Custom, Excise & Service Tax Tribunal
M/S. Kisco Casting India Limited vs Commissioner Of Customs, Ludhiana on 17 October, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. I Appeal No. C/54398-54413/2015-DB Date of Hearing : 20.06.2017 Date of Decision : 17.10.2017 [Arising out of Order-in-Appeal No. OIA-ASR-CUSTM-PRV-APP-101-116-15-16 dated 28.07.2015 passed by the Commissioner (Appeals) Central Excise & ST, Ludhiana] For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) M/s. Kisco Casting India Limited : Appellant vs. Commissioner of Customs, Ludhiana : Respondent
Appearance:
Shri Saurabh Kapoor, Advocate for the Appellant(s) Shri Vijay Gupta, A.R. for the Respondent(s) CORAM:
Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No. /2017 Per : Ashok Jindal The appellants are in appeal against the impugned orders. As, all the appeals are arising out of a common issue, therefore, all are disposed of by a common order.
2. The facts of the case are that appellant is an importer of re-rollable steel scraps, falling under tariff heading 72044900. The appellant imported various consignments of re-rollable steel scraps and filed bills of entry. At the time of assessment of bills of entry, some doubts about bonafide and truthfulness of value declared by the importer were raised verbally. The importer-appellant did not provide any evidence or documentary proof in support of genuineness of the declared price, therefore, the bills of entry were assessed on enhanced value, on the basis of cotemporaneous value of steel scraps imported by the other importers. Later on, the appellant asked for the order to be issued under Section 17 (5) of the Customs Act, 1962 and after the request of the appellant the order under Section 17 (5) of the Act was passed. The said order was challenged before the Commissioner (Appeals) who affirmed the adjudication order. Aggrieved from the said orders, the appellant is before us.
3. Ld. Counsel for the appellant submits that Revenue has enhanced the value without rejecting the declared price and therefore, impugned orders are to the set-aside. He further submits that ld. Commissioner (Appeals) has observed that as the appellant has accepted the enhanced value without any protest, the same cannot be challenged in appeals. Ld. Commissioner (Appeals), to support his contentions, relied upon the decision of the Tribunal in the case of Vikas Spinners vs. CC, Lucknow 2001 (128) ELT 143 (Tri. Del.) and in the case of CC (Import), Mumbai vs. Asian Hotels Limited 2012 (275) 229 (Tri. Mumbai). He submits that the said reliance by the ld. Commissioner (Appeals) has no relevance to the facts of this case, therefore, the impugned orders are to be set-aside on this ground alone. He further submits that the appellant was not put to any notice to reject the transaction value and no reasons have been cited for rejecting the transaction value, therefore, transaction value cannot be rejected. It is his submission that no samples were drawn to compare with the contemporaneous imports of steel scraps which has been followed to enhance the value. He submits that the said value should be in identical conditions and for the similar goods. Therefore, he submits that contemporaneous price cannot be taken for assessable value. He submits that the appellant is a regular importer from the same supplier from Sweden and the authorities below have not examined the said fact that appellant is a regular buyer of the same material from the same supplier under the contract and the goods have been imported for their self use. In these circumstances, the contemporaneous price cannot be considered as assessable value.
4. On the other hand ld. AR supports the impugned order.
5. Heard both sides and considered the submissions. We find that in this case, one of the reasons for rejecting the appeals filed by the appellant is that appellant has not protested the enhanced value. In fact, at no point of time the appellant have any occasion to lodge a protest. The bills of entry were filed and the same have been assessed and the appellant has paid the duty to avoid detention and demurrage charges. At no point of time, the appellant has accepted the enhanced value or have offered to the authorities below to enhance the value. The case law relied on by ld. Commissioner (Appeals) in the impugned order have no relevance to the facts of this case as in the case of Vikas Spinners (supra), the appellant has agreed for the enhanced price and has signed an affirmation on the back of the bill of entry and the same is not in the case in hand. In the case of Asian Hotels Limited (supra), the importer, in reply to the show cause notice accepted the proposed loading of value and waiver personal hearing. In the case in hand, no show cause notice is issued to the appellant nor it was brought to the knowledge of the appellant that the adjudicating authority is going to enhance the declared value, on the basis of contemporaneous imports. Therefore, the impugned orders, on this ground alone, can be set-aside.
6. We find that, in this case the value of contemporaneous imports has been taken as a basis for enhancing the price. The transaction value has not been rejected under Section 14 of the Customs Act, read with Rule 3(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. We also find that no samples were drawn from the consignments and no laboratory reports of the contents of the said goods are available. Therefore, relying on the decision in the case of S.K. Dhawan vs. CC (Import) Mumbai - 2016 (344) ELT 436 (Tri. Mumbai), wherein this Tribunal has observed as under:-
7.3?Thirdly, we find that the adjudicating authority has come to a conclusion that there was undervaluation as the appellant-importer did not produce the manufacturers invoice nor catalogue. In our view these findings of the adjudicating authority is totally not in consonance with the law, as these consignments were cleared by the same department when the bills of entries were filed and the documents as produced were accepted as correct at that time. If the authorities had entertained any doubt, they should have called for these documents at the time of clearance of the consignments.
7.4?Fourthly, we find that the adjudicating authority has recorded that the declared value were not actual transaction value paid or payable by the importer; are incorrect findings as they are not evidenced in any form; if the adjudicating authority has to come to such a conclusion in the impugned order there has to be a findings that the appellant-importer had paid additional amount to the exporters in some way or other with proper evidence. In the absence of any evidence it is not possible to accept the statement of learned DR that the transaction value and the declared value were not actual transaction value.
7.5?We also find strong force in the contention raised by the learned advocate for the appellant-importers that the decision of this Tribunal in the case of Radhey Shyam and Ajay Exports & Ors. (supra) are on similar set of facts wherein this Bench has recorded that contemporaneous import details if produced by the appellant-importer, refusing to look to such evidence is incorrect as the value in the contemporaneous imports were accepted by the department in respect of some importers. We reproduce the findings of this Bench in the case of Ajay Exports (supra).
(c)?We also note that the adjudicating authority has refused to look at other contemporaneous imports, which are not the subject matter of the present show cause notice on the ground that there was gross undervaluation being done by the trade. We find that if the value of contemporaneous imports were accepted and the transaction value in those case are not doubted by the revenue in the assessment orders, it is not understandable why the said values could not have been used for the purposes of comparing the same with the value of the consignments in question in these appeals. It is also said along that the Department has to first reject the transaction value and then follow the rules as laid down from rules 5 to 9 of the valuation rules in order to arrive at the value for discharge of Customs duty. From the entire records we find that this does not seen to have been done. In addition, we find that the documents which have come from the foreign source, i.e., Indian embassy, Moscow cannot bring home the charge of undervaluation in the case of Bhatia Group and Sunderlal Group as none of these documents which are relied upon and received from foreign source pertain to these groups; even as far as Ratan Lal Group is concerned these documents cannot be relied upon for the reasons set out hereinabove. 7.6?It can be seen that the above reproduced findings are squarely applicable in these cases. The reliance placed by the learned DR in the case of Shibani Engineering Systems (supra) will also not carry the case of Revenue any further as we find that in that case also in paragraph 11, the Apex Court has come to a conclusion, that the transaction value can be rejected if it is unrealistically and ridiculously low, but at the same time they had stated that the reasoning given in that case by the adjudicating authority are not acceptable to them in the absence of details of contemporaneous imports. In the case in hand, the ratio of the said judgment may not apply as it is on record that the appellant herein produced details of contemporaneous imports which was not considered by the adjudicating authority.
Further in the case of Vyapar Industries Limited 2016 (343) ELT 825 (Tri. Mumbai), again the same issue has come up before this Tribunal and this Tribunal has held as under :-
6.?Firstly, we notice that the import made by the appellant is for the period January, 2005. The show cause notice issued to the appellant, seeks, to reject the declared price by relying upon the imports made during the period May, 2004 which is evidence from Paragraph No. 2 of the Order-in-Original. The reliance placed for enhancing the value seems to be incorrect as the prices of the same product during May, 2004 may not be the same in January, 2005. Secondly, we find that for rejecting the declared price reliance was placed on the imports made in May, 2004 while arriving at the conclusion of undervaluation, the adjudicating authority as well as the first appellate authority relied upon imports during January, 2005 to March, 2005. This would indicate for rejecting the transaction value during January, 2005 there was no data available as the data was relied upon in the Order-in-Original was of April, 2005 was not indicated to the importer. Thirdly, on perusal of details of contemporaneous imports as relied upon by the adjudicating authority to enhance the value from $ 2.4/Kg. to $ 3.18/Kg., is also on wrong footing as the details lack the quantity of imports, the country of origin and manufacturer of the goods. In the absence of any such details, in our considered view, the same cannot be held as contemporaneous imports to reject the value declared by the appellant-importer. Further, in the case of Kuber India vs. CC, Jaipur 2016 (340) ELT 404 (Tri. Del.), again the Tribunal has observed as under:-
6.?We find that the above reasoning and finding of the original authority is completely devoid of legal merit. First of all, the original authority did not record any reason for rejecting the invoice value. Apparently, he was guided by a general alert issued by the DRI in 2008 and also certain guidelines issued by the Board for assessment of used machinery vide Circular No. 4/2008-Cus., dated 12-2-2008. We find neither the alert nor the circular can substitute the legal provisions of Section 3 read with the Valuation Rules of 2007. Further, the lower authority invoked Rule 9 which talks about residual method of valuation. Here it has to be noted that the imported goods were very old and used. At least two machines are admittedly manufactured in 1982, i.e., before 28 years of import. The importer cannot be faulted for not producing the original price of the imported item at the time of their manufacture. It is not clear as to why the lower authority rejected the report given by the Chartered Engineer appointed by the department. The forensic test done also categorically stated that there is no tempering with any label of the machines. In spite of all these facts the lower authority went ahead and did some search in internet and fixed the value for imported goods. We are not able to appreciate the legality of such decision. The Tribunal Commissioner v. B.C. Trading Company - 2008 (223) E.L.T. A133 (S.C.), Commissioner of Customs v. P.J. Network - 2012 (277) E.L.T. 104 (Tri.-Del.) and in Arrow Coated Products Ltd. v. CC, Delhi - 2008 (231) E.L.T. 633 (Tri.-Del.) held that value cannot be enhanced based on information taken from internet. There should be a clear finding about contemporaneous imports of identical or similar goods of comparable quality. Ld. DR relied on the Tribunals decision in Grand Metal Industries Pvt. Ltd. Final Order Nos. 52569-52570/2015, dated 17-8-2015 and also in Vikas Spinners v. CC, Lucknow - 2001 (128) E.L.T. 143 (Tri.-Del.) to state that loaded value uncontested or voluntarily accepted and duty paid, cannot be agitated later by the importer. We find in the present case it is clearly recorded in the impugned order (Para 18) that the importer did not accept the enhanced value of imported printing machines. It is an admitted fact that they have been contesting the valuation. The payment of duty and clearance of goods on enhanced value in order to avoid delay and demurrage cannot be held against the importer. Further, in the case of Peekay Steel Castings Pvt. Limited vs. CC, Cochin 2016 (340) ELT 389 (Tri. Bang.) the Tribunal observed as under :-
6.7?The Revenues contention that the Customs were justified in enhancing the value based on contemporaneous imports do not have any force when we find that the price quoted cannot be proved that they were of identical goods and when there was no evidence to justify the rejection of the invoice values declared by the appellants. The reason(s) quoted by the Revenue are not applicable to the facts of the present appeals. Further the case laws quoted in support by the Revenue are not applicable to the facts of these appeals.
6.8?We find sufficient force in the arguments of the appellants that the Revenue is not able to prove any undervaluation or mis-declaration and thus able to convincingly reject the transaction value declared by the importer. There cannot be any case for enhancement of value just by citing importation of contemporary period by other importers through different contracts unless Revenue is able to reject the transaction value strictly as per provisions of law including the provisions of Customs Valuation Rules as applicable. In the case of CC, Vishakhapatnam vs. Aggarwal Industries Limited 2011 (272) ELT 641 (S.C.) the Honble Apex Court has held as under:-
On a plain reading of Sections 14(1) and 14(1A), it is clear that the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in Section 14(1) of the Act. Section 14(1) is a deeming provision as it talks of deemed value of such goods. The determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1) of the Act. Conjointly read, both Section 14(1) of the Act and Rule 4 of CVR 1988 provide that in the absence of any of the special circumstances indicated in Section 14(1) of the Act and particularized in Rule 4(2) of CVR 1988, the price paid or payable by the importer to the vendor, in the ordinary course of international trade and commerce, shall be taken to be the transaction value. In other words, save and except for the circumstances mentioned in proviso to Sub-rule (2) of Rule 4, the invoice price is to form the basis for determination of the transaction value. Nevertheless, if on the basis of some contemporaneous evidence, the revenue is able to demonstrate that the invoice does not reflect the correct price, it would be justified in rejecting the invoice price and determine the transaction value in accordance with the procedure laid down in CVR, 1988. It needs little emphasis that before rejecting the transaction value declared by the importer as incorrect or unacceptable, the revenue has to bring on record cogent material to show that contemporaneous imports, which obviously would include the date of contract, the time and place of importation, etc., were at a higher price. In such a situation, Rule 10A of CVR 1988 contemplates that where the department has a reason to doubt the truth or accuracy of the declared value, it may ask the importer to provide further explanation to the effect that the declared value represents the total amount actually paid or payable for the imported goods. Needless to add that reason to doubt does not mean reason to suspect. A mere suspicion upon the correctness of the invoice produced by an importer is not sufficient to reject it as evidence of the value of imported goods.
7. On the basis of above judicial analysis, we hold that the transaction value cannot be rejected on the basis of contemporaneous value of steel scrap in the absence of the details of such cotemporaneous imports and relied by the authorities below without bringing the evidence of undervaluation. In these circumstances, the impugned orders are set-aside and the appeals are allowed with consequential relief, if any.
(Order pronounced in the court on 17.10.2017) Devender Singh Member (Technical) Ashok Jindal Member (Judicial) KL 8 Appeal No. C/54398-54413/2015-DB