Custom, Excise & Service Tax Tribunal
Anil Kumar Tiwari vs Commissioner Of Central Excise on 23 December, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH
CHENNAI
Appeal NoS.C/41935 & 41936/2013
[Arising out of Order-in-Appeal No.5/2013 dt. 7.6.2013 dt. passed by the Commissioner of Customs, Tuticorin]
1. Anil Kumar Tiwari
2. Paarth Trading Company Appellant
Versus
Commissioner of Central Excise,
Tuticorin Respondent
Appearance:
Dr. G.R. Sarkar, Advocate For the Appellant Ms. Indira Sisupal, AC (AR) For the Respondent CORAM : Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member Date of Hearing : 26.06.2015 Date of Pronouncement : 23.12.2015 FINAL ORDER No.41730-41731/2015 Per R. Periasami
Both the appeals are arising out of a common impugned order. Therefore, they are taken up together for disposal. The present appeals are filed by M/s.Paarth Trading Company and its Proprietor Shri Anil Kumar Tiwari against Order-in-Original dt. 7.6.2013 of Commissioner of Customs, Tuticorin.
2. The brief facts of the case are that appellant M/s.Paarth Trading Company filed Bill of Entry No.5449215 dt. 13.12.2011 for import of Dyed Woven Fabrics declaring the quantity of 96119 meter equivalent to 141602.51 Square metre. Based on the intelligence gathered by DRI that goods are being highly undervalued, the office of DRI Regional unit, Tuticorin took up the matter for investigation and has examined the goods on 12.1.2012 on the reasonable belief that the goods are highly undervalued at US$ 0.7 per Mtr. when compared to US$ 2.36 per Mtr of contemporaneous imports from China. Immediately the goods were seized under a valid mahazar. On completion of the investigation and recording of various statements, SCN dt. 6.7.2012 was issued to the appellant for confiscation of goods under Section 111 (m) and rejection of declared value demanding duty on the redetermined value and for imposition of penalty. The Commissioner of Customs, Tuticorin after following the principles of natural justice in his order rejected the declared value of US$ 0.7 per Mtr on the imported goods and re-determined the value of US$ 1.05 per meter under Rule 4 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and also ordered for payment of duty of Rs.69,61,352/-. He confiscated the goods covered under Bill of Entry No.5449215 dt. 13.12.2011 under Section 111 (m) and also imposed penalty of Rs.30 lakhs on Shri Anil Kumar Tiwari, Proprietor of appellant company under Section 112A of the Customs Act. Hence the present appeals.
3. Heard both sides. Ld. Senior Advocate Dr. G.K. Sarkar, appearing for the appellant, reiterated the grounds of appeal and submits that the goods were imported and appellant declared the correct price whereas the Customs enhanced the price based on the contemporaneous imports. He drew our attention to SCN annexed at page 42 of the paper book and also referred to para 17 & 18 of OIO at page 29. He submits that seizure was illegal as the goods were imported and filed Into Bond Bill of Entry for warehousing whereas the warehousing was denied and the goods were seized by the authority. He submits that OIO travels beyond the SCN and submits that only statement of Shri Anil Kumar Tiwari, Proprietor of appellant company was recorded. The adjudicating authority travelled beyond the SCN to consider extraneous factors discussed at paras 17, 18 and relied other evidences of Shri Vikram Jain of Chennai whereas only contemporaneous imports of M/s.ICON Fibers and Fabrics P. Ltd. Mumbai was relied in the SCN. On this issue, he relied the following citations :-
(1) CCE Vs Ballarpur Industries Ltd. 2007 (215) ELT 489 (SC) (2) CC Mumbai Vs Toyo Engineering India Ltd.
2006 (201) ELT 513 (SC) (3) CC New Delhi Vs Prodelin India (P) Ltd.
2006 (202) ELT 13 (SC) [Relied Para30] 3.1 Ld. Counsel submits that samples were drawn on 10.1.2012 and also on 12.1.2012 and submits that samples drawn on 10.1.2012 were not given to the appellant. In this regard, he relied paras 16, 17 of the Honble Supreme Court judgement in the case of Tata Chemicals Ltd. Vs CC Jamnagar 2015-TIOL-120-SC-CUS.
3.2 Regarding undervaluation, he further submits that for enhancement of value, the department relying on contemporaneous imports by M/s.ICON Fibers and Fabrics P. Ltd., Mumbai is not comparable as it was for the later period and he relied the comparative chart given at page 80 of the paper book and explained that both are comparable on account of description, quantity, value and period of import. The adjudicating authority has not discussed or given any finding on this aspect. He also relied additional evidences submitted before Tribunal and copies of various Bills of Entry where they imported the goods at same or less price. He relied on the following case law :-
(1) CC Mumbai Vs J.D. Orgochem Ltd.
2008 (226) ELT 9 (SC) (2) Gira Enterprises Vs CC Ahmedabad 2014 (301) ELT 209 (SC)
3) Eicher Tractors Ltd. Vs CC Mumbai 2000 (132) ELT 321 (SC)
4. On the other hand, Ld. A.R for Revenue reiterated the findings of OIO and investigation report. She referred to copy of invoice extracted at page 56.The date of invoice is 10.11.2011 and also drew our attention to comparable invoice at page 44. She referred to mahazar for seizure of the goods annexed at page 51 & 52 and submits that the goods imported are polyester knitted fabrics whereas the appellant declared the goods as Polyester Fabrics whereas on examination the goods were found to be Polyester Suiting Fabrics. She referred to para-22 of the OIO and also relied the statement of proprietor Shri Anil Kumar Tiwari annexed at page 65, 66 wherein he has admitted that price of comparable goods shown to him is between US$ 2.2 and US$ 3.5 per kg. and admitted that he offered his price of US$ 0.70 per metre (US$ 2.1 per kg) and the supplier accepted to supply the fabrics at the above price. She submits that value of suiting material is higher than general polyester fabrics. She relied invoice dt. 6.9.2011 of M/s.Shaoxing Mina Textile Co. Ltd., China annexed at page 53 where the contemporaneous goods were imported at the price of US$ 1.32 per mtr. and US$ 2.36 per mtr. supplied from the same country of origin which is similar to contemporaneous of invoice pertaining to M/s.ICON Fibers and Fabrics P. Ltd. She relied Supreme Courts decision in the case of CC Bombay Vs Shibani Engineering System - 1996 (86) ELT 453 (SC). She also relied para-24 of Honble Supreme Court decision relied by counsel in the case of CC New Delhi Vs Prodelin India (P) Ltd.
5. In rejoinder, ld. Counsel countered the arguments of Ld. A.R and submits that department cannot make new case by stating that imported goods are Polyester Suiting Material which was not the charge made out in the SCN or in the OIO.
6. We have carefully considered the submissions of both sides and perused the records. The issue involved in the present appeals relates to (i) undervaluation of imported goods i.e. Polyester Woven Dyed Fabrics where the declared value of US$ 0.70 per Mtr. is enhanced to US$ 1.05 per mtr is correct or otherwise, (ii) denial of availment of DFIA licence for clearance of the goods, and (iii) confiscation and imposition of fine and penalty is sustainable or not. On perusal of the SCN, investigation report, statement and mahazar, we find that the adjudicating authority has discussed the issue at length in his OIO.
7. As regards the appellants preliminary objection on the seizure based on the reasonable belief and drawal of samples, we find that appellant raised the same issue before the Commissioner of Customs and the adjudicating authority in his findings at paras 13, 14 & 15 has clearly discussed the issue and gave clear findings. We find that seizure of goods was justified. It was done on the reasonable belief that the department had clear evidence of contemporaneous imports where declared value is at US$ 2.46 per Mtr. Therefore, reasonable belief is established in effecting the seizure. As regards drawal of samples, we find that the Textile Committees test report conforms to the description of the goods declared by the appellant and it is not disputed by the appellant or by the revenue. We do not find any infirmity as far as the test reports and drawal of samples of both the samples were drawn by the department in the presence of the representatives of the appellant. Therefore, appellants relying on the Honble Supreme Courts citation in the case of Tata Chemicals Ltd. (supra) is not relevant to the present case.
8. On the merits of the case, we find the appellant is engaged in trading of imported fabrics and imported Polyester Dyed Woven Fabrics from China. Appellants contention is that contemporaneous imports relied by Revenue in the case of Bill of Entry No.6800547 dt. 11.5.2012 of M/s.ICON Fibers and Fabrics P. Ltd., Mumbai is not comparable. In this regard, we find that the impugned goods and the comparable goods were originated from China and shipment made from M/s.Shaoxing Mina Textile Co. Ltd., China in and around the same time and the date of shipment of both consignments are dt. 29.10.2011 and 11.11.2011 respectively. The appellant is also a trader and purchased the goods from supplier who is also a trader which is similar to evidence relied by Revenue. We find that appellant failed to produce any evidence of purchase order and terms and conditions of sale and manufacturers invoice before the Commissioner of Customs. In the absence of any evidence, we do not find any justification on the appellants argument that when compared to contemporaneous imports, the impugned goods were declared at US$ 0.70 per mtr., whereas the international price of Polyester Woven Fabrics is between US$ 2.36 and US$ 1.05 per mtr and the adjudicating authority has correctly taken the lowest price of US$ 1.05 per mtr. There is a difference of 33% less when compared to US$ 1.05/mtr. which cannot be considered as normal discount offered by the supplier to the appellant. In the absence of manufacturers invoice, or any suppliers price list or manufacturers price list of the imported goods, we do not find any justification of the appellant it is a discount. The appellants contention that they have purchased stock lot also is not supported with any evidence. Whereas we find that the statement of Shri Anil Kumar Tiwari, Proprietor clearly confirms that all his transactions are through telephone and he orally bargained the price with supplier and supplier agreed his price. The whole transaction was without any written documents but only oral transactions. Therefore, appellants relying Honble Supreme Court decision in the case of Eicher Tractors Ltd. (supra) is not applicable in the present case for the reasons that the Honble Supreme Court in the above case clearly held that there was existence of price list from the foreign supplier / manufacturer and the Supreme Court held that a discount of 23% on the foreign suppliers price list was acceptable. Whereas in the present case, as already discussed in the preceding paragraphs there is neither suppliers or manufacturers price list or any terms of contract of purchase of stock lost etc. to establish the quantity discount. Therefore, the Apex Court judgement is distinguishable and not applicable to the present case. The other citations relied by appellant in the case of CC Mumbai Vs J.D. Orgochem Ltd. (supra) and in the case of Gira Enterprises Vs CC Ahmedabad (supra) are also distinguishable and not applicable to the facts of the present case.
9. We also find that appellants had relied various Bills of Entry and invoices in the form of additional evidence submitted before the Tribunal of import of Polyester Fabrics. In this regard, we find that appellant submitted written submissions to SCN before the adjudicating authority and also appeared for the personal hearing and failed to substantiate their claim during the adjudication proceedings. Therefore, we do not find any force in appellant relying these documents at this juncture. On the valuation of the goods based on contemporaneous imports, we rely Honble Supreme Court judgement in the case of CC Mumbai Vs ShiBani Engg. System (supra). The relevant paragraph of the Supreme Court order is reproduced as under :-
"10.?In our view, the Tribunal mis-directed itself. There is no question of reading the word and disjunctively here. The Exemption Notification must be read plainly, as an ordinary man would read it, and, so read, Sl. No. 6(a) says that cups of roller bearings are liable to the duty applicable to the bearings of which they are part and cones of roller bearings are liable to the rate of duty applicable to the bearings of which they are part. There is no justification for reading the entry conjunctively in the sense that the rate of duty applicable to the bearings of which they are part will apply only when the cups and cones of roller bearings are imported together but not if they are imported separately.
11.?Insofar as valuation is concerned, the Collector was right in rejecting the transaction value of the goods because, plainly, it was a totally unrealistic value. For the purpose of placing a value on the goods, however, the Collector resorted to very tenuous reasoning which we cannot uphold. At the same time, we must say that we do not approve of the findings of the Tribunal in this behalf, which we have referred to above. It may in a given case be necessary to value unbranded goods on the basis of the known price of branded goods and also the goods of one country of origin on the basis of the known price of the goods of another country of origin, but the linkage must be appreciable and proximate. The ratio of the above Supreme Court judgement squarely applies to the present case. This view was again affirmed by the Apex court in the case of CC Vs Prodeline India Pvt. Ltd. (supra) wherein the Court has clearly held that Revenue is bound to prove the declared price is not true value and should bring on record any evidence of identical goods/similar goods imported at higher price. The relevant para-24 of the Supreme Court's judgement is extracted as under :-
"24.?It is settled law that the onus to prove that the declared price did not reflect the true transaction value is always on the Department. It is also a settled law that the Department is bound to accept the transaction value entered between the two parties. It is not the case of the Department that M/s. PC USA were exporting the identical goods to other importers at higher price and that the Department has not made any effort to bring on record any evidence that identical or similar goods were imported by other importers at higher price. Therefore, in view of the clear position of law about the acceptance of the transaction value, the Customs authorities could not add the technical know-how fee in respect of the post-importation activities to the assessable value of the imported goods."
The ratio held by the Apex Court in the above case is squarely applicable to the present case as the department proved that the declared price is not true transaction and also brought out clear contemporaneous evidence of similar/identical goods at higher price from the same country of origin. Once the department proved the bona fide, the onus is on the appellant to prove to the contrary.
10. In the absence of any valid documents by the appellant it is evident that declared price of US$ 0.70 per mtr. is not a normal price and the same cannot be considered as transaction value. We find that adjudicating authority correctly determined the value under Rule 4(3) of CVR 2007 and taken the lowest contemporaneous price of US$ 1.05 per mtr. instead of US$ 2.36/mtr of contemporaneous import was available. Therefore, respectfully following the ratio of above two decisions, we find that rejection of declared price and enhancement of value from US$ 0.70 to US$ 1.05 per mtr. determined by the adjudicating authority is fully justified and liable to be upheld. Consequently, the confiscation of the seized goods under Section 111 (m) and demand of differential duty of Rs.69,61,352/- on the re-determined value under Section 28 of Customs Act is upheld.
11. As regards appellants contention on denial of DFIA licence, we find that adjudicating authority in the impugned order while confirming the demand denied benefit under DFIA licence. On perusal of records, it is seen that there was no allegation made in the SCN for the denial of benefit of DFIA Licence or any misuse of DFIA licene for clearance of the goods. Therefore, we hold that appellants are entitled to utilize DFIA licence for clearance of the said goods. Accordingly, we allow DFIA benefit for clearance of the said goods.
12. As regards the imposition of redemption fine and penalty, by taking into account overall facts and circumstances of the case, and also considering the fact that appellants have not availed provisional release of the goods ordered by the authority after seizure of the goods, and the goods are still lying with the Customs, we reduce the redemption fine from Rs.30 lakhs to Rs.10,00,000/- (Rupees Ten lakhs only) on the first appellant. Consequently, we reduce the penalty imposed on the second appellant Shri Aniil Kumar Tiwari, Proprietor of the company from Rs.30 lakhs to Rs.5,00,000/- (Rupees Five lakhs only). Accordingly, the impugned order is upheld but for the reduction in RF and penalty and allowing DFIA benefit. Both the appeals are partly allowed. Issue order by Dasti.
(Pronounced in open court on 23.12.2015)
(P.K. CHOUDHARY) (R. PERIASAMI)
JUDICIAL MEMBER TECHNICAL MEMBER
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