Customs, Excise and Gold Tribunal - Calcutta
Eastern Exports And Imports Co. vs C.C.E. And C., (Admn/Aiu-Prev) on 4 July, 2006
ORDER S.S. Sekhon, Member (T)
1. These appeals against the same order of Commissioner are being disposed by this common order.
1.2 Heard, Shri Advocate, C. Harishankar in CDM 130-132/2003 Advocate Shri S.K. Mehta in CDM No. 141/2003 and B.N. Chattopadhyay for appeal No. 143/2003 and Dr. Mannian who appears in all these cases for Revenue.
1.3 Acting on intelligence that one company in the name of M/s. Tiru-mala Seven Hills (P) Ltd. having their laboratory at flat No. 303, 3rd Floor, Block-D, Deshbandhu Nagar (N) Baguihati, had procured illegally imported 'Optical Time Domain Reflectometer(OTDR) under (hereinafter referred to as OTDR) machine and estabilised light, Source machines for supplying the DOT, the officers conducted search of the premises of M/s. Trimula (sic) Seven Hills (P) Ltd. and found 2 Nos. of Dual Mode Automatic Fusion supplier 3000 made in USA at by M/s. Aurora Instruments Ins. bearing Sl. No. 0001542-2-1 and 0001542-2-2, along with adopters in a suit case marked Shri Vinod Kumar Khetawat Managing Director of M/s. Tirumala Seven Hills (P) Ltd., who could not produce, on the spot, any documents for procurement or import of the said machines. Later in his statements, the Managing Director informed that the said machines were of foreign origin and imported by M/s. Eastern Exports and Imports Co. Delhi and purchased from them and produced challans for the delivery and other information.
1.4 The documents tendered on this appeal reveal the purchase invoice were for Model 2000 SI in both cases and were imported and cleared from customs on Bill of Entry No. 205995 dated 24-02-2000, which had declared the two Fusion Splicer Machine for junction cables with accessories and were supplied on invoice of M/s. Lalasis Trading Pvt. Ltd., Singapore at USD 1875.00 i.e. Rs. 82,125/- and were sold, at Rs. 2,40,000/- each, by M/s. Eastern Exports and Imports Co. to M/s. Tirumala Seven Hills (P) Ltd. The CHA for the subject clearance effected through NSCBI Airport Kolkata was M/s. Saikh and Pandit, Kol-kata.
1.5 Enquiries made, recorded gross under invoicing of the SC machine and it was alleged that -
In order to ascertain the actual price of the Fusion Splicer machines, enquires were undertaken through Internet and in response to a specific query about the price of Fusion Splicer 3000 a letter was received though E-mail from M/s. Agents Private International, Ontario, Canada enclosing a copy of their catalogue and a quotation for the said Fusion Splicer machines of their catalogue and a quotation for the said Fusion Splicer machines of model 3000 along with prices for goods for other models/variety. According to the said quotations, bearing No. FSPL-INTL the unit price for Fusion Splicer of Model 3000 is US $ 3000 to US $ 20950.00.
From the overseas enquiry undertaken by DRI it has been gathered that the price range of different model of Fusion Splicer is in between GBP 6318 to GBP 22571. Therefore it appears that even the minimum price of splicer machine is (GBP 6318) as shown in the quotation of M/s. A.G. Electro Optics, England is far above US$ 1875 i.e. unit price of Fusion Splicer as declared by the importer in the Bill of Entry No. 205995 dated 24-2-2000.
Moreover, on scrutiny of the import documents it is seen that in the Bill of Entry, the importer disclosed the country of origin as Singapore and in the invoice dated 21-2-2000 of M/s. Lalasis Trading Pvt. Ltd. The importer submitted before the Customs, bears the description of the goods as" Machines having individual function, machines for joining cables" but there was no mention about the actual name of the machine model No. and manufacturer's name. The packing list from Lalsis Trading Pvt. Ltd. However indicates the model No. as 3000 and Sl. No. as 0001542-2-1 and 0001542-2-2.
On physical examination of the subject goods it is seen that the machine has been described as Fusion Splicer model 3000 and Sl. Nos. 0001542-2-1 and 0001542-2-2 (tallying with the Sl. Nos. as indicated in the Packing List) manufactured by Aurora Instruments Inc. USA. The importer also did not furnish an invoice of the manufacturer or producer of the imported goods in terms of Rule 10(b) of the Customs Valuation Rules 1988, though the goods in this case were imported from or through a person other than the manufacturer or producer.
Thus from the above it appeared that the induced the Singapore supplier to incorporate in the invoice the tariff description of the goods only suppressing the actual name of the machine as well as country of origin. The actual price of the subject Fusion Splicer machine as offered by Agents Private International, Ontario, Canada following an open query through internet was found to be US$ 20950.00 which is more than ten times of the declared price of US$ 1875. Thus it appears that the importer deliberately suppressed the Country of Origin and the actual name of the goods with a sole motive to evade duty by projecting a lesser price in the invoice.
Now, considering USD 20950.00 (i.e. the price declared in the Quotation of M/s. Agents Pvt. International) as the actual unit price for fusion splicer machine of Model 3000 (i.e the same model; which is the subject matter of this notice), the cost for two such machines comes to USD 41900. This price is FOB value of the above two machines as clearly indicated in the quotation comes to Rs. 18,60,075.28.
CALCULATION FOB= USD 41900 equivalent to Rs. 18,35,220.00 Freight = SGD 172.15 Equivalent to Rs. 4,209.06 (as declared by the importer in the Bill of Entry No. 205995 dated 24-2-2000) Insurance = USD 47,375 equivalent to Rs. 20,646.22 The CIF (Rs. 1835220 + Rs. 4209.06 + Rs. 20646.22) = Rs. 18,60,075.28 Note : (i) Exchange Rate has been taken as Rs. 43.80 for 1 USD as it was mentioned in the concerned Bill of Entry No. 205995 dated 24-2-2000.
(ii) Exchange rate for Singapore Dollar has been taken as Rs. 24.45, the rate of Singapore Dollar on 24-2-2000, the date of Bill of Entry No. 205995.
(iii) Insurance has been calculated on 1.125% of the FOB as it was calculated in the foresaid Bill of Entry No. 205955 dated 24-2-2000.
Now adding 1% Landing Charge on the CIF, the assessable value comes to Rs. 18,78,676.06 and the duty involvement (35% basic + 10% surcharge + 16% CV duty) comes to (Rs. 11,39,604.87 (-) Rs. 1,05,504.80) Rs. 10,35,100.07. Rs. 1,04,504.80 is the amount of duty paid by the importer in the Bill of Entry 205955 dated 24-2-2000.
Further as the investigation revealed that the actual price (FOB) of the two Nos. of Fusion Splicer Machines under Seizure is USD 41,900 i.e. Rs. 18,35,220.00. But from the invoice No. EEI/062 dated 17-3-2000 raised by M/s. Eastern Exports and Imports Co. in favour of M/s. Tirumala Seven Hills P. Ltd. it could be seen that M/s. Eastern Exports and Imports Co. had sold the subject two machines to M/s. Tirumala Seven Hills P. Ltd. At the unit price of Rs. 2,40,000 a price which is much lower than the actual price of the machine. Had the two Nos. of Fusion Splicer machines been imported by M/s. Eastern Exports and Imports co themselves, then they would have sold it M/s. Tirumala Seven Hills P. Ltd acted in close nexus in the importation of the subject two Nos. of fusion splicer machines with the sole purpose of evading duty by projecting a lower value before the customs, Analysis of the statements of the concerned persons as discussed hereinbefore also corroborates the above fact.
Thus from the foregoing it appears that the said Shri Pradeep Kumar Baid. Director of M/s. Tirumala Seven Hills P. Ltd. had acted as a common platform between the importer Shri Madusudan Bajaj prop, of M/s. Eastern Exports and Imports Co. and Shri Vinod Kr. Khetawat the Managing Director of M/s. Tirumala Seven Hills P. Ltd. It was also said Shri Pradeep Kr. Baid who had introduced Shri Madusudan Bajaj to Shri Ashim Kr. Chatterjee the representative of CHA M/s. Saikh and Pandit. Therefore, it appears that there was a nexus between Shri Vinod Kr. Khetawat of M/s. Tirumala Seven Hills P Ltd. and Shri Madusudan Bajaj prop, of M/s. Eastern Exports and Imports Co. in importing the two Nos. of Fusion Splicer machines under seizure at a grossly undervalued price.
From the above it also appears that the said Shri Madusudan Bajaj Prop, of M/s. Eastern Exports and Imports Co. knowingly and consciously had misdeclared the value of the said two Nos. of Fusion Splicer machines in the Bill of Entry No. 205995 dated 24-2-2000 and had thus violated the provisions of Section 46(4) of the Customs Act and by such act of misdeclaration his company i.e. M/s. Eastern Exports and Imports Co. had evaded Customs duty amounting to Rs. 10,35,100.07 (as per calculation at para 19) such action on his part has rendered the said two Nos. of Fusion Splicer Machines under seizure liable to confiscation Under Section 111(m) of the Customs Act. Thus, Sri Madusudan Bajaj prop, of M/s. Eastern Exports and Imports Co., by his act of misdeclaration of value in respect of two Nos. Fusion spilcer machines model 3000 had rendered himself liable to penal action under Section. 112 of the Customs Act. It also appears that Shri Vinod Kr. Khetawat, MD of M/s. Tirumala Seven Hills P. Ltd. and the CHA M/s. Sikh and Pandit had the conscious knowledge that the said two Nos. of Fusion Splicer machines of model 3000 which were seized from the repairing and testing lab of M/s. Tirumala Seven Hills P. Ltd. at Baguihati were illegally imported into India. Thus, Sr. V.K. Khetawat, M.D. of M/s. Tirumala Seven Hills P. Ltd. At Baguihati were illegally imported into India. Thus, Shri V.K. Khetwat, M.D. of their acts of omission or commission were concerned in depositing harboring, keeping concealing purchasing and dealing with the said two Nos. of Fusion Splicer machines under seizure which they knew or had reasons to believe were liable to confiscation Under Section 111(m) of the Customs Act have rendered themselves liable to penal action Under Section 112(b) of the Customs Act, 1962 and the with the said two Nos. of Fusion Splicer Machines under seizure which they knew or had reasons to believes were liable to confiscation under Section 111(m) of the Customs Act have rendered themselves liable to penal action Under Section 112(b) of the Customs Act, 1962.
Accordingly vide Show Cause Notice issued under DRI F. No. 52/CAL/ 2000/2587-2595, 2596 dated 28-09-2000, M/s. Eastern Exports and Imports Co. Shri Madusudan Bajaj prop, of M/s. Eastern Exports and Imports, M/s. Tirumala Seven Hills P. Ltd. Shri V.K. Khetawat, M.D. of M/s. Tirumala Seven Hills P. Ltd. Shri P.K. Baid, Director, M/s. Tirumala Seven Hills Pvt. Ltd. and M/s. Saikh and Pandit, Customs House Agent, were called upon to Show cause in writing to the Commissioner of Customs (Airport and General) Customs House, 15/1 , Strand Road, Calcutta within 30 (thirty) days of receipt of the notice as to why -
(i) The goods under seizure i.e. Two Nos. of Fusion Splicer Machines of model 3000 having Sl. No. 0001542-2-1 and 0001542-2-2 imported by M/s. Eastern Exports Imports Co. under B/E No. 205995 dated 24-2-2000 where the importer had evaded duty to the tune of Rs. 10, 35,100.07 by means of willful and deliberate suppression of fact, would not be held liable to confiscation under Section 111(m) of the Customs Act, 1962.
(ii) Assessable value of the goods under seizure i.e. two Nos. of Fusion Splicer Machines of model 3000 having Sl. No. 0001542-2-1 and 0001542-2-2 shall not be taken as Rs. 18,78,676.03 for the purpose of assessment of Customs duty.
(iii) M/s. Eastern Exports and Imports Co. shall not pay the duty amounting to Rs. 10,35,100.07 which had been evaded by them in terms of the proviso of Section 28 (1) ibid.
(iv) Penalty shall not be imposed and realized from Shri. Madusudan Bajaj prop, of M/s. Eastern Exports and Imports Co. in terms of Section 114A of the CA 62.
(v) Penalty shall not be imporsed on M/s. Tirumala Seven Hills P. Ltd. Shri. V.K. Khetawat M.D of M/s. Tirumala Seven Hills P. Ltd. Shri P.K. Baid , Director M/s. Tirumala Seven Hills P. Ltd. and M/s. Saikh and Pandit, Custom House Agent, in terms of Section 112(b) of the CA'62.
and proceeding was conducted by issue of notice and concluded. Commissioner Found -
(a) As regards valuation the goods, declared to be of Singapore origin-but was found on examination to be manufactured by Aurora Instruments Inc. USA. There was a gross misdeclaration at the time of filing Bill of Entry; no invoice was furnished from the manufacturer in terms of Rule 10 of the 1988 Rules.
(b) For valuation; on the validity of and reliability of the quotations, as obtained it was found that the argument that "quotation of M/s. Agents Private International (A.P.I.) is concerned, the same does not bear any signature and it has not been mentioned to whom the quotation has been given. Such unsigned and unauthenticated quotation, even without mentioning to whom the quotation has been sent, cannot have any evidentiary value. On the basis of such quotation, no conclusion can be arrived at. The notice refers to the decision of Hon'ble Tribunal in the case of Laxmi Colour Lab. v. Collector of Customs reported in 1992 (62) E.L.T. 613 wherein it has been held that the enhancement of transaction value on the basis of merely telex quotation of offer is not permissible. Same decision of the Hon'ble Tribunal has been confirmed by the Supreme Court 1997 (90) E.L.T. A183. I find that the evidentiary value of the Internet quotation and/or offer can not be equated with that of the Telex or Fax message Internet is a medium through which prices are offered to one and all. The level of transaction is the only parameter which will make a price offered for retail different from price offered for wholesale. The Commissioner therefore proceeded to reject to invoice value of the impugned goods under Rule, 10A of the Customs Valuation Rule 1988 and finding that the correct value could not be determined under Rule 5, 6, 6A, 7 and 7A applied for and of the valuation Rules, after recording that the notice have not questioned that the goods being compared and in actual import are different determined the valuation as-
(c) In view of above, after giving reasonable flexibility as under Rule 8 of Customs Valuation Rules, 1988(1) hold that the value of the goods Fusion 3000, dual mode Automatic Fusion Splicer declared as CIF Rs. 82,125.00 (Rupees Eighty Two Thousand One Hundred Twenty Five only) be enhanced to CIF Rs. 18,60,075.28 (Rupees Eighteen Lakhs sixty thousand and seventy five and paisa twenty eight) taking FOB at US $ 41900 (equivalent to Rs. 18,35,220.00), Freight at SG$ 172.15 (equivalent to Rs. 4,209.06) as declared by the importer in the Bill of Entry no. 205995 dated 24-2-2000 and Insurance at US$ 471 371 (equivalent to Rs. 20,646.22), taking the Exchange Rate as Rs. 43.80 for 1 USD as it was mentioned in the concerned Bill of Entry no. 205995 dated 24-2-2000 and exchange rate for Singapore Dollar has been taken as Rs. 24.45, the rate of Singapore Dollar on 24-2-2000, the date of Bill of Entry no. 205995. Insurance has been calculated on 1.125% of the FOB as it was calculated in the aforesaid Bill of Entry No. 205955 dated 24-2-2000.
and duty demands of short paid were worked are to Rs. 10,35,100.07 along with penalty of equivalent amount under Section 114A of Customs Act.
(b) Thereafter same gross under valuation was arrived by the Commissioner to cause liability to confiscation under Section 111(m) which was upheld and a redemption fine of Rs. 5 lakhs was agreed.
(c) Thereafter penalty liability was arrived at under Section 112(a) on M/s. Eastern Exports and Imports Co. and 112(b) and Shri V.K. Khetawat MD. of M/s. Tirumala Seven Hills (P) Ltd., and CHA M/s. Shaikh and Penalty of Rs. 50,000/-. Hence these appeals.
2.1 From the following paragraph in the reply to the notice (I) Model No. 3000, 3500 etc. only show the capacity of Fiber Optic Fusion Splicer. It is not a name of a brand but a general name of the machine like car, truck etc. A car may be of Fiet, Opel, BMW and its price will vary. Similarly, the price of a Fiber Optic Fusion Splicer will vary on the basis of its quality, its specification, facilities, technique, etc. In the show Cause Notice it is stated that Fusion Splicer is available from 6000 to 20,000 US Dollar. There is no place of 6000 Dollar in the quotation. It means that Fusion Splicer is of various types, various qualities and various specifications are available. It does not appear from the quotation what is the capacity of the machinery and its technique.
(II) The model No. 3000 (new model) is of much advanced technology and is based on Power Alignment Technology for no loss and accurate loss estimate.
(III) The Country of origin is different and new model of Fiber Optic Fusion Splicer is very upgraded model.
(IV) "It only shows that there are different qualities of machines fetching different price". If the price differentiates from GBP 6318 to GBP 22571 then the difference between US $ 1875 and GBP 22571 then the difference between US$ 1875 and GBP 6318 also normal for varying quality of machine.
In the order itself at page 16 it is stated as the contention of the Noticee that-
There is no similarity of the goods imported by me and the goods mentioned in the quotation. The quotation obtained through Internet is worthless document and on such basis the value cannot be challenged. This has been mentioned in the Show Cause Notice that Prices of the machine varies from GBP 6318 to GBP 22571. There cannot be such variation of the price of identical machines.
Therefore, it has to be held that Commissioners following on no challenge by the notice is false on record and order is passed in a bias predetermined manner is a plea made and is to be accepted.
2.2 It is well settled that Internet Display cannot be reliable and applicable evidence for valuation in view of Aggarwal Distributors confirmed by the apex court as reported in 2000 (122) E.L.T. A121 and the decision cited and noted by the Commissioners on impugned quotation, as in this case (see Laxmi Lab. 1992 (62) E.L.T. 613 confirmed by S.C. 1997 (90) E.L.T. A183. The Commissioner differentiates the same on basis of not being fax or Telex and relies on Internet Data without appreciating the Plea of appellants on Cyber Crimes being indulged and the subject company whose Internet Display/Date is being relied is subject of many Enquiries by Agencies, in the past. Subject Data, obtained from Internet, therefore is unreliable and cannot be a source to confirm undervaluation.
2.3 The submission of the appellants that, "We certify that the goods are of USA origin" is seen to be clearly indicated on the Invoice No. LLS/3032/2000/INDT21/021200 of the Singapore supplier M/s. Lalsis Trading Pte. Ltd. is to be upheld on perused of the copy of this invoice covering the goods under Import and presented to the proper officer of Customs who appraised the goods which was submitted along with B/E showing part of loading on Singapore, that relevant material has been ignored by the adjudicator the plea of declaration of the country of origin as Singapore as made in the B/E cannot be on a mala fide reason since the invoice to the contrary is not withheld. It has to be accepted that such a declaration on BE, is as an understanding of the persons concerned, with making an Entry on BE's filed. It cannot be an attempt to clear USA origin goods as of Singapore origin. The reliance on decision in the case of Filaments India Ltd. 2000 (123) E.L.T. 954 (Tri.) is well founded to call such errors to be a Technical Mistake; That cannot be a reason to order confiscation of goods and call for a penalty.
2.4 The E-mail relied by the department is not for the model under import. The quotation is not a firm price but is 'negotiable' offer with no delivery promise/undertaking. The supplier is in Canada and that goods to be supplied would be of 'US origin' is not forth coming in this offer. Reliance on such unsigned quotations, to upset a Proper Officers assessment arrived after due examination and ordering the clearance of goods on 24-2-2000 by affecting a seizure of 'Fusion Splicer Machine" while working out an intelligence regarding an OTDR machine can not be upheld. It is already found and during we would not be upholding that the reasons to believe that the "Fusion Splicer Machine" under seizure is smuggled and liable to confiscation exist. No such reason could be entertained while working out Intelligence on OTDR Machine and it is not shown how the machines are same or similar. When the reason to believe to seize the goods itself is in doubt, the consequent liability arrived at confiscation under Section 111(m) in this case cannot be upheld on basis of misdeclaration of country of origin as arrived at such confiscation is to be set aside.
2.5 On valuation it is found that there is no cogent, reliable material to arrive at comparable goods valuation or under Rule 8 as arrived by the ld. Commissioner. The Apex court is Eicher Traders have stipulated conditions in which Transaction Value can only be rejected. The notice issued is devoid of any grounds and or material, based on, which the Transaction Value could be departed in this case. The invoice produced is not challenged. Following Puja Poly Plastics , as relied by the appellants, it has to be held that the Transaction value cannot be discarded in this case based on unsigned, unreliable quotations. Imports of different models cannot be compared. The onus on the department to prove undervaluation cannot be said to be discharged by them by basing based on solicited quotations which are unsigned and unreliable. The Department could have, in course of enquiries made abroad, obtain the manufacturers price list/invoice's for same models. The investigation failure or abssuce (sic) of such high prices at manufacturers end cannot call for upholding the valuation as arrived by the Commissioner. Misdeclaration of value cannot be upheld.
2.6 Once the change of under valuation is not being upheld, nor the value as arrived approved, the duty demands made cannot survive. Consequently the demands of duty and penalty under Section 114A of the Central Act 1962 cannot be upheld and are to be set aside.
2.7 Once liability to confiscation for misdeclaration of country of origin and misdeclaration of value is not being upheld, redemption fine offered and penalty liability under Section 112(b) as ordered is to be set aside.
2.8 The Commissioner has found a penalty liability under Section 112(a) on M/s. Eastern Exports and Imports Co. by misdeclaration and no penalty was ordered under Section 112(a) in the operative parts of the order. The only conclusion that could be drawn is that either the Commissioner has not applied his mind or he did not consider the visit of penalty under 112(a) to be called for or to be upheld.
2.9 In view of the findings arrived, we would not go into the other pleas made by the appellants an facts of the role played by them or other grounds, as urged and the question of bar of limitation on demands being made before us.
3.1 Appeals, in view of findings to be allowed after setting aside the order.
3.2 Order set aside.
3.3 Appeals allowed.
(Pronounced in Court on 4-7-2006)