Custom, Excise & Service Tax Tribunal
Sree Sudharsan Trucking Private ... vs Chennai- Port Import on 14 November, 2024
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHENNAI
REGIONAL BENCH - COURT No. I
Customs Appeal No. 40001 of 2015
(Arising out of Order-in-Appeal C.Cus.No. 1121/2014 dated 30.06.2014 passed by
Commissioner of Customs (Appeals), Chennai II, Custom House, No. 60, Rajaji Salai,
Chennai - 600 001)
M/s. Sree Sudharsan Trucking Private Ltd. ...Appellant
No. 1-20, SR, D-4, Sahithi Residency,
Kondapur,
Hyderabad - 500 084.
Versus
Commissioner of Customs ...Respondent
Chennai Import Commissionerate, No. 60, Rajaji Salai, Custom House, Chennai - 600 001.
APPEARANCE:
For the Appellant : Shri N. Viswanathan, Advocate For the Respondent: Smt. Anandalakshmi Ganeshram, Authorised Representative CORAM:
HON'BLE MR. P. DINESHA, MEMBER (JUDICIAL) HON'BLE MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) FINAL ORDER No. 41468 / 2024 DATE OF HEARING : 14.10.2024 DATE OF DECISION: 14.11.2024 Per Mr. VASA SESHAGIRI RAO The Appellant has filed the present appeal, aggrieved by the impugned order upholding the imposition of redemption fine and penalty in the Order- in-Original issued by the lower authority. The issue involved related to the import of Marbles and Mosaic by the Appellant, covered under Bill of Entry 2 Nos. 4156076 dated 23.12.2013 and 4117466 dated 18.12.2013, involving CIF value less than US$ 60 per SQM and 80 per SQM respectively, in violation of the import policy, by contravening conditions stipulated under DGFT Notifications No. 38(RE-2013) dated 26.08.2013 and 65 (RE- 2010)/2009-2014 dated 04.08.2011, thereby rendering the imports liable for confiscation under Section 111(d) of the Customs Act,1962 read with Section3(3) of the Foreign Trade (Development and Regulations) Act,1992 (FTDR) and imposition of penalty under Section 112(a) of the Customs Act,1962 (ACT). The lower authority had vide Order-in-Original dated 17.03.2014 confiscated the subject imports and imposed redemption fines of Rs.10,00,000/- and Rs.7,00,000/- respectively on the Appellant under Section 125 of the ACT ibid, besides imposing penalties of Rs.20,00,000/-
and Rs.1,00,000/- respectively under Section 112(a) of the ACT ibid.
2. The main contentions of the appellant in the appeal have been summarized below: -
i. It was submitted that the impugned order was not sustainable as the restriction imposed under the said DGFT Notification never specified the Customs Tariff entry number under which the imported goods were assessed.
ii. It was averred that the impugned order enhanced the value under Rule 9 of Customs Valuation Rules, 2007 (CVR) without any basis as the minimum unit price/floor price specified in the DGFT Notification for free importation was mistakenly adopted as contemporaneous price of subject imports to determine the 3 enhanced value for assessment in terms of CVR and quantification of duty payable without passing any order on the same which required vacation of the findings.
iii. It was submitted that the objective of discouraging import of inferior quality of goods by pushing up the value to the prescribed floor price which was 6-7 times more than the declared value without adducing proper reasoning and therefore not legally sustainable.
iv. It was contended that the conclusion drawn by the impugned order on the question of waiver is biased and erroneous as the payment of redemption fine and penalty by the Appellant was construed as evidence towards undervaluation by the Appellant. v. It was submitted that the impugned order imposed excessive redemption fine by ignoring the Circulars of CBEC and various judgements of Hon'ble Courts and Tribunals which advocated imposition of fine only to the extent of setting off the margin of profit.
vi. It was contended that the impugned order is erroneous as it ignored the circumstances warranting imposition of penalty as held in Hon'ble Supreme Court judgement in the case of M/s. Hindustan Steel Ltd. [1978 (2) ELT 159 (SC)].
3.1 The Ld. Counsel Shri N. Viswanathan representing the Appellant reiterated the grounds of appeal and submitted that the lower appellate authority was in gross error in approving both the enhancement of the value 4 equivalent to the Minimum Import Price notified by the DGFT while also holding that the imports were violative of the DGFT notification which provided for the free importability of the goods once its value is equivalent to the MSP notified. Therefore, having re-determined the value for the goods equivalent to the MSP the impugned order ought to have held that since the value of import is not in violation of the DGFT notification, the goods are freely importable and therefore are not confiscable and accordingly could have vacated the fine and penalty imposed by the original authority. 3.2 It was pointed out that the observation in the Impugned order pertaining to the evidence produced by them in the form of FIR to claim that they had already lost the substantial value of the part of the goods imported and transported in the particular lorry was erroneous and in correct as it was relied upon to only show that the Appellant will not be in a position to market the said goods and earn any profit so as to substantially reduce the RF which would be imposed which was failed to be appreciated resulting in sustaining the huge and harsh fine and penalty on them adding to the heavy financial losses already suffered by them.
3.3 It was pointed out that it is a well settled position of law that the policy condition imposed by the DGFT in exercise of powers conferred on them under Sec. 5 of the FTDR is not legal or valid and in any case any condition imposed must be specific for considering such imports to be restricted or prohibited. In the subject notification it is recorded that import of the specified goods is permitted freely so long as the unit price for the goods is not less than 60$ or 80$ as the case may be and the notification 5 nowhere specified that if the import value for the specified goods is less than the MSP it is to be regard as restricted.
4. The Ld. Authorised Representative Smt. Anandalakshmi Ganeshram representing the Department, reiterated the findings in the impugned order and submitted that the Appellant resorted to import of Marble and Mosaic below statutorily fixed prices by DGFT in contravention of Import Policy rendering the imports liable for confiscation and imposition of redemption fine and penalties. She has further argued that the importer has voluntarily accepted the enhanced value without any protest, he is precluded from challenging the same relying on the judicial precedents in the cases of M/s. Namo Alloys P Ltd. [2023 (12) TMI 15-CESTAT-CHANDIGARH] and Sodagar Knitwear [2018 (8) TMI 1777-SC].
5. We have heard the Ld. Counsel and the Ld. Authorised Representative and perused the grounds of appeal and the submissions made by both sides.
6. The issues which arise for consideration in this appeal pertain to:
i. Whether the subject imports are to be treated as restricted goods under the Import Policy thus become liable for confiscation justifying imposition of redemption fine and penalties under the Customs Act, 1962? and, 6 ii. Whether enhancement of the value of imported goods basing on the DGFT's Notification No. 38 (RE-2013) dated 26.08.2013 is legal or valid in accordance with the provisions of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007?
7. The facts in the appeal make it clear that the Appellant has imported Marble of various dimensions vide Bill of Entry Nos. 4156076 dated 23.12.2013 and Marble/ Mosaic of various dimensions, UPVC Windows/ dining table (made of marble and wood) and dining chairs vide Bill of Entry No. 4117466 dated 18.12.2013 and have paid applicable duties of Customs on enhanced value. The main dispute revolves around the applicability of DGFT Notifications No. 65 (RE-2010)/2009-2014 New Delhi dated 04.08.2011 and No. 38 (RE-2013) dated 26.08.2013 with regard to import of Marble and Mosaic. As per the said Bills of Entry, Marbles have been classified under CTH 68029900 and Mosaic has been classified under 69089090 which has not been disputed by the department during assessment. The dining table has been classified under CTH 9403 which does not fall within the purview of the subject DGFT Notifications. We also find from the Commercial invoices that the price of the Marble ranges between US$ 9 and US$ 20 per square metre and the price of the Mosaic at US$ 8 per Square Metre. Since the declared CIF values of Marble / Mosaic were less than US$ 60 per SQM and 80 per SQM respectively, the Department alleged that the Appellant had imported restricted items in violation of the import policy, and DGFT Notifications No. 38 (RE-2013) dated 26.08.2013 and No. 65 (RE-2010)/2009-2014 New Delhi dated 7 04.08.2011, thereby rendering the goods liable for confiscation under Section 111(d) of the Customs Act, 1962 read with Section 3(3) of the Foreign Trade (Development and Regulations) Act, 1992 (FTDR) and also for imposition of penalty under Section 112(a) of the Customs Act, 1962 (ACT).
8. The Appellant has contended that the confiscation, imposition of redemption fine and penalties and also the valuation adopted in terms of Rule 9 of CVR are not in accordance with the law. The Ld. Counsel for the Appellant has put forth that the enhancement of value to the ceiling price as specified in the DGFT Notifications for payment of Customs duty and subsequent confiscation of goods citing the said Notification are both mutually exclusive and cannot operate in tandem and hence the impugned order could have done away with invocation of restrictions imposed by import policy once the values were enhanced to the ceiling price.
9. In order to have a better understanding of the implications of the said DGFT Notifications which have been reproduced below: -
Notification No. 65 (RE-2010)/2009-2014 New Delhi dated 4th August, 2011 reads as under: -
"Subject : Import policy of Worked monumental or building stone (except slate) and articles thereof, other than goods of heading 6801; mosaic cubes and the like, of natural stone (including slate), whether or not on a backing; artificially coloured granules, chippings and powder, of natural stone (including slate) S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with Para 2.1 of the Foreign Trade Policy, 2009-2014, the Central Government hereby makes the 8 following amendments in the Schedule 1 (Imports) of the ITC (HS) Classifications of Export and Import Items.
2. Existing policy conditions (prior to this amendment) as available at page 474-475, for the Exim Codes 6802 10 00, 6802 21 10, 6802 21 20, 6802 21 90, 6802 91 00 and 6802 92 00 of Chapter 68 of ITC(HS) Classifications of Export and Import Items are extracted below (earlier policy conditions) : "Import permitted freely provided CIF value is US$ 50 & above per square metre."
3. After amendment the entry would read as below (amended policy conditions) : "Import permitted freely provided CIF value is US$ 60 & above per square metre.
Now the import of items under the Exim Codes specified above is permitted freely if CIF value is US$ 60 and above per square meter instead of the earlier value of US$ 50."
Notification No. 38 (RE-2013)/2009-2014 New Delhi, dated 26th August, 2013 reads as follows: -
"Subject : Import policy of Worked monumental or building stone (except slate) and articles thereof, other than goods of heading 6801; mosaic cubes and the like, of natural stone (including slate), whether or not on a backing; artificially coloured granules, chippings and powder, of natural stone (including slate) S.O.(E) In exercise of the powers conferred by Section 5 of the Foreign Trade (Development and Regulation) Act, 1992 read with Para 2.1 of the Foreign Trade Policy, 2009-2014, the Central Government hereby makes the following amendments in the Schedule 1 (Imports) of the ITC (HS) Classifications of Export and Import Items.
2. Existing policy conditions (prior to this amendment) as available at page 545-546, for the ITC HS Codes 68022310, 68022390, 68022900, and 68029300 of Chapter 68 of ITC(HS) Classifications of Export and Import Items are extracted below (earlier policy conditions) : "Import permitted freely " if CIF value is US$ 60 and above per square metre.
3. After amendment the entry would read as below (amended policy conditions) : "Import permitted freely provided CIF value is US$ 80 & above per square metre."
4.The effect of this Notification :- Now the import of items under the ITC HS Codes specified above is permitted freely if CIF value is US$ 80 and above per square meter."
The Minimum Import Prices of Marble and Mosaic have been fixed at US$ 60 and US$ 80 respectively in terms of above DGFT's Notifications and the Appellant by importing these specified items at much below these prices 9 have contravened the provisions of Foreign Trade (Development and Regulations) Act, 1992, thus, rendering these imported Marble and Mosaic as 'restricted goods' for import.
10. The Tribunal Ahmedabad in the case of Siemens Gamesha Renewable Power Pvt. Ltd. Vs. Commissioner of Customs, Mundra [2019 (365) ELT 631 (Tri.-Ahmd.)] has ruled that the DGFT has power under Section 3 of Foreign Trade (Development & Rule) Act, 1992 to impose any condition for import. The relevant para reads as given below: -
"7. As per above section, in our considered view, the DGFT is empowered to impose restriction for import. The fixing of MIP is not to enhance the value of the goods but only to impose of restriction, any type of restriction can be imposed by the DGFT by issuing the Notification, therefore, the DGFT is well within the power under Section 3 of FT (D&R) Act, 1992 to impose any condition for import."
As such, the arguments of the Ld. Advocate that the policy condition imposed by the DGFT in exercise of powers under Section 5 of the Foreign Trade (Development and Regulations) Act, 1992 is not legal or valid and the Notification has not specified that the import value if less than the MSP are to be regarded as restricted are not acceptable.
11. The Original Adjudicating Authority in his Order-in-Original dated 17.03.2014 has observed that the importer has agreed for enhancement of the value in line with the Minimum Import Price as fixed in terms of DGFT Notification No. 38 (RE-2013) dated 26.08.2013. The Lower Appellate Authority also has observed on the issue of valuation of the goods as follows: -
"Secondly, regarding the valuation of the goods, it is seen from para 10 of 10 the Order-in-Original that the lower authority has sought to reject the values declared by the importer as they are too low and contemporaneous unit price of marble is fixed at USD 60 and price of Mosaic is fixed at USD 80. This valuation has been accepted by the importer himself which is recorded in the Order-in-Original. Further, the importer has waived the need for a show cause notice and also a personal hearing. Therefore, the adjudication done by the lower authority should be eminently acceptable to the importer. There is no legal foundation whatsoever laid by the importer at the time of original adjudication. Therefore, the points being raised by him are without any basis. The waiver of show cause notice and personal hearing by the appellants is a conscious one with definite legal consequences. If the urgency to clear the goods has propelled him to forfeit his legal right to have show cause notice and personal hearing, he should suffer the consequences of forfeiture of such rights. Once the goods are cleared after waiving the right to show cause notice and personal hearing, the order passed by the lower authority should be gracefully accepted by the appellant. The appellant cannot now start laying fresh legal foundations at appellate stage to a case where he has already consented to enhance the value, fine and penalty by way of waiving his rights. Waiver of right of show cause notice and personal hearing have definite legal consequences for the appellant."
12. The Ld. Authorised Representative has argued that when an importer has voluntarily accepted the enhanced value without any protest then he is precluded from challenging the same placing reliance on the ratio of the decisions in the cases of M/s. Namo Alloys P Ltd. [2023 (12) TMI 15- CESTAT-CHANDIGARH] and Sodagar Knitwear [2018 (8) TMI 1777-SC]. In the case of Commissioner of Customs (IMPORT), ICD, TDK, New Delhi Vs. M/s. Sodagar Knitwear [2018 (5) TMI 686-CESTAT NEW DELHI] where the Tribunal has held that once the importer voluntarily accepted the enhancement then he is precluded form challenging the same. This judgment of the Tribunal has been upheld by the Hon'ble Apex Court.
13. Applying the ratio of the above decisions to the facts in this appeal, we are of the view that once the value of the imported goods have been enhanced on the basis of Minimum Import Price fixed in terms of DGFT's Notifications No. 65 (RE-2010)/2009-2014 New Delhi dated 11 04.08.2011 and No. 38 (RE-2013) dated 26.08.2013, we do not find any legal necessity to treat the imported goods having contravened the provisions of the Customs Act, 1962 read with Foreign Trade (Development and Regulations) Act, 1992. As such, the confiscation and penalties are not justified.
14. In view of the above, the impugned Order-in-Appeal C.Cus.No. 1121/2014 dated 30.06.2014 passed by Commissioner of Customs (Appeals), Chennai II is upheld to an extent of demand of duty at the enhanced value on the basis of Minimum Import Price fixed in the aforesaid Notifications, but, we order to set aside the confiscation and imposition of fine and penalty imposed. Thus, the appeal of the party is partly allowed on the above terms with consequential relief, if any, as per the law.
(Order pronounced in open court on 14.11.2024)
Sd/- Sd/-
(VASA SESHAGIRI RAO) (P. DINESHA)
MEMBER (TECHNICAL) MEMBER (JUDICIAL)
MK