Custom, Excise & Service Tax Tribunal
Kuber Impex Limited vs Commissioner, Central Excise &Amp ... on 14 September, 2020
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Customs Appeal No. 52885 of 2019
[Arising out of Order-in-Appeal No.IND-EXCUS-000-APP-85-86-19-20 dated 28.06.2019
passed by the Commissioner (Appeals), Customs, Central Goods & Service Tax &
Central Excise, Indore (M.P.)]
M/s Kuber Impex Limited Appellant
207, Silver Arch Plaza,
20/1, New Palasia
Indore-452003.
VERSUS
Commissioner of Customs, Central Goods Respondent
and Service Tax & Central Excise
Post Box No.10, Manik Bagh Road,
Manik Bagh Palace,
Indore (M.P.).
AND
Customs Appeal No. 52461 of 2019
[Arising out of Order-in-Appeal No.IND-EXCUS-000-APP-85-86-19-20 dated 28.06.2019
passed by the Commissioner (Appeals), Customs, Central Goods & Service Tax &
Central Excise, Indore (M.P.)]
Kapil Garg, Director of Appellant
M/s Kuber Impex Limited
207, Silver Arch Plaza
20/1, New Palasia
Indore-452003.
VERSUS
Commissioner of Customs, Central Goods Respondent
and Service Tax & Central Excise
Post Box No. 10, Manik Bagh Road,
Manik Bagh Palace
Indore (MP).
APPEARANCE:
Shri Ashok Singh with Shri Prem Ranjan and Shri Abhishekh Jaju,
Advocates for the appellant
Shri Rakesh Kumar, Authorised Representative for the respondent
CORAM:
HON'BLE MR. ANIL CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. C.J. MATHEW, MEMBER (TECHNICAL)
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FINAL ORDER Nos.50767-50768/2020
DATE OF HEARING:14.02.2020
DATE OF DECISION: 14.09.2020
ANIL CHOUDHARY:
These two appeals have been filed by the importer company and
its Director, Mr. Kapil Garg, aggrieved by the impugned common order-
in-appeal, whereby their appeals have been rejected.
2. The appeals have been rejected, confirming the rejection of
declared value with respect to 6 bills of entry for import of VRLA
batteries, holding the same being value suppressed and mis-declared and
accordingly, the value was re-determined and differential customs duty of
Rs.30,17,330/- was demanded along with interest and equal amount of
penalty under Section 114 A of the Customs Act. Further, penalties have
been imposed on Shri Kapil Garg, Director amounting to Rs.3,00,000/-
under Section 112(a) and Rs.2,00,000/- under Section 114 AA of the
Customs Act.
3. The brief facts are that M/s Kuber Impex Limited, Indore is an
importer. They had imported a consignment of 10,000 pieces of voltage
Regulated Lead Acid Batteries (VRLA) 12V 7.2 Ampere Hours, through
JNCH, Nhava Sheva, vide Bill of Entry No. 803525 dated 25.08.2010, by
declaring the unit value @ US$ 1.17 (Rs. 55.97) per piece. The total
declared value of goods was Rs. 5,59,721/- and in US$ 22700 (C&F).
The supplier had raised Invoice No. LHI1010290002 dated 10.08.2010
for these VLRA batteries. The above said Bill of Entry was facilitated
through „Risk Management System‟ under no assessment, no
examination procedure. The importer deposited Customs duty amounting
to Rs. 1,50,278/- on the above declared value and presented the said Bill
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of Entry before the Shed officer, for getting out of charge order. The
shed officer compared the value of the above imported batteries with the
value available in National Import Data Base (NIDB) and found that there
was a huge difference between the declared unit value (Rs. 55.97) and
the contemporaneous import unit price (Rs. 247/- to Rs.259/-) by other
importers, and therefore, an objection on valuation was raised on the
hard copy of the Bill of Entry and forwarded the same to the concerned
Group V-B for further action.
4. The concerned Group Appraiser asked the appellant to justify the
declared value alongwith original manufacturer‟s invoice, price list and
other documents. The appellant submitted various documents to justify
the declared value. However, being not satisfied with the explanation
and considering the huge difference between the declared value and
contemporaneous import price, the concerned group forwarded the
matter to „Special Intelligence and Investigation Branch‟ (SIIB) (Import)
of JNCH, Nhava Sheva for investigation.
5. Examination of goods covered under the said Bill of Entry was
carried out in presence of the importer‟s authorised custom house agent-
M/s Eagle Shipping Agency. On examination, the goods in respect of
quantity and description were found as per declaration, but the declared
value appeared to be very low. During market survey, retail sale price of
similar batteries having same specifications and weight were found to be
in the range of Rs. 550/- to Rs. 650/- per piece.
6. Statement of Shri Kapil Garg, Director of M/s Kuber Impex Limited
were recorded on 19.10.2010 and 22.10.2010 under Section 108 of the
Customs Act, 1962. Importer‟s business premises and godown were
searched out, through the jurisdictional Central Excise officers on
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19.10.2010. During the course of search at the business premises of the
importer, several incriminating documents alongwith 3 hard disks and 1
pen drive were seized under panchnama dated 19.10.2010. The stock of
imported VRLA batteries lying in the importer‟s godown were also
detained.
7. During the course of scrutiny of seized documents, an Invoice No.
LHI1010290001 dated 27.07.2010 raised by M/s Shenzhen Leoch Battery
Technology Co. Ltd., China for supply of 10,000 pieces of VRLA batteries
DJW-12-8.0 was found. The unit value of battery mentioned in the
invoice was @ US$5.75 (FOB) and the total FOB value of the invoice was
shown as US$ 57500 and the freight costs was shown as US$1200 and
the total C & F value was shown as US$ 58700. Further scrutiny of the
records revealed that the importer had got cleared a consignment against
invoice No. LHI1010290001 dated 27.07.2010 vide bill of entry No.
785027 dated 10.08.2010 and had submitted a fake, false, manipulated,
fabricated and parallel invoice having the same No. LHI1010290001
dated 27.07.2010 showing unit value @ US$ 1.17 per piece, to customs,
and thereby it appeared that the importer had suppressed the true and
correct value of the goods. Two other consignments of VLRA batteries
imported under bill of entry No. 803525 dated 25.08.2010 and 827979
dated 25.08.2010 were also cleared by declaring unit value as US$ 1.17
per piece. Therefore on reasonable belief that the import of goods had
been cleared by misdeclaring the value in contravention of the provisions
of the customs Act, 1962 and hence were liable for confiscation.
Detention of VRLA batteries was converted into seizure. The seized
goods were provisionally released on the request of the importer after
obtaining necessary Bond and Bank Guarantee from the importer.
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8. Statement of Shri Kapil Garg, Director of the appellant company
was recorded on 19.10.2010 and 22.10.2010 wherein, he, interalia,
stated that his company has been dealing in import of VRLA batteries
and battery accessories since 2002, and ordered for 3,00,000 pieces of
6 Volts batteries and 60,000 pcs. of 12 volts batteries, splitted in 16
containers, out of which they received one container of 12 Volts battery
and other than that, one container of 6 V and one mix container of 12 V
and 6 Volts approximately, and one container was due for loading. The
„lead content in the battery is about 41% of weight of battery‟. He further
disagreed with the finding of marketing survey stating that same was not
done in the specific manner and segment. He further stated that
batteries were not branded and without warranty and guarantee. As
regards the contemporary import prices of similar battery, as per
Department, in the range of US$ 4.7 to 5.75/ per piece, stating that
the same is not correct and the value varies from supplier to supplier
and buyer to buyer basis. Further, batteries imported by the appellant
were made of re-cycled material having lesser life.
9. Revenue referred to website of the supplier company situated in
China and information on the Website revealed that batteries imported
were quality products having manufacturing facility of ISO 14001 and QS
9000 certification. In response to query made by the Department, the
supplier company confirmed vide email that they have never
manufactured batteries from recycled materials. The material data sheet
of the product was also showing the service life of about 5 years of the
batteries.
10. During the course of scrutiny of seized documents, it was noticed
that page No. 62 of file no. 2 was an invoice bearing No. LHI1010290001
dated 27.07.2010. The invoice was raised by the supplier M/s Shenzhen
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Leoch Battery Technology Co. Ltd., China for 10000 pieces of VRLA
batteries DJW-12-8.0. The unit value of battery mentioned in the invoice
was @ US$ 5.75 (FOB) and the total FOB value of the invoice was shown
as US$57500 and the freight costs was shown as US$ 1200 and the total
CFR value was shown as US$ 58700. The further scrutiny of the records
revealed that the importer had got cleared a consignment against invoice
No. LHI1010290001 dated 27.07.2010 vide Bill of Entry No. 785027
dated 10.08.2010, but had submitted a fake, false, manipulated,
fabricated and parallel invoice having the same No. . LHI1010290001
dated 27.07.2010, showing unit value @ US$1.17 per piece to Customs,
and thereby it appeared that the importer had suppressed the true and
correct value of the goods. The importer had declared total value for the
consignment as US$ 11170 (C & F) only against the actual value of US$
58700. Both the invoices, one which was fake, false, manipulated,
fabricated and parallel invoice and the second one which is the original
invoice, were compared as below for clarity in matter:-
False / fabricated Actual invoice
Supplier Shenzhen Leoch Shenzhen Leoch
battery Technology Co. Ltd., battery Technology Co. Ltd.,
Invoice No. LHI1010290001 LHI1010290001
Date July 27, 2010 July 27, 2010
Contract No. LHA10125 LHA10125
Description VRLA Battery DJW12-8.0 VRLA Battery DJW12-8.0
Quantity 10000 pieces 10000 pieces
Unit price USD 1.17/CFR USD 5.75/FOB
Freight -- US$1200
FOB Value -- US$57500/FOB
Total Amount US$11700 US$58700
C&F
Assessable value Rs.5,59,898.52 Rs. 28,38,175.20
Duty (Rs.) 1,50,325/- 7,62,011/-
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Thus, from above it appeared that the importer in case of goods
imported under Bill of Entry No. 785027 dated 10.08.2010 had mis-
declared value at just about 20% of the actual value. The importer had
declared value at Rs. 5,59,898.52 against the actual value of goods at
Rs. 28,38,175.20, and they paid duty amount just Rs.1,50,325/- against
the actual duty amount of Rs. 7,62,011/- and thereby they evaded the
customs duty to the tune of Rs. 6,11,686/- in this case alone.
11. It was seen that the VRLA batteries imported under B/E No.
803525 dated 25.08.2010 and 827979 dated 25.08.2010 were of 12
volts and in both the cases declared unit value was @ US$1.17/ per
piece. The supplier of both the consignments was M/s Shenzhen Leoch
battery Technology Co. Ltd., China and both the consignments were
covered under the same contract No.LHA 10125. The actual invoice No.
LHI1010290001 dated 27.7.2010 which was recovered from the
importer‟s premises was also part of the same contract. It was also
seen that the actual invoice recovered pertains to import of 12 Volts
batteries, therefore, on the reasonable belief that the imported goods
under Bill of Entry No. 803525 dated 25.08.2010 and 827979 dated
7.9.2010 had been attempted to be cleared by misdeclaring the value in
contravention of the provisions of the Customs Act, 1962 and hence,
liable to confiscation under Section 111(m) of Customs Act, 1962, were
seized under Section 110 of Customs Act, 1962 under seizure Memo No.
27/2010 dated 10.11.2010 and the jurisdictional Central Excise
authorities at Indore was also requested (office letter F. No. SG/MISC-
107/10-11 SIIB(I) JNCH dated 10.11.2010) to convert the detention of
70,956 pieces batteries into seizure. Accordingly, the jurisdictional
Central Excise authorities seized 70,935 pieces of battery on 15.11.2010
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under panchnama (detained batteries 70956 pieces (-) 21 drawn for
samples on 3.11.2010 = 70935 pieces).
12. On 16th October, 2010, officers of SIIB (I) visited the Cyber
Forensic Lab., Ground Floor, Directorate of Revenue Intelligence, Mumbai
Zone, to secure the electronic data stored in the seized 3 hard discs and
one USB drive, without disturbing the data contained therein and
create „mirror image‟ of the data for carrying out further analysis and
investigation with the help of equipment available in the Forensic
Laboratory. Out of three hard discs, two hard discs could not be read by
the equipment of Forensic Lab., and data contained in one hard disc
Sl. No. WXZ 07774085 and one USB drive bearing Sl. No. CEFC - MIC D
- 33193 were created and copied in another portable hard disc under
Panchnama drawn. Subsequently, vide panchnama proceedings dated
6.12.2010, the officer visited once again for making attempt to create
mirror image of another seized hard disc having no.B2RSTURE was
created, and images were copied to another portable hard disc.
13. The statement of Shri Sanjay A. Chothani, employee of the CHA of
the importer company was recorded on 24.11.2010, wherein he inter
alia, stated that he is satisfied with the market survey done at Lamington
road & Ghatkoper and the same has been done in fair manner. He further
stated that he has got no idea of the value of the VRLA Batteries.
Further, he stated that he was present on 16.11.2010 in the Forensic
Laboratory, at the time of data retrieval.
14. Further, statement of Shri Kapil Garg, Director was recorded on
23.11.2010, wherein he, inter alia, stated that he visited China to meet
the battery manufacturers including Leoch. At Leoch, he contacted a
person named Mr. Alex, with whom he negotiated the deal for 12 Volts
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batteries. The price was US $4 CIF in the month of Jan.-Feb., 2010. After
hard negotiation and to ascertain the quality of the ingredients to be
used in the production (recycled lead/plastic), they had finalized the deal
at US$ 3.25 per piece, and settled the contract for 60,000 pieces. The
supplier in China informed him that few importers in India were getting
lower value invoice from them for payment of duty. In order to sustain in
the competitive market, he decided to adapt the same modus operandi.
The supplier suggested to prepare the invoice value at USD 1.17/ per
piece. Thus, the supplier suggested him for under-invoicing of the goods.
Prior to this, he had not adopted the practice of under valuation.
15. The USB drive, which was recovered and seized from the
possession of the Accountant of the appellant, contained vital data
relating to the import as well as local sales. One file having name as -
"Import Format" retrieved from the seized USB drive, revealed the details
of the actual value of the goods imported from the supplier - M/s.
Shenzhen Leoch Battery Technology Co. Ltd., China. This file was
showing the details of the Job No. Invoice, supplier, model, unit price,
quantity, total amount, bank deposit, balance and ocean freight. On
comparison of the declared value with actual value, revealed that the
appellant was declaring about 20% of the actual value. Further, on
scrutiny, it was revealed that the actual Invoice No.LHI 1010290001
dated 27.07.2010 matched fully with the details of this document. This
document also revealed that true and correct FOB value of two Proforma
Invoice - LHA 10124 and LHA 10125 was at US $ 8,42,800 whereas as
per the invoice submitted by the importer company, it was only US $
1,75,200. The above document also contained the details of the present
consignment imported under Invoice No.LHI 101029002, against which
the appellant had filed B/E. No.803525 dated 25.08.2010 by declaring
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the unit value of goods as US$ 1.17/-per piece/C & F against the actual
value of US$ 5.23/FOB per piece. Further analysis of data contained
in the pen drive, it appeared to Revenue that the appellant was not only
involved in the activity of manipulating the import price but they were
also involved in manipulating the local sale price by (on resale in India),
by issuing lower sale price invoices to justify their mis-declared import
price. Thus, they were evading not only the customs duty but also other
taxes like sales tax and income tax. The Revenue, on comparison of the
actual price with the price declared and mentioned in false/
fabricated/manipulated invoices, found as under:-
S. No. Model Declared Unit Price CFR Nhava Actual Unit
Sheva in False Proforma Invoice Price (FOB)
1. 6V4.2AH USD0.35 $1.65
2. 6V4.5AH USD0.35 $1.79
3. 6V5.0AH USD0.35 $1.90
4. 12V7.2A USD1.17 $5.23
5. 12V7.6A USD0.17 $5.50
6. 12V8.0A USD0.17 $5.75
16. Statement of Shri M. Rajendra Mangal (Aggarwal), Accountant of
the appellant company was recorded on 3.12.2010, who, inter alia,
stated, that he was looking after the work of the appellant as part time
Accountant for the last two years at a salary of Rs.3,000/- per month.
There was another Accountant, Shri Mahesh Aggarwal, who mainly
attended the appellant company. In respect to the data contained in the
seized pen drive and the printouts taken therefrom, he stated that the
data was prepared and fed by him on the computer, and DSR means
the Daily Sales Report. The information on the rough sheet was
prepared by Shri Kapil Garg and he fed it on the computer. Fusion 1.497
means Rs.1,49,700 dated 16.04.2010.
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17. Tiger 540 means Rs.54,000/- dated 16.04.2010. Thus, all
data/figures of the payment recorded have been mentioned in the code.
That he changed the figures on the instructions by Shri Kapil Garg. On
being shown and confronted with the print out of file viz. - Import
Format - showing the actual value of the imported goods with reference
to container loading sequence / Job/ Invoice/ Supplier/ Model/U/P/Qty./
Payment Information (Total amount/B. Deposit/Balance/Ocean Freight).
This information was kept by Shri Kapil Garg. It was further stated that
Shri Kapil Garg got two bills for local sales. One bill was of lower value,
the payment of which was received through cheque and the balance
payment was taken in cash.
18. Mr. Kapil Garg, Director of the appellant company stated on
Affidavit before the Notary Public on 2.12.2010 i.e. statement dated
23/29.11.2010 before the Customs Authorities, Nava Sheva was not
voluntary and rather a dictated one. Further, stated therein that he was
prevailed upon to state that the value declared at USD 1.17 per piece has
been mis-stated, instead of USD 3.5. In his further statement dated
3.12.2010 recorded before the Revenue. Shri Kapil Garg further stated
that the imported goods were not manufactured from recycled materials.
Further, informed that the value of VRLA batteries depend upon the price
of Lead and Plastic (ABS). He further stated that the wholesale price (in
India) of 6 volts batteries range from 109 to 130 per piece and of 12
Volts battery from Rs.352 to 420 per piece. On being asked, how they
collected the excess amount when they raised invoice for lower price for
local sales, he stated that the balance amount was collected in cash. On
being confronted with actual price Inv. No.LHI1010290001 dated
22.08.2010 of Shenzhen Leoch Battery Technology Co. Ltd., China for
10,000 batteries having unit value at USD 5.75 - FOB, he admitted that
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they have been manipulating the unit value while filing bill of entry, to
evade the customs duty. Shri Kapil Garg signed on both the invoices in
token of having seen and identified as genuine - unit price USD 5.75
per piece FOB, totaling USD 57500 and USD 1200 freight amounting to
Rs.58,700/- C &F. He further accepted that the invoice showing the unit
rate USD 1.17 CNF/piece is a fabricated invoice submitted to customs. He
also admitted that he has submitted the manipulated/fabricated invoice
in respect of both the live consignment being Bill of Entry No.803525 and
827979. He further submitted that invoice of BE NO.803525, the actual
unit value of 12V/7.2 AH is USD 5.23/piece FOB and in case of BE
No.827979, the actual unit value is USD 5.5/FOB/piece. He further
admitted that in some instances of earlier import, he might have
manipulated the declared value, the bills of which are in the Hard
disc/USB drive, seized by the Department. On being confronted with by
the Department - „‟Import Format" retrieved from the seized Hard
disc/Pen drive showing the actual value of the batteries imported or to be
imported , he explained that this sheet showed the invoice, supplier‟s
name, modal, U/P, quantity, etc. as well as actual unit rate, along with
amount actually remitted to the supplier. Shri Garg further confirmed the
modal-wise actual import price from M/s. Shenzhen Leoch Battery
Technology Co. Ltd., China as below:-
1. 12V/8AH @ US$ 5.75/pc FOB
2. 12V/7.2 AH @US$5.23/pc FOB
3. 12 V/7.6 AH @US$5.50/pc FOB
4. 6V/4.2 AH @US$1.65/pc FOB
6V/4.5 AH5 @US$1.79/pc FOB
.
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19. Shri Garg, on being confronted with photocopy of P/I No. LHA10124 dated 16.06.2010 for 3 lakh pieces of 6 V batteries, having unit value US$ 0.35/pieces CNF total value US$ 105000/- and LHA 10125 dated 16.06.2010 for 60,000 pieces of 12V batteries showing unit value as US$ 1.17 / piece CNF, having total value US$ 70200, he admitted that these are not genuine or correct Proforma Invoices. These invoices are prepared for customs purposes only and he further admitted the total actual value of both sale contracts at US$842800.
20. In view of the above facts and admission of the facts as to suppression of actual value by Shri Kapil Garg, Director of M/s.Kuber Impex Ltd., the value of seized goods at JNCH, Nhava Sheva were re- determined as under:-
(A) B/E No.803525 dated 25.08.2010 Description Declared Re-Determined 12V7.2AH $1.17(CFR) $5.23 (FOB) Qty. 1000 1000 Total Value in $ $11700 $52300 (FOB) Freight - $1180 Insurance 1.125% $3.89 $588.37 Total CIF $11700 $54068 Assessable Value Rs.5,59,721 Rs.25,85,721 Duty 1,50,278 6,94,233 Duty attempted to be 5,43,955 evaded (B) B/E No.827979 dated 07.09.2010 Description Declared Re-Determined 12V7.6AH $1.17(CFR) $5.50 (FOB) Qty. 1000 1000 Total Value in $ $11700 $55000 (FOB) Freight - $1180 Insurance approx.1.125% $3.89 $618.75 as charged 14 Total CIF $11700 $56,798.75 Assessable Value Rs.5,58,539 Rs.26,83,741 Duty 1,49,960 7,20,547 Duty attempted to be 5,70,587 evaded
21. Further, statement of Shri K. Garg was recorded on 13.12.2010 under Section 108 of the Act, wherein, he, inter alia, stated /admitted as follows:-
" On account of prevailing market condition, under valuation process had been involved in some battery models, else other competitors acquisition cost is so low that to sustain they had to follow this process".
22. On being confronted with email dated 21.12.2006 to Shri Anil Kingarani @ hotmail.co., requesting him for making wire transfer of US$60747 to Power ROC Co. Ltd., China, he stated that he did not recollect the details credential of Shri Anil Kingarani, and as per supplier‟s instruction, they were advised to send the above mail to Shri Kingrani.
23. On being confronted with TT for US$ 38700 sent by Shri Jitendra Kumar Vyas to M/s. Power ROC Co. Ltd., China. Shri Garg stated that he will provide detailed comments on this, after verifying the data.
24. On being confronted with correspondence with Lauren @leaoch.com and false Proforma Invoice no.LHA08090004 dated 11.09.2008, totalling value US$20,015 and the actual Proforma Invoice, having same reference showing higher unit value totalling US$ 1,31,080, the details as per Bill of Entry No.700711 and 700713 both dated 01.12.2008, he admitted the correct invoice value in case of these two bills of entry was US$ 1,31,080, but the declared value was mis-declared at US$20,015/-.
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25. Investigation revealed that the appellant - importer has imported several consignments during the last 5 years adopting the similar modus of mis-declaration of value to evade customs duty. Out of 68 consignments, 62 were imported and cleared through JNCH, Nava Sheva and rest 6 consignments, which were imported and cleared through ICD, Pithampur, Indore. For the consignments imported through JNCH, Nava Sheva, a separate show cause notice had been issued demanding differential duty of Rs.3,46,78,022/-. The present show cause notice relates to 6 consignments imported through ICD, Pithampur, from the two Chinese supplier, Power roc Company Ltd. and M/s. Suqian Yongda Imp. & Exp. Trade Co. Ltd. The details of bills of entry are as follows:-
Supplier, M/s POWER ROC.CO.LTD.
B/E No. Date Invoice No. Date Model Qty. Unit
101167 24.01.07 PROC-KU- 08.12.06 6V4.5 22600 US$0.25
101168 24.01.07 PROC-KU 30.11.06 6V4.5 22600 US$0.25
101169 24.01.07 PROC-KU 08.12.06 6V4.5 22600 US$0.25
Supplier M/s.Suqian Yongda Imp & Exp Trade Co. Ltd.
B/E No.& Model Quantity Declared Unit Declared Value in
Date Value B/E (Rs.)
106599 6V4.2AH 25000 US $ 0.35 429829
dt. 6.10.2009
107292 6V4.2AH 25000 US $ 0.35
dt.9.12.2010
6V5.5AH 25000 US $ 0.35
842482
2024256 6V4.2AH 32000 US $ 0.35 528090
dt.08.03.2010
26. Revenue came across with further evidence being email of Shri Kapil Garg dated 9.3.2006 to Ms. Elana Zhang, (Representative of supplier) in reference to her email dated 9.3.2006, vide which supplier increased the price of 6 Volts battery from US$ 1.27 battery to US$ 1.37. He replied her as to how they can maintain the contract price of US$ 1.27/piece FOB Shanghai for the order of 3,00,000 pieces. In 16 response to the same, Ms. Elana Zhang vide her email dated 13.03.2006, confirmed the price as US$ 1.27 - FOB for 25540 pieces but for pending orders , she asked to adjust the price at US$ 1.37 per piece.
Shri Garg vide email dated 22.09.2006 to Ms. Kitty (supplier) expressed his inability to sign the contract (for 6 Volts battery) at US$ 1.34/piece, as they were undergoing litigation with the Customs Department in India. Shri Garg also asked her to consider the price at US$ 1.34 for balance 64090 pieces.
27. Ms. Kitty/supplier vide email dated 01.12.2006 informed Mr. Garg that they have received first payment of US$ 16,898 and the Ocean Freight of US$ 615 per container for three full container loads. The balance payment was US$ 75,747. At the material time, the importer had imported a lot of three containers at ICD, Pithampur vide three bills of entry, as aforementioned. Total 67,800 pieces were imported in the 3 containers & considering the total payment of US$ (16898 + US$75747) = US$92,645 (C&F) + freight, USD 1845. For the quantity of 67,800 pieces, the unit value comes to US$ 1.339 or 1.34 per piece.
28. Investigation revealed that the importer apart from the regular payment through their legal banking channel, had made the following payments (at the material time, or above three imports) through other sources based in Canada & Dubai, Sri Lanka to their supplier, M/s. Power ROC:-
"(a) Wire Transfer dated 27.12.2006 through Mr. Anil Kingrani of US$25000
(b) Wire Transfer dated 15.01.2007 through A1 Fardan Exchange of US$23262.
(c) Wire Transfer dated 29.12.2006 through HSBC, Indonesia of US$ 15000.17
(d) Wire Transfer dated 16.10.2006 through Mr. Anil Kingrani of US$50618.
(e) Shri Kapil Garg‟s E-Mail dated 21.12.2006 to Mr. Anil Kingrani asking him to transfer $ 60747 to Power ROC Co.Ltd.
(f) Ms. Kitty (supplier) vide E-Mail dated 4.1.2007 informed Shri Kapil Garg that they had received $ 14980 & $ 25000 by the end of last month.
(g) Mr. Kapil Garg‟s E-Mail dated 22.12.2006 to supplier that today they have planned to remit US$ 75747 to them. This corroborates the balance payment of three containers imported at ICD Pithampur."
29. From Shri Kapil Garg‟s E-Mail dated 29.01.2007 to supplier, it was found that their supplier had received an E-mail from AC(ICD), Pithampur for confirmation of the valuation of batteries imported by them, and the importer being apprehensive of being caught about the malpractice of valuation, advised their supplier to send the reply as suggested by him, to Customs & insisted to confirm the price of $0.25/pc CIF.
30. Similarly, it appeared to Revenue that for the consignments of 6 V batteries imported from M/s Suquian Yongda Imp. & Exp Trade Co. Ltd., China, the appellant had suppressed the actual value and have mis- declared the lower value at US$0.35 per battery. The imports from Suqian Yongda Imp. & Exp. Trade Co. Ltd. were effected during June, 2009 to July, 2010. Although no evidence like email correspondence or parallel invoice or remittance of amount other than the declared value was found in respect of the total 19 consignments. However, from the investigation it appeared that the appellant was indulging in suppressing the actual value and mis-declaring the lower amount by submitting the fabricated/manipulated / parallel invoices to evade the customs duty. 18 Accordingly, three consignments aforementioned imported from Suquian Yongda were also taken for re-valuation of the declared value.
31. Further, from the E-mail exchanged by the importer company and its local buyers, it appeared that the appellant has resorted to raise the lower value sales invoice of the imported batteries, than the actual transaction value and the difference was collected in cash. The lower value of the local sale as per the invoice for 6 V batteries, which was in the range of Rs.22.30 to 30 per piece. For 12 V batteries, the same was in the range of 88.24 to 100 per piece. Whereas as per the records from the hard disc and pen drive, it was revealed that the actual local sale price of 6 V batteries was between Rs.101 to 130/- per piece and 12 V batteries from Rs.332 to 420 per piece. The evidences found in this regard are as follows:-
"(i) E-mail 11.10.2010 of M/s Biswas Udyog asking M/s Kuber Impex Ltd., to provide bill for 12V/8Ah @ Rs. 420/pc (including 12.5% VAT) & 6V/5A/h@ Rs. 132/pc including 12.5% VAT.
(ii) Shri Kapil Garg‟s E-Mail to Shri Koppula Laxman Murthy dated 16.10.2007 vide which price of 6V4.5A/h battery (740 gms) was quoted @ Rs.
125+ Freight + C Form.
(iv) Shri Kapil Garg‟s E-mail to Shri Chittrapal B. Seth dated 01.04.2008 vide which he asked to arrange pending payment of Rs. 684925/-, out of which invoice amount was Rs. 193125 & balance of INR 491800/- had to be remitted by cash.
(v) Shri Kapil Garg‟s E-mail to Shri Koppula Laxman Murthy dated 12.10.2007 quoting price of 6v/4.5 A/h battery @ 126 +CST + Freight.
(vi) Shri Kapil Garg‟s E-mail to Shri Koppula Laxman Murthy dated 09.10.2007 mentioned that they charged @ Rs. 280/pc for 12V4.5Ah battery.
(vii) Shri Kapil Garg‟s E-Mail to Shri Koppula Laxman Murthy dated 13.08.2007 to settle their total outstanding of Rs. 6,64,174/- & out of which Rs. 3,46,742/- to pay in cash.
(viii) Shri Kapil Garg‟s E-mail to Shri Koppula Laxman Murthy dated 29.10.2007 vide which 19 informed that for new order of 5000 pieces total outstanding amount is Rs.638750 & out of which the cheque amount will be Rs. 154500 & Rs.
231750= Rs. 3,86,250/- & the balance amount is Rs.252500. It was further mentioned in the E-mail that INR 349650 by cash.
(ix) Shri kapil Garg‟s E-mail to Shri Koppula Laxman Murthy dated 07.10.2007 that they have sent 650 pcs. Of 12v4.5 batteries @ Rs.280/-
piece.
(x) Shri B. Chhitrapal vide E-mail 25.09.2007 placed an order for 1000 pieces of batteries 12V4.5AH@ Rs. 265/- piece.
(xi) E-Mail dated 06.10.2006 vide which Shri Laxman wrote to Shri Kapil Garg that he will make DD for invoice amount & remaining balance would be deposit by cash.
(xii) Shri Kapil Garg vide E-Mail dated 22.12.2007 to Shri Chhitrapal B. Seth requested for making payment as below.
1.5000 pieces @ INR 135 675000
C. form 7500
@ 3%
Freight 6750
Total INR689250 out of which DD amount is
264250 & cash amount is 425000
(xii) Shri Koppula Laxman Murthy vide E-mail dated 06.10.2006 asked shri Kapil Garg to send the goods immediately & that he would make DD for invoice amount & remaining balance he would deposit cash.
(xiii) From the DSR sheet retrieved from the seized USB Drive. DSR sheet explained to be daily sale report for the period from 15.4.2010 to 27.4.2010. The scrutiny revealed that the actual sale unit price for month April 2010 of batteries were as follows:
Battery (Model) The minimum unit Local sale
price found in DSR (Rs.)
365 to 38012V7.6AH 365 to 380
6V5AH 128
6V4.2AH 101
6V4.5AH 110.6
12V7AH 330
(xiv) Battery wise sales reports retrieved from the
seized USB Drive indicated the unit sale value in Rs. As follows:
20
810 gms. 6V5ah battery Rs.121 to 130/-
760 gms. 6V4.5ah. battery Rs.115 to 119/-
710 gms. 6V4.2ah battery Rs.101.6 to 111/-
(xv) The importer for evading taxes & justification of the mis-declaration of the value on which goods imported, had restored to raise local sale invoice showing low value. The local sale invoices showing unit sale price for 6 volts between Rs. 22.30/- to Rs. 30/- per piece & 12V batteries Rs. 88.24 to 100/- per piece, recovered from the importer‟s seized records.
(xvi) The actual value, local sale invoice & purchase orders showed unit value also retrieved from seized record, as detailed below:
(a) Invoice No. 759 dated 21.09.2009 for 1000 pieces of 6V battery to M/s Satwik Scales Industries having unit value @ Rs. 135/- piece.
(b) Invoice No. KIL/DIS/B/38 dated 31.10.2009 for 2000 pieces of 6V battery to M/s Ammini Energy System Pvt. Ltd., having unit value @ Rs. 135/-
pieces.
(c) Purchase order No. PO/1017/08-09 dated 31.05.2008 given by M/s Ammini Energy System Pvt. Ltd. to the importer for 20 pieces batteries of 6V4.5 Model @ Rs. 140/-.
(d) Purchase order No. PON-002725 dated 5.9.2008 given by M/s Ammini Energy System Pvt. Ltd. to the importer for 100 pieces of batteries of 6V4.5 Model @ Rs. 150/-.
(xvii) The importer themselves purchased these batteries locally at price showing 4-5 times higher (than the false price declared by them) as per their Local Purchase Invoices.
(a) Purchase of I2V7.2 Battery 890 pieces from M/s Empire Batteries @ Rs. 402/- under Tax Invoice No. 1355/09-10 dated 31.12.2009.
(b) Purchase of I2V7.2 AH Battery 1100 pieces from M/s Empire Batteries @ Rs. 410/- under Tax Invoice No. 1341/09-10 dated 29.12.2009.
(c) Purchase of 6V4.5 AH Battery 5000 pieces from M/s Empire Batteries @ Rs. 110/- under Tax Invoice No. X-799 dated 25.2.2010.
(III)(a) During investigation, one document named as „IMPORT COST SHEET‟ 350-419 was recovered from the importer‟s records. It was showing the total expenditure like duty, detention, freight, local taxes 21 etc. incurred by the importer after the importation of the goods. Thus on the basis of their actual local sale price, the value of the goods imported under particular import can be re-determined by allowing the deduction on account of expenses/ profit/duty & taxes under the deduction method as outlined under Rule 7 of the Customs Valuation (Determination of value of imported goods) Rules, 2007.
The importer had imported 50,000 pieces of 6V5Ah batteries vide B/E No. 107292 dated 09.02.2010 imported from the supplier M/s Suqian Yongda Imp. & Exp. Trade Co. Ltd. and as per the details of the said import cost sheet the total expenses incurred in respect of the above said bill of entry was as follows:
Expenses incurred for 50000 pieces of 6V4.2AH & 6V5AH in (Rs.) DUTY 201301 C&F 33965 ET 10810 VAT 143303 LT 23400 Total 4,12,779 From the seized records the minimum actual local sale price of 6V4.2Ah and 6V5Ah (at the corresponding time) battery was noticed at Rs.101 & Rs. 121 per piece respectively.
(i) Thus the total sale value of 25000 pcs XRs.101 =Rs.25,25,000/-
(ii) Less-Total expenses (Rs.412779/50000 x 25000) =Rs.2,06,390/-
(iii) Thus the value including profit for 25000 pieces was to be =Rs.23,18,610/-
(iv) Less -the importer, however claimed just profit only 3-5% but as certain unexplained expenses are involved in such transaction deduction on a/c of profit & other such expenses on higherside can be deemed @ 20% = Rs.3,86,435/-
(v) Total assessable value of 25000 pcs of battery =Rs.19,32,175/-
(vi) CIF value for 25000 piece =Rs.19,13,045/-
Thus the unit value after allowing deduction on account of expenses profit & other unexplainable 22 expenses, arrived at Rs. 76.52 or in US$1.64/piece (CIF).
Similarly the calculation for CIF value and assessable value for Model 6V5Ah made as under:
(i) Thus the total sale value of 25000 pics. X Rs.121 arrived at Rs.30,25,000/-
(ii) Less -Total expenses (Rs.412779X5000/25000) =Rs.2,06,390/-
(iii) Thus the value including profit for 25000 pieces was to be =Rs.28,18,610/- (iv) (iv) Less - The importer, however claimed just profit only 3-
5% but as certain unexplained expenses are involved in such transaction deduction on a/c of profit & other such expenses on higher side can be deemed @ 20% = Rs.4,69,768/-.
(v) Total assessable value of 25000 pcs of battery =Rs.23,48,812/-
(vi) CIF value for 25000 pieces = Rs. 23,25,586/-
From the above it was seen that in case of 6V battery expenditure per piece was coming to be Rs. 8.26 per piece on account of duty, freight, tax etc. Therefore, the CIF value of battery model 6V4.2 arrived at Rs. 75.37 or US$ 1.64 on actual local sale price of Rs. 101/- and similarly in case model 6V5AH battery, the same was arrived at Rs. 93.02 or US$ 2.00/ piece on the actual local price of Rs. 121/ piece. The unit price so arrived is more or less found to be same with the actual price of the batteries imported from M/s Shenzhen Leoch Battery Technology co. Ltd., China."
32. The Revenue, on scrutiny of NIDB data of 12 V 7.2 AH batteries, it was revealed that some other importers, who were importing the identical goods of „Suquian brand‟ China, in a much higher volume than this importer, the declared prices were 4 to 5 times in the range of 250.47 to Rs.257.65. It further appeared to Revenue that there is no significant difference between the contemporaneous import price of identical goods found as per NIDB data and the price arrived at after applying the deductive method or the actual price retrieved from the seized USB drive.
23
33. The Revenue also considered that the price of VRLA batteries depends on the cost of lead content and the price of lead in the International Market. The international price of lead during June, 2009 to December, 2009 was at US$ 2047.96 per MT and during January, 2010 to July, 2010 was at US$ 2050.37 per MT. Thus, it appeared to Revenue that even on the basis of the lead content, which as per the manufacturer is 59.6 % of the total weight of the battery, the declared value appeared to be suppressed and mis-declared, and hence, the cost of lead content for 6 V battery was coming to US$ 1.62 to 1.80 and for 12 V battery from US$ 4.88 to 5.54. Thus, due to the facts on record, on the failure on the part of the importer-appellant, to provide the exact value in spite of allowing time and opportunity, it appeared to Revenue that in respect of these consignments also, the declared value is fit to be rejected and re- valued under Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
34. Further, the statement of Shri Kapil Garg was recorded on 17.03.2011, 11.04.2011 and 13.06.2011, wherein, inter alia, on being confronted with several e-mails, addressed to the various persons viz. Mr. Jovial Pan, E-mail dated 11.02.2006, for remittance of US$ 57.40, E- mail dated 13.11.2006 from Shri Jovial Pan mentioning that they got notice from the Bank for your payment of US$15089 from Colombo, but there is problem of Account No. ..............The E-mail communications between Ms. Elana Zhang (Supplier) Power ROC Co. Ltd., China (Importer) and the appellant for the period 9.3.2006 to 30.03.2006, negotiating the prices at US$ 1.27 for 6445 batteries.
35. Remittance of US$5618 to the supplier - Power ROC Co. Ltd. through Mr. Anil Kingrani vide supplier‟s email dated 19.10.2006, on 24 being confronted with these facts or allegations, Mr. K. Garg reiterated that the entire system was governed from the suppliers and he was being forwarded wire copies, just for reference. On being confronted with e- mail communication during 21.09.2006 to 11.02.2006 between the appellant and the Power ROC Co. Ltd., quoting the unit price US$1.34 for 64,090 pieces for 6 V battery, Mr. K. Garg gave a vague reply that he does not remember the exact details. On being confronted with email of the appellant dated 20.04.2007 to the supplier - Power ROC Co. Ltd., wherein they mentioned that they plan to book for container of 6 V 4.5 AH @1.85 USD, which was for 90,400 pieces = USD 1,67,240 and one container of 12 V /7.5 AH (9000 x USD 5.5) = US$49,500/-, Mr. Garg in his vague reply submitted that these are just series of the email correspondence with the supplier in the course of bargaining. They have not executed any purchase order as the prices were higher.
36. Thus, from the statement and replies given by Shri Kapil Garg, on being confronted with the documents retrieved from the Hard disc drive/pen drive and correspondence, etc evidently Mr. Garg could not give proper replies and gave vague replies. Mr. Kapil Garg also contended that the higher values revealed in the parallel invoices, etc. was not the actual value, as the same were meant for the supplier, who were claiming higher duty draw back in China. Whereas the actual values being lower were declared.
37. The said contention was found to be not believable in view of the other evidences brought on record.
38. The appellant contested the show cause notice particularly mentioning that neither relied upon documents have been served upon them, nor the non-relied upon, in spite of there being a list of documents 25 relied upon as per the show cause notice. The appellants submitted an interim reply requesting for return of non-relied upon documents and also for service of relied upon documents in order to make an effective and detailed reply to the show cause notice. The appellants were informed, with reference to the letter dated 4.11.2016 issued by the Dy. Director, SIIB (JNCH) that the original file F.No.SS/MISC/107/2010- 11/SIIB (I) is not traceable in the Section, as well as pursuant to the tracer‟s circular. Further, the documents, hard disc and pen drive also cannot be found. However, the adjudicating authorities confirmed the proposed demand of differential duty by rejecting the declared value and revaluing the same, along with equal amount of penalty on the appellant company and also personal penalty on the Director. Being aggrieved, the appellants preferred appeal before the ld. Commissioner (Appeals), who was pleased to dismiss the appeals confirming the adjudication order. As regards the RUDs and non-RUDs, the ld. Commissioner (Appeals) observed as follows:-
"12. The appellants have also contended that since the department has not provided them with relied upon documents, the adjudication process cannot take place. In this regard, I find that main show cause notice dated 08.08.2011 has been issued to the appellants on this issue by Commissioner, JNCH, Nhava Sheva after the case was duly investigated by SIIB there. As per para C of grounds of appeal, the appellant vide their interim reply to show cause notice dated 08.08.2011 filed during hearing held on 09.11.2016 in respect of the said show cause notice, before the Commissioner of Customs, JNCH, they had requested the Commissioner to provide non-relied documents in respect of the said main show cause notice dated 08.08.2011. The appellants have never mentioned that they were not provided the relied upon documents. Therefore, I find that the appellants have been provided all the relied upon documents along with show cause notice issued at JNCH, Nhava Sheva which are also relied upon documents in present show cause notice. In view of this, I do not agree with the appellant‟s submission."
39. Being aggrieved, the appellant are before this Tribunal. 26
40. Heard Shri Ashok Singh, ld. Advocate for the appellants and Shri Rakesh Kumar, Authorised Representative for the respondent/Department.
41. Ld. Advocate for the appellant urges that in case of the three imports made from Power Roc Co. Ltd., China vide bill of entry nos.101168/69/67, all dated 24.11.2007, the same were assessed provisionally and the finalisation is still pending. Thus, in respect of these three bills of entries, the show cause notice is bad for invoking Section 28 (4) of the Customs Act. As Section 28 can be invoked/applied only in case, where the assessment has been finalised and there is a case of duty short levy or not levied. He relied upon the ruling in the case of International Computers Indian Manufacturer Ltd. - 1981 (8) ELT 62 (Delhi), wherein it has been held that the demand under Section 28 of the Customs Act would follow only when provisional assessment is finalised. Ld. Counsel further urges that the Revenue placed reliance on the email and wire transfers found from the seized hard disc and pen drive and alleged that the declared transaction value pertaining to these three bills of entries are liable to be rejected. He submitted that reliance on email and wire transfer is not sustainable as the same are merely assumptions / presumptions. There is no correlation made out by the Revenue with the said emails with respect to the particular bills of entries or the bills of entries under consideration. Further, there is time gap between the imports, which are in Jan. 2007, whereas the emails are of March, 2006. He further urges that the data found on the hard disc/pen drive cannot be relied upon as neither these were opened in the presence of the Director of the appellant or their authorised Signatory. These were opened in presence of the Representative of CHA, who is not anyway concerned with such data. The CHA is authorised only for limited 27 purposes for clearance of the goods at Port. The appellant was never informed or summoned to witness the Panchnama proceedings of opening of the seized electronic device and retrieval of data therefrom. Thus, allegations based upon data retrieved from hard disc/pen drive are not reliable evidences for imposition of duty and penalties.
42. As regards the three bills of entries for import from M/s.Suquian Yongda Imp. & Exp Trade Co. Ltd., China, it is submitted that there is no evidence of under-valuation. The only basis for rejection of transaction value is assumption and presumption being that Since the appellants have under-valued the other consignments, hence, they have under- valued the three subject consignments also.
43. Ld. Counsel further submitted that rejection of transaction value for import of batteries from Power Roc. Company are not at all comparable under Rule 5. Since the goods in question are different as the goods imported from Power Roc. Company are 6 V 4.5 SLA, whereas the goods imported from M/s Suquian Yongda Imp. & Exp. Trade Co. Ltd. are 6 V 4.2 AH and 6 V 5.5 AH. Further, there is time gap of 3 years, as the bill of entry of Power Roc. Company is of Jan., 2007, whereas the bill of entry of Suquian Yongda Imp.& Export is for the period March to October, 2010. It is further urged that with reference to local purchase/sale price by the appellant is mis-placed as stated by Shri Kapil Garg. That such local sale and purchase of batteries was under warranty and guarantee, whereas the batteries imported by them are without warranty and guarantee.
44. It is further urged that so far as the reliance placed on the import cost sheet retrieved from the seized electronic record, on the basis of which, the declared value, for 6 V 4.2 AH and 6 V 5 AH in respect of the 28 bills of entry of Feb., 2010 at Rs.75.37 and Rs.93.02 respectively is taken, the entire calculation is based on assumption. The Revenue for calculation in order to arrive at the desired assessable value, further erred in relying upon the cost sheet. The said cost sheet reflects the invoice value, which has been remitted through normal banking channel and all other expenses. Had it been a case of suppression of value, the same would have been reflected in the cost sheet, which is not the case. The ld. Counsel further urges that comparison or/reference made to NIDB data is bad and erroneous as the batteries in question are 6 V batteries, whereas the NIDB data is in respect to 12 V 7.2 AH.
45. Further, it is urged that the show cause notice refers to cost of lead in the International Market to allege that the declared value cannot be less than the cost of main raw material - Lead. The cost of lead in the International Market cannot be made the basis for rejection of transaction value and its re-determination. The international price of any product /metal is only indicative and does not reflect true and correct market price on the date of purchase of any product.
46. It is further urged that sofar as the market survey is concerned, the same has not been conducted in proper manner. Firstly, the importer was not a party to such market inquiry and secondly, the importers have disputed the market inquiry. It is further urged that comparing the consignment value of the appellant with any other import, makes little sense in view of the vast difference in their deal with the supplier like volume, rejections, quality and price discount, payment terms offered, etc. Further, neither the manufacturer nor the appellants were giving any warranty and guarantee, which was also an important factor for the lower acquisition price by the appellant.
29
47. Further, in view of the non-supply of the RUDs as well as non- RUDs, the appellant has been prevented in making an effective defence and as such, the impugned order is vitiated and fit to be set aside. The ld. Commissioner (Appeals), without going through the adjudication records at JNCH, Nava Sheva, assumed that the appellant has received the RUDs, leading to mis-carriage of justice.
48. It is further urged that the alleged wire transfers has got no co- relation with the subject imports as it does not give any reference of bills of entry, invoice, air-container no., etc. The email relied upon in March, 2006, whereas the import is within Jan. 2007. It is further urged that the data as per the pen drive and hard disc is also not reliable for the reasons that these were not made available to the Adjudicating authority for adjudication. The Investigating Authority denied the availability by stating that the evidence is untraceable. Further, it is urged that the Court Below ignored the vital facts that the appellant has entered into the contract for supply of batteries in bulk about 1 lakh or more in each purchase contract and as such, enjoyed the discounted price.
49. Opposing the appeal, Mr. Rakesh Kumar, ld. Authorised Representative for Revenue urges that the transaction value has been rejected correctly in view of evidence being parallel invoice, evidence of payment through non-banking channel, wire transfer, cost of lead in international market, which form major cost component of the batteries and also the admission made by the Director of the appellant in his statements on different dates. It is further urged that the market survey had to be undertaken after the appellant was granted opportunity to satisfy the transaction value as claimed by them. Although the market survey was done at, Nava Sheva, Mumbai in respect of 12 V batteries 30 and in the survey against the declared price of Rs.55.97 per battery retail price in the market was found to be from Rs.550 to Rs.650/- per battery. Admittedly, the evidence came on record from the hard disc and pen drive seized from the premises of the appellant and also from the email account of the Director, Shri Kapil Garg.
50. In the course of investigation, an invoice dated 27.07.2010 was recovered issued by M/s. Shenzhen Leoch Battery Technology Co. Ltd., China for 1000 pieces of 12 V 8.08 AH VL wire battery @ of US 5.75 FOB per battery. Whereas the appellant had declared the value of USD 1.17 per piece, in their bill of entry no.785027. Thus, the appellant declared the about 20% of the actual value as per invoice of the manufacturer/supplier by mis-declaring the transaction value. It is further urged that the Representative of the CHA is good enough for the purpose at the time of market survey. It is further urged that Director of the appellant, Shri Kapil Garg in his statement dated 29.11.2010 had admitted that in order to sustain in the market, he had adopted modus operandi of mis-declaration of transaction value. Further, it is stated that Shri Rajendra Mangal (Aggarwal), Accountant of the appellant confirmed in his statement that the appellant used to prepare two bills for resale of batteries, one of lower value, the payment of which was received by them through cheque and the balance payment was taken in cash. The appellant with respect to import of 6 V batteries for Shenzhen Leoch Battery had declared the transaction value of USD 0.25 per piece approximately, whereas as per email communication with the supplier during the period March, 2006 to April, 2006, they had settled the FOB value at US$ 1.27 to US $1.37 per battery of 6 V, which is much relevant and reliable for the batteries imported during Jan. 2007. 31
51. It is further found during investigation, from email record that the appellant was transferring money to the supplier through non-banking channel also, which also supports the case of Revenue. It is further urged that the allegation of Revenue of suppression of transaction value is supported by the various evidences being (i) market survey, (ii) suppression of sale price after import by splitting the sale price and preparing the two separate invoices, (iii) import cost sheet, (iv) NIDB data, (v) lead price in the international market, (vi) admission of the Director, Shri Kapil Garg in the statement recorded under Section 108 and (vii) evidence of wire transfer (non-banking channel).
52. Ld. Authorised Representative further urges that the transaction value has been rightly rejected following the principles in the case of Eicher Tractors - 2001 1 SCC 315 laid by the Hon‟ble Supreme Court. He further urges that relevance of Rule 10 A has been emphasised by the Apex Court in its judgement in the case of Indus Communication Ltd. Vs. CC, New Delhi.
53. He further urges that the appellant in the facts of the present case has done fraud and forgery by preparing parallel invoices to suppress the transaction value for evading customs duty. The revaluation has been done on the basis of the parallel invoice found (although in respect of other bills of entries), which is corroborated by the confession and admission of the Director, Shri Kapil Garg. It is an accepted principles of law that whatever has been admitted need not be proved. Reliance is placed on the ruling in the case of CCVS Systems & Components - 2004 (165) ELT 136 (SC). It is further urged that sofar as the retraction statement is concerned, the same is not reliable in view of the admission/confession made in the subsequent statements. Further, the 32 statement is supported by other corroborative evidences, as mentioned hereinabove. Accordingly, ld. Authorised Representative prays for dismissal of the appeals.
54. Having considered the rival contentions and on perusal of the records and the written submissions, we find that so far as the batteries imported from M/s Power ROC Company Ltd. vide three bills of entries dated 24.1.2007 is concerned, the bill of entries were assessed provisionally and were pending finalisation. Accordingly, we hold that the impugned order is bad under Section 28 of the Customs Act, as the provisional assessment is still not finalised. Accordingly, the demand in respect of three bills of entry nos. 101168, 101169 and 101167 is set aside.
55. We further find that in the present case, the appellant has imported VRLA batteries 6-V/4.5 GLA/4.2 AH/4.5 A.H. We also find that the show cause notice was issued by relying upon the data from seized hard disc and pen drive. However, the appellant was informed later on that the said pen drive and hard disc are not traceable for the purpose of adjudication. The Dy. Commissioner of Customs, SIIB (I), JNCH, in his communication dated 4.11.2016 has categorically stated that the original file of seized documents, hard disc and pen drive seized under Panchnama are not traceable. We further find that the appellant was not noticed before opening of the hard disc/pen drive by the Department. One hard disc and pen drive was opened in the presence of Shri Sanjay A. Chothani, employee of the CHA firm and at the time of opening of another hard disc on the other date, nobody was present in absence of notice to the appellant to witness the retrieval of data. Thus, the whole exercise of the retrieval of data is vitiated rendering it unreliable. We 33 further hold that Representative of the CHA was not the competent person to witness the proceedings relating to the retrieval of the data from hard disc /pen drive. Further, the reliability of the data from hard disc/pen drive is also bad as the same were not made available to the Adjudicating Authority nor made available to the appellant for inspection. Further, as required by Section 138 C of the Customs Act, Revenue failed to bring on record the details of the computer or machine, on which the data was prepared or compiled. Further, it is found that there is no specific correlation with the bills of entry under dispute with the alleged evidence of wire transfer. Further, we find that there is no investigation or confirmation from the persons, whose names have appeared from the email for wire transfer. We further find that reliance has been made on the import cost sheet, which was retrieved from the seized hard disc /pen drive. The conclusion has been drawn by the Revenue from the cost sheet on the basis of assumption and presumption. The cost sheet reflects the invoice value, which has been remitted through normal banking channel along with other expenses. The suppression of transaction value would also have been reflected in the said cost sheet, which is not the case. The NIDB data is in respect of the import of 12 V batteries by other importers, whereas in the present case, the appellant has imported 6 V batteries. Hence, the NIDB data cannot be relied upon. Further, in respect of the batteries imported from M/s.Shenzhen Leoch Battery Technology, China, we find that the demand of differential duty is based upon the allegation that the appellant has under-valued the other consignments. Hence, they must have suppressed the value in respect of these bills of entries also.
56. We find that none of the aforementioned aspects has been addressed by the court below. We further find that the documents /data 34 retrieved from the hard disc/pen drive, in absence of the authorised person of the appellant, as admittedly no notice was issued to them, cannot be relied upon. We further find that there has been mis-carriage of justice by neither examining the persons, whose statements have been relied upon in the course of adjudication proceedings, nor they have been offered for cross examination by the appellant.
57. Thus, we are of the view that the issue as regards the transaction value of batteries imported from M/s.Shenzhen Leoch Battery Technology, China, requires re-consideration by the Court Below, keeping in view our aforementioned observations. Accordingly, we remand the matter as regards the three bills of entries for the batteries imported from M/s.Suqian Yongda Import & Export Co. Ltd. China, and set aside the demand of differential duty and penalty with respect to the import from Power ROC Co. Ltd. We also set aside the penalty in respect of the appeal of the Director of the appellant company, Shri Kapil Garg.
58. Thus, the Appeal No.C/52885 of 2019 is allowed in part and set aside in part. Whereas the Appeal No.C/52461 of 2019 is allowed by way of remand. Both the appeals are remanded to the Adjudicating Authority for re-determination in accordance with law in view of our findings and observations hereinabove.
(Pronounced on 14.09.2020).
(Anil Choudhary)
Member (Judicial)
(C. J. Mathew)
Member (Technical)
Ckp