Custom, Excise & Service Tax Tribunal
T N Malhotra vs Principal Commissioner, Customs-New ... on 4 June, 2024
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. III
Customs Appeal No.50024 of 2022 (DB)
[Arising out of Order-in-Original No.14/2021/SG/Pr.Commr./ICD-Import/TKD dated
10.09.2021 passed by the Principal Commissioner of Customs, ICD, Tughlakabad
(Import), New Delhi]
Shri T.N. Malhotra, Managing Director, Appellant
M/s. S.R. Bristle Products Pvt. Ltd.,
C-108,Sector-63,
Noida-201 301.
Versus
Pr.Commissioner of Customs Respondent
ICD, Tughlakabad (Import),New Delhi.
AND Customs Appeal No.50577 of 2022 (DB) [Arising out of Order-in-Original No.14/2021/SG/Pr.Commr./ICD-Import/TKD dated 10.09.2021 passed by the Principal Commissioner of Customs, ICD, Tughlakabad (Import), New Delhi] M/s. S.R. Bristle Products Pvt. Ltd. Appellant C-108,Sector-63, Noida-201 301.
Versus
Pr.Commissioner of Customs, Respondent
ICD, Tughlakabad (Import),New Delhi.
APPEARANCE:
Shri B.L. Garg, ld. Counsel for the appellant.
Shri Nagendra Yadav, Authorised Representative for the respondent. CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MR. P. V. SUBBA RAO, MEMBER (TECHNICAL) FINAL ORDER NOS.55895-55896/2024 DATE OF HEARING: 05.04.2024 DATE OF DECISION: 04.06.2024 2 BINU TAMTA:
1. M/s.S.R. Bristle Products Pvt. Ltd 1 and Shri T.N. Malhotra, Director of the firm have separately filed appeals challenging the order-in-original no.14/2021/Pr.Commr./ICD-Import/TKD dated 10.09.2021, whereby the declared value was rejected and re-determined value was upheld along with confiscation with recovery of differential customs duty and penalty under Section 114A, 114AA and 112(a)(ii) and 112(b)(ii) of the Customs Act2, 1962.
2. The facts of the case are that on the basis of an intelligence received by Special Investigation and Intelligence Branch 3 , Customs, ICD, Tughlakabad, Delhi that the importers of polyester filament for paint brushes falling under CTH 54049090 were engaged in suppression of actual transaction value of the goods imported by them and were evading customs duty, etc., an alert was issued to the appellant. The consignment under container no.KMTU7359650 vide Bill of Entry No.4157406 dated 27.11.2017 was put for 100% examination on 07.12.2017 and so far as the quantity was concerned, the goods were found to be as per declaration made in the Bill of Entry 4. The importer had classified the goods under CTH 54049090 to avail the benefit of customs notification no.50/2017, which provided for concessional rate of duty of 5% applicable for the goods under CTH 5404 subject to the condition that the goods were made of other than those of nylon. To ascertain the description of the imported goods, samples thereof were sent to CRCL for testing and as 1 (The appellant) 2 (The Act) 3 (SIIB) 4 B/E 3 per the test report, the goods were found to be of polyester and not made of nylon.
3. The consignments under B/E No.4860886 dated 18.1.2018 for container no.ECMU1850198 and B/E No.4995006 dated 29.1.2018 for container no.APZU3905497 were kept on hold for examination. During examination on 07.02.2018, container no.APZU3905497 pertaining to B/E No.4995006 dated 29.01.2018, 12 cartons of imported goods were found to be in excess of the declared quantity. On 07.02.2018, statement of Shri T.N. Malhotra was recorded under Section 108 of the Act, where in nutshell, he admitted that, " in few consignments he had done under- invoicing with the help of overseas supplier for which he had changed invoices instead of original invoices and had shown value of goods reduced by 15-20% of actual FOB value of the goods; that the actual value was not declared in the B/E and invoices but value on the basis of changed invoices, which was less than actual value had been shown to evade payment of customs duty."
4. During his statement on 07.02.2018, Shri T.N. Malhotra retrieved some printouts from his email [email protected] and wechat account on mobile no.9810003697 and submitted them with his dated signature on them. Having admitted the under-valuation, the appellant agreed to pay the differential duty, fine, penalty and later, accordingly paid the same.
5. The appellant thereafter filed B/E 5820879 dated 19.02.2018 for container no.ECMU9551758 and B/E No.5197912 dated 13.02.2018 for container no.CRXU9501486. As the investigation was likely to take some time, the appellant was granted permission for warehousing the goods. 4
6. Summons dated 27.02.2018 was issued to the appellant to appear on 08.03.2018 in relation to the above mentioned B/E, however , the appellant vide letter dated 07.03.2018 submitted that on account of his ill health, he will not be able to appear on the said date and requested for time. Accordingly, the appellant appeared on the next date on 26.03.2018, where his further statement was recorded. In compliance to the further summons dated 11.04.2018, Shri T.N. Malhotra appeared on 16.04.2018 and tendered his statement under Section 108 of the Act. He categorically stated that, "he voluntarily tendered his statement on 07.02.2018 and 26.03.2018 and accepted that the statement tendered was without any coercion and in token thereof, he had duly signed the said statement".
7. On the basis of the current five consignments, the Department proceeded further in respect of the past consignments during 22.04.2016 to 22.02.2017 also as there appeared to be a reasonable doubt that the declared prices of similar goods imported by the appellant must have been under-valued and, therefore, proposed to increase the value of the present as well as the past imports on the basis of the value differences found during investigation of the email and we-chat communications. Accordingly, show cause notice dated 23.12.2020 was issued invoking the extended period of limitation. On adjudication, the impugned order was passed confirming the demand as raised in the show cause notice.
8. Being aggrieved, both the appellants have filed separate appeals before this Tribunal.
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9. The learned counsel for the appellant has made the following submissions:-
9.1 He raised objections as to the reliance placed on his statements recorded under Section 108 of the Act on the ground that the same have been recorded under coercion and threat of arrest which is evident from the fact that the entire activities were conducted on 7.02.2018 itself when his statement was also recorded. He also submitted that the statements have been considered in parts which are favourable to the Department and have not been read as a whole in entirety. The learned counsel for the appellant tried to clarify the difference in value which was basically turnover discount offered by the foreign supplier and such discounts have been offered in respect of only four consignments.
9.2 On the issue of undervaluation, the submission of the learned Counsel for the appellant is that the appellant was coerced to admit under-valuation in respect of all the email printouts which were retrieved and his statement in that regard was not voluntary. The admission of undervaluation was obtained under pressure to hold-up the import consignments. Because of the threat from the Department the appellant could not retract the statements whereby he was made to admit undervaluation.
9.3 The next submission of the learned Counsel is that in respect of the past imports from 18.04.2015 onwards which covered 35 bills of entry, the appellant had neither made any admission of undervaluation nor any evidence was led by the Department to substantiate it. The submission is that the alleged admission of undervaluation in respect of five bills of 6 entry cannot be used as a ground to enhance value of the goods of other past clearances.
9.4 The demand of short payment of IGST was time barred as the same related to the nine bills of entry filed during the period 26.10.2017 to 19.02.2018, in respect of which normal period for issuing the demand notice in terms of Section 28(1) of the Act expired between the period from 25.10.2019 to 18.0 2.2020, whereas the show cause notice was issued on 23.12.2020. It was also submitted that it is not a case of suppression, mis-statement or mis-declaration since full details of the description, classification, quantity, and value of the goods were disclosed in all the bills of entry and the assessment was properly finalised and therefore, the department is not entitle to invoke the extended period of five years under Section 28(4) of the Act.
9.5 The learned Counsel for the appellant has challenged the determination of the value of the imported goods in violation of the Customs Valuation Rules, 2007 5 . The Adjudicating Authority ought to have followed the proper sequential course through Rule 4 to 9 of the Customs Valuation Rules. According to him, the declared transaction prices by the appellant should have been accepted in terms of Rule 4/5 of the 'CVR' as the contemporary import data of identical or similar goods was easily available. On the application of Rule 7, the submission is that appellant is a trader dealing in polyester filaments and natural bristles to be used in the paint brushes and all the goods imported by them are sold directly in the market and therefore, it was not difficult to arrive at the sale price of the goods and then arrive at the CIF value, making the 5 (CVR) 7 permissible deductions. Learned Counsel next contended that the loading of value of a large number of consignments on the basis of average loading factor is contrary to the provisions of CVR. Similarly, loading of all import products on the basis of evidence with regard to a few products is improper and illegal.
9.6 The learned Counsel for the appellant also challenged the admissibility of the retrieved email print-outs in the absence of fulfillment of the condition of furnishing the certificate by the investigating officers as required by Section 138C(2) and (4) of the Act.
9.7 Since the goods have been assessed and examined by the Department and cleared on payment of appropriate duty of customs, they could not reassess the goods at the later stage or invoke confiscation of the goods.
9.8 Lastly, he submitted that the appellant is not liable to penalty under Sections 112, 114A or 114 AA of the Act. In support of his submissions, the learned counsel for the appellant has relied on several decisions, which we shall discuss later.
10. The learned Authorised Representative, on the other hand, reiterated the findings in the impugned order and submitted as under:-
10.1 He has seriously contested the submission of the appellant that the statements were recorded under pressure, threat and coercion. He submitted that the statements were voluntary and were recorded on three occasions on 7.02.2018, 26.03.2018 and on 16.04.2018, when the 8 appellant categorically admitted the communications with the foreign suppliers and undervaluation, resulting in mis-declaration of the invoices and on that basis, deposited certain duties along with interest and penalty. The learned Authorised Representative reiterated the admission of the appellant in his subsequent statement dated 16.04.2018 that his statements recorded earlier were without any fear, pressure, influence, or coercion. He further admitted the documents recovered from the email and we-chat of the appellant clearly reflects the value difference and that the appellant had indulged in suppressing the actual invoices. Referring to the principle what is admitted need not be proved, he submitted that from the statement of the appellant as well as the communications retrieved from the email and we-chat, it is evident that the appellant maintained two parallel set of invoices, one of actual value and the other of lower value, which he presented to the Custom Authorities for clearance of goods with a view to evade customs duty thereon and hence nothing further needs to be proved.
10.2 On the issue of IGST, the learned Authorised Representative distinguishing the Entry no.132B in Schedule II and Entry no.159 of Schedule III submitted that the goods imported by the importer were not 'yarn' but 'polyester filament' to be further used in the manufacture of paint brushes and therefore, attracted IGST @ 18%.
10.3 On valuation, it has been submitted that the appellant deliberately suppressed the actual transaction value and therefore, the value declared in the bills of entry is liable for rejection in terms of Rule 12 of CVR 2007 read with Section 14 of the Act and the method of valuation adopted in this case is duly supported by the decisions of the Apex Court and also by 9 this Tribunal. According to him, the value found in the email/We-Chat excel sheets provided the correct transaction value and the same has been adopted to determine the valuation.
10.4 The learned Authorised Representative submitted that the extended period of limitation is clearly applicable in the given circumstances as the appellant had intentionally suppressed the actual invoices providing the true transaction value and wilfully presented fraudulent and incorrect invoice to the customs with sole intention to avoid payment of appropriate customs duty. The appellant have violated the provisions of Section 17 and Section 46 of the Act in not filing the truthful declaration in the bills of entry and proper self assessment, the extended period of five years has been rightly booked under the provisions of Section 28(4) of the Act and hence, the appellant is also liable to pay the differential customs duty and penalty under Section 114A and 114AA of the Act. The goods are therefore, liable for confiscation under Section 111(m) and penalty under Section 112 has been rightly imposed.
10.5 The learned Authorised Representative in response to the objection to non-compliance of the conditions enumerated in Section 138C of the Act relied on the decisions of Gujarat High Court in Principal Commissioner of Customs Versus Kishan Manjibhai Gadesriya 6 , which referred to the decision of this Tribunal in the case of M/s Laxmi Enterprises Vs. Commissioner of Customs, New Delhi7 affirmed by the High Court of Delhi and the Apex Court.6
2022(4)TMI 316 (Gujarat High Court) 7 2018 (361)ELT 1054 (Trb.-Delhi) 10
11. We have heard Shri B.L. Garg, learned counsel for the appellant and Shri Nagendra Yadav, learned Authorised Representative for the Revenue. Having perused the records of the case, we need to consider the submissions.
STATEMENT UNDER SECTION 108 OF THE CUSTOMS ACT
12. The much disputed issue is whether the statement of the appellant recorded under Section 108 was voluntary in nature or the same was hit by threat, pressure or coercion by the Department. Before adverting to the issue, it is necessary to appreciate the principles laid down in the various decisions and on that basis, determine whether the statement made by the appellant can be relied upon. The learned Counsel for the appellant has relied on the decision in Shiv Shakti Steel Tubes Vs. Commissioner of Central Excise, Ludhiana 8 , where Punjab and Haryana High Court observed that it is well settled that the statement made by a witness or a party under Section 14 of the Central Excise Act is admissible relying on the decision of the Apex Court in Assistant Collector of Central Excise, Rajahmundry Vs. Duncan Agro Industries Ltd. 9 , where while holding that the statement recorded by customs officer under Section 108 of the Customs Act is admissible in evidence, the test laid down was whether the inculpating portions were made voluntarily or whether it is initiated on account of any of the premises envisaged in Section 24 of the Evidence Act. The High Court observed as:-
"13. We are further of the opinion that the statements made under Section 14 are in the 8 2008(221) ELT 166 (P.&H.) 9 2000(120) ELT 280 (SC) 11 nature of admission and ordinarily may not fall within the meaning of expression 'confession'. It is equally well settled that if admission is divided in two parts 'inculpatory' and 'exculpatory' then inculpatory part of the statement can be acted upon and relied if it is corroborated by other evidence in material particulars. In that regard, reliance may be placed on a judgment of the Supreme Court in the case of Palvinder Kaur v. State of Punjab, AIR 1952 SC
354. According to the view expressed by Hon'ble the Supreme Court, a confession must either admit in terms of the offence or at any rate substantially all the facts which constitute the offence. An admission of a gravely incriminating fact, even of a conclusively incriminating fact cannot by itself be regarded as confession and a statement that contains self exculpatory matter cannot amount to a confession because if exculpatory statement is of some fact which if true then it would negative the offence alleged to be confessed. Accordingly if a statement recorded under Section 24 of the Evidence Act have portions of admission, which are corroborated by independent witnesses and other material then it may constitute basis for recording a firm finding with regard to penalty. Therefore, we do not find any legal infirmity in the view taken by the Tribunal specifically when various portions of admission are amply corroborated by statements of other witnesses and documents."
13. The learned counsel for the appellant also referred to the decision in Savaram D. Patel Vs. Commissioner of Customs, Ahmedabad 10, where this Tribunal relying on the decision of the Apex Court in K.I.Pavunnyy Vs. Assistant Collector (Hqrs.), Central Excise Collectorate, Cochin 11 , observed that one needs to examine that the statements are not only voluntary, but also true with reference to the documents in relation to which the statements have been made. The principle enunciated are settled over the period and there is no doubt thereof. The said decision cited by the appellant reiterates the principle in favour of the Revenue, however, on facts the same are distinguishable as 10 2014(312). ELT 193 (Tri.-Ahmd.) 11 1997 (90) ELT 241(SC) 12 there were inconsistencies between the statements and serious contradictions amongst the seized documents.
14. In reference to the issue of the veracity of the statements made under Section 108, we may refer to the decision in Principal Commissioner of Customs Vs. Kishan Manjibhai Gadhesariya, where the Gujarat High Court after considering the various decisions of the Apex Court concluded that the statement made before the customs officers is a material piece of evidence collected by the customs officials. Further, if a statement recorded under Section 108 of the Customs Act, incriminates the accused, inculpating him in the contravention of the provisions of the Customs Act, it can be considered as a substantive evidence to connect the accused or individual with the contravention of the provisions of the Customs Act.
15. In view of the principles enunciated in the various decisions, we need to examine whether the statement made by Shri T.N. Malhotra is voluntary or is under threat or pressure. We have gone through the statements of Shri T. N. Malhotra made on three occasions and we find that he has admitted the modus-operandi and details of the transaction in- extenso. Further, he has given the details, which were exclusively in his knowledge, that in the last four years, they have imported goods and filed around hundred bills of entry mainly relating to polyester filament for manufacturing paint brushes and gave the details of the overseas supplier. He also disclosed that he used to send email to them and after getting confirmation on pricing, it was finalised. All the statements have been duly signed and pursuant thereto, the appellant has deposited the 13 differential duty amount with interest and penalty voluntarily. There is no mention in the challans that duty deposited is 'under protest'. Infact in the subsequent statement dated 16.04.2018, he reiterated that whatever he has admitted in his earlier statement is correct. All this reveals that the statements given were true in nature. We would like to reproduce the relevant extracts from the statements of Shri T. N. Malhotra :-
Statement of Shri T.N.Malhotra, dated 07.02.2018 I further state that CAN has informed me that one SIIB alert has been placed on our firm issued vide letter C.No.VIII/ICD16/TKD/SIIB import/Misc./REP/80/2015 dated 15.05.2015 for investigating in respect of under- valuation of goods. In this connection B/E No.4157406 dated 27.11.2017 was referred from Import-shed to SIIB NOC, the container No.KMTU-7359650 carrying the subject consignment was opened and 100% examination was done on 07.12.2017 and goods were found as per invoice and packing list and value of the said goods appeared to be fair. Sample of the consignment "Polyester Filament for Paint Brush" was sent to 'CRCL' for testing purpose in order to ascertain that subject goods are not made of Nylon. It is come to know that the subject goods i.e. polyester filament for paint brushes are wholly composed of polyester and we are entitled to avail the duty exemption under Customs Notification No.50/2017.
I further state that I came here today before you to request the release of goods vide two containers are currently in shed. I also came to know that there is SIIB alert on these two containers. I am giving my voluntary statement which is true and correct statement. I further state that CHA has informed me to meet the higher officers of SIIB for clarification regarding excess quantity found during examination of our container no.APZO3905497 vide B/E No.4995006 dated 29.01.2018, hence I appeared today to submit clarification vide this statement.
I open my email srbristle@rediff mail.com the computer installed in SIIB branch by getting OTP on my mobile no.9810003697.
As a token, I provide printouts of my wechat with Ms. Kaaneh of Taiking Nylon and singed the same. Also prinouts from my email are also provided by me after signing the same. These printouts have been taken from my mail [email protected] & srbristle@rediff mail.com. 60 printouts in total have been provided of the documents recovered from our email ids & wechat 14 & I have signed all the documents as a token to be correct.
I admit that in the consignments I have done under-invoicing with the help of overseas supplier. I promise to pay the differential duty which is evaded, at the earliest. I promise that I will provide all the sales contract, PI related to my import by 14th Feb., 2018. I promise that I will not delete any mail, chat till the completion of investigation. I have tendered this statement voluntary without any fear, pressure, influence or enticement & duress. I have gone through my above statement & understood that it has been correctly written.
Statement of Shri T.N.Malhotra, dated 26.03.2018 On being asked, I state that I had also appeared on 07.2.2018 to tender my statement. I have been shown the said statement dated 07.02.2018 and I have signed the statement in token of having agreed that the same was my true & correct statement tendered without fear or threat.
In respect of current (4) consignment pending for clearance I state that I am aware that examination of the consignments had been conducted by the officer of SIIB deptt. in the presence of CHA and I have no objection in this regard. Further, I understand that samples taken from consignment have been sent for testing and I will accept the findings of the test results. Further in respect of B/E No.499 5006 dated 29.01.2018 wherein 12 extra cartons were found during examination, I promise to pay differential duty for the same.
I further request that the said four pending consignments may be cleared provisionally or otherwise subject to outcome of test reports. I promise to pay the differential duty arising out of any misdeclaration, if any, and any fine and penalty that the customs may impose on these B/Es. I further state that I do not want any show cause notice, personal hearing in this matter & the case may be adjudicated in my absence.
Statement of Shri T.N.Malhotra, dated 16.04.2018 On being asked, I state that I had appeared on 26.03.2018 & 7.2.2018 in connection of the consignments detained by SIIB & had also tendered my voluntary statement. I have been shown my statement dated 26.03.2018 & 07.02.18 and I agree that the statement had been tendered by myself voluntarily and without any coercion. In token of same, I have appended my dated signature on statement dated 7.2.18 & 26.3.18.
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On being asked, I state that in my statement dated 7.2.18 I had admitted that in few consignments I have done under-invoicing with the help of overseas supplier for which we had changed invoices instead of original invoice and had shown value of goods reduced by 15-20% of actual of FOB value of the goods. The actual value was not declared in the B/E & invoices but value on the basis of changed invoices, which was lesser than actual, had been shown to evade payment of customs duty. The remittance against the amount shown in B/E was transferred from our bank in ICICI & Axix Bank account and the balance account is basically turnover discount which had been offered to me by the foreign supplier generally for a period of one year or more. Such discounts have been offered to me by M/s.Taiking Nylon Filament Co.Ltd., ..........Famous Trading Co. Ltd. & Shizhu Hongda Bristle Mfg. Co. Ltd. only in four consignments and no such discounts has been offered before that. The consignments in which discount had been offered were B/E no.5182195 dated 4.4.2016, 6733140 dated 9.8.2016, 8028033 dated 20.12.16 and 2677962 dated 26.6.2017 and for these consignments, we had submitted invoices of lesser value than actual for the clearance of goods.
On being asked that when the foreign supplier is offering the discount, as has been stated by me, the overseas suppliers could have issued an invoice of discounted value directly and therefore there was no need for M/s.S.R.Bristle Products (P) Ltd to change the invoice. I state that exporter requested us to guide them to make the invoice of lesser value and accordingly, we suggested them to change the invoice.
On being asked, I stated that during my statement on 07.02.18 some printouts from my email [email protected] & wechat account on mobile no.9810003697 had been submitted with my dated signature on them."
16. From the aforesaid, we conclude that Shri T.N. Malhotra had given the statements voluntarily and he has deposited the duty freely and not 'under protest'. None of the statements have been retracted by Shri T. N. Malhotra at any stage and the submission that he was not allowed to retract his statements is unsustainable, for the simple reason that when Shri Malhotra had requested for another date in terms of summons dated 27.02.2018, the same was allowed by the Department. Consequently, the statement of Shri Malhotra is admissible as substantive evidence. 16
17. The learned Counsel for the appellant has next contended that the statement cannot be read in a selective manner and relied on the decision of the Tribunal in Commissioner of Central Excise, Noida Vs. MIT Corporation 12 , holding that evidence not to be relied upon selectively and should be read in whole. Similar observations in Shiraj Ahmed Vs. Union of India 13 have been relied on, where again the Tribunal reiterated that the statement has to be read as a whole and cumulatively, and it was not open to single out the confessional portion of the statement. We have no quarrel with the principle laid down by the Tribunal, however, from the impugned order, we find that the Adjudicating Authority had considered the entire statement and reproduced the relevant paras of the statement. There is no error in such an approach and therefore the objection in this regard does require any interference. DOCUMENTARY EVIDENCE
18. Another factor to be noted is the documentary evidence retrieved by Shri T.N. Malhotra from his email and we-chat from the computer, which have been accepted and admitted by him in his statement and explained. Thus the statements of Shri T.N. Malhotra is duly supported by documents and hence the same can be relied on.
19. Having arrived at the above conclusion, we would like to refer the principle enunciated in Commissioner of Central Excise, Madras Vs. Systems & Components Private Ltd 14 by the Apex Court that once the 12 2018(364) ELT 162 (Tri.-All.) 13 1996 (82) ELT 467 (Delhi) 14 2004(165)ELT136(SC) 17 assessee admits, there is no need for the department to prove the same thus, what is admitted need not be proved. Similarly, in Surjeet Singh Chhabra Vs. Union of India 15 the Apex court held that the confession made by a party even if it is retracted, binds him as it is an admission since custom officials are not police officers. The learned Authorised Representative has also referred to the decision in Naresh J. Sukhawani Vs. Union of India16 where the Apex Court relied on the statement of the co-accused and upheld the conviction of the petitioner for contravention of illegal export of foreign exchange as the statement clearly inculpates not only the co-accused, but also the petitioner. SECTION 138C OF THE CUSTOMS ACT
20. On the admissibility of the computer printouts retrieved from the email and we-chat, the learned Counsel for the appellant has raised an objection that the condition of furnishing the requisite certificate of the investigating officer as specified in Section 138C(4) of the Act has not been complied with and in support thereof relied on the decisions in Gaurav Kushwaha Vs. Commissioner of Central Excise, Indore 17; M/s. S.N. Agrotech Vs. Commissioner of Customs, New Delhi 18 and M/s.Agarvanshi Aluminium Ltd Vs. Commissioner of Customs (I), Nhava Sheva 19 . However, after the said decisions were rendered, the Gujarat High Court in Principal Commissioner of Customs Vs. Kishan Manjibhai Gadesriya (supra) affirmed the view taken by the Tribunal in M/s Laxmi Enterprises (supra) noting that the decision in M/s.Laxmi Enterprises (supra) was challenged before the Delhi High 15 1997(89) ELT 646(SC) 16 1996(83)ELT 258(SC) 17 2018(363)ELT 859(Tri.-Del.) 18 2018(361)ELT 761(Tri.-Del.) 19 2014(299)ELT 83(Tri.-Mumbai) 18 Court and the view of the Tribunal was upheld vide order dated 06.08.2019. Subsequently, the matter was taken up to Supreme Court and the special leave petition was dismissed as reported in M/s.Laxmi Enterprises Vs. Commissioner of Customs20. Rejecting the contention of the party that the computer printouts taken out from the computer cannot be considered as evidence unless certificate as required under subsection (2) of section 138 C of the Act is issued, the High Court of Gujarat observed as under:-
"99. We do not find any merit in the above submission of Mr.Trivedi. The truth or the relevance of the documents has been admitted in no uncertain terms by the respondents in their statements recorded under Section 108 of the Act 1962. In such circumstances, it is too much for the respondents to say that the electronic evidence could not have been taken into consideration. In fact, the electronic evidence on record fortifies what has been stated by the respondents in their statements recorded under Section 108 of the Act.
100. In the aforesaid context, we may refer to one order passed by the CESTAT Principal Bench, New Delhi, in the case of Laxmi Enterprises vs. Commissioner of Customs (Prev.), New Delhi, reported in 2018 (361) E.L.T. 1054 (Tri.-Del.). We quote the relevant observations made by the Principal Bench of the Tribunal as under :
"11. The appellant has raised objections to the admissibility of the documents recovered from the laptop. They have cited the provisions of Section 138C of the Customs Act. We find such objections without basis in as much as the truth of the documents printed-out from the laptop has been admitted by Shri Sumit Chawla son of the proprietor in clear terms. Further, their clear admission by him that these invoices recovered, reflect the correct valuation at which the transaction was concluded with the valuation supplier. Further the appellant was given an opportunity to prove 20 2020(372) ELT A 33 (SC) 19 the correct transaction value of the goods imported under 32 bills of entry by providing bank attested genuine invoices but Shri Sumit Chawla did not make same available. On the other hand, in his statement dated 19.01.2016, that the prices indicated in the invoices/commercial invoices could be taken for assessment of all past imports as the rate of product did not change much during period of imports.
We are of the view that there is no infirmity on the part of the adjudicating authority in re-determining the value of the past imported goods on the basis of such invoices. In the peculiar facts and circumstances of the present case, there is no need for the Revenue to collect evidence in the form of contemporaneous imports." (Emphasis laid)
21. We are of the view that in the facts and circumstances of this case, where the appellant had duly admitted the documents, which he recovered from his own email and we-chat after getting the OTP on his own mobile phone, the decisions of the two High Courts is squarely applicable, which are otherwise binding on us and therefore, the objection raised by the appellant is unsustainable. The issue is answered, accordingly, against the appellant and in favour of the Revenue.
UNDERVALUATION
22. In so far as the allegations of undervaluation are concerned, Shri T.N. Malhotra in his statement under Section 108 had categorically admitted and the same stands further corroborated by the documentary evidence retrieved by Shri T.N. Malhotra from his email and WeChat. The said documents reflecting the differential transaction value was admitted by Shri T.N. Malhotra and hence the allegation of undervaluation is fully 20 established. The contention of the learned Counsel for the appellant that redetermination of value in terms of Rule 9 is also unsustainable as the transaction value could have been ascertained under Rule 4/5 is also unsustainable in the facts and circumstances of the present case. It is an admitted position that parallel invoices have been retrieved by Shri T.N. Malhotra from his email and WeChat, which gave the actual transaction value and hence the same was rightly accepted. There cannot be more reliable evidence than the parallel invoices to determine the differential customs duty as they reflected that the appellant had paid much higher price to the foreign supplier. From the impugned order, we find that the Adjudicating Authority has elaborately discussed the applicability of Rules 4 to 9 in sequential manner having rejected the valuation under Rule 12.
The relevant paragraph from the impugned order regarding the applicability of the valuation is reproduced here:-
"45. I find that Rule 3 (1) of the customs valuation rule states that value of the imported goods shall be the "transaction value" adjusted in accordance with the provisions of Rule 10. Rule 2(g) states that "transaction value" means the value referred to in sub-section (1) of Section 14 of the Customs Act, 1962. Section 14 (1) of the Customs Act, 1962 provides that transaction value of the imported goods shall be the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. Here statute has laid special emphasis on price paid or payable. The price actually paid or payable is the total payment made or to be made by the buyer to or for the benefit of the seller for the imported goods. The payment need not necessarily take the form of a transfer of money. Payment may be made by way of letters of credit or negotiable instruments. Payment may be made directly or indirectly. I find that the proforma invoice/commercial invoice raised by the supplier to the importer at higher value indicated to be the correct value (price actually paid) and thus evidence the actual payment which was to be paid by the importer to the supplier. I further find that Sh. T. N. Malhotra in his statements recorded under Section 108 of the Customs Act, 1962 has also disclosed that the differential amount between the actual price of 21 Imported goods, as detailed in the impugned show cause notice and the price declared in their bills of entry at the time of import, were made through a person in Indian Currency. Therefore, I hold that the value in the said proforma invoice/commercial Invoice has to be treated as the correct transaction value in cases where parallel invoices have been recovered and for the Bills of entry where parallel invoices and packing lists through email correspondences and other evidences have been recovered during investigation and thus the declared value does not represent actual transactional value and is liable to be rejected in terms of Rule 12 of the Customs Valuation Rules, 2007. As per Rule 12(1), it shall be deemed that the transaction value cannot be determined under the provisions of sub- Rule 1 of Rule 3. Further, in terms of Rule 3 (4) of the said rules, the value has to be re-determined by proceeding sequentially through Rule 4 to 9.
46. I find that the value cannot be determined in terms of Rule 4 of the said rules as The impugned goods cannot be compared with identical goods as these are assorted and different items sourced from different sellers in China. On the same grounds, Rule 5. providing for transaction value of similar goods, can also not be invoked. I also find that the deductive value as provided for under Rule 7 cannot be arrived at as there is no one to one correlation of goods imported and sold by themofurther, computed value, as provided under Rule 8, cannot be calculated in the absence of quantifiable data relating to cost of production, manufacture or processing of import goods. As such, in this case, the value needs to be re-determined under Rule 9 .i.e. residual method for determining, the value of the impugned import goods. Rule 9 provides for determination of value using reasonable means consistent with the principles and general provisions of these rules. The underlying principle behind the Valuation Rules for determination of transaction value is that it should reflect the actual price paid or payable for the import goods. I find that, in keeping with the principles of the said rules and Section 14, the actual price paid by the buyer of the goods as reflected in the evidences discussed above can be taken as the transaction value of the impugned goods. As discussed above, the actual values of the impugned goods were found from the email correspondence/wechats and the same should be taken as the basis for re-determining the transaction value of the impugned goods for the purpose of quantification of the duty payable thereon. These values are comparable with the value declared by importer M/s. SR Bristle Products Pvt. Ltd. in their import from 2015 onward. These direct evidences form the basis of determination of the correct transaction 22 value of the goods. under Section 14 of the Customs Act, 1962 read with Rule 9 of the CVR 2007 as applicable. In other Bills of Entry, where such direct evidences are not available, an average value enhance factor of 1.32 has been taken for calculating the actual value of the imported goods, as discussed above, for calculating of value and the consequential short- payment of customs duty in respect of such Bills of entry under Rule 9 of the CVR 2007.
47. I further find that on comparison of declared values of items imported by M/s SR Bristle Products Pvt. Ltd. with those of actual values recovered by SIIB during the investigations, it is observed that the declared values in past Bills of Entry filed by the importer M/s SR Bristle Products Pvt. Ltd., in respect of which no parallel invoice were recovered or submitted by the importer, were highly under-valued. Hence, from the modus operandi and the pattern of undervaluation, I hold that the extent of undervaluation would be same in this import and thus the correct value can be determined resorting to Rule 9 of CVR, 2007. I find that differential Customs duty Payable by M/s S.R. Bristle Products Pvt. Ltd for past Bills Entry in respect of which no parallel invoice were found or submitted by the importer has been re-calculated by enhancing the declared assessable value 1.32 times as detailed in the show cause notice for all the imports prior to 13.10.2017 the date of Notification No. 35/2017 (IGST). I find that for the import made after 13.10.2017 where undervaluation has been found and the importer had wrongly taken the benefit of IGST Notification No. 35/2017 dated 13.10.2017, and paid IGST at the rate of 12%, differential Customs duty has been calculated by enhancing the declared assessable value 1.32 times IGST at the rate of 18%. Thus, differential Customs duty payable by the importer is liable to be re- calculated on the basis of values unearthed during investigation. As I already held that differential duty calculated for Table E of the SCN on by taking BCD @10% is wrong the applicable rate is 5% in terms of notification No. 50/2017-Customs, dated 30.06.2017 (S.No. 318). Accordingly, I agree with the value re-determined on the basis of the documents recovered and differential duty worked out to Rs.77,52,836/- for imports prior to 13.10.2017 (as per table -D of SCN)and Rs. 35,06,052/-(duty re-calculated @ BCD 5% as per Table of para 38 (xv) above) for imports after 13.10.2017."
23. On the issue of valuation, the learned counsel for the appellant has relied on several decisions, which we have gone through, however, we 23 find that the same are distinguishable in so far as the facts of the present case are concerned. The decisions referred to are based on the peculiar facts of that particular case and no principle of law has been laid down. For instance, the findings recorded in K-Link Healthcare India (Pvt.) Ltd Vs. Commissioner of Customs (AIR), Chennai 21 was that the claim of the appellant assessee for a particular classification by itself will not make the case for mis-declaration, when all the required details, including the product literature and the imported product itself being available at the time of assessment.
24. On the other hand, we find that the facts of the case and the issues considered on the contentions raised in M/s Laxmi Enterprises (supra) are absolutely identical, where the goods imported were found to be mis-declared, and on search, laptop and mobile phone was recovered from where the data retrieved included, pro forma invoices, price list, commercial invoices, etc. of various goods relating to the consignments imported in past by the appellant therein for which the real value of the goods was hidden from the customs authorities. The Tribunal concluded that there is no infirmity on the part of the Adjudicating Authority in determining the value on the basis of such invoices and there is no need for the Revenue to collect evidence in the form of contemporaneous imports. The relevant paras of the decision are reproduced below:-
"9. The valuation of imported goods is required to be done in terms of Section 14 of the Customs Act, 1962, read with the Customs Valuation Rules, 2007. The transaction value of imported goods can be rejected only as per the provisions of Rule 12 of the Customs Valuation Rules. In the present case, in respect of 32 Bills of Entry pertaining to imports, certain documents 21 2018(364)ELT 476 (Tribunal-Chennai) 24 were recovered during the course of search from the laptop and mobiles phones. From among the documents recovered from the laptop and mobile phone, the department has recovered the invoices/commercial invoices pertaining to the goods imported under these Bills of Entry. Such invoices indicate that the goods were procured by the appellant from the foreign supplier at significantly higher prices than what has been declared to the department at the time of filing Bills of Entry. It further has been admitted by Shri Sumit Chawla, son of the proprietor, that these invoices, printout from laptop/mobile phone, reflect the correct value of imports. He has even admitted that the differential amount, over and above the invoice originally declared, have been paid to the foreign supplier through means other than the banking channels.
10. In the light of the evidence, as above, we are of the view that the adjudicating authority has rightly rejected the transaction value of goods imported under the 32 Bills of Entry, in terms of Rule 12 of the Customs Valuation Rules, 2007. In fact, Explanation (f) to Rule 12 ibid specifically provides for rejection of the transaction value in the case of fraud or manipulated documents as in the present case."
25. In Dharmesh Silk Mills V Union of India 22 , the High Court of Gujarat upheld the findings of the Tribunal that since the appellant had in his statement recorded by the central excise authorities admitted recovery of double set/parallel central excise invoices and removal of the goods without accounting for the same in the statutory records and without payment of central excise duty, the Revenue's case is based upon the recovery of parallel invoice book read with the statements of the Director recorded over a period of time prove the Revenue's case beyond doubt. The High Court even discarded the contention that the statement was subsequently retracted as the same was done after a period of two years. 22
2010(256) ELT 541 (Gujarat) 25
26. Mr. Nagendra Yadav, the learned Authrised Representative has referred to the decision of the Tribunal in Welcure Drugs and Pharmaceuticals Ltd. Vs. Commissioner of Central Excise, Jaipur 23 , where also the Director of the appellant company as well as the authorised signatory in their statements accepted the clearance of the goods on the basis of the parallel invoices recovered during the search by the officers and paid the duty on the basis of the parallel invoices. The statements were believed as no evidence was placed on record that the statements were recorded under pressure and the retraction made was after 20 to 30 days, which had no effect on the legality of the case proceedings.
27. The learned Authorised Representative has relied on the decision of this Tribunal in Carpenter Classic Exim Pvt Ltd. Vs. Commissioner of Customs, Bangalore 24 here also, the documents seized indicated that the value declared for customs purposes is much less than the actual value. When the party was confronted with the document seized, the entire modus was revealed and it was accepted that the undervaluation is to the extent of 65% and the party had confirmed in his statement the practice of collecting part of the amount from the customers by cash. As the contents of the documents seized were corroborated by the statements of the parties, the Tribunal upheld the differential duty demanded. The decision of the Tribunal has been upheld by the Apex Court25.
23 2007(213)ELT 710(Tri.-Del.) 24 2006(200)ELT 593 (T-Bang.) 25 2009 (235) ELT 201 (SC) 26
28. The learned counsel for the appellant has raised an objection that the allegations of undervaluation or mis-declaration are based on presumptions and assumptions as the Department has failed to produce any independent evidence. For instance, the submission of the learned Counsel is that SIIB officers failed to produce any evidence of withdrawal of equivalent amount of Indian currency from any of the bank accounts held by the appellant or any other beneficiaries of the appellant firm, or any confirmation of the receipt of the differential amount by the foreign supplier. We do not agree with the submissions made by the learned Counsel and refer to the observations made by the Tribunal in Carpanter Classic Exim Pvt Ltd (supra) as under:
"No doubt there are certain deficiencies in the investigations on account of the above facts. It should be borne in mind the case of undervaluation like this, it is extremely difficult to attain mathematical precision. DRI officers do not possess a magic wand which would unfold the entire events which had taken place. On the basis of the available documents and the statements recorded during investigation, they have to come to a conclusion. In a quasi-judicial like this, we are concerned more with a pre-ponderance of probability rather than proof beyond reasonable doubt, as held by various judicial fora."
We may refer to the observations of the Apex Court in Collector of Customs, Madras Vs. D. Bhoormal26 as under:-
"One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs, absolute certainty is a myth, and as Prof. Brett felicitously puts it all exactness is a fake" EL Dorado of absolute proof being unattainable, the law accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man 26 AIR 1974 SC 859 27 may, on its basis, believe in the existence of the fact in issue."
29. We, therefore, conclude that in view of the documents retrieved by the appellant himself and his admissions made in the statement recorded under Section 108 proves the allegations of undervaluation beyond any doubt. The rejection of the declared value under Rule 12 has been rightly adhered to and following the sequential order as per the Valuation Rules, the valuation determined on the basis of parallel invoices is correct in view of the judicial pronouncements in similar circumstances. The contention that Revenue has not relied on the NIDB or EDW data has no merits in the facts of the present case.
INVOCATION OF EXTENDED PERIOD OF LIMITATON INCLUDING IGST
30. In view of the discussion above, it is evident that the appellant had mis-declared the value of the goods and suppressed the correct value of the goods, which was much higher than what was declared to the custom authorities with intent to evade the customs duty to be levied on the correct value. The entire modus-operandi was disclosed only when the documentary evidence was unearthed whereby parallel invoices were traced showing much higher value of imports and which has been admitted by Shri T. N. Malhotra, the master mind of this fraud. It is a clear case of suppressing the actual transaction value of the goods and wilfull undervaluation of the imported goods. The importer has thus violated the provisions of Section 17(1) and Section 46(4) of the Act and hence, the extended period of five years under Section 28(4) is invocable. Moreover, the Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 provided for relaxation of time limit under 28 Central Excise Act, 1944, Customs Act, 1962, Customs Tariff Act, 1975 and Finance Act, 1994 vide Notification dated 30.09.2020. As a result, the time limit for issuing any notice under these Acts was extended upto 31.12.2020 and the present SCN being issued on 23.12.2020 is well within the time limit prescribed.
31. The contention of the appellant that the demand of short payment of IGST was time barred, points to his admission that on merits there was short payment of IGST as claimed by the Revenue and therefore, the challenge is limited to the same being time barred. Since we have held that on account of mis-declaration, suppression of true value of the imported goods with intent to evade payment of requisite customs duty, the extended period of limitation is applicable and the same would apply in the case of short payment of IGST.
CONFISCATION UNDER SECTION 111(m)
32. According to the appellant, the goods have been correctly declared, finally assessed by the Department and cleared on payment of appropriate customs duty and therefore, the Department could not have re-assessed the goods alleging mis-declaration. Having concluded that the goods have been imported by declaring incorrect value, which have been admitted by the appellant, no further evidence was required and hence the same are liable for confiscation under Section 111 (m) of the Act. PENALTY UNDER SECTION 112,114A & 114AA OF THE CUSTOMS ACT
33. Penalty has been imposed on the appellant company and Shri T.N. Malhotra under Section 114A of the Act for willful suppression and mi- 29 statement of actual value by filing wrong declaration and hence no interference is called for. Penalty under Section 112(a)(ii) and 112(b)(ii) of the Act has been imposed on Shri T.N. Malhotra being the only active Director of the company, who was solely looking after the entire affairs of the company and the master mind behind the evasion of customs duty. We also find that Shri T.N. Malhotra was himself negotiating with the foreign supplier and the same is admitted by him in his statement and is corroborated by various e-mails retrieved by him. For his acts of omission and commission as discussed above, the ingredients for imposing the penalty under Section 112 are satisfied. Under Section 114AA, penalty has been imposed both on the appellant company and Shri T.N. Malhotra, as the importer had intentionally made incorrect declaration of the value in the B/E by manipulating the invoices.
Thus, we find that penalty under Section 112 has been rightly imposed as the goods have been held to be mis-declared by the appellant and were liable for confiscation under Section 111(m) of the Act. Similarly, we find no reason to interfere with the penalty imposed under Section 114A and Section 114AA of the Act.
PAST IMPORTS
34. We now come to the challenge to the past imports being without any basis and the value being enhanced on presumptions and conjectures. The learned Counsel for the appellant in support of his contention has relied on several decisions. In Visualan Technologies Private Limited Vs. Commissioner of Customs, Sea, Chennai 27, the Tribunal rejected the action taken by the Department in respect of past imports on the basis 27 2007(211)ELT 466 (Tri.-Chennai) 30 of material contemporaneous to the import covered under current imports vide Bill of Entry dated 1.12.1999. The other decision relied on by the appellant is M/s. Mehta Trading House Pvt. Ltd. Vs. Commissioner of Customs, Mumbai 28 , where also the Tribunal rejected the case of the Revenue that the price list, which was for prime quality goods along with the duplicate set of invoices recovered during the course of search for the live consignment should be made the basis for confirming the demand in respect of the previous consignment. The rejection was on the ground that there is no recovery of duplicate set of invoice in respect of the previous importation.
35. On the other hand the learned Authorised Representative has relied on the decision in the case of M/s Laxmi Enterprises (supra), where the data retrieved included proforma invoices, price list, commercial invoices pertaining to the past imports and the appellant therein admitted that many of the past consignments were under-valued and the documents recovered from the electronic devices pertain to the consignment imported earlier by the applicant. In that view, the Tribunal held that there was no infirmity on the part of the Adjudicating Authority in determining the value of the past imported goods on the basis of such invoices. The Gujarat High Court in Principal Commissioner of Customs vs Kishan Manji Bhai Gadhesariya upheld the order of the Tribunal, holding that the declaration of the customs value in respect to the past clearances made under 32 bills of entry was established in view of the recovery of certain invoices or commercial invoices pertaining to the goods imported from laptop and mobile phones during the course of the 28 2007(213) ELT 54 (Tri.-Mumbai) 31 search, indicating procurement of goods from the foreign supplier at significantly higher prices than the amount declared to the Department at the time of filing the bills of entry.
36. The distinguishing feature in the aforesaid decisions relied on by the appellant and the learned Authorised Representative is that where the invoices relating to the past imports are traceable and available, the transaction value can be rejected and reassessed on the basis of the recovered invoices or other documents. Where no such documents are available pertaining to the past imports and the valuation of the past imports is computed on the basis of the current invoices, etc., the same is not permissible. We find from the impugned order that the Adjudicating Authority had categorically noticed:-
"I find that differential Customs duty Payable by M/s S.R. Bristle Products Pvt. Ltd for past Bills Entry in respect of which no parallel invoice were found or submitted by the importer has been re-calculated by enhancing the declared assessable value 1.32 times as detailed in the show cause notice for all the imports prior to 13.10.2017."
Despite having concluded as above, the Adjudicating Authority took a contradictory view that the importer must have undervalued in respect of other bills of entry filed since the goods imposed are similar/identical goods from same source. We do not agree with such findings as the same seems to be based on conjectures and surmises. Hence, the valuation arrived at in respect of five live consignments cannot be loaded in respect of the past consignments in the absence of requisite documents. We, therefore, set aside the impugned order in respect of past consignments. 32
37. We, therefore, uphold the impugned order in so far as it relates to the confirmation of the differential amount of customs duty along with the interest and penalty as imposed on the live consignments covered under the five bills of entry. However, in respect of the 35 bills of entry, we remand the matter to the Adjudicating Authority to decide afresh in view of our discussion in the present order and pass a speaking order.
38. The appeal filed by the appellant company is partly allowed as indicated in para 36, whereby the impugned order is set aside in so far as past consignments under 35 B/Es are concerned. The demand along with penalty in so far as the current five B/Es is confirmed. The appeal filed by Shri T.N. Malhotra against the imposition of penalty is dismissed.
39. The appeals, are accordingly, disposed of.
[Order pronounced on 4th June, 2024.] (Binu Tamta) Member (Judicial) (P. V. Subba Rao) Member (Technical) Ckp