Custom, Excise & Service Tax Tribunal
R.V.Fashion vs Commissioner Of Customs(Export) Nhava ... on 16 April, 2009
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.II
APPEAL NO.C/955/08
(Arising out of Order-in- Original No.95/2008 Comm.(X) dtd. 25.7.2008 passed by the Commissioner of Customs(Export), Mumbai.II )
For approval and signature:
Honble Mr.A.K.Srivastava, Member(Technical)
And
Honble Mr. Ashok Jindal, Member(Judicial)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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R.V.Fashion
:
Appellants
VS
Commissioner of Customs(Export) Nhava Sheva
Respondents
Appearance
Shri S.N.Kantawala, advocate with Shri B.Phatak, Advocate for Appellants Shri P.K.Agarwal, Authorized Representative (DR) CORAM:
Mr.A.K.Srivastava, Member(Technical) And Mr.Ashok Jindal, Member(Judicial) Date of hearing: 16.04.09 Date of decision: 22.04.09 ORDER NO.
Per : A.K.Srivastava The Appellant imported goods described as Rejected Stock Lot of Plastic film/sheeting/clear/colour printed (mixed size, width and thickness) and filed two Bills of Entry, seeking clearance of the goods. The total declared value of the two Bills of Entry was Rs. 18,46,616/-.
2. The goods were examined by Docks Appraisers in presence of CIU staff on 100% basis, and on examination, goods were found to be of various thickness, lengths and widths and colour and were in rolls of different sizes. Stickers were pasted on each roll giving details of thickness, weight in Kgs. No specific details regarding Country of Origin were found on the goods. Representative Sealed Samples from each container of various sizes, along with the stickers pasted were drawn. The goods were found to be Mix lot of different sizes, colours, it may be considered as stock lot of goods. The goods were found to be neatly packed in the form of rolls having stickers pasted showing details of dimensions, specifications, weight etc. No indications of rejected in nature was evident, as declared by importers. The declared value of US$ 480 per Ton was found very low when compared with the average international prices of raw material, used in manufacturing of such goods viz. PVC. The international price of Chinese origin raw material was ranging from US$ 1000 to US$ 1145 PMT during past 4 months.
3. Statements of the Proprietor were recorded and the Proprietor, inter alia, stated that the goods were purchased as stock lot on as is where is basis, and were purchased from different warehouses at different locations in China. The lots were having different sizes and different types of thickness, which is evident from the examination conducted by the Customs authorities. Samples were also sent to the concerned Geo-Syndicate, IIT, Powai. Ultimately, a show cause notice dated 28.5.2008 came to be issued seeking to enhance the declared value of the goods to Rs. 38,87,329/- and it has also proposed confiscation of the goods and imposition of penalty. The Appellant contested the show cause notice and filed a detailed reply before the adjudicating authority. Consistent grievance of the Appellant apart from legal issues is that the goods have arrived since April, 2008 and are lying uncleared in the port premises incurring demurrage, ground rent and other incidental costs. The Appellant enclosed to the reply a chart showing imports at or almost declared value and also enclosed evidence of the case of the Appellants own identical goods which were cleared at Chennai Customs House at the price of US$ 480 PMT. However, the adjudicating authority conducting adjudication proceedings rejected the value declared by the Appellant under Rule 12 and ordered determination of the value at US$ 1030 PMT under Rule 8 of the Customs Valuation Rules 2007 read with Section 14 of the Customs Act, 1962. A redemption fine of Rupees 8 lakhs was imposed by invocation of Section 111(m) of the Act and a penalty of Rupees 2 lakhs was imposed on the Appellant - importer in terms of Section 112(a) of the Act, 1962.
4. Being aggrieved by the adjudication order, the Appellants have urged and vehemently contested through their counsel Shri S.N.Kantawala, advocate, loading of the declared value and consequent imposition of fine and penalty which impugned order is assailed before us.
5. Since the goods were uncleared, stay of pre-deposit of penalty was granted and the application made for out- of- turn hearing, this being a case of Live Bill of Entry and the goods were required for making raincoats and since rainy season is fast approaching, all these facts and circumstances were considered and the final hearing was conducted at length after hearing both the sides by us.
6. The learned Counsel for the Appellant drew our attention to various portions of the show cause notice, reply and the adjudication order and narrated the entire factual matrix before us. He brought to our notice that the Customs authorities, while examining the goods, had found the goods to be mixed lot of different sizes, colour and as per his argument the Department itself accepted that the goods may be considered as stock lot of goods. Incidentally, the ld.SDR Mr. Agarwal also accepted that the Department does not dispute that the goods are stock lot of goods. The ld.Counsel further drew our attention to the fact that international prices of Chinese origin raw material, which were fluctuating prices, was sought to be used to enhance the declared value, though it was not comparable by any stretch of imagination. The show cause notice clearly accepted the position that as imported lot is having mixed sizes, data of identical goods are not readily co-relatable, Rule 4 & 5 of Valuation Rules cannot be adopted. The notice also admits that NIDB data provides a substantially reasonable basis for comparison for import of similar goods, which is more indicative in nature, and the foolproof comparison is not feasible. No ready independent data of the sale price of these imported goods in local market is available to rely on. The show cause notice, therefore, incorrectly jumped to Rule 8 to re-determine the value. The ld.advocate stated that when these facts were pointed out to the adjudicating authority and the data was produced before him, he was duty bound to consider and give reasons on the crucial data submitted by the importer to support the declared value. He stressed that onus to prove under-valuation, if any, clearly was on the Department, which had not been discharged in the present case and completely uncomparable goods were sought to be compared with the goods in the present proceedings. Merely because the Appellants Proprietor could not remember the exact addresses of the warehouses, it could not automatically give a handle to the Customs authorities to resort to Rule 8, when enough data was produced before the adjudicating authority and hence in the submission of the ld.counsel Shri Kantawala, the adjudicating authority fully erred in rejecting the value under Rule 12, which does not give power to reject the value but only empowers the Customs officer to raise doubts and ask for certain details or documents. He stated that the methodology adopted by re-working and comparing it to the prices of PVC granules on the basis of PLATT rates was incorrect method. PLATT could be a factor but cannot form the basis for arriving at the assessable value. Decisions in the form of compilation, which were shown to us, are as under:-
(i) 2000 (122)ELT 321(S.C.) [Eicher Tractors Ltd. vs CC, Mumbai]
(ii) 2007(214) ELT 3(S.C.) [ CC, Calcutta vs. South India Television (P) Ltd.]
(iii) 2008(226) ELT 9 (S.C.) [CC, Mumbai vs J.D.Orgochem Ltd.]
(iv) 1992(62)ELT 528(Cal.) [Sandip Agarwal vs Collector of Customs]
(v) 1999(108) ELT 307(Tribunal) [Hindustan Pencils Ltd. vs CC, Mumbai]
(vi) 2002(144)ELT 619(Tri-Kolkata) [B.N.Exports vs. CC(Port) W.B]
(vii) 2006(199)ELT 710(Tri-Mumbai) [Reliable Impex vs CC, Nhava Sheva] (Viii) 2004(173)ELT 59 (Tri-Mumbai) [Metplast India vs CC, Nhava Sheva]
(ix) 2005(180)ELT.27(Tri-Del) [Vijay Inder Plastis vs. CC, New Delhi]
(x) 2006(198)ELT 479(Tri-Del.) [Anita International vs. CC, ICD,TKD, New Delhi]
(xi) 2004(172) ELT 397(Tri-Delhi) [Multitrade Overseas vs CC & C.Ex. Noida].
He, therefore, stressed that once goods are accepted as stock lot and there being clear-cut evidence of identical/similar goods being regularly assessed and cleared at or almost the declared value, which was approximate to the declared value in the present case, loading of value on the basis of methodology adopted by the adjudicating authority was clearly erroneous and has caused great financial losses to the Appellant.
7. The ld.SDR, on the other hand, stated that the adjudicating authority had passed the order showing valid reasons. He produced before us a decision of the Honble Gujarat High Court, in Ramchandra Art Silk Yarn vs UOI, reported in 2002(139)ELT 540(Guj) and the decision of the Honble Supreme Court in Varsha Plastics Pvt.Ltd. vs. UOI reported in 2009(235)ELT 193(S.C.), and stated that PLATT prices could be used as a basis for loading the declared value in the present case. He stated that the Appellant did not give to the proper officer the details, which were necessary to arrive at and determine the assessable value, and hence the Department was left with no other choice but to load the declared value, which was only due to the non-co-operation of the Appellant. He stated that the adjudication order correctly determines the assessable value and the redemption fine and penalty imposed were extremely reasonable and prayed for dismissal of the appeal.
8. We have considered carefully the submissions advanced from both sides and have perused the records. On a careful reading of the adjudication order, it clearly appears that goods, which are not at all comparable, are sought to be compared with the goods imported by the Appellant. The goods imported have been described in the Bills of Entry as rejected stock lot of plastic film . And PVC granules are sought to be compared by the Department, which is not permissible and is not a recognized method under the Rules. At this stage, we find it necessary to observe that the Geo - Syndicate report does not establish or give any definite opinion. The retired Professor, who is the Chief Consultant, has observed that the recycled PVC, get yellowish colour and so recycled granules are coloured, while these films are colourless. The Customs re-examination shows mixed colours. The Chemical Examiner has also not given any definite opinion. The reliance placed on PLATT price indicating the price of PVC granules, which is the raw material on one hand and the show cause notice clearly observing that no ready independent data of the sale price of these imported goods in local market being available to rely on, cannot give a handle to the Department to compare goods, which are not comparable at all. This would lead to an absurd situation not contemplated or recognized by the Rules. It is no doubt true, as held by the Apex Court, that PLATTs price report or other reputed financial journals are indicators of international prices, but the Apex Court has also observed as follows:-
21 .. The availability of evidence of contemporaneous import of the same goods obviously provides the best guide for determination of value of the import, reference to foreign journal for finding out correct international price of imported goods may not be irrelevant because ultimately the Assessing Authority has to determine value of the imported goods, at which such goods are sold or offered for sale in the course of international trade at the time of importation.
This clearly means that the Honble Apex Court has held that the assessing authority has to apply independent and impartial mind and determine the value in accordance with law. The Commissioner should have discussed and seriously considered the evidence produced by the Appellant during the adjudication proceedings. We find no application of mind nor any reasons indicating that such an exercise has been conducted in the adjudication proceedings. The Commissioner has not even referred to the details of the Bills of Entry in the chart produced before him nor has given serious consideration to the Chennai Custom House assessment proceedings in the Appellants own case. This shows a highly casual approach to serious adjudication proceedings, which have financial implications. No reasons are forthcoming as to how and on what basis the amount of redemption fine has been imposed and thus the mandate of Section 125 of the Customs Act and the spirit and intention of the concept of margin of profit appears to have been ignored by the Commissioner. No reasons are present to indicate as to why penalty also has been imposed on the Appellant. It was the consistent stand of the Appellant that the goods in the instant case are stock lot of unsold, rejected and left-over material accumulated over a period of time. The present lot was initially manufactured by the manufacturer for some U.S.company, which was rejected by the said buyer and was later offered to the Appellant at the unit price of US$ 480 PMT (C&F) in a stock clearance exercise on as is where is basis, without any guarantee for the quality of the goods. The question, therefore, is that if the Department is accepting that the goods are stock lot and there is no dispute that the price declared on a per kg basis is more or less comparable to the imports made under various Bills of Entry in the chart annexed to the reply and the Appellants own case being the best evidence to support the value of US$ 480 PMT (C&F), the onus to disprove the declared value has to been discharged and hence we are left with no other alternative but to allow the appeal and set aside the impugned order. The question, which fell for consideration before the Honble Gujarat High Court in the case of Ramchandra Art Silk Yarn is different and is reproduced hereunder:-
Judgment per : D.M. Dharmadhikari, C.J.] In these Writ petitions, a common challenge is made to the constitutional validity of Section 151 A of the Customs Act, 1962 ( for short the Act) and three Circulars described as Standing Orders issued thereunder by the Chief Commissioner of Customs, Mumbai, directing the method to be followed for valuation of plastic items, non-ferrous metal scrap, polyester chips, POY, PFY,PSF, acrylic fibre, viscose staple fibre and silk, for the purpose of assessment of Customs duty.. The judgment in the case of Varsha Plastics also dealt with the goods, which were found to be mis-declared in terms of value and some were found mis-declared in terms of description, value and quality. Hence, both the decisions cited by the ld.SDR were dealing with completely different factual matrix. On the other hand, the decisions cited before us in the form of a compilation on the valuation aspect and the stock lot goods support the case of the Appellant. Stock lot goods need not necessarily have to look old or worn out and stock lot is a term used internationally for goods, which are remnant and not sold for various reasons. Hence, in the hands of the buyer, pursuant to negotiations, the goods are sold as a stock lot material and the transaction value has necessarily to be accepted unless the tests as laid out in the Rules are satisfied to disprove the value which onus lies on the Department. It is common commercial practice to dispose stock lots at discounted lower prices. The Apex Court in the case of Eicher Tractors Ltd. vs CC, Mumbai reported in 2000(122)ELT 321 (SC) has observed that A discount is a commercially acceptable measure which may be resorted by a vendor for a variety of reasons including stock clearance.
9. In the light of the foregoing discussions and findings, the adjudication order enhancing the total declared transaction value of Rs. 18,46,616/- for both the Bills of Entry and enhancing the value to Rs. 38,87,329/- under Rule 12 is set aside. The redemption fine of Rupees 8 lakhs on the goods and penalty of Rupees 2 lakhs on the Appellant are also set aside. The Appellant has pleaded that the goods are lying uncleared since a very long time and are required for the manufacture of certain goods, which would be usable in the approaching rainy season and hence we order and direct that the goods be released forthwith, preferably within three days from production of this order after ascertaining that the duty has been paid by the Appellant on the declared value. The appeal is allowed. Ordered accordingly.
(Pronounced in court on 22.04.09) Ashok Jindal Member(Judicial) A.K.Srivastava Member(Technical) pv 10