Custom, Excise & Service Tax Tribunal
M/S Jmd Oils Pvt. Ltd vs Commissioner Of Customs on 14 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI PRINCIPAL BENCH, COURT NO. III Customs Appeal No. 397-400 of 2009-Cus (DB) [Arising out of Order-In-Original No. 23/2009 dated 17.03.2009 passed by Commissioner of Customs, New Delhi ] For approval and signature: Honble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Manmohan Singh, Member (Technical) 1 Whether Press Reporters may be allowed to see 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 CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s JMD Oils Pvt. Ltd. Appellants Shri Kishan Kumar Shri Gulshan Kumar Shri Naresh Kumar Vs. Commissioner of Customs, Respondent
(ICD) New Delhi Appearance:
Shri Piyush Kumar and Ms. Prinyanka, Advocates for the Appellant Shri P.K. Sharma , AR for the Respondents CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial) Honble Mr. Manmohan Singh, Member (Technical) Date of Hearing : 16.07.2013 Date of Decision: 3.10 .2013 Final ORDER NO.A/50031-50034/2016 -Cus(BR) dt 14.1.2016 I O/ C 457-460/2013 Per Archana Wadhwa (for the Bench):
All three appeals are being disposed of by a common order as they arise out of the same impugned order passed by lower authorities vide which the value of the mixed acid oils and mixed fatty acid imported by M/s. JMD Oils Pvt. Ltd. stands enhanced with consequential confirmation of demands of duty and penalties of varying amounts stand imposed upon all the appellants.
2. After hearing both sides for sometime, we find that M/s. JMD Oils Pvt. Ltd. imported three consignments of mixed acid oils and two consignments of mixed fatty acid and filed bills of entry by declaring the same as such including declaration of country of origin and the unit price of US $ 190 in respect of mixed acid oils and of US $ 210 and 205 in respect of mixed fatty acid. The samples were drawn from the said consignment and the goods were found to be palm stearin, palm fatty acid, palm stearin composed of triglysides of fatty acids (easters), RPO etc. The price declared by the appellant was enhanced by the assessing officer to US $ 336.25 in respect of mixed acid oils and to US $ 415.5 in respect of mixed fatty acid. The appellant accepted the said enhanced value and cleared the same on payment of duty.
4. However, subsequently based upon certain investigation, proceedings were initiated for enhancement of assessable value resulting in passing of impugned order vide which the assessable value of the mixed acid oils as well as mixed fatty acid was enhanced to US $ 420.
5. After hearing both sides, we find that identical proceedings, based upon the identical investigation conducted by the Revenue were initiated against another importer and orders were passed enhancing the declared assessable value of US $ 185 per MT to US $ 420 per MT. The evidence collected by the Revenue for enhancement of value was the statement of two indenting agents Shri Rakesh Kumar and Shri Anil Kumar Arora. Tribunal in the case of H.K. International vs. CC New Delhi [2011 (274) ELT 449 (Tri-Del)] took note of the said two statement made by Indenting agents and also took note of the fact that importer accepted the enhanced value so as to get release of the goods and to avoid further damage charges indicating that the price reflected in invoice was not correct declared transaction value, the same cannot be discarded.
6. Learned advocate has placed strong reliance on the said decision of the Tribunal. From para 5 of the said order of the Tribunal, we find that the evidence relied upon by the adjudicating authrotiy stand reproduced in the said paragraph. When we compare the said evidence with the finding of the Commissioner in the present case, we find that para 29.3 of the present impugned order is identical to the earlier order of the Commissioner in the case of H K International. There is not even difference of comma, full stop, colon, semi-colon in the said paragraph from the finding of Commissioner in the earlier impugned order.
7. As Tribunal in the earlier order has already considered the same very evidence, which is available in the present case and stands reproduced by the Commissioner in para 29.3 of this present impugned order, we are of the view that earlier order of the Tribunal in the case of H.K. International is fully applicable to the facts of the present case. As such, without going into further elaborate discussion, we only in the light of preceding order of the Tribunal, set aside the present impugned order and allow all three appeals with consequential relief. It may not be out of place to mention that as per the submissions made by Shri Piyush Kumar, learned advocate the said order of the Tribunal stand accepted by the Revenue. Though he has not been able to show us any documentary evidence to reflect upon the fact of acceptance but submits that a caveat was filed before Honble High Court and period of three months has already passed and they have not received any intimation from the Honble High Court as regards filing of appeal by the Revenue as regards filing of appeal by the Revenue. Not only that, he also draws our attention to an order of Commissioner (Appeals) dated 4.11.10 wherein the original adjudicating authority, by relying upon the same very statement of two indenting agents namely Shri Rakesh Kumar and Shri Anil Kumar Arora has confirmed the demand, but appellate authority set aside the same by observing that there is no evidence of rejection of transaction value. The said order of the Commissioner (Appeals) also stand accepted by the Revenue inasmuch as there is no appeal before the Tribunal.
8. In view of the above, the impugned order is set aside and all three appeals are allowed with consequential relief to the appellant.
(order pronounced in the open court on )
( Archana Wadhwa ) Member(Judicial)
( Manmohan Singh )
Member (Technical)
ss
C/397/2009, 398/2009, C/399/2009
JMD Oil
Per: MONMOHAN SINGH
9. I have gone through the draft order passed by learned Member (Judicial) in respect of M/s JMD Oil Pvt. Ltd wherein order passed by the Commissioner of Customs vide his Order-in-Original no. 23/2009 dated 17.3.2009 confirming demand of duty and imposition of penalties has been set aside. I do not agree with these decision and findings recorded by the ld. Judicial Member for the reasons stated below
10. Basis of the order recorded by Member (Judicial) was relying on Tribunals earlier order in the case of M/s H.K. International Vs. CC New Delhi 2011 (274) E.L.T. 449 (Tri.-Del) wherein adjudication proceedings were dropped and enhancement of value was not agreed. It is not necessary that all cases are equal and mechanical reliance shall be placed on a past decision without examination of facts of each case to allow an appeal or dismiss the same. It is therefore necessary to look in to the fact of the present proceeding.
11. Two Indian indenters Shri Anil Kumar Arora and Shri Rakesh Kumar of the various importers of the said goods and Malaysian suppliers were examined by the Delhi Zonal Unit of DRI. Shri Rakesh Kumar, an indenting agent for Palm Fatty Acid Distillate for various importers in India and several Malaysian firms, in his voluntary statement dated 03.11.2006, inter-alia stated that the prevailing prices of PFAD (Palm Fatty Acid Distillate) was around USD 340 PMT in the Malaysia; that the landed cost of PFAD in India was around USD 440 PMT which included USD 340 PMT for the goods; USD 50 PMT for drumming and USD 50 PMT as freight charges; that the local importers and traders asked him to arrange the invoices at price in the range of USD 180 PMT for mixed acid oil and USD 210 PMT for PFAD: that accordingly, he contacted the suppliers in Malaysia to issue invoices in the range of USD 210; and that the suppliers agreed on invoicing those goods at that rate with the condition that the difference of invoice rate and actual rate would be sent to them in advance.
12. Shri Anil Kumar Arora, the other indenting agent in his voluntary statement dated 6.11.2006, inter-alia, stated that the prevailing price of PFAD (Palm Fatty Acid Distillate) which at the time of import was being declared as Mixed Fatty Acid (MFA) by the Indian importers was around USD 320 to 350 PMT in Malaysia; that the landed cost of PFAD in India was around USD 430 to 440 PMT; that on the request of Indian importers in India, he used to ask to the supplier in Malaysia to issue invoices in the range of USD 210 to 220 PMT for PFAD and USD 180 t0 190 PMT for MFA; that they (suppliers) used to issue invoices for the consignments on these prices; that the PFAD and the mixed Fatty Acid which were being so declared by the importer, were one and the same thing; that he received USD 3 to USD 5 PMT as commission for the deals brokered by him.
13. Discrete enquiry was done in the case of the appellant by investigation as stated by ld. Adjudication Authority in Para 5 of his order in respect of Bill of entry no. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007 where the goods imported were declared as Mixed Fatty Acid @ USD 190 to 210 PMT CIF Nhava Sheva as depicted in the said para. Containers covered by the B/Es were physically examined and samples drawn. When samples were sent to CRCL, result thereof went against appellant and such result has been vividly described by ld. Adjudicating authority in Para -6 of his order. Last column of the table appearing under that Para proved conduct of the appellant misdeclaring goods. For better appreciation of the fact of misdeclaation in different B/Es covering the respective containers approved by CRCL report as appearing in Para 6 of the impugned order is extracted below:
S.No B/E No. Date Description goods declared Total Net Weight Container No. Assessable Value (USD PMT) Invoice Value (USD PMT) 1 540653 09.10.06 MIXED ACID OIL 90.65MT IALU 2270080 IALU 2273407 IALU 2266692 IALU 2271425 IALU 2271195 336.25 190 2 541277 10.10.06 Mixed Acid Oil 72.52 MT IALU 2267132 336.25 190
3. 540762 09.10.06 Mixed Acid Oil 72.52 MT IALU 2269990 IALU 2268822 IALU 2274907 IALU 2269006 336.25 190 4 563848 12.01.07 Mixed Fatty Acid 53.684 MT MLCU2929713 ZIMU2479777 UESU2206241 415.5 210
5. 563904 12.01.07 Mixed Fatty Acid 90.65MT CAXU6068423 CAXU6174908 CAXU6594372 TNBU3497800 MOGU2522841
14. It was proved by technical report that the goods imported were not PFAD of MFA/MAO but were Palm Stearin and that remained uncontroverted. Appellant waived service of show cause notice on him and did not contest against established mis-declaration as well test results. Result of investigation as depicted by adjudicating Commissioner in Para 25 of his order is reproduced below for appreciation of stand of Revenue which remained unassailed:
(i) M/s JMD Oils Pvt. Ltd., the importer indulged in fraudulent trade and import of Palm Stearin by mis-declaring the description as PFAD, PFA and MFA as well as under-valuation of the same.
(ii) M/s JMD Oils Pvt. Ltd. used to enter into negotiation with its foreign suppliers to procure invoice showing wrong description of the goods and their lower value than the actual value and to pay suppressed part of actual value in advance through hawala.
(iii) The above negotiations used to be communicated via e-mails/fax between the buyer and foreign supplier as was evident from the enquires with the Indian Indenters, namely, Sh. Rakesh Kumar and Sh. Anil Kumar Arora. Facts stated by them clearly indicated the modus operandi of procurement of manipulated documents including invoices.
(iv) In spite of the facts that M/s JMD Oils Pvt. Ltd. did not have facility to use Palm Stearin in accordance with the conditions as set out in Public Notice No. 14/97-02 dated 06.06.1997 issued under the Export Import Policy including the one that import of Palm stearin is allowed subject to actual user condition and the importer must have facilities to convert Crude Palm Stearin into fatty acids and glycerol), it fraudulently imported the Palm Stearin knowing fully well about the condition and that too without an approval or authorization from the Secretariat of Industrial Approvals of the Department of Industrial Development, Govt. of India, DGTD registration for the manufacture of Fatty Acids or registration with Directorate of Vanaspati, Vegtables Oils and Fats.
(v) Sh. Gulsahan Kumar, authorized representative of the company and his two brothers Sh. Kishan kumar and Sh. Naresh Kumar, both the Directors of M/s JMD Oils Pvt. Ltd. controlled and managed all the business activities related to the fraudulent import of Palm Stearin as well as Palm Fatty Acid Distillate / Palm Fatty Acid and sold them in the local market. They intentionally mis-declared the value and description of the imported goods as PFAD, PFA or MFA in order to import them bypassing the restrictions and also to justify the value declared on lower side.
(vi) As per the monthly Export Price Bulletin of Palm Fatty Acid Distillate (FOB USD/TONNE) issued by the Malaysia Palm Oil Board, the average price of Palm Fatty Acid Distillate during the year 2006 was USD 345 PMT (FOB). If valuation of the same is conducted as per the valuation Rules, 1988 then 20% of the FOB is to be added as Freight which comes to USD 69 and the total comes to USD 414 and insurance @ 1.125% comes to USD 3.88 and this the CIF value comes to USD 417.88 PMT. Therefore, the average actual price in USD of Palm Fatty acid distillate comes to USD 420 PMT (CIF).
(vii) M/s JMD Oils Pvt. Ltd. had adopted the above modus operandi and it was confirmed by the attempt made by Shri Gulshan Kumar, authorized representative of the company and his two brothers Sh. Kishan kumar and Sh.Naresh Kumar, both the Directors of M/s JMD Oils Pvt. Ltd. to get the goods cleared under five (5) bills of entry Nos. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.10.2007 and 563904 dated 12.01.2007 declaring them as Mixed Fatty Acid, imported through their company. However, goods could not be cleared as the same were seized.
(viii) Test reports of the 54 samples drawn from the goods imported vide bills of entry No. 54.653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007, indicated that 33 samples were of Palm Stearin, I sample of Refined Palm Oil, 14 samples of Fatty Acid and 6 samples of palm Stearin composed of Triglycerides (Esters) which leads to the reasonable conclusion that out of the 325.63 MT goods imported by M/s JMD Oils Pvt. Ltd. under the said 5 Bs/E, 61.11% (199 MT) were Palm Steain, 25.93% (84.44 MT) were Fatty Acid, 11.11% (36.18 MT) were Palm Stearin composed of Triglycerides (Esters) and 1.85% (6.02 MT) were Refind Palm Oil and that all these goods wee imported mis-declaring the same as MFA knowingly and with fraudulent intention to evade customs duty.
(ix) Test reports confirmed that M/s JMD Oils Pvt. Ltd. imported Palm Stearin under bills of entry Nos. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007 540661 dated 09.10.2006 and 542500 dated 13.10.2006 which was restricted for import and could not be imported without industrial license or an approval or authorization from the Secretariat of Industrial Approvals of the Department of Industries development, Govt of India or DGTD registration for manufacture of Fatty Acid or registration with Directorate of Vanaspati, Vegetables Oils and fats. M/s JMD Oils Pvt. Ltd. also had no such license or the facility to split Crude Palm Stearin into Fatty acids and glycerol.
(x) Sh. Gulshan Kumar, authorized representative of M/s JMD Oils Pvt. Ltd., Delhi had finalized the contract of purchase, approved the quality and prices of the said goods so imported by his company M/s JMD Oils Pvt. Ltd. which confirmed that he was aware of the true character and description of the goods. He had admitted that his company M/s JMD Oils Pvt. Ltd., Delhi imported and traded Palm Fatty Acid Distillate, Palm Stearin and Palm Fatty Acid by mis-declaring them as Mixed Fatty Acid. It is evident that it was he who negotiated and contracted the description and value of the imported goods, i.e. Palm Fatty Acid Distillate, Palm Fatty Acid and Palm Stearin in the range of USD 400 PMT to US$ 450 PMT (CIF) and that on his direction his foreign supplier issued the invoices for value which was about 40% to 50% less than the actual value of the so imported goods. He also submitted the invoices of less value to customs for clearance of goods imported by him with willful intent to evade customs duty. Facts above confirmed that he had full knowledge of the actual prices and description of the goods but he illegally imported the said goods by way of mis-declaration of their correct description and actual value.
(xi) Import of the said goods on understanted values was further proved by the Indian indenters Sh. Rakesh Kumar and Shri Anil Kumar Arora, in their voluntary statement dated 03.11.2006 and 06.11.2006 respectively.
(xii) M/s JMD Oils Pvt. Ltd. had imported the goods covered by bills of entry Nos. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007 by suppressing their actual description and transaction value with the intention to bypass the restriction on import of Palm Stearin without proper authority and to evade customs duty.
(xiii) Similarly, the value mis-declared by M/s JMD Oils Pvt. Ltd. before the customs authorities as mentioned in the invoice which could not be treated as correct transaction value as stipulated under the law in view of the fact that at the relevant time, the prevailing value in the international market for the said goods, i.e. Palm Fatty Acid and Palm Stearin was between USD 420 PMT to USD 440 PMT and USD 390 PMT to USD 440 PMT respectively as published in monthly Export Price Bulletin of Palm Fatty Acid Distillate (FOB USD/Tonne) and issued by the Malaysian Palm Oil Board. Indian indenters and Shri Gulshan Kumar (authorized representative of the company) also confirmed the same. The actual transaction value of the goods. i.e. Palm Stearin and Palm Fatty Acid & Palm Fatty Acid Distillate covered by bills of entry Nos. 540653 dated 09.10.2006, 541277 dated 10.10.2006, 540762 dated 09.10.2006, 563848 dated 12.01.2007 and 563904 dated 12.01.2007 is correctly determinable @ USD 420 PMT, as per the law.
(xiv) Shri Gulshan Kumar, authorized representative of the company and his two brothers Shri Kishan Kumar and Shri Naresh Kumar, both the Directors of M/s JMD Oils Pvt. Ltd. indulged in fraudulent import of the impugned goods and trading thereof. Investigations clearly indicated that Sh. Gulshan Kumar looked after the import of Mixed Fatty Acid, managed its documentation wit the Bank, CHS and Customs and negotiathed the prices and quality with the foreign supplier in respect of the imported goods; imported Palm Stearin, Palm Fatty Acid and Palm Fatty Acid Distillate by mis-declaring their description and value to evade customs duty and that he had complete knowledge of price and description of the imported goods which he attempted to clear from Customs by mis-declaration of actual description and actual value. [Emphasis supplied]
15. I have examined the records and the matter under appeal in detail Result of test report given by CRCL as depicted in para 12 of Order-in-Original compared with the declaration of description in Bill of Entries show that there was deliberate mis-declaration of description of the goods and the Goods in question were not PFAD or MFA as declared but were Palm stearin. Test reports unquestionably proved mis-declaration and the appellant failed to lead any evidence to the contrary.
Result of the test reports received from CRCL are as under:-
BILL OF ENTRY NO. 540653 DT.09.10.2006.
1. Container No. IALU 2270080 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 14A 35CRCL/2006-CL-5749 SIIB dt. 08.02.07 1.49% by weight as P.A. 53/C The sample appears to be Palm Stearin 14B 35CRCL/2006-CL-5743 SIIB dt. 08.02.07 0.06% by weight as P.A. 54/C The sample appears to be Palm Stearin 14C 35CRCL/2006-CL-5744 SIIB dt. 08.02.07 0.12% by weight as P.A. 54/C The sample appears to be Palm Stearin
2. Container No. IALU 2273407 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 05 A 35CRCL/2006-CL-5403 SIIB dt. 20.02.07 77.3% by weight as O.A. 71.6% by weight as P.A. Not mentioned The sample appears to be Palm Stearin 05B 35CRCL/2006-CL-5404 SIIB dt. 14.02.07 0.22% by weight as P.A. 0.25% by weight as O.A. 54/C The sample appears to be Palm Stearin 05C 35CRCL/2006-CL-5405 SIIB dt. 14.02.07 0.22% by weight as P.A. 54/C The sample appears to be Palm Stearin
3. Container No. IALU 2266692 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 06 A 35CRCL/2006-CL-5406 SIIB dt. 12.03.07 70.9% by weight as P.A. 76.5% by weight as O.A. 44/C The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA 06B 35CRCL/2006-CL-5407 SIIB dt. 14.02.07 0.31% by weight as O.A. 02.8% by weight as P.A. 54/C The sample appears to be Palm Stearin 06C 35CRCL/2006-CL-5408 SIIB dt. 14.02.07 1.5% by weight as P.A. 1.71% by wt. as O.A. 54/C The sample appears to be Palm Stearin
4. Container No. IALU 2271425 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 07 A 35CRCL/2006-CL-5403 SIIB dt. 20.02.07 77.3% by weight as O.A. 71.6% by weight as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA 07B 35CRCL/2006-CL-5404 SIIB dt. 20.02.07 0.25% as O.A. 0.22% as P.A. 54 degree /C The sample appears to be Palm Stearin 07C 35CRCL/2006-CL-5405 SIIB dt. 20.02.07 0.25% as O.A. 0.22% as P.A. 54 degree/C The sample appears to be Palm Stearin
5. Container No. IALU 2271195 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report
16 A 35CRCL/2006-CL-5748 SIIB dt. 08.02.07 0.08% by weight as P.A. 53/C The sample appears to be Palm Stearin 16B 35CRCL/2006-CL-5749 SIIB dt. 08.02.07 0.06% as P.A. 55 /C The sample appears to be Palm Stearin 17C 35CRCL/2006-CL-5750 SIIB dt. 08.02.07 0.05% as P.A. 54/C The sample appears to be Palm Stearin BILL OF ENTRY NO. 541277 dt. 10.10.2006
1. Container No. IALU 2267132 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 15 A 35CRCL/2006-CL-5745 SIIB dt. 08.02.07 0.06% by weight as P.A. 55/C The sample appears to be Palm Stearin 15B 35CRCL/2006-CL-5746 SIIB dt. 08.02.07 0.08% as P.A. 53 /C The sample appears to be Palm Stearin 15C 35CRCL/2006-CL-5747 SIIB dt. 08.02.07 0.05% as P.A. 54/C The sample appears to be Palm Stearin BILL OF ENTRY NO. 5540762 dt. 09.10.2006
1. Container No. IALU 2269990 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 10 A 35CRCL/2006-CL-5730 SIIB dt. 12.01.07 The sample appears to be Palm Stearin 10B 35CRCL/2006-CL-5731 SIIB dt. 12.01.07 0.07% as P.A. 53 /C The sample appears to be Palm Stearin 10C 35CRCL/2006-CL-5732 SIIB dt. 12.01.07 0.06% as P.A. 53/C The sample appears to be Palm Stearin Container No. IALU 2268822 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 13 A 35CRCL/2006-CL-5739 SIIB dt. 08.02.07 0.05% by weight as P.A. 54/c The sample appears to be Palm Stearin 13 B 35CRCL/2006-CL-5740 SIIB dt. 08.02.07 0.03% as P.A. 53 /C The sample appears to be Palm Stearin 13 C 35CRCL/2006-CL-5741 SIIB dt. 08.02.07 0.05% as P.A. 54/C The sample appears to be Palm Stearin
2. Container No. IALU 2274907 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 12 A 35CRCL/2006-CL-5736 SIIB dt. 08.02.07 0.07% by weight as P.A. 55/C The sample appears to be Palm Stearin 12 B 35CRCL/2006-CL-5737 SIIB dt. 08.02.07 0.07% as P.A. 55 /C The sample appears to be Palm Stearin 12 C 35CRCL/2006-CL-5738 SIIB dt. 08.02.07 68.54% as P.A. 46/C The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
3. Container No. IALU 2269006 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 11 A 35CRCL/2006-CL-5733 SIIB dt. 02.02.07 0.08% by weight as P.A. 55/C The sample appears to be Palm Stearin 11 B 35CRCL/2006-CL-5734 SIIB dt. 02.02.07 0.04% as P.A. 49 /C The sample appears to be Palm Stearin 11 C 35CRCL/2006-CL-5735 SIIB dt. 02.02.07 0.07% as P.A. 53/C The sample appears to be Palm Stearin BILL OF ENTRY NO. 563848 dt. 12.10.2006
1. Container No. MLCU 2929713 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 49 A 35CRCL/2006-CL-6212 SIIB dt. 26.01.07 0.47% by weight as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters) 49 B 35CRCL/2006-CL-6213 SIIB dt. 26.01.07 91.6% as P.A. 100.9% as O.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA 49 C 35CRCL/2006-CL-6214 SIIB dt. 26.11.07 0.39% as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters)
2. Container No. ZIMU 2479777 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 50 A 35CRCL/2006-CL-6230 SIIB dt. 05.07.07 0.09% by weight as P.A. 53/C The sample appears to be Palm Stearin 50 B 35CRCL/2006-CL-6231 SIIB dt. 27.07.07 86.99% as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA 50 C 35CRCL/2006-CL-6232 SIIB dt. 27.07.07 85.97% as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
2. Container No. UESU 2206241 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 51 A 35CRCL/2006-CL-6233 SIIB dt. 05.07.07 0.07% by weight as P.A. 52/C The sample appears to be Palm Stearin 51 B 35CRCL/2006-CL-6234 SIIB dt. 27.07.07 85.35% as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA 51 C 35CRCL/2006-CL-6235 SIIB dt. 27.07.07 85.827% as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA BILL OF ENTRY NO. 563904 dt. 12.10.2006
1. Container No. CAXU 6068423 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 44 A 35CRCL/2006-CL-6224 SIIB dt. 04.07.07 0.43% by weight as P.A. 53/C The sample appears to be Palm Stearin 44 B 35CRCL/2006-CL-6225 SIIB dt. 04.07.07 0.05% as P.A. 52/C The sample appears to be Palm Stearin 44 C 35CRCL/2006-CL-6226 SIIB dt. 11.06.07 58.74% as O.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
3.Container No. CAXU 6174908 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 45 A 35CRCL/2007-CL-6218 SIIB dt. 26.11.07 0.62% by weight as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters) 45 B 35CRCL/2007-CL-6219 SIIB dt. 26.11.07 0.41% as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters) 45 C 35CRCL/2007-CL-6220 SIIB dt. 04.07.07 76.67% as O.A. 52/C The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
1. Container No. CAXU 6594372 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 46 A 35CRCL/2007-CL-6228 SIIB dt. 11.07.07 0.47/0.43% by weight as P.A. 52/C The sample appears to be Palm Stearin 46 B 35CRCL/2007-CL-6228 SIIB dt. 11.07.07 0.53% as P.A. 52/C The sample appears to be Palm Stearin 46 C 35CRCL/2007-CL-6229 SIIB dt. 27.07.07 86.92% as P.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
2. Container No. INBU 3497800 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 47 A 35CRCL/2007-CL-6215 SIIB dt. 26.11.07 0.02% by weight as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters) 47 B 35CRCL/2007-CL-6216 SIIB dt. 26.11.07 0.68% as P.A. Not mentioned The sample appears to be Palm Stearin composed of Triglycerides of Fatty Acid (Esters) 47 C 35CRCL/2007-CL-6217 SIIB dt. 26.11.07 98.1% as P.A. 108.1% as O.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
4. Container No. MOGU 2522841 Sample No. Report C. No. & Date FFA (as oleic Acid /Palmitic Acid) Melting point Gist of report 48 A 35CUS/2006-CL-6221 SIIB dt. 04.07.07 1.0% by weight as P.A. 54/C The sample appears to be Palm Stearin 48 B 35CUS/2006-CL-6222 SIIB dt. 04.07.07 0.63% as P.A. 0.59% asO.A. 53/C The sample appears to be Palm Stearin 48 C 35CUS/2006-CL-6223 SIIB dt. 11.06.07 53.732% as O.A. Not mentioned The sample is having characteristics of Fatty acid, whether it is edible or not is not clear as it is having such a high FFA
16. An important fact in the present case to be noted is that Palm stearin imported by the appellant was not freely importable without appropriate licence/permission. Import of such goods is regulated under law and specific permission of Ministry/DGFD is required in terms of Public Noticee No. 14/97-02. Dated 06.6.1997. M/s JMD has no license to import crude Palm Stearin or facility to split the same into fatty Acids and glycerols. Such material fact clearly established deliberate mis-declaration and Revenue was defrauded. Such material fact and aforesaid investigation results have not been looked into by Learned Judicial Member for arriving at conclusion.
17. Above findings in adjudication unerringly establish fraudulent intent of the importers making mis-declaration as to description of goods as well as value thereof. Statement of Shri Gulshan Kumar authorized representative of M/s JMD Oils Pvt. Ltd Delhi show that he finalized the contract of purchase, approved quality and prices of the said goods imported by his company M/s JMD Oil Pvt. Ltd. which confirms that he was aware of the true character and description of the goods imported but mis-declared to cause loss to Revenue with the conscious knowledge of the appellant. His statement in so far as that is relevant is extracted below:
Sh. Gulshan Kumar, authorized representative of M/s JMD Oils Pvt. Ltd., Delhi had finalized the contract of purchase, approved the quality and prices of the said goods so imported by his company M/s JMD Oils Pvt. Ltd. which confirmed that he was aware of the true character and description of the goods. He had admitted that his company M/s JMD Oils Pvt. Ltd., Delhi imported and traded Palm Fatty Acid Distillate, Palm Stearin and Palm Fatty Acid by mis-declaring them as Mixed Fatty Acid. It is evident that it was he who negotiated and contracted the description and value of the imported goods, i.e. Palm Fatty Acid Distillate, Palm Fatty Acid and Palm Stearin in the range of USD 400 PMT to US$ 450 PMT (CIF) and that on his direction his foreign supplier issued the invoices for value which was about 40% to 50% less than the actual value of the so imported goods. He also submitted the invoices of less value to customs for clearance of goods imported by him with willful intent to evade customs duty. Facts above confirmed that he had full knowledge of the actual prices and description of the goods but he illegally imported the said goods by way of mis-declaration of their correct description and actual value.
18. From the above facts, it is manifest that without probe and investigation by the DRI and testing by CRCL, mis-declaration would have escaped scrutiny of customs causing huge loss and injury to exchequer. In each container, different types of products in various drums have been found which were entirely different from declared goods. It further comes out that mis-declarations was consciously made which was within the knowledge of Shri Gulshan Kumar. When CRCL results were shown to him during recording of his statements he did not result the same. Para 25(x) of Order-in-Original clearly establishes fraudulent conduct of the appellant by mis-declaration and under valuation . Ld. Adjudicating Authority recorded as under to demonstrate mischief of the importer as under:-
Sh. Gulshan Kumar, authorized representative of M/s JMD Oils Pvt. Ltd., Delhi had finalized the contract of purchase, approved the quality and prices of the said goods so imported by his company M/s JMD Oils Pvt. Ltd. which confirmed that he was aware of the true character and description of the goods. He had admitted that his company M/s JMD Oils Pvt. Ltd., Delhi imported and traded Palm Fatty Acid Distillate, Palm Stearin and Palm Fatty Acid by mis-declaring them as Mixed Fatty Acid. It is evident that it was he who negotiated and contracted the description and value of the imported goods, i.e. Palm Fatty Acid Distillate, Palm Fatty Acid and Palm Stearin in the range of USD 400 PMT to US$ 450 PMT (CIF) and that on his direction his foreign supplier issued the invoices for value which was about 40% to 50% less than the actual value of the so imported goods. He also submitted the invoices of less value to customs for clearance of goods imported by him with willful intent to evade customs duty. Facts above confirmed that he had full knowledge of the actual prices and description of the goods but he illegally imported the said goods by way of mis-declaration of their correct description and actual value.
19. Present case established premeditated and fraudulent design of the appellant to deliberately cause loss to Revenue. Without material facts recorded by Tribunal in H.K. Internationals case 2011 (274) ELT 449 (Tri. Del) decision was in favour thereon. Facts of the H.K. International Vs. CC New Delhi- 2011 (274) ELT 449 (Tri. Del) was that import of 3 (three) consignments of Mixed Acid Oils and 2 (two) consignments of Mixed Fatty Acid made through the port of Inland Container Depot, Tughlakabad. It was contended that consignments were purchased at a negotiated unit prices. But on the basis of some information the officers examined the consignments on 21.12.2006, 26.11.2006, 28.12.2006, 24.01.2007 and 29.01.2007, and drew representative samples from the consignments for testing and seized the same under Section 110 of the Customs Act, 1962. CRCL results established the imported goods were fatty acids. Shri Raghuver Dayal Prop. Of M/s H.K. International. accepted undervaluation and paid entire duty on enhanced valuation. In adjudication, learned Commissioner rejected the declared transaction value and enhanced the same for the purpose of assessment of duty and confirmed a demand of Customs Duty amounting to Rs.30,31,545/- with interest, as well as confiscated the goods under sections 111(d) and 111(m) imposing a fine of Rs.15 lakhs (Rupees fifteen lakhs only) in lieu of confiscation under section 125 as well as imposed penalty equal to the amount of differential duty and interest thereon under section 114A of the Act ibid . But on appeal, adjudication proceeding was dropped against M/s H.K. International based on contention that evidences produced by Revenue were generic in nature and prices based on bulletin were not acceptable without examining the mis-declaration of the product, gravity of misdeclaration, conduct of importer causing evasion.
20. It is relevant to briefly describe the facts in the present case for proper decision. There was specific intelligence received that certain importers were engaged in the fraudulent import of banned items of Palm Stearin & Crude Palm Oil mis-declaring their description as Mixed Acid Oils and Mixed Fatty Acids and also their value mis-declared. One such importer was M/s JMD Oils (P) Ltd., 5/1-B, Ramesh Nagar, New Delhi 110015 (hereinafter referred as the Importer) who was indulged in such activities and evasion of customs duty detected by investigation. Learned Adjudicating Authority recoded material facts which demonstrated deliberate and well designed mis-declaration of the imports.
21. Examination made by commissioner in the present case shows his application of mind and testing of evidence minutely vis-`-vis intelligence, evidence on record, statement recorded, result of test reports and under valuation as well as violation of import regulation/guidelines. He has rightly held violations of Section 14 of Customs Act, Section 111(d) and (m) of Customs Act, 1962. Section 28 read with Section 28A of Customs Act, 1962 were rightly invoked to levy duty and penalties under Section 114 A and 112 of Customs Act 1962. I am thoroughly convinced with cogent evidence of Revenue and findings of ld. Adjudicating Authority and concur with the result of adjudication without agreeing with the decision recorded by ld. Judicial Member.
22. In view of my observations I find that facts and circumstances of M/s H.K. International are not at all similar to the present case and accordingly present appeal is bound to be dismissed.
23. When there was deliberate mis-declaration of description and value of goods proved from technical report, malafide of appellant is established. Entire design of appellant was to defraud Revenue. Once fraud surfaces, that nullifies every solemn act and appellant is bound to restore the loss caused to Revenue. Revenue has established fraudulent mis-declaration that should meet the consequence of levy of duty, interest, confiscation and penalties.
24. Accordingly, I uphold the adjudication.
25. In view of different orders recorded by both Members, following differences arise for opinion of third member:
DIFFERENCE OF OPINION
1. Whether there was deliberate mis-declaration of description and value of imports proved from investigation result, report of CRCL and various evidence gathered by investigation as well uncontroverted adjudication finings as recorded by Technical Member and adjudication should be upheld? or
2. Whether merely relying on the decision of tribunal in the case of H.K. International (supra) irrespective of peculiar facts of each case tested on the basis of law, adjudication is to be set aside as recorded by Judicial Member?
(Archana Wadhwa) (Manmohan Singh) Member (Judicial) Member(Technical) In view of above, Registry is directed to put up this Difference of Opinion matter before Hon'ble President for appointment of third Member Bench for hearing Difference of Opinion matter.
(ARCHANA WADHWA) JUDICIAL MEMBER K. Gupta Pronounced on 3.10.2013 Per Ashok Jindal :
26. Heard the parties. The following difference of opinion has been referred before me:
Difference of Opinion
1. Whether there was deliberate mis-declaration of description and value of imports proved from investigation result, report of CRCL and various evidence gathered by investigation as well uncontroverted adjudication finings as recorded by Technical Member and adjudication should be upheld ?
OR
2. Whether merely relying on the decision of Tribunal in the case of H K International (supra) irrespective of peculiar facts of each case tested on the basis of law, adjudication is to be set aside as recorded by Judicial Member.
27. The learned Counsel for the appellants submits that para 29.3 of the impugned order have alleged against the appellant. The grounds were mis-declaration and under valuation of imported goods, therefore, the , value was enhanced.
28. In the case of H K International (supra) the grounds are identical. Therefore, the decision of this Tribunal in the case of H K International is to be followed. He further submits that Honble Member (Technical) has fell in error as there is no allegation or any evidence that the appellant has paid any amount over and above the declared invoice value to the overseas supplier and even in the statement of appellants representative, it has been stated that when they have not imported a consignment at higher value over above the invoice price. The Honble Member (Technical) further fell in error to record, on the basis of statement of Shri Gulshan Arora that the appellant has admitted under invoicing. In fact, in his statement he has admitted that similar goods are being under invoiced by co-Noticee but the appellant has paid the duty on determined value at the rate of 420 $ PMT only to avoid incurring demurrage, detention and other incidental costs. He further submits that Honble Member (Technical) failed to appreciate that in the case of H K International (supra) also the proprietor of imported firm has admitted to pay the duty at calculated value of Rs. 420 MPT and admitted that the landed cost of mixed fatty acid was on much higher side than the declared value. But in that case, this Tribunal has rejected the enhancement of the value. He further submitted that the test reports clearly indicate that the goods were heterogeneous in nature as the test report of each sample was different from other not only in physical appearance but also in constitution, free fatty acid contents, boiling point and description arrived by CRCL manifesting that the consignment were essentially in the nature of mixed lot of fatty acids and fatty acid oils and not palm styrene. The Honble Member (Technical) has also fell in error in relying on the statement of Shri Anil Kumar Arora and Shri Rakesh Kumar without appreciating the fact that the appellant have not imported any consignment through these intenders. He further submits that Honble Member (Technical) also failed to appreciate that in the impugned order in para 29.4(a) there was a general intelligence that fatty acids / acid oils imported from Malaysia at under invoiced price, whereas out of 5 consignments in impugned proceedings, 2 were imported from Indonesia. He further submits that Honble Member (Technical) has gone beyond the scope of show cause notice to arrive at a finding that the import was contrary to Import Policy which was even not alleged in the show cause notice.
29. On the other hand, learned AR submits that Member (Technical) has rightly held that it is a case of under-valuation and relying on the statement of Shri Gulshan Arora, the authorized representative who admitted that the goods have been imported and the market price of the imported goods is much higher than the declared value. He further submits that all the test report have been admitted by the appellants which shows that it is a palm styrene, therefore, the appellant has violated the condition of Import Policy. Therefore, the enhancement is proper.
30. I have perused the record and find that in the impugned order para 29.3 has made the allegations against the appellant of mis-declaration of description and value of the imported goods. For the sake of brevity, the evidence relied have been incorporated herein as under:-
29.3 I have carefully gone through the case records including the show cause notice and the relied upon documents. Allegations in the show cause notice are that the noticees M/s. JMD Oils Pvt. Ltd. and its Directors Sh. Kishan Kumar and Sh. Naresh Kumar and authorized representative Shri Gulshan Kumar have mis-declared the description and value of the imported goods. In support of these allegations, following evidences have been relied upon:
(a) There was general intelligence that the importers of PFAD and Palm Acid Oil were mius-declaring the description and value of the imported goods and were evading payment of custom duty.
(b) Shri Rakesh Kumar, an indenting agent for Palm Fatty Acid Distillate for various importers in India and several Malaysian firms, in his voluntary statement dated 03.11.2006, inter-alia, stated that the prevailing prices of PFAD (Palm Fatty Acid Distillate) was around US$ 340 PMT in Malaysia; that the landed cost of PFAD in India was around US $ 440 PMT which included US$ 340 MPT for the goods, US$ 50 PMT for drumming and US$ 50 PMT as freight charges; that the local importers and traders asked him to arrange the invoices at price in the range of US$ 180 PMT for mixed acid oil and US$ 210 PMT for PFAD; that accordingly, he contacted the suppliers in Malaysia to issue invoices in the range of US $ 210; and that the suppliers agreed on invoicing those goods at that rate with the condition that the difference of invoice rate and actual rate would be sent to them in advance.
(c) Shri Anil Kumar Arora, the other indenting agent in his voluntary statement dated 6.11.2006, inter-alia, stated that the prevailing price of PFAD (Palm Fatty Acid Distillate) which at the time of import was being declared as Mixed Fatty Acid (MFA) by the Indian importers was around US $ 320 to 350 PMT in Malaysia; that the landed cost of PFAD in India was around US$ 430 to 440 PMT; that on the request of Indian importers in India, he used to ask the suppliers in Malaysia to issue invoices in the range of US$ 210 to 220PMT for PFAD and US$ 180 to 190PMT for MFA; that the suppliers used to issue invoices for the consignments on these prices; that the PFAD and the Mixed Fatty Acid which were being so declared by the importer, were one and the same thing, that he received US$ 3 to 5 PMT as commission for the deals brokered by him.
(d) As per the monthly Export Price Bulletin of Palm Fatty Acid Distillate (FOB) US$ /Tonne) issued by the Malaysia Palm Oil Board, the average price of Palm Fatty Acid Distillate during the year 2006 was US$ 345 PMT (FOB). If valuation of the same is conducted as per the valuation Rules, 1988 then 20% of the FOB is to be added as freight which comes to US$ 69 and the total comes to US$ 414/PMT and insurance @ 1.125% comes to US$ 3.88 and thus the CIF value comes to US$ 417.88 PMT. Therefore, the average actual price in US$ of Palm Fatty Acid Distillate comes to US$ 420 PMT (CIF).
(e) Representative samples were drawn from the containers imported under bill of entries No. 540653 dt. 09.10.2006, 541277 dt. 10.10.2006, 540762 dt. 09.10.2006, 563848 dt.12..01.2007 and 563904 dt. 12.01.2007 and were sent to Central Revenue Control Laboratory (CRCL), New Delhi for chemical test and analysis, CRCL in their test reports reported that the goods covered by the above bills of entry were having the characteristics of Palm Stearin / Fatty Acid / Refined Palm Oil / Palm Stearin composed of Triglycerides of Fatty Acid (Esters).
(f) Sh. Sh. Gulshan Kumar, authorized representative of M/s. JMD Oils Pvt. Ltd. in his voluntary statements dated 13.12.2006, 29.1.2007, 06.03.2007, 05.4.2007, 25.5.2007 and 30.11.2007 recorded under section 108 of the Customs Act, 1962 has interalia, stated that he had been authorized by the Board of Directors of M/s. JMD Oils Pvt. Ltd. to tender the statement and represent the case; that he had the full knowledge of purchase/ sale of the goods in the company; that besides him, his two younger brothers namely Sh. Kishan Kumar and Shri Naresh Kumar are also Directors in the company; that their company was dealing in Edible and Non-Edible Oils and they started the business of Mixed Fatty Oil after the month of March, 2006; that the value of the subject goods in the market was USD 340 PMT one the minimum side and therefore, he realized that the declared value of USD 190 PMT was on extremely lower side; that he was ready to accept all conditions and value imposed for the provisional clearance of the subject goods; that though they have declared the subject goods as Mixed Fatty Acid, Mixed Acid Oil, however, they would obey the reports of the CRCL as and when they are received; that their company was engaged in the manufacture of edible oils like soya been oil, palm oil, mustered oil, ground nut oil under different brand names; that they did not manufacture any Vanaspati ghee for last 9 months in their factory; that they were importing Palm Oil and Soya Been oil in their factory from Kandla & Mundra ports; that they have not manufactured any vanaspati ghee on job work basis from any other manufacturer; that they have not brought any raw material from Delhi in their factory; that due to the shortage in import of Palm Oil, there was a shortage of Fatty Acid and Acid Oil in the market and that was why the demand of subject goods was raised; that they have imported these goods from Malaysia and Indonesia but no body from their company has ever visited these countries; that all negotiations including the description of oil was conveyed by the concerned supplier on telephone in all cases; that payment were made through bank on receipt of the documents and they were banking with Indian Overseas Bank, Rajouri Garden; that they have used approximately 3-4 tons of Mixed Acid oil in the manufacture of soap in their factory and rest goods was sold in open market; that he was not aware as to whom their buyers had sold the subject goods further; that all payments from their buyers were received either through DD or cheques.
(g) On being shown the test reports received from CRCL in respect of bills of entry Nos. 5407562 dt. 09.10.2006, 540653 dt. 23.10.2006 and 541277 dt. 10.10.2006, Sh. Gulshan Kumar stated that this material was fine quality of Mixed Fatty Acid and Mixed Acid Oil and its value in international market was around 425 USD PMT; that they were not aware about the restrictions on the import of Crude Palm Stearin imposed by the Govt. of India; that he did not know any process by which the subject goods could be used in the manufacture of Vanaspati Ghee because the melting point recommended for Vanaspatic Ghee is 41.5/C whereas the Melting Point of the subject goods was 50-60/C and it could not be the soap value, acid value and iodine value are also different of the subject goods as compared to that of Vanaspati Ghee; that they have not used the subject goods for edible purpose in any manner; that after seeing all 54 test reports received from CRCL in respect of the samples drawn from the goods imported under aforementioned five bills of entry, he was satisfied with the results shown in the reports and accepted all such results given in the test reports; stated that his company is agreed with the test reports and is ready to pay duty on the value derived at USD 420 PMT.
31. I have also perused the order of this Tribunal in the case of H K International (supra) wherein para 5 of the said order is relevant which records the evidence to allege under-valuation. Same is reproduced herein as under :
5.?After going through the order of the Commissioner we find that he has basically relied upon the following evidences.
(a) There was general intelligence that the importers of PFAD and Palm Acid Oil were mis-declaring the description and value of the imported goods and were evading payment of custom duty.
(b) Shri Rakesh Kumar, an indenting agent for Palm Fatty Acid Distillate for various importers in India and several Malaysian firms, in his voluntary statement dated 3-11-2006, inter alia, stated that the prices of PFAD (Palm Fatty Acid Distillate) was around US$ 340 PMT in the Malaysia; that the landed cost of PFAD in India was around US$ 440 PMT which includedUS$ 340 PMT for the goods, US$ 50 PMT for drumming and US$ 50 PMT as freight charges; that the local importers and traders asked him to arrange the invoices at price in the range of US$ 180 PMT for mixed acid oil and US$ 210 PMT for PFAD; that accordingly, he contacted the suppliers in Malaysia to issue invoices in the range of US$ 210; and that the suppliers agreed on invoicing those goods at that rate with the condition that the difference of invoice rate and actual rate would be sent to them in advance.
(c) Shri Anil Kumar Arora, the other indenting agent in his voluntary statement dated 6-11-2006, inter alia, stated that the prevailing price of PFAD (Palm Fatty Acid Distillate) which at the time of import was being declared as Mixed Fatty Acid (MFA) by the Indian importers was aroundUS$ 320 to 350 PMT in Malaysia; that the landed cost of PFAD in India was aroundUS$ 430 to 440 PMT; that on the request of Indian importers in India, he used to ask the suppliers in Malaysia to issue invoices in the range ofUS$ 210 to 220 PMT for PFAD andUS$ 180 to 190 PMT for MFA; that the suppliers used to issue invoices for the consignments on these prices; that the PFAD and the mixed fatty acid which were being so declared by the importer, were one and the same thing; that he received US$ 3 to 5 PMT as commission for the deals brokered by him.
(d) As per the monthly export price bulletin of Palm Fatty Acid Distillate (FOB) USS/TONNE) issued by the Malaysia Palm Oil Board, the average price of Palm Fatty Acid Distillate during the year 2006 was US$ 345 PMT (FOB). If valuation of the same is conducted as per the Valuation Rules, 1988 then 20% of the FOB is to be added as freight which comes to US$ 69 and the total comes to US$ 414/PMT and insurance @ 1.125% comes to US$ 3.88 and thus the CIF value comes to US$ 417.88 PMT. Therefore, the average actual price in US$ of Palm Fatty Acid Distillate comes to US$ 420 PMT (CIF).
(e) Representative samples were drawn from the containers imported under bill of entry No. 540998 dated 10-10-2006 and were sent to Central Revenue Control Laboratory (CRCL), New Delhi for chemical test and analysis. CRCL in their test reports reported that the goods covered by the above bill of entry were having the characteristics of Fatty Acid.
(f) Shri Raghuvar Dayal, Proprietor of M/s. HK International in his voluntarily statement dated 26-12-2006 recorded under Section 108 of the Customs Act, 1962 has inter alia stated that his firm M/s. HK International is engaged in import and trading of Mixed Acid Oil and Mixed Fatty Acid; that first import in his firm was started in the last period of 2004; that they imported 2 containers of Mixed Fatty Acid against bill of entry No. 540998 dt. 10-10-06; that the landing cost of Mixed Fatty Acid was on much higher side and that it would be about US$ 420 PMT; that market value of their product i.e. Mixed Fatty Acid was enhanced and he accepted voluntarily to pay the duty at enhanced assessed value @US$ 420 PMT.
32. I have seen that the allegations made against the appellants from (a) to (f) in para 30 & 31 herein above are identical apart from the allegation (g) in para 29.3 of the impugned order against the appellants is that Shri Gulshan Arora stated that these materials was of fine quality of mixed fatty acid and mixed acid oil and its value in international market was around 425 USD PMT and they were unaware about the restrictions of import of crude palm stearin imposed by Government of India that he did not know any process by which the subject goods can be used in vanaspati ghee because the melting point is 41.5 C and whereas the melting point of the subject goods was 5060 C and it cannot be reduced further any method. He further submits that besides melting point, the soap value, acid value and iodine value are also different of the subject goods as compared to that of vanaspati ghee. It is further submitted that they have not used the subject goods for edible purpose in any manner.
33. In this case almost all the allegations are considered by this Tribunal in the case of H K International (supra). Further, the appellant has already stated that the imported goods were not used in the manufacturing of vanaspati ghee in their statement. The appellants have never admittedly that they have paid any amount over and above the invoice value although they have admitted that international price of subject goods as 450 USD PMT but the same does not mean that the appellant has imported such goods at such a higher price. Moreover, the price which has been relied by the Revenue is originated from Malaysia whereas some of the consignments were imported from Indonesia. These facts have not been considered by the learned Commissioner. The appellants has described the goods as mixed fatty acid. Therefore, it cannot be said that appellant has intentionally imported palm stearin. Moreover, the investigation was also conducted on the basis of the statements of two indentors, namely Shri Anil Kumar Arora and Shri Rakesh Kumar who were unaware in the context of consignor and the appellant has not imported any goods through there indenters.
34. In these circumstances, I hold that decision of H K International (supra) is squarely applicable to the facts of this case. Therefore, relying on the said decision, wherein this Tribunal after going through the evidence has observed as under:
8.?After going through the evidences relied upon by the Commissioner, we fully agree with the learned advocate for the appellant that the said evidences are in the nature of general evidences and not relatable to the import made by the appellant. The statements of the two indenting agents are general in nature indicating that the landed price of the fatty acids is around US$ 440. In neither of the statements the said indenting agents have admitted that the goods imported by the appellant were invoiced on the lower side. On the other hand the appellants have strongly contended that they entered into negotiation with the supplier of the goods, who agreed to supply the same at US$ 185 PMT. There is no evidence recording any extra payment to the supplier. We also do not find any investigations made by the Revenue at the suppliers end. In these circumstances, it is difficult to uphold the contention of the Revenue.
9.?The Tribunal in the case of Jindal Strips Ltd. v. CC, New Delhi reported in 2001 (133) E.L.T. 570 (Tri.-Del.) has held that the transaction value has to be accepted as the correct assessable value unless there is an evidence to the contrary. It was also observed that the London Metal Exchange Bulletin prices cannot be accepted as basis of valuation in the absence of corroborative evidence of contemporaneous imports. The said decision stands approved by the Honble Supreme Court, when the appeal filed by the Revenue thereagainst was rejected, as reported in 2003 (156) E.L.T. A385. Similarly in the case of Pawan Goel v. CC, New Delhi reported in 2001 (135) E.L.T. 1425 (Tri.-Del.), it was held that theoretical price based on LME bulletin cannot be made basis without corroborative evidence. We find that the legal position is well-settled and we do not find any need to multiply the precedent decisions.
35. Therefore, relying upon decision of H K International (supra), I am of the view that Honble Member (Judicial) has taken the correct view in deciding the issue holding that as there is no contrary decision indicating that the price reflected in the invoice is not correct transaction value. In these circumstances, charge of under valuation of transaction value is not sustainable. Therefore, I agree with the view taken by the Honble Member (Judicial).
36. As reference has been answered, file be sent to the referral Bench for further proceedings.
(pronounced in the open court on 01.01.2016 )
( Ashok Jindal ) Member(Judicial)
ss
MAJORITY ORDER
In view of the majority order, the appeals filed by the appellant are allowed.
(Pronounced on 14.01.2016)
(B. Ravichandran) (S. K. Mohanty)
Member(Technical) Member (Judicial)
Neha
2