Custom, Excise & Service Tax Tribunal
M/S. Om International vs Cce, Kanpur on 11 March, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH, NEW DELHI.
Date of hearing:11.03.2013
Date of Decision:
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?
4
Whether Order is to be circulated to the Departmental authorities?
Customs Appeal No.C/127/2008-Customs (DB)
(Arising out of Order-in-Appeal No.350-351/Cus/Appl/KNP/2007 dated 31.10.2007 passed by the Commissioner (Appeals), Customs& Central Excise, Kanpur).
M/s. Om International Appellants
Vs.
CCE, Kanpur Respondent
Appearance: Shri Mayank Garg, Advocate for the appellant.
Shri Amresh Jain, DR for the respondent.
Coram : Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Shri Rakesh Kumar, Technical (Technical) Final Order: 56861/2013 Per Rakesh Kumar:
The facts in this case are, in brief, as under:-
1.1 The appellant imported at ICD, Agra, a consignment declared to be containing lighting fixtures complete fitting with break-up of the items as wall lamp, spare parts, chandeliers, Glasses, Mirror Lamp, Tube Fitting, Bulb and other fittings. They filed a bill of entry no.18/06 dated 6.2.2006 for clearance of the goods for home consumption through their CHA. The goods were examined 100% in presence of the officers of the Directorate General of Revenue Intelligence. On examination, it was found that in respect of certain items, viz. FSL Bulb and Halogen Bulb, retail sale price at which the same were to be sold was required to be affixed prior to their clearances, but the same had not been affixed. On the aspect of the value also, the officers were of the view that since per kg. price of the goods is much less than the prevailing prices of the raw materials plastics, stainless steel, H.R. Sheets, copper, aluminum, Galvanized Iron Sheets and glass, the declared valued is not correct. In this case, inquiry was made with Shri Manoj Kumar Gupta, Proprietor of the appellant firm, whose statements were recorded under Section 108 of the Customs Act, 1962. In these statements, Shri M.K. Gupta, while stating that he had imported the goods for the first time, agreed that the value of the goods should be determined under Rule 7 of the Customs Valuation Rules, 1988 on the basis of wholesale market price in India market of the like goods or similar goods imported by other importers in India. He also fully agreed with the wholesale market price of the various imported items quoted by a wholesale dealer at Firozabad and he accordingly, deposited an amount of Rs.3.5 Lakhs towards duty liability and fine. Though subsequently, Shri M.K. Gupta while letter dated 18.2.2006 retracted his statement claiming that same has been taken forcibly subsequently he withdrew retraction letter stating that his statement was correct. Accordingly, a show cause notice was issued to the appellant for revising the assessable value of the goods from the declared value of Rs.1,06,858/- to Rs.7,18,890/-, confirmation of demand for differential duty, and also for confiscation of the goods under Section 111 (d) and 111(m) of the Customs Act, 1962 and imposition of penalty on the importer firm and its proprietor under Section 112 ibid.
1.2 The show cause notice was adjudicated by the Joint Commissioner vide order-in-original dated 3.6.2007 by which the declared transaction value of the goods was rejected and the assessable value was enhanced to Rs.7,18,890/- and the demand for differential duty was confirmed on this basis. Besides this, imported goods were held to be liable for confiscation under Section 111(d) & 111(m) but since the same had been released against PP Bond, the appellant firm was directed to pay an amount of Rs.1.5 Lakhs towards redemption fine in lieu of the confiscation. Besides this, while penalty of Rs.1.5 Lakhs was imposed on Om International under Section 112 (a), a penalty of Rs.50,000/- was imposed on Shri M.K. Gupta, Proprietor. An amount of Rs.3.5 Lakhs deposited by the appellant prior to issue of the show cause notice was ordered to be brought towards customs duty demand, redemption fine and penalty.
1.3 On appeals being filed to the Commissioner (Appeals) against the above order of the Joint Commissioner, the Commissioner (Appeals) vide order-in-appeal dated 31.10.2007 dismissed the appeals, the appeal of M/s. Om International but set aside the penalty on Sh. M.K.Gupta and accordingly allowed his appeal. Against this order of the Commissioner (Appeals), this appeal has been filed.
2. Heard both the sides.
3. Shri Mayank Garg, ld. Counsel for the appellant, pleaded that the sole basis for rejecting the declared transaction value is that the declared value of the goods is lower than the price of the raw materials of the goods in the Indian market, that this basis for rejecting the declared transaction value is totally incorrect, as if at all, the price of the raw materials prevailing in China from where the goods have been imported, should have been adopted, that the declared transaction value can be rejected only if the conditions specified in Rule 4 (2) of the Valuation Rules are not satisfied, that it is not the departments case that the conditions mentioned in sub-rule (2) of Rule 4 of the Customs Valuation Rules are not satisfied, that in any case, even if the declared transaction value is rejected, the same is required to be determined by sequentially applying Rule 5, 6, 7 and 8 and the assessing officer cannot jump directly to Rule 7, which is what has been done in this case, that it is not even known as to whether the wholesale dealer of the Firozabad, whose quotation about the prevailing wholesale price of the imported items has been taken as the basis for determining the value of the goods, in question, had imported the goods which are similar goods or like goods within the meaning of these terms, as defined in the Customs Valuation Rules, that neither the impugned order nor the order-in-original mentions the name of the wholesale dealer of the Firozabad, who has given this report, that when the very basis for rejecting the declared value is incorrect, neither confiscation of the goods for mis-declaration of value under Section 111(m) nor the demand of differential duty is sustainable, that the goods are also not liable for confiscation under Section 111(d) and that the impugned order, therefore, is not sustainable.
4. Shri Amresh Jain, the Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) and pleaded that the declared transaction value of the goods has been correctly rejected, as the same was less than even the price of the raw materials, that even the appellants have accepted re-determining of assessable value under Rule 7 of the Valuation Rules on the basis of prevailing wholesale price of the like goods quoted by a wholesale dealer in Firozabad, that since the price of contemporaneous import of like or similar goods was not available, Rule 7 of the Customs Valuation Rules based on the domestic market wholesale price of identical or similar goods imported by other importers had been correctly applied, that in respect of FSL bulb and Halogen bulb, the MRP at which the same were to be sold were required to be affixed but the same had not been affixed rendering the same liable for confiscation under Section 111(d) that all the goods are also liable for confiscation under Section 111(m) of Customs Act for mis-declaration with regard to their value and that in view of this, there is no infirmity in the impugned order.
5. We have considered the submissions from both the sides and perused the records.
6. So far as the question of valuation of the goods is concerned, the declared transaction value can be rejected only if the conditions for accepting the declared transaction value as mentioned under sub-rule (2) of Rule 4 of the Valuation rules are not satisfied or in terms of the provisions of the Rule 12 of the Valuation Rules, the proper officer has reasons to believe that the declared transaction value is not acceptable and in this regard, an order has been passed by following the prescribed procedure. In this case, the impugned order does not discuss as to why the declared transaction value is not acceptable in view of the provisions of sub-rule (2) of Rule 4 of the Valuation Rules and whether there are doubting any valid goods for doubting the declared value. The basis for rejecting the value in the impugned order that the declared value is less than the average price of the raw materials plastic, glass, metals, etc, is totally incorrect, as the prices of these raw materials in India had been adopted, while the goods have been imported from China. In any case, even if the declared transaction value is rejected, the same has to be determined by sequentially applying under Rule 5 to 8 of the Valuation Rules and the assessing officer cannot jump directly to Rule 7. Even in respect of the Rule 7 also, which provides for valuation of the goods based on the wholesale price of the similar goods or like goods in India imported by other importers, the impugned order does not discuss as to who that importer is. There is no mention in the impugned order as to whether the contemporaneous import of like goods or similar goods in comparable quantity at the prices proposed in the show cause notice has been noticed. In view of this, we hold that the impugned order upholding the rejection of the transaction value and raising the same to Rs.7,18,890/- is not sustainable. For the same reason, the confiscation of the goods under Section 111(m) and imposition of penalty under Section 112 on this count is not sustainable.
7. As regards the question of confiscation of FSL bulb and Halogen bulb under Section 111(d) for not affixing their MRP, in terms of Note 5 (e) of the General Note of Foreign Trade Policy Pre-Packaged Commodities imported into India shall, in particular, carry maximum retail sale price at which the same in packaged form may be sold to the ultimate consumers. This provision is applicable to the commodities imported in pre-packaged form. The impugned order while holding the FSL bulbs and Halogen bulb as liable for confiscation under Section 111(d) does not give any finding as to whether the goods imported were in bulk packages and in pre-packaged form meant directly for sale to ultimate consumers. Unless the imported goods were in pre-packaged form meant directly for sale to ultimate consumers, the provisions of Note 5(e) of the General Note of the Foreign Trade Policy read with Section 111 of the Foreign Development and Regulation Act, 1992 would not be applicable. On this point, there is no finding of the Commissioner (Appeals) or of the Original Adjudicating Authority. Therefore, for deciding the question of liability to confiscation of the FSL Bulbs and Halogen Bulbs under Section 111(d), the matter has to be remanded for de novo adjudication.
8. In view of the above discussion, we, while holding that -
(a) :- there is no justification for rejecting the declared transaction value of the goods and same has to be accepted and for the same reason, the goods imported are not liable for confiscation under Section 111(m) of the Customs Act, 1962 and no penalty is imposable on the Appellant on this count; and
(b) the question of confiscation of FSL bulbs and Halogen bulbs under Section 111(d) has to be decided only after giving a clear finding as to whether these goods were imported in pre-packaged form so as to attract the provisions of Note 5 (e) of the General Note of Foreign Trade Policy;
set aside the impugned order and remand the matter to the original adjudicating authority for de novo adjudication only in respect of confiscation under section 111(d) of Halogen bulb and FSL bulbs for not declaring the MRP on the goods. The question of confiscation of these goods under Section 111(d) is to be decided after giving a finding as to whether the imported goods were in pre-packaged form.
[Order pronounced on..] ( Archana Wadhwa ) Member (Judicial) (Rakesh Kumar ) Member (Technical) Ckp.
1