Trader reported in 2010 (262) ELT917 upheld the orders of appellate authority quashing the orders of original authority which was solely based on NIDB Data. Similar decisions of Tribunal in the case of CC vs. KD Exports, reported in 2008(227)ELT494 and in the case of CC vs. Prem Enterprises reported in 2010(246)ELT399 are also relied.
d. That in respect of ladies footwear/chapel, the value was enhanced for the reason that the value was grossly undervalued by putting false MRP to avail benefit of Additional Custom Duty which was applicable to footwear having MRP of Rs. 150.00 and Rs.225.00 respectively. However, the adjudicating authority did not consider the fact that MRP was marked on the goods. That it was admitted that some of the ladies footwear was not having any brand yet the value was enhanced as if the same were branded goods. That in respect of import of Gents footwear also the appellants contended that merely because the footwear was not having MRP mentioned on the same, the department could not enhance value by seven times in the light of Hon'ble Tribunals decisions in the case of Viacom Electronics P. Ltd. vs. CC,[2003(156)ELT501] and in the case of Fair Deals Corp., [2007(218)ELT319].
e. That in respect of socks, the case of department was that the socks were bearing the brand name SPORT, however, while deciding the matter, the adjudicating authority has not given any findings over the same. The adjudicating authority has made observations regarding the applicability of NIDB Data in respect of Watch Batteries, Ladies Footwear, and Gents Footwear while no observations are made at all in respect of socks. When no discussions are made in the impugned order in respect of socks, the same could neither be confiscated nor subjected to enhancement of value. Similarly, no findings have been given in respect enhancement of value of baby optical frames.
f. That adjudicating authority has not satisfied the conditions for invoking the provisions of Rule 9 of the Valuation Rules.
5. The commissioner (Appeals) however, did not find merits in the above appeal of the appellant and rejected the same. He observed that the adjudicating authority was within its right to reject the assessable value and to determining the same under Rule 9, after giving reasonable flexibility. However, he reduced the penalty to Rs. 3,43,000/- the said order of Commissioners (Appeal) is impugned order before us.
6. We have heard both the sides and have gone through the impugned orders. It is seen that lower authorities have enhanced, the value on the basis of NIDB Data. Commissioner (Appeals) has upheld the order on the ground that Custom authorities have the power to enhance the value in terms of the provision of Rule 9 of the Valuation Rules. However, we find no dispute with the above observation. But value has to be enhanced on the basis of availability of assessable value of identical goods. The authorities below have not referred to the fact that the value as available in terms of NIDB is in respect of the same goods which stand imported by the appellant. It is well settle law that for adopting the value of other imported goods, the same have to be matched in terms of Country of original, time of import, quality of goods and quantity of goods. No such effort seems to have been made by the lower authorities and no such comparison is available on record. The appellant have claimed that the batteries were procured on stock-lot basis. The said plea of the appellant does not stand rebutted by the Revenue, by production of evidence to the contrary. Further, we find that apart from enhancing the value on the basis of NIDB Data, no evidence stand produced on record to reject the invoice value. Further, there is no allegation or evidence to show that the importer has made extra payment to the foreign supplier, in addition to the value reflected in the invoice. As such, we find no justifiable reason to uphold the impugned orders. The same are accordingly set aside and appeal is allowed with consequential relief to the appellant.
(Archana Wadhwa) Member(Judicial) (Mathew John) Member (Technical) Jyoti*
7. I have gone through the order recorded by Hon. Judicial Member and considered the submissions of either side and perused the case records. Since I am not in agreement with the order recorded, I am recording this separate order.
8. In this case the Revenue has made out a case of undervaluation of imported goods which were assorted goods in nature. The case is made out on the following evidences:
(a) There country of origin was declared wrongly in the case of most of the goods;
(b) Most of the goods were of reputed brand but that position was not indicated in the declaration.
(c) The value of some of the goods like watch batteries of reputed brands was found to be only about 5.65% (Rs.0.226 as compared to Rs. 4) of the value of such goods that was imported almost at the same time by other importers.
9. The appellant had declared goods under four items in the bill of entry. The case made out in respect of the four items can be quantified as under:
S. No Description Quantity Assessable Value declared in Rs.
Value Assed by Dpt 1 Ladies Footwear 9335 pair 316015 599610 2 Gents Footwear 1368 pairs 63155 194400 3 Socks 121200 pairs 186047 302400 4 Watch Battery 125933.31 dozen 390423 5702800 5 Baby Optical Frame 4000 pieces 36933 60000
10. As may be seen from above tabulation the valuation dispute was mainly for batteries where the value has been loaded almost 14.6 times for all batteries taken together. The value for all items of battery (12V, 3V, 1.55V) was declared as 0.06 US$ per Doz that is about Rs. 0.226 per piece. The department has loaded it to Rs. 4 per piece for the items which were imported in maximum quantity. The other items were valued at Rs.0877 per piece which value was increased to prices in the range of Rs. Rs. 2 to Rs. 8 per piece. The values declared by the importer are indeed unbelievably low.
11. The reasoning given by the appellant for low prices is that the goods were stock lot. There were about 15 lakh batteries of assorted specifications. Though in respect of other items the quantities may indicate odd lots, as far as batteries are concerned there is nothing odd about the number of pieces supplied. They are mostly in multiples of 10000 pieces with the exception of one type were the number was 9200. There is nothing to indicate a transaction of goods for stock lot available. In respect of 50000 Sony batteries (out of 1511200 batteries imported) there is an argument that the goods were packed in trays and not in strips. For the rest of the batteries the consignment looks like any other normal import of goods by a trader. Goods which are not in stock lot cannot become stock lot if a foot ware items are imported along with it. Against such back ground facts there is no reason to consider the batteries imported as stock lots or for allowing an appeal challenging the increased value assessed at the time of import based on increased values accepted by the importer at the time of import in the case of batteries. In the case of other items like ladies foot wear, gents foot wear, socks and baby optical frame it is difficult to compare goods and assess value of such goods by comparing it with value of similar goods imported by other importers. So the benefit of doubt can be given to the importers.
12. At this stage I would like to examine the case laws relied upon by the appellants to see its relevance 12.1 Sellers Men Vs. CC-2009 (248) ELT 338 12.1.1 The facts of the case are recorded in para 2 of the order which is re-produced below:
2.?The valuation of the impugned goods was carried out in terms of Rule 9 of Custom Valuation Rules, 2007. The Department tried to find out NIDB data to ascertain the value based on the contemporaneous import prices, but it was reported that the details of comparable quantities of identical or similar goods were not found. The Department carried out a market survey at Musafirkhana, Crawford Market, Alfa at Andheri etc. to ascertain the market price of such goods in order to arrive at the assessable value as per Rule 8 of Custom Valuation Rules, 2007. Accordingly, value of each and every item was fixed by the Department and the total value of the consignment was determined as Rs. 22,85,450/- CIF as against the declared value of Rs. 2,85,054/-.
12.1.2 The finding of the Tribunal given in para 8 are reproduced below:
8.?The appellants, in the preamble to the statement dated 6-10-2008, had stated that the goods imported vide Bill of Entry No. 894061/1-7-08 were bought by him as stock lot from Veropam, Paris. This was repeated by him in response to the Question No. 2 and Question No. 7 in the said statement dated 6-10-2008. He also filed the letter dated 23-6-2008 from the shipper to the effect that the goods are stock lot. We observe that no findings have been recorded by the Commissioner in this regard. Manufacturers price, wholesale price, retail price, auction of stock lot, etc. represent the different commercial levels of sale transactions. In the instant case, the goods were bought by the overseas shipper in an auction and sold to the appellants on stock lot basis. Hence, the auction price cannot be compared with the price of the impugned goods in the Indian market, as was done by the Department. It is settled principle as enunciated by the Honble Apex Court in Eicher Tractors Ltd. v. CC, Mumbai reported in 2000 (122) E.L.T. 321 that old stocks may be sold by the vendor at a discount. 12.1.3 Since this was a case were value was increased almost 10 fold without having the price of any contemporaneous imports, the decision is not relevant to the facts of the present case because there was mis-declaration of country of origin of batteries. So an enquiry about the value was justified and details of contemporaneous imports were disclosed. The appellant at that time chose not to seek any further details about the contemporaneous imports but accepted the increased value. The totality of facts and conduct of parties have to be taken together rather applying isolated sentences from different decisions to facts of one case to legalize a position that import of such goods at any price is acceptable once it is brought to Tribunal Level.
12.2 JAI INDUSTRIES Vs CC-2006 (193) ELT 218 12.2.1 I have read this order thoroughly. The order nowhere states that the goods cannot be confiscated under section 111(m) of the Customs Act for mis-declaring the country of origin, so long as rate of duty for import from the two countries are the same as canvassed by the appellants.
12.2.2 In fact I find that the importer in that case argued that the country of origin is a material particular relevant for determining value of goods and his main defence was that. So I do not understand how the country of origin is not a material particular relevant for determining value specified and not applicable for the purpose of section 111(m).
12.3 CC Vs. SITA TRADERS-2010 (262) E.L.T. 917 (Tri. - Del.) 12.3.1 In this case there were different types of goods imported. The nature of goods is not clear from the order. It is clear from the order whether import of similar goods were pointed. Para 5 of the order is reproduced.
5.?We have extensively heard the matter to find out the very basis of questioning the valuation. In absence of show cause notice, no head or tail could be made out. We do not find any recorded order passes in adjudication. The only basis for enhancement was NIDB data. Learned Commissioner in page 8 of order has given reason for which NIDB data cannot be basis in these cases. There is nothing coming from the first appellate order to hold that the order suffers from legal infirmity. Finding that Revenue has not brought out any material for contradiction, we are not inclined to interfere with the order passed by the learned first Appellate Authority. Accordingly, all the three appeals of Revenue are rejected. 12.3.2 From the above paragraph it is very clear that this order was very specific to the facts of the case and it cannot be applied to facts of any other case. I also note that this is a case where the First Appellate authority had given relief and Revenue had come in appeal.
12.4 CC Vs. K.D. EXPORTS-2008 (227) E.L.T. 494 (Tri. - Del.) In this case the goods imported were Polyester fabrics. This is not an item where the quality of goods in one consignment can be compared with quality of goods in another consignment unless both are seen simultaneously. Nothing derives from the fact that this case was decided against Revenue 12.5 CC Vs PREM ENTERPRISES-2009 (246) E.L.T. 399 (Tri. - Del.) In this case 22,600 pieces of Sealed Acid Batteries were imported from China and filed bill of entry No. 989 dated 9-9-05 was filed. The assessing officer enhanced the value. It is seen from the order that the basis of enhancement of value was not disclosed to the importer.
12.6 VIACOM ELECTRONICS PVT. LTD. Vs CC-2003 (156) E.L.T. 501 (Tri. - Mumbai) and Fair Deals Corporation- 2007(218) ELT 319 The above cases are on the issue whether MRP of goods is to be fixed on the goods before the goods leave factory abroad or whether such values can be fixed after its importation into India. This issue is not germane to the dispute at hand particularly because in the case of foot wear and baby opticals I am also not in favour of any enhancement of the value for reasons already recorded by me.
13. Before I conclude it is necessary to discuss the decision of Apex Court in the case of Eicher Tractors Ltd. v. CC, Mumbai reported in 2000 (122) E.L.T. 321 which is relied upon to decide cases of undervaluation of imported goods. The first two paragraphs of the decision are reproduced below:
M/s. Eicher Tractors Ltd., the appellant before us, manufacturers tractors and tractor engines in India. From 1955 the appellant imported bearings of a specific size for their tractors and tractor engines from M/s. NTN Corporation, Osaka, Japan. This 33 year relationship was snapped in 1988 when the appellant started utilising bearings manufactured for them in India by M/s. HMT Ltd. The Japanese vendor was left with a stock of the bearings which had been manufactured by it for the appellant anticipating the appellants continued custom. Not finding any customer for the bearings, by letter dated 12th February, 1993 the vendor's agent in India offered to sell the 1989 stock of 3579 bearings to the appellant at a price of Japanese Yen (JY) 826 per piece. The appellant found the offer competitive and agreed to buy the bearings from the vendor at the price offered. An order was placed by the appellant on the vendor on 17th April, 1993. The bearings were shipped from Japan and arrived in India. The appellant filed the Bill of Entry on 3rd December, 1993 together with the invoice dated 6th October, 1993 with the Custom authorities.
2.?The Assistant Commissioner of Customs was not satisfied that the value of the bearings as declared by the appellant was the value of the bearings for the purposes of levying customs duty. He issued a notice on 14th December, 1993 to the appellant. The appellant gave a detailed reply setting out the facts noted earlier. The Assistant Commissioner noted that the declared price was only 23% of the vendors list price and was of the view that the 77 per cent discount allowed to the appellant by the vendor was not normal and could not be accepted for the purpose of determining the price of the bearings under Section 14 of the Customs Act, 1962 and Rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (referred to briefly as the Rules). The Assistant Commissioner determined the price of the bearings at JY 2507 per piece under Rule 8. In arriving at this figure, the Assistant Commissioner took the list price of the vendor and deducted 30 per cent on account of discount, which, according to the terms of agency between the vendor and its Indian agent, was the maximum permissible discount allowable.
14. The facts as recorded above clearly shows the reasons why the goods were sold at a very low price to the importer. It is very obvious that any observation made against such background facts cannot be applied to import of Sony brand batteries by a trader at a ridiculously low price at which goods are not available to anyone except to the appellant and prices which can be prevail only in case laws. The fact that such goods are imported along with footwear or baby opticals cannot make it a consignment of odd lot and justify the artificially low value declared.
15. I see no reason to interfere with the impugned order and I hold that the appeal deserves to be rejected in respect of batteries imported in the said consignment.
(Mathew John) Technical Member
16. POINT OF DIFFERENCE IN OPINION TO BE RESOLVED In the facts and circumstances of the case,-
Whether the appeal is to be allowed as recorded by the Judicial Member?
Or Whether the appeal is to be rejected in respect of watch batteries as recorded by Technical Member ?
(Archana Wadhwa) Member(Judicial) (Mathew john) Member (Technical)
17. The registry is directed to take necessary steps to resolve the above difference in views.
(Pronounce in the open Court 21.02.13) (Archana Wadhwa) Member(Judicial) (Mathew John) Member (Technical) MPS
18. I have gone through the orders passed by Member (Judicial) Mrs. Archana Wadhwa and Member (Technical) Shri Mathew John and difference of opinion assigned to me for decision by the President.
19. The facts in brief are that the appellants filed a Bill of Entry dated 21.4.2011 for import of 9335 pairs of ladies footwear, 1368 pairs of gents footwear, 10100 dozen of socks, 125933.31 dozen of watch battery and 4000 pieces of Baby Optical Frames. The country of origin of the goods was declared as The Peoples Republic of China by the importer. During the course of examination of the goods under first check method in presence of representative of the importer it was observed that the goods were branded; no MRP was found on 300 pairs of unbranded ladies footwear and no MRP was found on most of the gents footwear. The socks were not to be Sport brand. Examination of batteries revealed that same were of Maxell/Sony brand and most of them were made in Japan as against the claim of the importer being of Chinese origin.
20. Member (Judicial) in the proposed order has set aside Order-in-Appeal and allowed appeal in respect of all items under import. On the other hand, the Member (Technical) in his order held that the appeal in respect of batteries imported in the said consignment deserves to be rejected.
21. The difference of opinion before me is therefore in respect of batteries imported in the said consignment.
22. Member (Judicial) in her order has not disputed the observation of the Commissioner (Appeals) that Custom authorities have powers to enhance the value in terms of provision of Rule 9 of the Valuation Rules. She has observed that while adopting the value of other imported goods in terms of NIDB data same has to be matched in terms of country of origin, time of import, quality and quantity of the goods in respect of import of batteries. She has observed that plea of the importer that batteries were imported on stock lot basis has not been rebutted by the department by production of any evidence to the contrary and accordingly she has set aside Order-in-Appeal.
23. On the other hand, Member (Technical) in his order has observed that the reasoning given by the appellant for the low prices of the batteries on the ground of stock lot is not acceptable as there are about 15 lakhs batteries of assorted specifications. He has observed that the goods which are not in stock lot cannot become stock lot if these are imported along with other items like footwear, socks and baby optical frame. He has also held that there is no reason to consider import of the batteries in stock lot as at the time of import the increased value was accepted by the importer in case of batteries.
24. None appeared on behalf of the appellant despite notice. There was no appearance on behalf of the appellant on 21.6.2013, 28.6.2013 also, Shri A.K. Jain, ld. Jt. CDR appeared on behalf of the department and has submitted that the plea of the appellant that the batteries were purchased is a stock lot is not sustainable as held by the Member (Technical). This was a deliberate attempt by the importer for undervaluing items for evading the Customs duty and as such appeal filed by them is required to be rejected.
25. I find that there is no dispute about description and the result of the examination conducted in presence of the representative of the importer. The non-declaration of the brand and the specification of the goods does have impact on the valuation of the goods under import. In respect of batteries the country of origin was declared by the importer as Made in China whereas on examination the batteries were found to be made in Japan and as such there was a mis-declaration in respect of country of origin of the batteries. It is submission of the appellant that the batteries were purchased in stock lot. No evidence has been submitted by the importer in support of his contention that the transaction in respect of the batteries was a stock lot transaction. Number of batteries imported by the appellant is 1,25,933 dozen and value of these batteries was declared by the importer as 0.06 US $ per dozen (Rs.0.226 per piece). On the basis of NIDB data available with the department in respect of batteries of Japan origin, the department loaded its value to Rs.4 per piece. The lower authorities have applied the NIDB data after taking the lowest value of identical or similar goods found during the relevant period. Therefore, I find that there is no infirmity in respect of applying NIDB data to the batteries imported by the appellant. I therefore agree with the finding given by the Member (Technical) that the appeal in respect of batteries needs to be rejected.
26. The Registry is directed to put up the file to the referral bench for further necessary action.
(Sahab Singh) Member (Technical) RM Final Order In view of the majority order, the impugned order is set aside and both appeals are allowed with consequential relief.
(Archana Wadhwa) Member (Judicial) (Mathew John) Member (Technical) Jyoti* ??
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